1) The efficiency loss of a tax is the idea that:
A.in addition to taking income from the citizenry, taxes also increase the rate of
inflation.
B.taxes cause a decline in output for which marginal benefit exceeds marginal cost.
C.taxes diminish incentives to work.
D.government spends dollars less efficiently than do households and businesses.
2) Which of the following antitrust cases is most recent?
A.the U.S. Steel case
B.the Alcoa case
C.the AT&T case
D.the Microsoft case
3) Suppose a firm anticipates that a R&D expenditure of $100 million will result in a
new production process that will reduce costs and thus create a one-time added profit of
$112 million a year later. The firm’s expected rate of return is:
A.0.12 percent.
B.112 percent.
C.12 percent.
D.2 percent.
4) Under a TAC system, fishing of a particular fishery is halted after:
A.a predetermined time period.
B.a predetermined amount of fish has been caught.
C.a predetermined number of fishing trips have been taken by each registered boat.
D.the market price of the fish falls below a predetermined trigger price.
5)
Refer to the above labor market diagram where D is the labor demand curve, S is the
labor supply curve, and MRC is the marginal resource (labor) cost curve. If this were a
purely competitive labor market, the equilibrium wage rate and level of employment
would be:
A.$5 and 3 respectively.
B.$6 and 4 respectively.
C.$7 and 5 respectively.
D.$8 and 3 respectively.
6) According to economist Abba Lerner (1903-1982), fiscal and monetary policy is
analogous to:
A.automobile brakes.
B.a steering wheel in an automobile.
C.a string that can be pushed or pulled.
7) African-American worker Jackson earns $30,000 per year; white worker Johnson
earns $40,000 per year. On the basis of this information we can conclude that:
A.it is not clear whether discrimination is present in this situation.
B.there are no discriminatory forces at work in the labor market.
C.Jackson is being discriminated against, but the dollar amount is unclear.
D.Jackson is being discriminated against in the amount of $10,000 per year.
8) The Federal budget surplus is found by:
A.subtracting government revenue plus government borrowing from government
spending in a particular year.
B.cumulating the difference between government spending and tax revenues over all
years since the nation’s founding.
C.subtracting government revenues from government spending on noninvestment goods
in a particular year.
D.subtracting government spending from government tax revenue in a particular year.
9) The following 2008 balance of payments statement for Transylvania. All figures are
in billions of dollars.
Refer to the above data. Transylvania had a $2 billion balance of trade (goods) surplus
in 2008.
10) as it relates to corporations, the principal-agent problem is that:
a.the goals of the corporate managers (the principals) may not match the goals of the
corporate owners (the agents).
b.the goals of the corporate managers (the agents) may not match the goals of the
corporate owners (the principals).
c.the federal government (the agent) taxes both corporate profits and the dividends paid
to stockholders (the principals).
d.it is costly for the corporate owners (the principals) to obtain a corporate charter from
government (the agent).
11) the price elasticity of supply measures how:
a.easily labor and capital can be substituted for one another in the production process.
b.responsive the quantity supplied of x is to changes in the price of x.
c.responsive the quantity supplied of y is to changes in the price of x.
d.responsive quantity supplied is to a change in incomes.
12) if the u.s. unemployment rate is 9 percent, we can infer that:
a.the economy is in the expansion phase of the business cycle.
b.potential gdp is in excess of actual gdp.
c.actual gdp is in excess of potential gdp.
d.actual gdp is equal to potential gdp.
13) Which of the following is a true statement?
A.The short-run Phillips Curve is horizontal.
B.The long-run Phillips Curve is horizontal.
C.There is a long-run tradeoff between inflation and unemployment.
D.The short-run Phillips Curve is downward sloping.
14) Stabilizing a nation’s price level and the purchasing power of its money can be
achieved:
A.only with fiscal policy.
B.only with monetary policy.
C.with both fiscal and monetary policy.
D.with neither fiscal nor monetary policy.
15) (Last Word) Suppose you borrow $500 and agree to pay this $500 plus $75 of
interest at the end of a year. The interest rate is:
A.10 percent.
B.15 percent.
C.12.5 percent.
D.7.5 percent.
16) Required payments to parties injured by firms found to have violated the Sherman
Act are known as:
A.antitrust fines.
B.treble damages.
C.economic reparations.
D.loss carry-forwards.
17)
refer to the above diagram. the combination of computers and bicycles shown by point
g is:
a.attainable, but too costly.
b.unattainable, given currently available resources and technology.
c.attainable, but involves unemployment.
d.irrelevant because it is inconsistent with consumer preferences.
18) which of the following is not economic investment?
a.the purchase of a drill press by the ajax manufacturing company
b.the purchase of 100 shares of at&t by a retired business executive
c.construction of a suburban housing project
d.the piling up of inventories on a grocer’s shelf
19) What conditions must exist in order for a pure monopolist to achieve economic
profits? Is the profitability of a firms operation a good index of the degree of monopoly
power it possesses?
20) Assume that a purely competitive firm has the schedule of total fixed and total
variable costs given in the table below. Fill in the total cost column.
•Complete the table below to show the total revenue and total profit of the firm at
each level of output the firm might produce. Assume market prices of $50, $150,
and $250.
21) A pure monopolist determines that at the current level of output the marginal cost of
production is $2.00, average variable costs are $2.75, and average total costs are $2.95.
The marginal revenue is $2.75. What would you recommend that the monopolist do to
maximize profits?
22) Compare the determinants of consumption with investment. Most economists
regard investment as being less stable than consumption. Looking at the determinants of
each factor, support this contention.
23) Explain the economic impact of an increase in the multiplier.
24) What is the Phillips Curve? What concept does it illustrate?
25) Of what significance is the will to develop?
26) Explain the three reasons given for the downward slope of the aggregate demand
curve.
27) Some government bonds can be redeemed for currency or a check at banks. Why,
then, isnt it universally agreed that government bonds are part of the money supply?