1) Creative destruction is most often associated with:
A.International trade
B.Technological advance
C.Government spending
D.Private consumption
2) Which of the following best explains why the net flow of illegal immigrants to the
United States has been close to zero (particularly from 2009-2011)?
A.Increases in Mexican birth rates have made migration more costly.
B.Economic growth in Mexico exceeded U.S. growth from 2009-2011.
C.Immigration reform has reclassified many illegal immigrants as legal immigrants.
D.Dramatic cuts in social services to illegal immigrants has led many to return to their
country of origin.
3) The tendency of hard-core Republicans to believe that all of the economic
developments under the Obama presidency have been detrimental to the nation
illustrates the:
A.Confirmation bias
B.Framing effect
C.Overconfidence effect
D.Availability heuristic
4)
Refer to the diagram. In the P1P2 price range, demand is:
A.of unit elasticity.
B.relatively inelastic.
C.relatively elastic.
D.perfectly elastic.
5)
Refer to the above graph which shows the supply and demand for unionized
manufacturing workers. The initial equilibrium point is point 1. There is an increase in
the demand for manufactured goods while at the same time health benefits for
unionized manufacturing workers also increase. Which point would represent the new
equilibrium?
A.3
B.4
C.5
D.6
6) For a usury law to be effective, the interest rate must be:
A.Determined by borrowing and lending
B.Set at the market equilibrium interest rate
C.Set above the market equilibrium interest rate
D.Set below the market equilibrium interest rate
7) If a 10 percent increase in the price of one good results in no change in the quantity
demanded of another good, then it can be concluded that the two goods are:
A.Complementary goods
B.Substitute goods
C.Independent goods
D.Normal goods
8) When a nation is in a debt crisis, the government’s level of debt is so high that:
A.monetary policy is ineffective.
B.the government is unable to find willing lenders so it can continue borrowing.
C.it can only be solved with a fiscal stimulus of lower taxes and more government
spending.
D.other countries will be unwilling to buy goods and services from the nation.
9) The benefits to trading nations based on comparative advantage accrue from:
A.Specialization only
B.Specialization and trading
C.Trading only
D.Protection of domestic industries
10) The government may impose industrial safety regulations and occupational
licensing requirements in which of the following economic systems?
A.Laissez-faire economy
B.Pure capitalism
C.Mixed market economy
D.Macroeconomic system
11)
Refer to the competitive market diagram for product Z. Assume that the current market
demand and supply curves for Z are D2 and S2. If there are substantial external costs
associated with the production of Z, then:
A.a price lower than B and an output greater than G would improve resource allocation.
B.government should levy a per-unit excise tax on Z to shift the demand curve to the
right.
C.government should levy a per-unit excise tax on Z to shift the supply curve toward
S1.
D.government should subsidize the production of Z to lower equilibrium price and
increase equilibrium output.
12) The profit-maximizing and the least-cost combination of inputs are:
A.the result of unrelated decisions.
B.always identical.
C.such that the minimization of costs always results in profit maximization.
D.such that the maximization of profits always entails the least-cost combination of
inputs.
13) When economists refer to capital flight, they are speaking of an:
A.outflow of financial capital from a certain country.
B.outflow of real capital from a certain country.
C.outflow of financial and real capital from a certain country.
D.outflow of human capital from a certain country.
14) Assume that the graphs show a competitive market for the product stated in the
question.
Select the graph above that best shows the change in the market specified in the
following situation: In the market for chicken, when the price of a substitute, such as
beef, decreases.
A.Graph A
B.Graph B
C.Graph C
D.Graph D
15) If farmers withhold some of their current corn harvest from the market because they
anticipate a higher price of corn in the near future, then this would cause a(n):
A.Rightward shift in the current supply of corn
B.Movement up along the current supply curve of corn
C.Leftward shift in the current supply of corn
D.Movement down along the current supply curve of corn
16) If the marginal benefit of a good is less than its marginal cost, then the nation
should:
A.Produce more of that good
B.Maintain the current level of production of that good
C.Reduce the marginal benefit of that good
D.Reduce the production of that good
17) In a purely competitive industry:
A.there will be no economic profits in either the short run or the long run.
B.economic profits may persist in the long run if consumer demand is strong and stable.
C.there may be economic profits in the short run but not in the long run.
D.there may be economic profits in the long run but not in the short run.
18) The major purpose of Medicare is to:
A.provide health care services to people on Social Security.
B.provide health care services to those receiving public assistance.
C.contain rising health care costs.
D.make a basic health care package available to all Americans.
19) Fixed costs for a firm are analogous to:
A.the dirt that fills up the financial hole.
B.digging a deeper financial hole by producing when prices are too low.
C.the cost of the shovel needed to fill the financial hole.
D.starting out in a hole that represents economic losses if the firm produces nothing.
20)
Refer to the competitive market diagram for product Z. Assume that the current market
demand and supply curves for Z are D2 and S2. If there are substantial external benefits
associated with the production of Z, then:
A.efficient resource allocation occurs at output G and price B because the market
mechanism does not measure all benefits.
B.an output smaller than G would improve resource allocation.
C.government should levy a per-unit excise tax on Z to shift the demand curve toward
D1.
D.an output greater than G would result in a more efficient allocation of resources.