A speculator who incorrectly anticipates the future
A) cannot inflict a loss on others because one person’s loss must be someone else’s gain.
B) incurs a personal loss but benefits everyone else.
C) inflicts a loss on others and incurs a personal loss.
D) makes a personal profit but inflicts a loss on others.
If a 50 cent increase in price causes the amount purchased to fall by 50 units per week,
we know
A) almost nothing about the price elasticity of demand.
B) demand is relatively elastic.
C) demand is relatively inelastic.
D) demand is unit elastic.
E) the demand does not obey the law of demand.
The price paid to purchase land
A) has no relation to cost because it did not cost anything to produce the land.
B) rarely has any relation to cost because it has usually been determined by competitive
bidding.
C) usually depends on the cost to the seller of letting the purchaser have the land.
D) would more accurately reflect the social value of the land if the price were zero.
Systematic efforts to extend vaccination throughout the world have produced a situation
today in which the smallpox virus is
A) in short supply (a shortage exists).
B) rare.
C) scarce.
D) all of the above.
Most of the income received by families and individuals in the United States arises
from the ownership of
A) capabilities embodied in human beings.
B) corporations.
C) industrial, commercial, and residential real estate.
D) stocks, bonds, and other financial instruments.
E) transnational business enterprises.
The army is more likely than a business firm to assign a highly-skilled person to a job
requiring little skill because the people who assign military personnel
A) are generally guided by the public interest rather than private interest.
B) incur little cost from misallocating personnel.
C) must consider the welfare of the whole rather than the profitability of the enterprise.
D) work for the government, where there is less demand for skilled personnel.
Other things constant, a rise in the number of unskilled immigrants tends to
A) reduce income inequality.
B) increase income inequality.
C) have no effect on income inequality.
D) initially reduce income inequality, but then increase it because immigrants steal jobs
from citizens.
A recession is a slowdown in the rate of economic growth that
A) causes total income to fall even though total output has not declined.
B) is unintended and therefore disappoints people’s expectations.
C) lowers the nominal level of gross domestic product.
D) persists longer than one year.
E) results in fewer people being employed.
If the university administration plans to cut tuition charges in the hope of attracting
more students and thereby increasing tuition revenues, we know
A) they are assuming an elastic demand.
B) they are assuming an inelastic demand.
C) they cannot succeed because of the law of demand.
D) they must be running in the red.
E) they will only succeed if more students can be enrolled at no cost.
Legislators facing a close electoral contest will tend to favor
A) policies with benefits greater than costs for everyone.
B) policies with benefits greater than costs for the majority.
C) policies with benefits in the near future and deferred costs.
D) policies representing the public interest.
The term for the Fed’s day-to-day technique for controlling the stock of money is
A) discounting operations.
B) interest-rate operations.
C) liquidity operations.
D) open market operations.
E) treasury operations.
Which age householder group’s mean income among the following was the highest in
2010?
A) 15-25 years old
B) 25-34 years old
C) 45-54 years old
D) 65 years and older
When we hear on the news, “The Fed has increased interest rates today,” the Fed has
most likely
A) raised the required reserve ratio.
B) sold government bonds.
C) lowered the discount rate.
D) bought government bonds.
Your textbook argues that the phrase “the distribution of income” is misleading because
A) income is not created in a market economy, only wealth is.
B) it suggests that income is not earned in process of its creation and can simply be
parceled out any which way policymakers wish.
C) income in the form of wages and salaries can be negative, and therefore cannot be
distributed.
D) it is only related to ethical rather than economic considerations.
A movement from one point of a demand curve to another is properly called a change in
A) demand.
B) quantity demanded.
C) tastes and preferences.
D) the availability of substitutes.
If a financial institution extends a 25 year loan at a 6 percent interest rate, and then the
inflation rate increases suddenly and unexpectedly to 6 percent per year, the institution
receives on its loan a real return of
A) minus 12 percent.
B) zero percent.
C) 6 percent.
D) 12 percent.
E) 36 percent.
Roughly what was the change in Columbia’s per capita GDP between 1960 and 2011?
