1) economists treat economic immigration as a human capital investment decision.
2) central planning is plagued with a coordination problem and an incentive problem.
3) price and marginal revenue are identical for an individual purely competitive seller.
4) natural monopoly may result where products produce substantial network effects and
can be simultaneously consumed by a large number of consumers.
5) The adverse selection problem is the tendency for workers to shirk when they are not
being monitored.
6) if there is substantial unemployment in the economy, it would be appropriate for
government to cut tax rates.
7) The aggregate supply curve (short-run) becomes steeper as the economy moves
rightward and upward along it.
8) If the MPC is .8 in a private closed economy, a $30 billion increase in planned
investment will increase equilibrium real GDP by $120 billion.
9) if the elasticity coefficient of supply is 0.7, supply is elastic.
10) Commercial banks monetize claims when they sell securities to Federal Reserve
Banks.
11) The Phillips Curve suggests an inverse relationship between increases in the price
level and the level of employment.
12) (Consider This) Countries like Russia and France have implemented policies to
discourage population growth.
13) in the united states, real gdp per capita has increased more rapidly than real gdp.
14) Producers should hire resources until the total output of each is equal.
15)
in the above diagrams for a hypothetical economy, figure 2 shows the:
a.personal distribution of income.
b.functional distribution of income.
c.microeconomic distribution of income.
d.rates of poverty in the united states.
16) Suppose that real GDP falls to 2 percent below potential GDP. The, according to the
Taylor rule, the Fed should reduce the Federal funds, relative to the current rate of
inflation, by:
A.1/2 percentage point.
B.1 percentage point.
C.2 percentage points.
D.4 percentage points.
17) In 2006, a household with an annual income of $100,000 would find itself in the:
A.second lowest quintile of the household income distribution.
B.third quintile of the household income distribution.
C.fourth quintile of the household income distribution.
D.fifth (highest) quintile of the household income distribution.
18) which of the following is a true statement?
a.economists who support economic growth say that it is the most practical route to the
higher standards of living that the vast majority of people desire.
b.most economists believe that the recent productivity acceleration implies an end to the
business cycle.
c.most economists believe that increases in real gdp actually produce decreases in
overall economic well-being because of spillover costs.
d.mainstream economists disagree as whether the rate or productivity growth was
higher between 1995 and 2005 than between 1973 and 1995.
19)
Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. Sd + Q is the product supply curve
after an import quota is imposed. A tariff of Pc Pt or an import quota of wy will:
A.have the same effect on the volume of imports.
B.have the same effect on domestic price.
C.have the same effect on the revenues of domestic producers.
D.do all of these.
20) a well-tested economic theory is often called:
a.a hypothesis.
b.a prototype.
c.a principle.
d.an anomaly.
21) in which of the following instances will total revenue decline?
a.price rises and supply is elastic
b.price falls and demand is elastic
c.price rises and demand is inelastic
d.price rises and demand is elastic
22) The basic equation of monetarism is:
A.MV = PQ.
B.Sa + T + M = Ig + G + Xn.
C.V = M/PQ.
D.Ca + Ig + Xn + G = GDP.
23) In many of the sub-Saharan African nations:
A.population is growing more rapidly than food production.
B.population growth is causing deforestation and diminished land quality.
C.governments have favored investment in industry and military spending rather than
investment for agriculture.
D.all of these have been true.
24) u.s. tariffs on imported goods:
a.have steadily increased since the 1970s.
b.have declined since the 1940s and are currently around 5 percent.
c.are currently around 20 percent.
d.are illegal.
25) If in a system of fixed exchange rates the dollar price of euros is above the market
equilibrium level:
A.gold will flow from the United States to Europe.
B.there will be a surplus of euros.
C.the United States government will have to ration euros to U.S. importers.
D.there will be a shortage of euros.
26) (Advanced analysis) Answer the next question(s) on the basis of the following
information for a private closed economy.
where S is saving, Ig is gross investment, i is the real interest rate, and Y is GDP.
Refer to the above information. If the real interest rate is 5 percent, investment will be:
A.$10 and the equilibrium GDP will be $75.
B.$15 and the equilibrium GDP will be $100.
C.$10 and the equilibrium GDP will be $120.
D.$15 and the equilibrium GDP will be $180.
27)
refer to the above supply and demand data for a certain elective surgical procedure.
without health insurance, the equilibrium price and quantity would be:
a.$5,000 and 2,000.
b.$4,000 and 4,000.
c.$3,000 and 7,000.
d.$2,000 and 11,000.
28) Who is the most likely to be a union member in the United States?
A.A female retail trade worker
B.A male transportation worker
C.An African-American manager
D.A white agricultural worker
29) Assume the Environmental Protection Agency imposes an excise tax on polluting
firms. In which of the following situations would we expect the additional costs to be
borne most heavily by consumers?
A.demand is highly elastic and supply is highly inelastic
B.demand and supply are both highly elastic
C.demand and supply are both highly inelastic
D.demand is highly inelastic and supply is highly elastic
30) List four factors that could shift the consumption schedule.
31) Explain the role interest rates play in understanding the time value of money.
32) (Consider This) Why is a trade war like shooting yourself in the foot?
33) (Last Word) Give five examples showing how different factors affect interest rate
calculations.
34) How could legal immigration increase a nations stock of capital and what effects
would such an increase have on productivity, production costs and product prices?
35) Assume that a purely competitive firm has the schedule of average and marginal
costs given in the table below.
•In the table below, complete the supply schedule for the competitive firm and state
what the economic profit will be at each price.
•If there are 100 firms in the industry and all have the same cost schedule, complete
the market supply schedule in the table below.
Answer the following questions: (1) What will the equilibrium price and quantity of
the product be? (2) What will the profits of each firm be? (3) Will firms tend to enter or
leave the industry in the long run? Explain.
36) What is the World Bank? Explain its primary purpose.
37) The possibility for gains trade is due to the fact that different countries face
different resource endowments, production costs and geographical locations. Interpret
and expand with examples.
38) Complete the table below by stating whether the direction of discretionary fiscal
policy was contractionary (C), expansionary (E), or neither (N), given the hypothetical
budget data for an economy.
39) (Consider This) What is the Prisoners Dilemma? How is this dilemma similar to the
one for two firms competing for market share as described in the text?