At the time of Carol’s 10 year high school reunion she was earning $30,000 and the CPI
was 90.Now that it is time for her to attend her 20 year high school reunion, Carol’s
income has risen to $65,000 and the CPI is 200.At her 20 year reunion, can Carol
rightfully brag that her real income has risen since the last time she saw her former
classmates ten years ago?
a. Yes, Carol’s real income rose during that 10 year period.
b. No, Carol’s real income fell during that 10 year period.
c. No, Carol’s real income remained constant during that 10 year period.
d. It is impossible to determine what happened to Carol’s real income.
The end of the Cold War is generally marked by the fall of the Berlin Wall in
a. 1961.
b. 1969.
c. 1979.
d. 1989.
e. 1994.
A society is productive inefficient when
a. it produces at a point inside (below) its PPF.
b. it does not produce the maximum output with its given resources and technology.
c. it can produce more of one good without giving up some of another good.
d. both a and b
e. all of the above
Rent seeking is more likely to occur in a family when the parents make their inheritance
plans clear by telling the children ahead of time that their estate will be divided equally
among the children (and that under no circumstances will the parents change their
minds) than when there is more uncertainty with regards to the parents€ inheritance
plans.
a. True
b. False
The real balance effect describes the change in
a. checking account balances that occur when the money supply increases or decreases.
b. the value of physical assets (e.g., houses) that results from a change in the price level.
c. the output producers produce as they attempt to balance their production in response
to changes in consumers’ demand.
d. the value of cash holdings that results from a change in the price level.
e. the balance of cash holdings that results from a change in the amount of income
earned.
Economists who propose a constant-money-growth-rate rule often argue that setting the
annual growth rate in the money supply equal to the average annual growth rate in Real
GDP
a. maintains price level stability over time.
b. is a way to raise Real GDP.
c. will cause the price level to fall over time.
d. a and b
e. a, b and c
Consider a point on a market demand curve. The point represents
a. a single price and the quantity demanded by an individual buyer.
b. a single price and the sum of the quantities demanded by all buyers.
c. various prices and various quantities demanded.
d. a single price and the quantity demanded by an individual buyer at that price and all
other prices.
e. a and c
The efficient number of gifts that a gift-giver wants to give is the number at which the
marginal benefits of giving a gift are__________________the marginal costs of giving
a gift.
a. greater than
b. less than
c. equal to
d. less than or equal to
Activists believe that
a. monetary policy should not be used to smooth out the business cycle.
b. fiscal policy should not be used to smooth out the business cycle.
c. the frequent use of fiscal or monetary policy is called for to smooth out the business
cycle.
d. rules should be established for the conduct of both monetary and fiscal policy.
For each additional lamp produced, aconstant opportunity cost is incurredin terms of
bookshelves. This means
a. that it takes more resources to produce a lamp than a bookshelf.
b. that it takes fewer resources to produce a lamp than a bookshelf.
c. that for every lamp produced, a constant number of bookshelves is forfeited.
d. that for every lamp produced, a different number of bookshelves is forfeited.
It has often been remarked that Democratic candidates are more liberal in the
Democratic primaries and Republican candidates are more conservative in the
Republican primaries than either is in the general election. The explanation for this is
most probably that
a. they are facing politically different opponents in the two elections.
b. the median voter preferences are more to the left (right) in the primaries than in the
general election.
c. more people vote in the general election than in the primaries.
d. candidates are not as likely to locate the position of the median voter in the (earlier)
primaries as they are in the (later) general election.
Which of the following is consistent with Keynes’s view of Say’s law?
a. Saving increases by $3 billion, consumption falls by $3 billion, and investment rises
by $3 billion.
b. Consumption rises by $3 billion and saving rises by more than $3 billion.
c. Saving rises by $3 billion, consumption falls by $3 billion, and investment rises by
something less than $3 billion.
d. Saving rises by $3 billion, consumption falls by $3 billion, and investment rises by
$6 billion.
e. none of the above
Here is a consumption function: C = C0 + MPC(Yd). If consumption is $2,000, MPC
=0.75, and disposable income is $2,000, what does autonomous consumption equal?
a. $950
b. $3,500
c. $500
d. $4,500
e. none of the above
Most economists believe that the market __________ produce nonexcludable public
goods because of the __________.
a. will;monetary incentive they have to produce them
b. will not; externality problem
c. will not; free rider problem
d. will;market shortage that often accompanies the production of public goods.
e. none of the above
Disposable income equals national income minus personal taxes.
a. True
b. False
A “decrease in the quantity demanded” means that
a. the demand curve has shifted to the right.
b. the supply curve has shifted to the left.
c. price has declined and consumers therefore want to purchase more of the good.
d. price has increased and consumers therefore want to purchase less of the good.
Which of the following statements is true?
a. When TP = TE (total production = total expenditures), the economy is necessarily
producing Natural Real GDP.
b. When TP is greater than TE, inventory levels unexpectedly fall.
c. When TE is greater than TP, inventory levels unexpectedly rise.
d. b and c
e. none of the above