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When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet
market
a. and the price paid by buyers both decrease.
b. decreases, but the price paid by buyers increases.
c. increases, but the price paid by buyers decreases.
d. and the price paid by buyers both increase.
Figure 5-6
Refer to Figure 5-6. Sellers' total revenue would increase if the price
a. increased from $6 to $8.
b. decreased from $18 to $16.
c. decreased from $16 to $15.
d. All of the above are correct.
Table 4-8
A country club usually only allows members to purchase tickets for its celebrity golf
tournament, but the club is considering allowing non-members to purchase tickets this
year. The demand and supply schedules are as follows:
Refer to Table 4-8. If both members and non-members are allowed to purchase tickets
to this year's celebrity golf tournament and the country club sets the ticket price at $20,
then there will be
a. a shortage of 300 tickets.
b. a surplus of 300 tickets.
c. 300 tickets sold.
d. 600 tickets unsold.
The circular-flow diagram is an example of
a. a laboratory experiment.
b. an economic model.
c. a mathematical model.
d. All of the above are correct.
Good news for farming can be bad news for farmers because the
a. supply curve for an individual farmer is usually perfectly elastic.
b. supply curve for an individual farmer is usually perfectly inelastic.
c. demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply
to the right decrease total revenues to sellers.
d. demand for basic foodstuffs is usually elastic, meaning that factors that shift supply
to the right increase total revenues to sellers.
If the real interest rate is 6 percent and the price level is falling at a rate of 2 percent,
what is the nominal interest rate?
a. 4 percent
b. 6 percent
c. 8 percent
d. 10 percent
Which is the most accurate statement about the GDP deflator and the consumer price
index?
a. The GDP deflator compares the price of a fixed basket of goods and services to the
price of the basket in the base year, whereas the consumer price index compares the
price of currently produced goods and services to the price of the same goods and
services in the base year.
b. The consumer price index compares the price of a fixed basket of goods and services
to the price of the basket in the base year, whereas the GDP deflator compares the price
of currently produced goods and services to the price of the same goods and services in
the base year.
c. Both the GDP deflator and the consumer price index compare the price of a fixed
basket of goods and services to the price of the basket in the base year.
d. Both the GDP deflator and the consumer price index compare the price of currently
produced goods and services to the price of the same goods and services in the base
year.
Which of the following changes would increase the present value of a future payment?
a. a decrease in the size of the payment
b. a decrease in the time until the payment is made
c. an increase in the interest rate
d. All of the above are correct.
When OPEC raised the price of crude oil in the 1970s, it caused the
a. demand for gasoline to increase.
b. demand for gasoline to decrease.
c. supply of gasoline to increase.
d. supply of gasoline to decrease.
Suppose the economy is in long-run equilibrium. If the government increases its
expenditures, eventually the increase in aggregate demand causes price expectations to
a. rise. This rise in price expectations shifts the short-run aggregate supply curve to the
right.
b. rise. This rise in price expectations shifts the short-run aggregate supply curve to the
left.
c. fall. This fall in price expectations shifts the short-run aggregate supply curve to the
right.
d. fall. This fall in price expectations shifts the short-run aggregate supply curve to the
left.
Some economists believe that there are positives from a little inflation and that it may
"grease the wheels"
a. in the stock market.
b. in the foreign exchange market.
c. in the bond market.
d. in the labor market.
A tax on the buyers of cereal will increase the price of cereal paid by buyers,
a. decrease the effective price of cereal received by sellers, and decrease the equilibrium
quantity of cereal.
b. decrease the effective price of cereal received by sellers, and increase the equilibrium
quantity of cereal.
c. increase the effective price of cereal received by sellers, and decrease the equilibrium
quantity of cereal.
d. increase the effective price of cereal received by sellers, and increase the equilibrium
quantity of cereal.
Minimum-wage laws dictate the
a. average price employers must pay for labor.
b. highest price employers may pay for labor.
c. lowest price employers may pay for labor.
d. the highest and lowest prices employers may pay for labor.
An increase in expected inflation shifts
a. the long-run Phillips curve right.
b. the short-run Phillips curve right.
c. neither the short-run nor long-run Phillips curve right.
d. both the short-run and long-run Phillips curve right.
Moving production from a high-cost producer to a low-cost producer will
a. lower total surplus.
b. raise total surplus.
c. lower producer surplus.
d. raise producer surplus but lower consumer surplus.
Scenario 12-1. An economy's production form takes the form Y = AF(L, K, H, N).
Refer to Scenario 12-1. In the production function, which of the following represents
technology?
a. A
b. K
c. H
d. N
Suppose there are only two firms in an economy: Rolling Rawhide produces rawhide
and sells it to Chewy Chomp, Inc., which uses the rawhide to produce and sell dog
chews. With each $2 of rawhide that it buys from Rolling Rawhide, Chewy Chomp,
Inc. produces a dog chew and sells it for $5. Neither firm had any inventory at the
beginning of 2008. During that year, Rolling Rawhide produced enough rawhide for
1000 dog chews. Chewy Chomp, Inc. bought 75% of that rawhide for $1500 and
promised to buy the remaining 25% for $500 in 2009. Chewy Chomp, Inc. produced
750 dog chews during 2008 and sold each one during that year for $5. What was the
economy's GDP for 2008?
a. $3750
b. $4250
c. $5250
d. $5750
Educational attainment tends to be
a. low in countries with high population growth.
b. low in countries with low population growth.
c. high in countries with high population growth.
d. None of the above are true.
