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1) In terms of the circular flow diagram, households make expenditures in the _____
market and receive income through the _____ market.
A.product; financial
B.resource; product
C.product; resource
D.capital; product
2) Since 1980 the difference between the earnings of college graduates and high school
graduates has:
A.fallen, thereby increasing income inequality.
B.increased, thereby increasing income inequality.
C.remained constant.
D.increased, thereby decreasing income inequality.
3) Suppose the productivity of labor increases and at the same time the price of capital,
which is complementary to labor, increases. As a result, the demand for labor:
A.will increase.
B.will decrease.
C.may either increase or decrease.
D.will not change.
4)
Which of the following is likely to be an extreme view taken by critics of illegal
immigration?
A.Illegal aliens are close substitutes for legal resident workers
B.Illegal workers accept jobs that legal residents are unwilling to do
C.Undocumented workers do not displace legal residents from their jobs
D.Undocumented workers are complements to legal resident workers
5)
Refer to the total revenue graph above. When the seller is earning maximum revenues
from selling Product X, the demand is:
A.Elastic
B.Inelastic
C.Unit-elastic
D.Perfectly inelastic
6) Suppose that in each of four successive years producers sell more of their product
and at lower prices. This could be explained:
A.by small annual increases in supply accompanied by large annual increases in
demand.
B.in terms of a stable supply curve and increasing demand.
C.in terms of a stable demand curve and increasing supply.
D.as an exception to the law of supply.
7) Which of the following is not a factor of production?
A.Money
B.Labor
C.Capital
D.Entrepreneur
8) In 2011, the average income for households in the United States was about:
A.$69,821.
B.$42,820.
C.$56,610.
D.$64,842.
9) When a purely competitive market is at its long-run equilibrium, then all of the
following are true, except:
A.Price equals marginal cost, and they are equal to the lowest attainable average cost of
production
B.Marginal benefit of the last unit of the product equals the marginal cost of producing
that unit
C.Maximum willingness of buyers to pay for the last unit of the product equals the
minimum acceptable price for the seller of that unit
D.Combined amount of consumer and producer surpluses is at its minimum possible
10) Behavioral economists believe that people:
A.assess current and future options equally well.
B.do not care about fairness, especially if it impairs their ability to get what they want.
C.make errors in decision making because of problems such as bad information, but
such errors are random and generally not repeated by the same individual.
D.often succumb to temptation.
11) Answer the question on the basis of the following information:
Refer to the information. Marginal cost is:
A.
B.
C.
D.
12) The table below summarizes the exchange market for the dollar and euro. Use this
information to answer the following questions.
(a)What is the equilibrium exchange rate and quantity?
(b)Suppose the European Central Bank decides to counter rampant growth by reducing
the money supply to moderate the European economy. How will the supply and demand
situation for the euro change? What likely effect will this have on the equilibrium
exchange rate and quantity?
(c)Suppose that inflation increases in Europe. How will the supply and demand
situation for the euro change? What likely effect will this have on the equilibrium
exchange rate and quantity?
(d)Suppose Europeans decide to take more vacations in the United States. Using the
data in the table above, calculate the new equilibrium. Assume the subsequent shift(s)
(if one or more occur), causes the affected curve(s) to shift by 50 in the appropriate
direction.
(e)Suppose that to pull the U.S. economy out of a recession, the Federal Reserve
decides to reduce interest rates. Facing the same economic conditions, the European
Central Bank decides to increase the money supply. Using the data in the table above,
calculate the new equilibrium. Assume the subsequent shift(s) (if one or more occur),
causes the affected curve(s) to shift by 50 in the appropriate direction.
13) The amount to which some current amount of money will grow as interest
compounds over time is known as:
A.the future value of that sum of money.
B.the present value of that sum of money.
C.compound interest.
D.the time-value of money.
