Economics 81687

Economists Novy-Marx and Rauh contend that states are
A) accurately stating their pension liabilities.
B) understating the value of both their assets and liabilities.
C) accurately stating the value of their assets but understating the value of their pension liabilities.
D) accurately stating the value of their assets but overstating the value of their pension liabilities.

A fully-funded system
A) has current retirees being paid out of the taxes of current workers.
B) has a sufficient amount of money on hand currently to pay out all future obligations.
C) has current retirees being paid out of the taxes of current workers and has a sufficient amount of money on hand currently to pay out all future obligations.
D) never needs to run a surplus.

Nursing home care is covered by
A) Medicare, Part A.
B) Medicare, Part B.
C) Medicaid, regardless of income or wealth.
D) Medicaid, but only for the poor.

The increase in the price of a good would
A) move its demand curve to the right.
B) move its demand curve to the left.
C) cause a movement along the demand curve to a (higher price, lower quantity) point.
D) cause a movement along the demand curve to a (lower price, higher quantity) point.

Figure 2.1
In Figure 2.1 above, a “P*” for equilibrium price would go in
A) Box 1.
B) Box 2.
C) Box 3.
D) Box 4.

If people (who used to neither borrow nor save) are now borrowing to put their kids through college then this will cause the equilibrium interest rate
A) to rise.
B) to fall.
C) to fluctuate wildly.
D) to remain constant.

The use of the “common” logarithm in stock data graph is done to
A) Confuse the issue.
B) Show the up and down swings in the early years because without it, it just looks like an upward sloping line.
C) Show the up and down swings in the later years because without it, it just looks like an upward sloping line.
D) Show the up and down swings in the middle years because without it, it just looks like an upward sloping line.

Independent grocery stores are best-advised to
A) “out Walmart” Walmart by lowering prices.
B) hire less qualified people to keep costs down.
C) sell exactly the same goods Walmart does.
D) provide a level of service, community involvement, and types of goods Walmart does not.

An increase in productivity will cause
A) AD to increase (move to the right).
B) AD to decrease (move to the left).
C) AS to increase (move to down and to the right).
D) AS to decrease (move to up and to the left).

The Endangered Species Act was originally passed in
A) the 1930’s.
B) the 1970’s.
C) the 1980’s.
D) the 1990’s.

The value of the market to society is
A) the consumer surplus it generates.
B) the producer surplus it generates.
C) the sum of the producer and consumer surpluses.
D) consumer surplus minus producer surplus.

M1 is the total amount of ________ in the economy.
A) coin
B) paper currency and coin
C) checking accounts, coin and paper currency
D) paper currency only

Production of a catheter in the U.S. requires either one skilled worker-day or two unskilled worker-days, while production of the same device in Guatemala, because of its relative lack of transportation and communications infrastructure, requires either three skilled worker-days or four unskilled worker-days. Production of a hammock in the U.S. requires one-fourth skilled worker-day or one-third unskilled worker-day, while production of a hammock in Guatemala requires one-third skilled worker-day or one unskilled worker day. If eighty unskilled worker-days are moved from producing hammocks to producing catheters in the U.S., while ninety skilled worker-days are moved from producing catheters to producing hammocks in Guatemala, combined production of the two goods in the two countries will change by
A) ten additional catheters and thirty additional hammocks.
B) thirty additional catheters and five additional hammocks.
C) ten additional catheters and sixty fewer hammocks.
D) no net change in production of the two goods would occur.

Figure 30.1
In Figure 30.1, at the market price-quantity combination where production is limited, the consumer surplus is
A) AP_floorB
B) P*AC
C) HP*C
D) HP_floorBG

If interest rates rise and all else is equal, the price of a stock will
A) fall.
B) rise.
C) remain unchanged.
D) adjust to reflect a higher ratio of price to earnings.

