A tariff on avocadoes ______________ the price of avocadoes, _____________
consumers’ surplus for avocado buyers, _______________ producers’ surplus of
avocado growersand __________________ tariff revenue. Because the loss to
_____________ is more than the gain to ___________________, there is a net loss to
society.
a. raises; increases; decreases; generates; producers; consumers and government
b. lowers; increases; decreases; does not generate; producers and government;
consumers
c. raises; increases; decreases; does not generate; producers and government; consumers
d. raises; decreases; increases; generates; consumers; producers and government
The rules-based monetary policy reads: The annual growth rate in the money supply
will be equal to the average annual growth rate in Real GDP minus the growth rate in
velocity. If the average growth rate in Real GDP this year is 3 percent and the growth
rate in velocity is 2 percent, then the money supply will increase by ______________
percent this year.
a. 1
b. 2
c. 3
d. 4
The federal funds rate and the quantity demanded of reserves have a(n) ____________
relationship.This is because as the federal funds rate moves down, it becomes
_______________ for banks to hold reserves, encouraging banks to hold
____________ in reserves to guard against checkable deposit withdrawals.
a. inverse; more expensive; more
b. direct; more expensive; less
c. inverse; cheaper; more
d. direct; cheaper; more
When housing prices rise, homeowners gain equity in their homes.
a. True
b. False
Exhibit 2-5
Which of the following labeled points are productive
efficient?
a. A, B, C, D, and E
b. B, C and D only
c. C only
d. All of the points are productive efficient.
e. None of the points are productive efficient.
In a political election, a candidate whose positions are on the left will tend to be labeled
__________ by his or her opponent.
a. too far to the left
b. too far to the right
c. too much of a middle-of-the-roader
d. an unknown quantity
Exhibit 32-1
The exhibit shows the breakdown of benefits and costs for a four-person town of a
proposed $1,200 addition in books to the public library. The members of the community
get to vote on the project at hand, and the majority rules. Given the data, the $1,200 will
a. be spent, even though the total benefits are less than the total costs.
b. not be spent, since more persons are against the project than are for it.
c. be spent, since the total benefits are greater than the total costs.
d. not be spent, since the total benefits are less than the total costs.
If the (average) tax rate falls by 10% and as a result the tax base rises by 20%, then tax
revenues will
a. rise.
b. decline.
c. remain unchanged.
d. There is not enough information given to answer this question.
Which of the following is true?
a. When income tax rates fall, it is possible for tax revenues to rise.
b. When income tax rates fall, it is possible for tax revenues to fall.
c. All economists agree that a monetary rule is preferred to discretionary Fed policy.
d. All economists agree that discretionary Fed policy is preferred to a monetary rule.
e. a and b
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter.
In an eight-hour day, John can produce either 8 loaves of bread or 8 pounds of butter.
The opportunity cost of producing 1 pound of butter is
a. 1/3 hour for Andy and 1 hour for John.
b. 1 hour for Andy and 1 hour for John.
c. 3 loaves of bread for Andy and 1 loaf of bread for John.
d. 1/3 loaves of bread for Andy and 1 loaf of bread for John.
e. none of the above
Which of the following statements about a political campaign is false?
a. Candidates often label their opponents as either “too far right” or “too far left.”
b. Candidates often call themselves “middle-of-the-roaders” rather than “right-wingers”
or “left-wingers.”
c. Candidates often tend to talk about ends rather than means.
d. Candidates often tend to talk in specific terms rather than general terms about what
needs to be done.
Wage rates fall. This increases __________ and the __________ curve shifts rightward.
a. aggregate demand (AD); AD
b. short-run aggregate supply (SRAS); AD
c. short-run aggregate supply (SRAS); SRAS
d. employment; AD
e. none of the above
According to Say’s law, in a money economy a reduction in consumption spending
causes a __________ shift of the saving curve and therefore a __________ in the
interest rate.
a. leftward; rise
b. leftward; fall
c. rightward; rise
d. rightward; fall
The condition in an economy that makes a “rationing device” a necessity is:
a. the economy is organized around free markets.
b. the economy is centrally planned by the government.
c. scarcity exists.
d. there are fewer types of goods than there are people in the economy.