Table 8-11
Consider the following data for Tyrovia, a country that produces only two products:
guns and butter.
Refer to Table 8-11. Real GDP for Tyrovia for 2013 using 2005 as the base year equals
A) $1,140.
B) $880.
C) $690.
D) $560.
Which of the following is a microeconomics question?
A) Why do economies experience periods of recession?
B) Will government intervention lower the unemployment rate?
C) Why has growth in the economy slowed down over the past decade?
D) How will Apple decide on a selling price for the iPad?
Figure 4-1
Figure 4-1 shows Kendra’s demand curve for ice-cream cones.
Refer to Figure 4-1. Kendra’s marginal benefit from consuming the first ice cream cone
is
A) $9.00
B) $7.50
C) $3.50
D) $0.50
Inflation is measured
A) using the level of the consumer price index.
B) as the percentage change in the consumer price index.
C) using the level of real GDP.
D) as the percentage change in real GDP.
The Congressional Budget Office estimates that the additional taxes and fees enacted
under the ACA will not even cover half of the true cost of the ACA.
In the circular flow model, the value of total production for an economy ________ the
value of total expenditures on final goods and services.
A) equals
B) is greater than
C) is less than
D) may be greater than or less than
In a small Asian country, it is estimated that a $10,000 increase in capital per hour
worked will increase real GDP per hour worked by $600. Based on this information,
what is the slope of the per-worker production function in this range?
A) 0.06
B) 6.6
C) 66.6
D) 666
Buyers scrambled to secure stocks of Australian wool following a forecast of an 11
percent decline in wool production. What happens in the Australian wool market as a
result of this announcement?
A) The demand curve for Australian wool shifts to the left in anticipation of higher
prices in the future.
B) The demand curve for Australian wool shifts to the right in anticipation of higher
prices in the future.
C) The quantity of Australian wool demanded increases in anticipation of higher prices
in the future.
D) The quantity of Australian wool demanded decreases in anticipation of lower
quantities in the future.
Protection in the form of tariffs create winners and losers. Winners include ________
and losers include ________.
A) U.S. consumers and taxpayers; foreign firms that rely on U.S. exports
B) firms sheltered from foreign competition; U.S. consumers and taxpayers
C) U.S. firms that rely on exports to foreign countries; foreign manufacturers
D) the U.S. government; firms sheltered from foreign competition
What is an economic model?
A) It is a description of an economic issue that includes all possible related information.
B) It is a description of an economic issue based on official government information.
C) It is a detailed version of some aspect of economic life used to analyze an economic
issue.
D) It is a simplified version of some aspect of economic life used to analyze an
economic issue.
In an effort to discover whether or not workers understand inflation, economist Robert
Shiller conducted a survey. When asked about the effect of general inflation on their
wages or salary, the most popular response coming from workers was:
A) “My wages usually catch up to rising prices within a year.”
B) “The price increase will create extra profit for my employer…. There will be no
affect on my pay.”
C) “My wages have always increased by more than the rate of inflation.”
D) None of the above is correct.
Zane’s Vanes is a service that restores old weather vanes. Zane has just spent $125
purchasing a 1920s era weather vane which he expects to restore and sell for $500 once
the work is completed. After having spent $125, Zane realizes that he will need to spend
an additional $200 on materials to complete the restoration. Alternatively, he can sell
the weather vane without restoring it for $200. What is his marginal benefit if he sells
the weather vane without restoring it?
A) $75
B) $125
C) $200
D) $300
When firms benefit from the results of research and development they didn’t pay for, we
say firms
A) are litigious.
B) free ride.
C) invest in knowledge capital.
D) maintain a level playing field.
Household wealth is defined as the value of a household’s
A) assets minus the value of its liabilities.
B) assets plus the value of its liabilities.
C) assets.
D) liabilities.
How do a sole proprietorship and a corporation differ?
A) Proprietorships have unlimited liability while corporations have limited liability.
B) Corporations can issue stocks and bonds, while proprietorships cannot.
C) Corporations face more taxes than do proprietorships.
D) All of these are differences between the two types of businesses.
When the labor market is at full employment
A) there is only cyclical unemployment in the economy.
B) there is only structural unemployment in the economy.
C) the unemployment rate is 0%.
D) there is no cyclical unemployment in the economy.
Article Summary
Roberto Azevedo, director-general of the World Trade Organization (WTO), reported
that global trade growth estimates will be lowered for 2013 and 2014 because of
increasing global protectionism. The current protectionism is based primarily in
regulations rather than the more common tariffs and subsidies. Since 2008, almost 700
new trade restrictions have materialized € over 150 of those in 2012 alone € with
Russia being singled out as one of the primary offenders.
Source: Kiran Moodley, “WTO warns of trade slowdown due to protectionism,” CNBC,
September 6, 2013.
Refer to the Article Summary. The protectionism being granted to Russian firms is
likely to cause
A) exporting countries to retaliate by placing trade barriers on Russian imports.
B) Russian manufacturers to become more efficient.
C) Russian consumers to pay lower prices for a wider variety of products.
D) most countries to reduce their own trade barriers to be able to better compete with
Russian imports at home.
Table 7-2
Madison and Austin own Cafe Ole’. Table 7-2 lists the number of empanadas and tacos
Madison and Austin can each make in one hour.
Refer to Table 7-2. Select the statement that accurately interprets the data in the table.
A) Madison has a comparative advantage in making empanadas.
B) Austin has an absolute advantage in making tacos.
C) Austin has a comparative advantage in making empanadas.
D) Austin has a comparative advantage in making empanadas and making tacos.
If, due to a recession, foreign workers begin to leave the United States to search for
temporary work in their home countries until the recession has ended, this will
A) shift the short-run aggregate supply curve of the home country to the left.
B) shift the short-run aggregate supply curve of the home country to the right.
C) move the home country’s economy up along a stationary short-run aggregate supply
curve.
D) move the home country’s economy down along a stationary short-run aggregate
supply curve.
Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is
$21,500, what is the marginal propensity to consume?
C = 1,500 + (MPC)Y
I = 1,000
G = 2,000
NX = -200
A) 0.67
B) 0.75
C) 0.8
D) 0.9