If it takes one country two units of labor to produce a computer and three units of labor to produce a TV but it takes the other country three units of labor to produce a computer and four to produce a TV, then the first country has
A) a comparative advantage in both goods.
B) an absolute advantage in TVs but a comparative advantage in computers.
C) an absolute advantage in TVs and computers but a comparative advantage in computers only.
D) an absolute advantage in TVs and computers but a comparative advantage in TVs only.

Suppose your community is considering using public money to build a new sports stadium for the team that is already in the community but is likely to leave without a new stadium. Suppose you are watching a news broadcast in which the supporters are saying that it will enhance economic activity because of the increase in restaurant activity that will occur around the new stadium. Now suppose you hear that an independent economist is going to appear during the next segment. It is likely she will say
A) the jobs created in the area will make it worth the investment.
B) there will be no new jobs created.
C) there will be no new jobs created in net because the same amount of money will be spent in the city whether or not there is a team. It will simply substitute from the game to something else.
D) it may be a short term cost, but in the long term it will be worthwhile.

Figure 5.1
In Figure 5.1 above, what profit would a perfect competitor earn?
A) a profit of zero
B) a positive profit
C) a loss less than its total fixed cost
D) a loss greater than its total fixed cost

The pattern of the 1930’s through the middle 1990’s was
A) deficits interspersed with a few years of surplus.
B) deficits each and every year.
C) surpluses each and every year.
D) surpluses interspersed with a few years of deficits.

If a given reduction in market demand causes the market equilibrium price to decrease by a very large percentage while equilibrium quantity purchased decreases by a very small percentage,
A) market supply is inelastic (but not perfectly inelastic.)
B) market supply is elastic (but not perfectly elastic.)
C) market supply is perfectly inelastic.
D) market supply is perfectly elastic.

The use of the supply and demand model to analyze labor markets implicitly assumes that there is ____ governing the labor market.
A) perfect competition
B) monopoly
C) monopsony
D) bi-lateral monopoly

The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because
A) interest rates may turn out to be higher in the future.
B) modest changes to the programs could be enacted soon.
C) unemployment rates may turn out to be higher than they are currently predicted to be.
D) taxable incomes may turn out to be lower than they are currently predicted to be.

When a firm chooses to shutdown, it is
A) making a poor decision because it should always produce where marginal cost equals marginal revenue.
B) making a poor decision because it should always produce where average costs exceed average revenue.
C) making a good decision as long as the price it is getting is less than its average total costs.
D) making a good decision as long as the price it is getting is less than its average variable costs.

The fraction of families living in poverty that are headed by single mothers of children under age 18 is
A) 22%.
B) 36%.
C) 45%.
D) 68%.

If your broker tells you that a trust to which you are a beneficiary has changed and instead of getting $5000 per year starting next year you will be getting $4000 per year starting next year, the present value to you has
A) fallen.
B) risen.
C) remained unchanged.
D) necessarily become more predictable.

Between Labor Day weekend and the date of the U.S. presidential election in 2008,
A) Fannie Mae and Freddie Mac were placed in conservatorship.
B) Lehman Brothers filed for bankruptcy.
C) the U.S. Treasury and the Federal Reserve asked Congress for $700 billion for TARP.
D) all of the options are correct.

The majority of proven world oil reserves are
A) in the Persian Gulf region.
B) held by non-Persian Gulf OPEC members.
C) under Alaska.
D) in the former Soviet Union.

The use of quotas in affirmative action are legal only when
A) necessary to achieve the employer’s diversity goals.
B) court-mandated, through a verdict or consent decree.
C) the employer is a government agency.
D) publicly advertised in newspapers, television or radio.

If in 2011, a woman made $100,000 on the job, $20,000 from a consulting business she operated, and $10,000 in dividends on stock she owned, she would owe old-age Social Security taxes on
A) $87,000.
B) $97,500.
C) $106,800.
D) $130,000.

If scalpers were to charge only face value for tickets to a sold-out event, there would be
A) a scalped ticket available for every seat in the stadium.
B) a higher price in the market for scalped tickets than the equilibrium price.
C) a price in the market for scalped tickets equal to the equilibrium price.
D) a lower price in the market for scalped tickets than the equilibrium price.