When people become unemployed because of a higher minimum wage, this type of
unemployment is called:
a. frictional.
b. structural.
c. cyclical.
d. abnormal.
On a production possibilities curve, the opportunity cost of good X, in terms of good Y,
is represented by the:
a. distance to the curve from the vertical axis.
b. distance to the curve from the horizontal axis.
c. movement along the curve.
d. all of these.
Are outstanding credit card balances counted as part of the money supply?
a. Yes; they are used to purchase things, and therefore, they are included in the money
supply figures.
b. No; money is an asset, while the credit card balances are a liability. Thus, they are
not included in the money supply figures.
c. Partly; credit card balances of $100 or less are included in the M1 money supply, but
the money supply figures do not include balances in excess of $100.
d. Partly; credit card balances are included in the M1 money supply, but not the M2
money supply.
Which of the following countries devote the smallest percentage of its GDP to taxes?
a. The United Kingdom.
b. Sweden.
c. Germany.
d. The United States.
Classical economic theory predicted that in the long run the economy would
experience:
a. below full unemployment.
b. rising rate of inflation.
c. full employment.
d. idle factors of production.
The Securities and Exchange Commission (SEC) is concerned with
a. All companies in the United States regardless of size.
b. Companies that issue securities to the general public.
c. Accounting reports issued by government entities.
d. All domestic and international companies that issue accounting reports.
If a new method for obtaining oil from dry oil fields is found, then we will see:
a. the AS curve shift to the left.
b. a movement to the left along the AD curve.
c. the AD curve shift to the left.
d. the AD curve shift to the right.
e. the AS curve shift to the right.
Exhibit 7-1 Consumer Price Index YearConsumer
Price Index
1 100
2 110
3 115
4 120
5 125 As shown in Exhibit 7-1, the rate of inflation for Year 5 is:
a. 4.2 percent
b. 5 percent.
c. 20 percent.
d. 25 percent.
Which of the following would not be included in the gross private domestic investment
(I) category of GDP?
a. A bakery’s purchase of a new oven.
b. A retailer’s additions to its inventories.
c. Newly built residential construction.
d. A bank’s purchase of a U.S. Treasury bond.
Suppose the price of gasoline rises and consumers cut back on their use of gasoline
relative to other consumer goods. This situation would contribute to which bias in the
consumer price index?
a. Substitution bias.
b. Transportation bias.
c. Quality bias.
d. Indexing bias.
Since the 1970s, the Phillips curve has:
a. remained stable.
b. moved in a clockwise direction.
c. been unstable.
d. been used as a reliable model to guide public policy.
Who was one of the first proponents of employing market economies instead of
command economies?
a. Robert Heilbroner.
b. Karl Marx.
c. Jeffrey Sachs.
d. Adam Smith.
A review of the performance of the economy during the Bush administration is the
concern of:
a. macroeconomics.
b. microeconomics.
c. both macroeconomics and microeconomics.
d. neither macroeconomics nor microeconomics.
Consumption spending includes:
a. durable goods, nondurable goods, and housing.
b. durable goods, nondurable goods, and imports.
c. durable goods, services, and housing.
d. durable goods, nondurable goods, and services.
e. nondurable goods, services, and housing.
If the MPC = 1, the spending multiplier is:
a. infinite.
b. zero.
c. 10.
d. 100.
e. 1.
Suppose prices for new homes have risen, yet sales of new homes have also risen. We
can conclude that:
a. the demand for new homes has risen.
b. the law of demand has been violated.
c. new firms have entered the construction industry.
d. construction firms must be facing higher costs.
Three of the four events described below might reasonably be expected to shift the
demand curve for Tacos to a new position. One would not shift the demand curve. The
single exception is:
a. a change in people’s tastes with respect to Tacos.
b. an increase in the money income of beef consumers.
c. a widespread advertising campaign undertaken by the producers of a product
competitive with Tacos.
d. a fall in the price of Tacos.
Tickets to the Indiana-Purdue basketball game are usually sold out in advance of game
day. This suggests:
a. the price of the tickets must be very high or else people would not consider them
valuable.
b. the price is set below the equilibrium level.
c. the Indiana basketball stadium is relatively small.
d. everyone who attends the game will enjoy it.