Which of the following events could shift the demand curve for gasoline to the left?
a. The income of gasoline buyers rises, and gasoline is a normal good.
b. The income of gasoline buyers falls, and gasoline is an inferior good.
c. Public service announcements run on television encourage people to walk or ride
bicycles instead of driving cars.
d. The price of gasoline rises.
If Korea is capable of producing either shoes or soccer balls or some combination of the
two, then
a. Korea should specialize in the product in which it has an absolute advantage.
b. it would be impossible for Korea to have an absolute advantage over another country
in both products.
c. it would be difficult for Korea to benefit from trade with another country if Korea is
efficient in the production of both goods.
d. Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.
To say that a price ceiling is binding is to say that the price ceiling
a. results in a surplus.
b. is set above the equilibrium price.
c. causes quantity demanded to exceed quantity supplied.
d. All of the above are correct.
An adverse supply shock will shift short-run aggregate supply
a. right, making prices rise.
b. left, making prices rise.
c. right, making prices fall.
d. left, making prices fall.
Suppose the number of buyers in a market increases and a technological advancement
occurs also. What would we expect to happen in the market?
a. Equilibrium price would decrease, but the impact on equilibrium quantity would be
ambiguous.
b. Equilibrium price would increase, but the impact on equilibrium quantity would be
ambiguous.
c. Equilibrium quantity would decrease, but the impact on equilibrium price would be
ambiguous.
d. Equilibrium quantity would increase, but the impact on equilibrium price would be
ambiguous.
In the early 1900s, Henry Ford introduced
a. a high-wage policy, and this policy produced many of the effects predicted by
efficiency-wage theory.
b. a high-wage policy, and this policy produced none of the effects predicted by
efficiency-wage theory.
c. a low-wage policy, and this policy produced many of the effects predicted by
efficiency-wage theory.
d. a low-wage policy, and this policy produced none of the effects predicted by
efficiency-wage theory.
In 1980, the U.S. economy had an inflation rate of
a. about 1 percent and an unemployment rate of about 7 percent.
b. less than 4 percent and an unemployment rate of less than 6 percent.
c. less than 7 percent and an unemployment rate of about 9 percent.
d. more than 9 percent and an unemployment rate of about 7 percent.
Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of
fish per year, and a worker in Farmland can produce either 25 units of wheat or 5 units
of fish per year. There are 10 workers in each country. Political pressure from the fish
lobby in Farmland and from the wheat lobby in Boatland has prevented trade between
the two countries on the grounds that cheap imports would kill the fish industry in
Farmland and the wheat industry in Boatland. As a result, Boatland produces and
consumes 25 units of wheat and 125 units of fish per year while Farmland produces and
consumes 125 units of wheat and 25 units of fish per year. If the political pressure were
overcome and trade were to occur, each country would completely specialize in the
product in which it has a comparative advantage. If trade were to occur, the combined
output of the two countries would increase by
a. 25 units of wheat and 25 units of fish.
b. 50 units of wheat and 50 units of fish.
c. 75 units of wheat and 75 units of fish.
d. 100 units of wheat and 100 units of fish.
Policymakers following a "lean against the wind" policy would
a. increase government expenditures when output is low and decrease them when
output is high.
b. increase government expenditures when output is low and do nothing when output is
high.
c. decrease government expenditures when output is low and increase them when
output is high.
d. decrease government expenditures when output is high and do nothing when output
is low.
According to 2009 data on the U.S. population, which of the following groups of
teenagers (ages 16-19) had the lowest unemployment rate?
a. white males
b. white females
c. black males
d. black females
You could borrow $1,000 today from Bank A and repay the loan, with interest, by
paying Bank A $1,060 one year from today. Or, you could borrow $1,500 today from
Bank B and repay the loan, with interest, by paying Bank B $1,600 one year from
today. Which of the following statements is correct?
a. The interest rate on the loan from Bank A is higher than the interest rate on the loan
from Bank B.
b. The interest rate on the loan from Bank A is lower than the interest rate on the loan
from Bank B.
c. The interest rates on the two loans are the same.
d. There is not enough information to determine which loan has the higher interest rate.
Which of the following is correct?
a. The labor-force participation rate of women has increased in part due to smaller
families.
b. The labor-force participation rate of men has decreased in part due to men retiring
younger and living longer.
c. Both a and b are correct.
d. None of the above is correct.
Suppose that because of the popularity of the low-carb diet, bakeries need fewer
workers and steak houses need more workers. The unemployment created by this
change is
a. frictional unemployment created by efficiency wages.
b. frictional unemployment created by sectoral shifts.
c. structural unemployment created by efficiency wages.
d. structural unemployment created by sectoral shifts.
In which period was most of the change in U.S. net capital outflow due to an increase in
investment in the U.S.?
a. 1980-1987
b. 1991-2000
c. 2000-2006
d. None of the above are correct.
In fiscal year 2008, the U.S. government ran a deficit of about $459 billion. In fiscal
year 2009, the government ran a deficit of about $1,413 billion. This change would be
expected to have
a. decreased interest rates and investment.
b. decreased interest rates and increased investment.
c. increased interest rates and investment.
d. increased interest rates and decreased investment.
