Fill in the blank: According to your textbook, “Fiscal policy is simply ________.”
A) budget policy
B) monetary policy under a different name
C) price policy
D) wage policy
E) stupid
Which of the following things does not have an objective cost?
A) Platinum
B) Water
C) Ski lift tickets
D) Medical equipment
E) None of the above has an objective cost.
Rank the following goods from most elastic to least elastic: The Economic Way of
Thinking (11th ed.), economics textbooks, textbooks.
A) The Economic Way of Thinking (11th ed.), economics textbooks, textbooks
B) The Economic Way of Thinking (11th ed.), textbooks, economics textbooks
C) Economics textbooks, The Economic Way of Thinking (11th ed.), textbooks
D) Textbooks, economics textbooks, The Economic Way of Thinking (11th ed.)
E) None of the above.
Discretionary monetary policy was more frequently employed than discretionary fiscal
policy in the two decades following World War II because
A) economic conditions did not seem to require any use of fiscal policy tools during
this period.
B) economists did not yet believe in the effectiveness of fiscal policy.
C) inflation was not yet seen as a problem.
D) monetary policy could be altered without Congressional action.
E) monetary policy was thought to be capable of raising output while holding down
prices.
Interest is to saver as
A) interest is to debtor.
B) profit is to entrepreneur.
C) tuition is to student.
D) commission is to committee.
Effectively managing aggregate demand in order to stabilize nominal GDP requires
A) policy makers to know the size of the gap between current demand and demand at
equilibrium.
B) only that policy makers know what level of aggregate demand is necessary for full
employment.
C) successful economic forecasting.
D) that nominal GDP be the same as real GDP.
E) very little information about the economy because the market system is an efficient
generator of high-quality information.
A price searcher faces the following demand curve: At $9, $8, $7, and $6, the quantity
demanded is 10, 20, 30, and 40 units, respectively. If the firm’s marginal cost is $50 at
any level of output, it would maximize net revenues by
A) producing 10 units and charging $9.
B) producing 20 units and charging $8.
C) producing 30 units and charging $7.
D) producing 40 units and charging $6.
E) charging $50 plus markup.
It is not uncommon for people who travel by bus in Bosnia to keep the windows shut
tight, even in warmer weather. Passengers worry about drafts caused by an open
window leading to head colds. Apparently folks would rather travel for hours in stuffy
busses than take the chance on getting sick. Suppose, however, the correlation between
open windows and colds is only a coincidence, and no causal connection between the
two variables exists. Then
A) the travelers are displaying mistaken reasoning.
B) the travelers are nevertheless acting in a way they think yields them the greatest net
benefit.
C) both A and B are true.
D) none of the above are true.
An upward-sloping supply curve suggests that producers
A) sell less at higher prices.
B) sell more at lower prices.
C) plan to sell more at a given, higher price.
D) ignore marginal costs of production, and only focus on the demand for their product.
A cartel is
A) an agreement among competitors to regulate prices or output.
B) a bond with no fixed maturity date.
C) a contract between manufacturers and retailers.
D) a highly leveraged buy-out.
E) a shopping center in which all lessees pay the same percentage of common operating
costs.
The opportunity costs of labor is largely determined by
A) demand.
B) supply.
C) need.
D) greed.
According to your textbook, which of the following best explains the fact that income
inequality has increased in the U.S. since 1980?
A) The weakening of the labor union movement
B) A reduction in economic growth
C) An increase in the supply of less-skilled workers combined with an increase in
demand for more highly-skilled workers
D) A growing distrust of the efficacy of federal government spending programs
combined with a rising concern over federal budget deficits
A social system could eliminate profits and losses if it could
A) eliminate greed and selfishness.
B) eliminate uncertainty.
C) fix all prices to reflect opportunity costs.
D) fix all prices to reflect the value of the labor embodied in goods.
E) tax all receipts above cost and redistribute them to firms unable to cover all their
costs.
Who would the BLS count as unemployed?
A) Anybody over 16 who doesn’t have a full-time job
B) Anybody over 16 who doesn’t even work odd jobs
C) Anybody under 65 who doesn’t have a full time job
D) Anybody, regardless of age, who is seeking work
E) None of the above.
If oil refiners expect the government to tax away any profits created by international
supply disruptions, refiners will choose to
A) carry smaller inventories of crude petroleum.
B) leave the oil refining business.
