Table 3-2
Refer to Table 3-2. The table above shows the demand schedules for cashews of two
individuals (Jordy and Amy) and the rest of the market. At a price of $10, the quantity
demanded in the market would be
A) 2 lbs.
B) 48 lbs.
C) 50 lbs
D) 52 lbs.
Which of the following is a normative economic statement?
A) Tobacco products should be banned in all public spaces.
B) The increase in tobacco taxes has caused an increase in the price of cigarettes.
C) Better awareness of health risks has decreased tobacco use.
D) A reduction in tobacco subsidies has caused the price of tobacco to increase.
An increase in the price level will
A) shift the short-run aggregate supply curve to the left.
B) shift the short-run aggregate supply curve to the right.
C) move the economy up along a stationary short-run aggregate supply curve.
D) move the economy down along a stationary short-run aggregate supply curve.
If tax reduction and simplification are effective, then
A) real wages will rise as labor supply and demand increase.
B) saving and investment in new capital will increase.
C) interest rates will rise in financial markets and demand for financial assets falls.
D) fewer new firms will be established, since existing firms will make more profit.
Which of the following causes the unemployment rate to understate the true extent of
joblessness?
A) Many full time workers really want to be part time workers.
B) Persons who collect unemployment benefits report themselves to be searching for a
job.
C) Discouraged workers are not counted as unemployed.
D) A drug dealer reports herself as unemployed.
E) Discouraged workers are counted as unemployed.
Technological advances generally result in
A) decreased incomes.
B) increased life expectancy.
C) increased infant mortality rates.
D) increased average number of hours worked per day.
Which of the following is a reason why increases in the price level result in a decline in
aggregate expenditure?
A) Price level increases raise real wealth, which causes consumption spending and
aggregate expenditure to decline.
B) Price level increases cause firms and consumers to hold more money, which raises
the interest rate. Higher interest rates lower consumption and planned investment
expenditures, which lowers aggregate expenditure.
C) Price level increases in the United States relative to other countries raise net exports,
which lowers aggregate expenditure.
D) As the price level rises, government spending falls, which lowers aggregate
expenditure.
Figure 19-3
Refer to Figure 19-3. Which of the following is not true?
A) U.S imports are cheaper at exchange rates greater than $.03/baht than at the
equilibrium exchange rate.
B) The baht is overvalued at exchange rates greater than $.03/baht.
C) To achieve an exchange rate greater than $.03/baht, the Bank of Thailand must buy
surplus dollars with bahts.
D) Thai exports to the United States are more expensive at exchange rates greater than
$.03/baht than at the equilibrium exchange rate.
If, at the current exchange rate between the dollar and the South African rand of 6.92
rand per dollar, the rand is “undervalued,” how do you expect demand and supply in the
foreign exchange markets to respond?
A) The demand for the dollar will fall, while the supply of the rand will rise.
B) The demand for the dollar will rise, while the supply of the rand will fall.
C) The supply of the dollar will rise, while the demand for the rand will rise.
D) The supply of the dollar will rise, while the demand for the rand will fall.
Figure 4-12
Refer to Figure 4-12. The figure above represents demand and supply in the market for
cigarettes. Use the diagram to answer the following questions.
a. How much is the government tax on each pack of cigarettes?
b. What portion of the unit tax is paid by consumers?
c. What portion of the unit tax is paid by producers?
d. What is the quantity sold after the imposition of the tax?
e. What is the after-tax revenue per pack received by producers?
f. What is the total tax revenue collected by the government?
g. What is the value of the excess burden of the tax?
h. Is this cigarette tax efficient?
Figure 2-4
Figure 2-4 shows various points on three different production possibilities frontiers for
a nation.
Refer to Figure 2-4. A movement from ________ is the result of additional government
restrictions on the pollution that results from plastic production.
A) X to V
B) X to W
C) Z to W
D) Z to Y
When the Fed uses contractionary policy,
A) the price level rises higher than it would if the Fed did not pursue policy.
B) the price level rises less than it would if the Fed did not pursue policy.
C) it does not change the price level.
D) it causes inflation.