1) The World Trade Organization was established by the United States to force other
nations to open their markets to U.S. goods.
2) All illegal immigrants enter the U.S. and arrive here illegally.
3) Investment is highly stable; it increases over time at a very steady rate.
4) The era after the Industrial Revolution proved that it was impossible to have
improved standards of living with large population growth.
5) Buying 100 shares of Google stock would be an example of economic investment.
6) Firms would rather shrink package sizes than raise prices because consumers will
feel less of a loss from the change in package size.
7) In thinking about the “principal-agent problem” in a democratic government, we
assign the role of “principal” to the government.
8) Imports and exports are examples of financial flows.
9) Depreciation of the dollar relative to foreign currencies will tend to increase net
exports and thus aggregate demand of the U.S. economy.
10) Some low-income workers are not covered by Medicaid because of the income that
they are earning from their jobs.
11) Stocks represent a debt, and buyers of stock expect to earn interest.
12) Demand-side market failures refer to those situations when there is a shortage in the
market because buyers want to buy more than what is available in the market.
13) The dictator and ultimatum games reveal that fairness and concern for others
motivate people’s behavior.
14) The major wave of defaults on home mortgages in 2007 destabilized:
A.Only the banks that directly made the mortgage loans
B.Only the mortgage brokers; not the commercial banks
C.Many banks including those that made the loans indirectly
D.Mostly large banks, but not too many small ones
15) If the equation for the consumption schedule is C = 20 + .8Y, where C is
consumption and Y is disposable income, then the average propensity to consume is 1
when disposable income is:
A.$80.
B.$100.
C.$120.
D.$160.
16) Historically, the total amount of real capital per worker in the United States has:
A.Provided financing for the industrial expansion of business
B.Increased significantly and made labor more productive
C.Been the single most important determinant of economic growth
D.Remained relatively constant, although the quality of capital has improved
dramatically
17) The total product curve graphically shows the:
A.Minimum level of output that can be produced by a quantity of a variable resource
holding constant the quantity of other resources
B.Minimum level of output that can be produced by a quantity of a fixed resource
letting other resources vary
C.Maximum level of output that can be produced by a quantity of a fixed resource
letting other resources vary
D.Maximum level of output that can be produced by a quantity of a variable resource
holding constant the quantity of other resources
18)
Refer to the above graph. The shift of the budget line from AB to CD is consistent with:
A.A decrease in money income
B.A decrease in the prices of both Goods 1 and 2
C.An increase in the prices of both Goods 1 and 2
D.A decrease in the price of Good 1, and an increase in the price of Good 2
19) Supply factors in economic growth include the following, except:
A.Improvements in technology
B.Expansion of capital stock
C.Increases in purchases of output
D.Better education and training
20)
Consider the supply and demand curves depicted in the diagram above. If the
government imposed a price ceiling of $15, then sellers will be willing to sell ___, and
a black market could develop where the price would be:
A.24 units; below $15
B.36 units; above $15
C.24 units; above $15
D.36 units; below $15
21) If the exchange rate for the euro changes from $1 = 0.81 euro to $1 = 1.14 euro,
then the:
A.Euro has appreciated
B.Dollar has appreciated
C.Dollar has depreciated
D.Value of euros has increased
22) Answer the question based on the following table which shows a demand schedule.
Refer to the table above. Total revenues will decrease if price rises from:
A.$1 to $2
B.$2 to $3
C.$3 to $4
D.$4 to $5
23) Autos and chemicals are in million of units in the following production possibilities
tables:
Refer to the tables above. If Germany and the United States engage in trade, the
mutually-beneficial terms of trade will be between:
A.3 and 4 units of autos for 1 unit of chemicals
B.2 and 4 units of autos for 1 unit of chemicals
C.2 and 4 units of chemicals for 1 unit of autos
D.0.33 and 0.5 units of autos for 1 unit of chemicals
24) Define what is meant by an inverse relationship between two variables and describe
the line graph depicting such a relationship.
25) Define “producer surplus.”
26) What are the main characteristics of a bond? How does it differ from a stock?
27) Describe the personal and social costs of unemployment.
28)
29) How will a change in productivity increase or decrease aggregate supply?
30) Explain the income and substitution effects and use the concepts to describe what
happens when the price of a product decreases.