C) prevent the price of crude petroleum from rising.
D) raise their prices to cover their added risks.
E) take a higher percentage of their profits as windfalls.
The implicit GDP deflator is
A) nominal GDP divided by real GDP.
B) nominal GDP times real GDP.
C) real GDP divided by nominal GDP.
D) the zero economic growth society.
Fill in the blank: National income accountants who measure GDP try to avoid the
________ problem by only measuring the market value of all final goods and services
produced within a country.
A) double trouble
B) double indemnity
C) double counting
D) double jeopardy
E) double-your-pleasure
Scarcity can be eliminated by
A) abolishing competition.
B) abolishing capitalism.
C) abolishing money.
D) all of the above.
E) none of the above.
Suppose Ann can produce 8 units of a material good (M) or 4 units of a spiritual good
(S) in a day, while Ben can produce only 3 Ms or 3 Ss in a day. Which statement below
is true?
A) Ann is the most efficient producer of spiritual goods.
B) Ann is the most efficient producer of material goods.
C) Ben is the least efficient producer of spiritual goods.
D) All of the above are true.
The “miracle” of the market, as addressed in your text, refers to the countless goods and
services of great complexity made abundantly available
A) so everybody gets what they need.
B) so everybody gets what they want.
C) and no failures of cooperation occur.
D) even though most people do not know one another.
Consider the market for credit. When the demand for credit increases while the supply
of credit remains unchanged,
A) the interest rate will decrease and the amount of credit provided in the market will
increase.
B) the interest rate will increase and the amount of credit provided in the market will
increase.
C) the interest rate will decrease and the amount of credit provided in the market will
decrease.
D) the interest rate will increase and the amount of credit provided in the market will
decrease.
All individuals, even Bill Gates, must select among alternative goods because of
A) pollution.
B) global warming.
C) scarcity.
D) poverty.
According to the economic theory of government, policies in a democracy will favor
A) the interests of many small minorities.
B) the public interest.
C) the real interests of the majority.
D) whatever the majority thinks it wants even when this is not in the majority’s real
long run interest.
In the economic way of thinking, all ignorance is ultimately
A) rational ignorance.
B) irrational.
C) inefficient.
D) unjust.
E) selfish.
Switzerland provides a counterexample to the claim
A) nations are poor because they are subject to exploitation by nations with superior
military power.
B) the rule of law is necessary for economic growth.
C) military power is the source of the wealth of a nation.
D) central economic planning doesn’t work.
Someone who owns stock in a drug company that suddenly and unexpectedly reveals it
has found an effective vaccine against AIDS will make a profit on the stock
A) at once.
B) only if she hangs on to the stock for a number of years.
C) only if she sells the stock.
D) only when the dividends actually start to increase.
E) when total revenue exceeds all costs, including research and development costs.
Retailers and other middlemen provide benefits to patrons
A) because people don’t realize how much they could save by cutting out middlemen.
B) but the middlemen benefit far more.
C) by lowering the cost to their customers of acquiring valuable information.
D) only because their customers are irrational.
The uncertainty and ambivalence surrounding government policies toward competition
stems from
A) conflict between the goals of preserving competition and protecting competitors.
B) the influence producers are able to exert on agencies charged with enforcing laws
governing business practices.
C) uncertainty about the actual effects of various measures intended to promote
competition.
D) all of the above.
E) none of the above but from uncertainty about federal, state, or local jurisdiction.
According to your textbook, the following is the prime cause of traffic congestion:
A) Population growth
B) The American automobile industry
C) Most roadway space is not priced.
D) A lack of commitment to public transportation expansion
According to the economic way of thinking, alcohol prohibition in the U.S.
A) effectively destroyed peoples’ incentives to produce and drink liquor.
B) abolished the supply and demand process in liquor.
C) led to a surge in prices and considerable profit opportunities for people willing to
break the law.
D) failed to make liquor truly illegal.
Politicians have often kissed babies to improve their re-election prospects. A rational
politician will kiss babies as long as
A) the public is impressed.
B) the marginal benefits exceed the marginal costs.
C) there is a camera crew to document the activity.
D) the babies are cute.
Government officials facing the challenge of an election will tend to make decisions
A) acceptable to a majority whether or not the majority is informed on the issues.
B) expressing the public interest.
C) favoring the long run interests of the majority.
D) that reflect a high rate of time discount.