John Steinbeck’s Cannery Row describes a character who takes his own life because of
poor job prospects. If he was an unemployed person who gave up looking for work, he
would be considered:
a. chronically unemployed.
b. a discouraged worker.
c. a member of the labor force.
d. frictionally unemployed.
Income received minus personal taxes is called:
a. national income.
b. personal income.
c. disposable personal income.
d. transfer payments.
e. net national product.
Assume the United States can use a given amount of its resources to produce either 20
airplanes or 8 automobiles and Japan can employ the same amount of its resources to
produce either 20 airplanes or 10 automobiles. The U.S. should specialize in:
a. airplanes.
b. automobiles.
c. both goods.
d. neither good.
Wage and price controls imposed for an extended period of time are likely to result in:
a. shortages.
b. rationing.
c. black markets.
d. All of these.
Which of the following would be recorded in the U.S. goods export account?
a. Harry, an American citizen, spends 1,000 francs on vacation in the south of France.
b. A machine shop in Ohio purchases a grinder made in Italy.
c. Martha receives a $50 dividend check on stock she owns in a business in Germany.
d. The U.S. government subsidizes American farmers for planting corn for export.
e. France purchases a new jet fighter aircraft from the Boeing Company in the United
States.
Ceteris paribus, an increase in the supply of a good causes which of the following?
a. Lowers the equilibrium price, and reduces the quantity bought and sold.
b. Raises the equilibrium price, and raises the quantity bought and sold.
c. Raises the equilibrium price, and increases the quantity bought and sold.
d. Lowers the equilibrium price, and increases the quantity bought and sold.
e. Equilibrium price and equilibrium quantity change are indeterminate.
Exhibit 18-5 International currency markets
Exhibit 18-5 displays
the international currency market for yen in terms of dollars and dollars in terms of yen.
The supply curve in graph 18-5(B) is determined by:
a. U.S. citizens attempting to purchase Japanese-made goods.
b. Japanese attempting to purchase U.S.-made goods.
c. U.S. businesses attempting to sell to the Japanese.
d. Japanese businesses attempting to sell to the U.S.
e. the U.S. government attempting to unload dollars to the international market.
Which of the following would raise both the equilibrium price and the equilibrium
quantity of strawberries?
a. A decrease in the demand for strawberries.
b. An increase in the demand for strawberries.
c. A decrease in the supply of strawberries.
d. An increase in the supply of strawberries.
Owners’ equity is the residual interest that remains after deducting liabilities from
stockholders’ equity.
a. True
b. False
Personal consumption expenditures include:
a. all commodities that business firms buy.
b. the purchase prices paid for stocks and bonds by individual households.
c. the construction of residential housing.
d. all goods and services bought by households.
e. the corrected value of housewives’ services.
Socialism is correctly described by which of the following statements?
a. Central planning is used exclusively to answer the basic economic questions.
b. Markets are used exclusively to answer the basic economic questions.
c. Tradition is used exclusively to answer the basic economic questions.
d. Government ownership of many resources and centralized decision-making answers
the basic economic questions.
Which of the following statements is true regarding a bond?
a. A bond is a certificate that acts as evidence of ownership in a corporation.
b. A bond is a certificate that represents a corporation’s promise to repay a certain
amount of money and interest in the future.
c. If you buy a bond from a company, you are borrowing money from the company.
d. Bondholders receive dividends semiannually.
Domestic law and order, the infrastructure, and the climate of international trade are all
aspects of a country’s:
a. natural resources endowment.
b. human resources investment.
c. capital investment.
d. political environment.
In Exhibit 5-9, personal income (PI) equals:
a. $3,472 billion.
b. $3,691 billion.
c. $4,291 billion.
d. $3,384 billion.
e. $3,175 billion.
The choice of a voter to remain uninformed because the marginal cost of obtaining
information is greater than the marginal benefit from obtaining knowledge is called:
a. irrational ignorance.
b. rational ignorance.
c. collective interest.
d. choice.
Exhibit 4-4 Supply and demand curves for good X
Which of the graphs in Exhibit 4-4 represents a decrease in the price of a factor of
production?
a. Graph A.
b. Graph B.
c. Graph C.
d. None of these.
Assuming that travel from New York to Los Angeles is a normal good, a decrease in
consumer income, other things being equal, will:
a. decrease the quantity demanded of travel to Los Angeles.
b. increase the demand for travel to Los Angeles.
c. decrease the demand for travel to Los Angeles.
d. increase the quantity of travel to Los Angeles demanded.
If U.S. buyers purchased $500 billion of foreign goods and foreign buyers purchased
$400 billion of U.S. goods, the U.S. balance of trade would be:
a. -$100 billion.
b. $100 billion.
c. $400 billion.
d. none of these.
The basic difference between macroeconomics and microeconomics is:
a. microeconomics concentrates on individual markets while macroeconomics focuses
primarily on international trade.
b. microeconomics concentrates on the behavior of individual consumers while
macroeconomics focuses on the behavior of firms.
c. microeconomics concentrates on the behavior of individual consumers and firms
while macroeconomics focuses on the performance of the entire economy.
d. microeconomics explores the causes of inflation while macroeconomics focuses on
the causes of unemployment.
Suppose the consumer price index (CPI) for a given year is 150. This means the rate of
inflation for the given year is 50 percent.
Are we passing the national debt burden on to our children?
In Marx’s ideal state of communism there would be no haves and have-nots.
The Phillips curve represents an inverse relationship between the inflation rate and the
unemployment rate.
Economists most often disagree over positive rather than normative economic issues.
Total producer surplus is the area below the equilibrium price and above the supply
curve.
A normative economic statement can be proven either true or false.
The real balances effect is caused by an inverse relationship between the price level and
the real value of financial assets with fixed nominal value.