Demands for greater government regulations of workplace safety rest on the belief that
A. labor market competition is great.
B. firms will adopt safety devices on their own.
C. left on their own, firms will exploit workers and subject them to unreasonable risks.
D. workers are very mobile.
Income lost by the unemployed is an example of the ______ cost of unemployment,
while the additional spending to control crime is an example of the ______ cost of
unemployment.
A. social; psychological
B. economic; social
C. economic; psychological
D. psychological; economic
Supporters of legalizing marijuana usage in the United States
A. remain silent so as not to be considered crazy.
B. are funded by those who produce and export drugs.
C. have no evidence from other countries to support their view.
D. are frequently drug abusers.
The time between when Federal Reserve policymakers decide to close an output gap
and when they act to change the fed funds rate is an example of:
A. the outside lag in macroeconomic policy.
B. a structural policy change.
C. anchoring inflationary expectations.
D. the inside lag in macroeconomic policy.
If the consumers cannot switch to a close substitute when the price of a good increases,
the demand for that good is likely to be:
A. elastic.
B. inelastic.
C. unitary elastic.
D. perfectly elastic.
The table below shows the payoff matrix in the form of short term profits for two firms,
A and B, for two different strategies, investing in new capital or not investing in new
capital. Payoffs are in millions of dollars.
Refer to the figure above. For Firm A, _____ is its dominant strategy, and for Firm B,
______ is its dominant strategy.
A. investing; not investing
B. not investing; investing
C. investing; investing
D. not investing; not investing
Suppose there are two parallel highways between two cities with approximately equal
traffic. What would you expect to happen if the state began charging tolls to drive on
one of those highways?
A. More drivers would drive on the non-toll road, making the toll road less congested.
B. More drivers would drive on the toll road making the non-toll road less congested.
C. Traffic would remain evenly divided between the two roads as drivers continuously
sought the less-congested route.
D. Traffic would decrease on both roads.
A minimum wage law prohibits employers from paying workers less than a specified
hourly wage. If the minimum wage is above the equilibrium wage
A. there will be excess supply of labor.
B. there will be excess demand for labor.
C. it creates a price ceiling.
D. it is the most efficient way to assist the working poor.
An inefficient point on a production possibilities curve is:
A. necessarily also an attainable point.
B. not necessarily an attainable point.
C. necessarily an unattainable point.
D. possibly an unattainable point.
Refer to the figure above. The opportunity cost to produce one bushel of corn is:
A. 2 bushels of wheat.
B. ½ of a bushel of wheat.
C. 500 bushels of wheat.
D. 250 bushels of wheat.
Assume one investor bought a 10-year inflation-protected bond with a fixed annual real
rate of 1.5% and another investor bought a 10-year bond without inflation protection
with a nominal annual return of 4.2%. If inflation over the 10-year period averaged 2
percent, which investor earned a higher real return?
A. The investor who purchased the inflation protected bond.
B. The investor who purchased the bond without inflation protection.
C. Both investors earned the same real return.
D. Neither investor earned a positive real return.
According to the textbook, Manning and his colleagues found that people with
$1000-deductible policies spent _____ on health care relative to people with first-dollar
coverage.
A. less
B. more
C. an equal amount
D. 50% more
In which of the following markets is the presence of asymmetric information of little
concern to the buyer?
A. The market for used textbooks
B. The market for used houses
C. The market for used computers
D. The market for used cars
When your grandfather keeps a bundle of $100 dollar bills behind a brick in the
basement, this is an example of dollars serving as:
A. bank reserves.
B. a medium of exchange.
C. aunit of account.
D. a store of value.
For a given occupation, jobs with a large social approval factor will pay _________ the
average salary while jobs with a large social disapproval factor will pay __________.
