Which of the following would shift the supply curve for energy drinks to the left?
A) a decrease in the expected future price of energy drinks
B) an increase in consumer income (assuming that energy drinks are normal goods)
C) a decrease in the number of firms that produce energy drinks
D) a decrease in the price of an input used to produce energy drinks
Table 1-1
Eva runs a small bakery in the village of Roggerli. She is debating whether she should
extend her hours of operation. Eva figures that her sales revenue will depend on the
number of hours the bakery is open as shown in the table above. She would have to hire
a worker for those hours at a wage rate of $12 per hour.
Refer to Table 1-1. Using marginal analysis, determine how many hours should Eva
extend her bakery’s hours of operations?
A) 2 hours
B) 3 hours
C) 4 hours
D) 5 hours
E) 6 hours
The real interest rate equals the nominal interest rate ________ the inflation rate.
A) times
B) divided by
C) plus
D) minus
Scott is a woodworker and charges $125 an hour for his time manufacturing
custom-made wood products. For his wife’s birthday, he designs and creates an intricate
birdseye maple jewelry box that takes him 15 hours to complete. By how much and in
what direction does GDP change as a result of his efforts?
A) GDP rises by $1,875.
B) GDP is not affected by Scott’s production of the jewelry box.
C) GDP rises by $125.
D) GDP falls by $1,875.
If workers and firms have rational expectations, they understand that ________
monetary policy will raise the inflation rate, so actual inflation ________ expected
inflation.
A) expansionary; will be equal to
B) expansionary; will be greater than
C) contractionary; will be equal to
D) contractionary; will be less than
E) expansionary; will be less than
In a small Asian country, it is estimated that changing the level of capital from $8
million to $12 million will increase real GDP from $4 million to $6 million. What level
of GDP would you expect the economy to be able to reach if spending on capital
continued to rise to $16 million, assuming no technological change and no change in
the hours of work?
A) GDP would increase further, but by less than $2 million.
B) GDP would increase further by exactly $2 million.
C) GDP would increase further by more than $2 million
D) GDP would increase further by exactly $8 million.
In a market economy, ________ interact in markets to decide the answers to the
fundamental economic questions.
A) state and local governments
B) large corporations
C) households and firms
D) the judicial and legislative branches of the federal government
Nominal GDP is GDP in a given year
A) adjusted for inflation.
B) adjusted for anticipated inflation.
C) valued in the prices of that year.
D) valued in the prices of the base year.
Since the Social Security system began in 1935, the number of workers per retiree has
A) stayed roughly the same.
B) continually risen.
C) continually declined.
D) risen and declined with different generations.
________ sell shares to investors and use the money to buy short-term securities.
A) Mortgage-backed securities dealers
B) Hedge funds
C) Money market mutual funds
D) Shadow banks
What does the term “marginal” mean in economics?
A) the edge of a market
B) an additional or extra
C) illegal
D) secondary
E) trivial
If the Fed orders a contractionary monetary policy, describe what will happen to the
following variables relative to what would have happened without the policy:
a. The money supply
b. Interest rates
c. Investment
d. Consumption
e. Net Exports
f. The aggregate demand curve
g. Real GDP
h. The price level
Most economists agree that an automatic mechanism brings the economy back to
potential GDP in the long run. In mid-2011, two years after the recession of 2007-2009
had ended, real GDP in the United States
A) had returned to potential GDP.
B) had exceeded potential GDP by 1.5 percent.
C) remained more than 7 percent below potential GDP.
D) was predicted to never return to potential GDP.
Table 7-6
Production and
Consumption Production
Without Trade With Trade
Estonia and Morocco can produce both swords and belts. Table 7-6 shows the
production and consumption quantities without trade, and the production numbers with
trade.
Refer to Table 7-6. Which country has a comparative advantage in producing belts?
A) Estonia
B) Morocco
C) both countries
D) neither country
The Bretton Woods exchange rate system was a
A) floating exchange rate system.
B) managed float exchange rate system.
C) fixed exchange rate system.
D) flexible exchange rate system.
An increase in United States net foreign direct investment would occur if
A) United States citizens have increased the value of foreign stocks and bonds they
own.
B) United States citizens have increased their building or purchasing of facilities in
foreign countries.
C) net foreign investment increases.
D) net capital flows decrease.
FedEx plays such a large role in moving packages around the country that there is
usually a close relationship between fluctuations in FedEx’s business and fluctuations in
GDP. Some economists refer to this relationship as the
A) shipping cycle.
B) FedEx indicator.
C) overnight delivery index.
D) package prognostication process.