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Which of the following statements represents a correct and sequentially accurate
economic explanation?
a. Goods X and Y are substitutes. The price of X falls, the quantity demanded of X
rises, and the demand for Y rises.
b. Goods X and Y are substitutes. The price of X rises, the demand for X falls, and the
demand for Y rises.
c. Goods X and Y are substitutes. The price of X falls, the demand for X rises, and the
quantity demanded of Y rises.
d. Goods X and Y are substitutes. The price of X falls, the quantity demanded of X
rises, and the demand for Y falls.
e. Goods X and Y are complements. The price of X falls, the quantity demanded of X
rises, and the demand for Y falls.
An expansionary fiscal policy will
a. always result in a budget deficit.
b. always result in a budget surplus.
c. sometimes result in a budget deficit.
d. never result in a budget surplus.
e. More information is necessary to answer this question.
In economics, capital is defined as a financial asset such as stocks and bonds.
a. True
b. False
The formula for determining the production flexibility contract payment is:
a. contract acreage x 0.75 x yield per acre x crop payment rate.
b. contract acreage x 0.85 x yield per acre x $1.
c. contract acreage x 0.85 x yield per acre x crop payment rate.
d. contract acreage - (0.85 x contract acreage) x yield per acre x crop payment rate.
e. There is no formula for the production flexibility contract payment. There is only a
flat fee that changes annually.
Suppose the economy is at a position below its institutional production possibilities
frontier. To improve this situation, Keynesian economists might propose that
government __________ taxes, which will cause the aggregate demand curve to shift to
the __________ and Real GDP will __________.
a. increase; right; increase
b. increase; left; decrease
c. decrease; left; decrease
d. decrease; right; decrease
e. decrease; right; increase
In his article Straight Talk About Economic Literacy, economist
_______________________ said, €Citizens can vote even if they have no idea what
they are doing.If enough voters fit that description, democratic governments are bound
to make foolish decisions.€
a. Milton Friedman
b. James Buchanan
c. Bryan Caplan
d. John Maynard Keynes
In a simple Keynesian model, the aggregate supply curve is upward sloping.
a. True
b. False
An American computer is priced at $1,200. If the exchange rate between the U.S. dollar
and the Mexican peso is $0.09 = 1 peso, approximately how many pesos would a
Mexican buyer pay for the computer?
a. 13,333 pesos
b. 108 pesos
c. 133.50 pesos
d. 15,075 pesos
A put option is a contract
a. that gives the owner the right, but not the obligation, to buy shares of a stock at a
specified price within the time limits of the contract.
b. that gives the owner the right, but not the obligation, to sell shares of a stock at a
specified price within the time limits of the contract.
c. in which the seller agrees to provide a particular good to the buyer on a specified
future date at an agreed-upon price.
d. that gives the owner the right, but not the obligation, to buy or sell shares of a stock
at a specified price within the time limits of the contract.
Special interest groups are very unlikely to push for policies that increase the size of
their slice of the economic pie if it means that the overall size of the economic pie will
shrink.
a. True
b. False
According to the Keynesian consumption function, an increase in disposable income
will result in
a. a decrease in consumption.
b. an increase in consumption.
c. a decrease in investment.
d. an increase in investment.
The minimum wage is an example of a
a. price door.
b. price wall.
c. price floor.
d. price ceiling.
"In two hours the polls will close. I know I should probably vote, but it is raining, and
besides, there is a basketball game on TV tonight, so I'll just stay in." This person is
exhibiting
a. median voter preferences.
b. rational ignorance.
c. decision making based on cost-benefit considerations.
d. logrolling.
The simple quantity theory of money predicts that the larger the percentage change in
the money supply, the larger the percentage change in Real GDP.
a. True
b. False
