As a percentage of GDP, imports are greater than exports for which of the following
countries?
A) Germany
B) Japan
C) the Netherlands
D) the United States
If people assume that future rates of inflation will follow the pattern of inflation rates in
the past, they are said to have
A) rational expectations.
B) adaptive expectations.
C) unstable expectations.
D) accommodative expectations.
Figure 17-1
Figure 17-1 shows the
marginal revenue product for Dale’s Hand-Sewn Doilies, a producer of linen doilies.
Suppose the market price of doilies rises to $3. What happens to the curve given in the
diagram?
A) Nothing, because labor’s productivity has not changed.
B) There will be a movement along the curve.
C) The curve shifts to the right.
D) We cannot answer the question without knowing if Dale would want to hire more
workers.
Figure 7-4 Figure 7-4 represents the
market for medical services with and without insurance, and the effect of a third-party
payer system on the demand for medical services.
If consumers paid the full price of medical services, the equilibrium quantity would be
A) 200.
B) 500.
C) 700.
D) >700.
The increase in quality bias in the consumer price index refers to the idea that price
increases in the CPI reflect pure inflation, but ________ quality increases. This causes
the CPI to ________ the cost of the market basket.
A) also; understate
B) also; overstate
C) not; understate
D) not; overstate
Table 9-6
Production and
Consumption Production
Without Trade With Trade
Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production
and consumption quantities without trade, and the production numbers with trade. If the
actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many hats
will Belize consume?
A) 100
B) 130
C) 250
D) 400
Twenty-seven countries in Europe have formed the European Union (EU). After the EU
was formed it
A) eliminated all tariffs among its member countries.
B) completed a trade treaty (NAFTA) that reduced tariff rates between the EU and
North American countries.
C) greatly decreased imports and exports among its member countries.
D) barred imports of 747 jumbo jets by its member countries; all EU countries must
now buy jets from Airbus, a European company.
The output of U.S. citizens who work in Canada would be included in the
A) gross domestic product of Canada.
B) gross national product of Canada.
C) gross domestic product of the United States.
D) gross national product of Canada and the gross national product of the United States.
A study conducted by Alberto Alesina and Lawrence Summers concluded that countries
with ________ had lower inflation rates than countries with ________.
A) low rates of unemployment; high rates of unemployment
B) a large government debt; little to no government debt
C) no private banking system; an independent banking system
D) highly independent central banks; central banks that have little independence
Figure 18-1
Of the tax revenue collected by the government, the portion borne by consumers is
represented by the area
A) B+C.
B) F+G.
C) E+H.
D) B+C+F+G.
Employees at the hospital have negotiated a 3 percent increase in wages for the next
year, based on their inflation expectations. If inflation is actually 5 percent over the next
year, which of the following will occur?
A) Unemployment of hospital employees will rise.
B) Real wages for hospital employees will fall.
C) Inflation will be 3 percent the following year.
D) The increase in inflation is expected.
If the demand for a steak is unit-elastic, then
A) the percentage change in quantity demanded is 1 percent greater than the percentage
change in price.
B) the percentage change in quantity demanded is equal to the percentage change in
price.
C) the percentage change in quantity demanded is 100 percent greater than the
percentage change in price (in absolute value).
D) quantity demanded does not respond to changes in price.
Cross-price elasticity of demand is calculated as the
A) percentage change in quantity demanded divided by percentage change in price of a
good.
B) percentage change in quantity demanded of one good divided by percentage change
in price of a different good.
C) percentage change in quantity sold divided by percentage change in buyers’ incomes.
D) percentage change in quantity supplied divided by percentage change in price of a
good.