In a situation where two goods can be produced by two different people, it is possible
for one person to have a comparative advantage in the production of both goods and the
other person to have the comparative advantage in the production of neither good.
a. True
b. False
A minimum wage law (that sets the minimum wage above the equilibrium wage) can be
expected to
a. clear the market for unskilled workers.
b. increase the number of unskilled workers employed.
c. increase the number of firms in those industries where the law is effective.
d. reduce the number of unskilled workers employed and/or reduce the number of hours
worked by unskilled workers.
e. all of the above
Elasticity of investment measures the responsiveness of
a. interest rates to changes in investment.
b. investment to changes in government spending.
c. investment to changes in the interest rate.
d. investment to changes in consumption.
Exhibit 10-3
When disposable income equals $2,300, saving equals
a. -$20.
b. -$10.
c. 0.
d. $10.
e. $20.
If excess reserves are $10 million, (total) reserves are $14 million, and the required
reserve ratio is 10%, then required reserves equal ________________ and checkable
deposits equal ____________________.
a. $4 million; $40 million
b. $40 million; $4 million
c. $24 million; $240 million
d. $7 million; $70 million
Suppose that prices in the United States rise relative to prices in France. We expect that
(on the foreign exchange market) the demand for U.S. dollars will __________ and the
supply of dollars will __________.
a. increase; increase
b. increase; decrease
c. decrease; increase
d. decrease; decrease
The interest rate effect is one of the
a. reasons why an AD curve is downward-sloping.
b. shifters of an AD curve.
c. reasons why a short-run aggregate supply curve can be derived.
d. shifters of a short-run aggregate supply curve.
If a person did any work as a paid employee during the Bureau of Labor Statistics
survey reference week, how is she classified?
a. as an employed person
b. as not in the labor force
c. as an unemployed person
d. as part of the labor force
e. a and d
The real balance effect works through a change in the value of
a. monetary assets in response to changes in the unemployment rate.
b. nonmonetary assets in response to changes in the unemployment rate.
c. monetary assets in response to changes in the price level.
d. nonmonetary assets in response to changes in the price level.
The Fed pays banks interest on bank deposits held on reserve at the Fed.
a. True
b. False
Asymmetric information exists when
a. both parties to an exchange have all relevant facts about that exchange.
b. a good that is either nonrivalrous or nonexcludable is being sold on a market.
c. the two parties to an exchange differ in what they know about the good being
exchanged.
d. neither party to an exchange is knowledgeable about the quality of the good being
exchanged.
One criticism of monetary policy based on a predetermined steady growth rate in
money supply is that
a. wages and prices are sufficiently flexible to allow the economy to restore the natural
level of Real GDP on its own.
b. the total lag in monetary policy may be too long to allow for effective monetary
policy.
c. changes in velocity, if not accounted for, can then be a source of price instability.
d. a and b
e. all of the above
You turn to the bond market page of a newspaper and look under the column headed
“Bonds” and see that it says, “Alpha 7 1/2 25” this information indicates that
a. the coupon rate on this bond is 7.5 percent.
b. the year this bond matures is 2025.
c. the current yield on this bond is 7.5 percent.
d. the current yield on this bond has risen 0.25 percent since the previous trading day.
e. a and b
Which of the following is usually discussed in the case against government?
a. special interest groups and transfers
b. the unintended effects of governments actions
c. removal from the prisoner’s dilemma
d. a and b
e. none of the above
Scarcity is defined as the condition in which
a. both wants and resources are limited.
b. wants are finite and resources infinite.
c. both wants and resources are infinite.
d. wants are infinite and resources finite.
The Federal National Mortgage Association (FNMA), also known as Fannie Mae, was
established in ________to ____________ demand in the housing market.
a. 1970; increase
b. 1938; increase
c. 1938; decrease
d. 1970; decrease
Currently an economy is producing (at a point on its production possibilities frontier)
100 units of good X and the opportunity cost of producing 1X is 3Y. If good X is
produced at increasing opportunity costs, then when the economy produces 120 units of
good X (on the same PPF) the opportunity cost of producing 1Y (not 1X) could be
a. 1/4X.
b. 1/3X.
c. 1/2X.
d. 1X.
e. none of the above
Exhibit 3-14
At a price of $12, there is a ____________ unit____________ of good X.
a. 195; shortage
b. 230; shortage
c. 195; surplus
d. 230; surplus
e. 180; shortage
According to Say’s law,
a. the demand curve is negatively sloped.
b. the supply curve is positively sloped.
c. supply creates its own demand.
d. economic units should produce those goods for which they are low-opportunity-cost
producers.