A. more than; the average
B. the same as; less
C. less than; more
D. more than; less than
For any horizontal demand curve, the calculated price elasticity of demand is:
A. 0.
B. 1.
C. infinity.
D. equal to the price of the good.
Suppose the price of gasoline increases and that sport utility vehicles get poor gas
mileage compared to other available cars. One would expect:
A. the demand for gasoline to decrease.
B. the demand for sport utility vehicles to decrease.
C. the demand for sport utility vehicles to increase.
D. the quantity of sport utility vehicles demanded to decrease.
Perfect price discrimination occurs when:
A. each buyer pays his or her marginal cost.
B. most buyers pay their reservation price.
C. each buyer pays exactly his or her reservation price.
D. the buyer with the highest reservation price sets the market price.
In the short run with predetermined prices, when output is greater than planned
aggregate expenditure, firms will:
A. reduce production.
B. increase production.
C. increase planned aggregate expenditure.
D. decrease planned aggregate expenditure.
Consumers know that some fraction X of all new cars produced and sold in the market
are defective. The defective ones cannot be identified except by those who own them.
Assume for this problem that cars do not depreciate with use.
The lemons problem provides owners of above average quality cars an incentive to
A. exaggerate the quality of their cars when it is time to sell.
B. offer a warranty when selling their cars.
C. understate the quality of their cars when it is time to sell.
D. ask for a sales price higher than the blue book value when selling their cars.
A price index measures:
A. the price of specific good or service.
B. the change in the price of a specific good or service.
C. only the prices that change.
D. the average price of a given class of goods or services relative to the price of the
same goods and services in a base year.
For two goods, A and B, the rational spending rule is expressed as
A. MUA = MUB.
B. MUA * MUB = PA * PB.
C. (MUA/PB) = (MUB/PA).
D. (MUA/PA) = (MUB/PB).
Based on the information in the table, what quantity of reserves did the Federal Reserve
inject into the economy in 1932?
A. $0.30 billion
B. $0.23 billion
C. $0.16 billion
D. $0.07 billion
The seven leaders of the Federal Reserve System headquartered in Washington, D.C.
constitute the:
A. Federal Reserve Bank of Washington, D.C.
B. Federal Open Market Committee.
C. Federal Economic Advisory Board.
D. Board of Governors.
The location of a firm will be a _________ factor of production in ________ run.
A. variable; the short
B. fixed; both the short and long
C. variable; the long
D. fixed; the long
Shel and Fran are neighbors. They work at the same firm and hold the same title. Shel
finds that when Fran’s consumption rises, Shel feels worse off. Fran feels the same way
towards Shel’s consumption.
Refer to the information given above. Suppose that the firm that employs both Fran and
Shel began offering an hour of overtime at 1.5 times their base hourly wage and that
both Fran and Shel worked the additional hour. A few weeks later the firm began
offering a second hour of overtime at 1.5 times their base hourly wage and that both
Fran and Shel worked that second additional hour. An effective mechanism to avoid
working all day and all night as their employer offers more and more overtime, Fran
and Shel could:
A. stop independently.
B. not let the other’s consumption affect them.
C. lobby for limits on the maximum number of hours in a work week.
D. agree between them to stop this silly game.
Alpha has $40,000 of capital per worker, while Beta has $5,000 of capital per worker.
In all other respects, the two countries are the same. According to the principle of
diminishing returns to capital, an additional unit of capital will increase output ______
in Alpha compared to Beta, holding other factors constant.
A. more
B. less
C. not at all
D. by the same amount
If the marginal utility of the 3rd cup of coffee is 23 and the marginal utility of the 4th
cup is 15, then
A. it is optimal for the consumer to have 3 cups of coffee.
B. the price of a cup of coffee must be relatively low.
C. it is optimal for the consumer to have 4 cups of coffee.
D. there is evidence of the law of diminishing marginal utility.
The coupon rate on newly issued bonds is usually higher for bonds with ______ terms
and ______ risk that the borrower will go bankrupt.
A. shorter; greater
B. shorter; smaller
C. longer; greater
D. longer; smaller
Suppose that the latest Indiana Jones movie played in theaters first, where it was sold
out during its opening week. Several months later it was available on pay-per-view TV.
Two years later it was shown on CBS, a broadcast television network.
When a family rents an Indiana Jones movie on DVD to watch together, the DVD is a
____ good.
A. public
B. jointly consumed private
C. jointly consumed public
D. private
Banks hold reserves:
A. to earn interest.
B. to increase profits.
C. only because the government requires them to hold reserves.
D. to meet depositor withdrawals and payments.
In which of the following markets do all firms sell the same standardized product?
A. Four-door cars
B. 2% milk
C. Desktop computers
D. Sandwiches