A) 25%
B) 90%
C) 150%
D) 185%
The overall money supply would tend to increase if the Fed were to
A) increase the required reserve ratio.
B) increase the discount rate.
C) buy government bonds.
D) exchange crisp dollar bills for worn and tattered dollar bills.
“Material” wealth cannot be distinguished in any useful way from wealth (with no
modifying adjective) because
A) all wealth consists finally of valued experiences.
B) material objects are not essential to the creation of wealth.
C) wealth includes anything a person can purchase with money, whether material or
not.
D) wealth usually fluctuates in value while matter cannot be created or destroyed.
According to the law of supply, producers will
A) change their consumption plans when the price of a good changes.
B) change their supply when the price of a good changes.
C) change their production plans when the price of a good changes.
D) increase their quantity supplied when the price of a good decreases.
E) decrease their quantity supplied when the price of a good increases.
What is most likely to happen to the cost of owning and operating a golf course in a
large city when the population grows?
A) The cost will decline because the course will be used closer to its capacity.
B) The cost will not change as long as no attempt is made to enlarge the course.
C) The cost will rise because the land will become more valuable for other purposes.
D) The cost will rise if the course is privately owned but will be unchanged if the
course is municipally owned.
E) The cost will vary depending on the amount of competition from other courses.
Suppose Stan transfers $1,000 from his checking account into a savings account. What
are the effects on M1 and M2 money supply?
A) M1 increases; M2 decreases.
B) M1 decreases; M2 remains the same.
C) Both M1 and M2 increase.
D) Both M1 and M2 decrease.
E) Both M1 and M2 remain the same.
When people reduce their rate of time preference
A) more credit is made available in the banking system.
B) less credit is made available in the banking system.
C) the demand for credit shifts right.
D) the supply of credit shifts left.
Unemployment rates were much higher in the 1980s than they were in the 1950s
basically because
A) a higher percentage of the population was in the labor force in the 1980s, but the
cost to many of them of being unemployed was much lower than it was in the 1950s.
B) automation has eliminated many unskilled jobs.
C) fewer jobs are available in the 1980s relative to the population.
D) inflation raises unemployment rates.
E) recessions have become much more severe since the 1950s.
Your authors state that the rise in the U.S. poverty rate from 2000 to 2010 was primarily
caused by
A) the rise of huge corporations and “big box stores” in the consumer goods sector.
B) the growing number of students straddled with student loan debt.
C) the Great Recession that began in 2008.
D) none of the above reasons.
Entrepreneurs engage in
A) arbitrage.
B) innovation.
C) imitation of other successful entrepreneurs.
D) all of the above.
The marginal cost to the phone company of handling a long distance call is likely to be
A) higher the fewer such calls people make.
B) higher the more the phone company has invested in equipment.
C) substantially less than the price charged for the call.
D) substantially more than the price charged for the call.
Drivers are charged a price to use a tollway. But even tollways, such as the Tri-State
Tollway near Chicago, become heavily congested during the morning and evening rush
hours. Thus,
A) the rush hour represents a surplus of cars.
B) your textbook author is wrong in claiming congestion is caused by zero prices.
C) higher tolls are required during rush hours to reduce congestion.
D) growing population is indeed the problem.
Why do people in New York City often read the obituaries to locate an apartment?
A) They are strange.
B) They find it efficient, given the alternatives.
C) The landlords force them to.
D) There is no other source of apartment rental information outside the obituaries.
When a tax on emissions into the air accurately reflects the cost to all members of
society of an additional unit of the emissions, it
A) amounts to no more than a license to pollute.
B) encourages firms to reduce emissions as long as the cost of doing so is less than the
cost of continuing the emissions.
C) gives firms little incentive to search for less-polluting production processes.
D) will not prevent large and profitable firms from polluting.
When we look at a production possibilities curve, the opportunity cost can be
understood as
A) The point of maximum production of one good
B) The amount of the other good that must be given up for one more unit of production
C) The total cost of producing the good
D) The price people will pay for the additional amount produced
What might prompt a fresh college graduate to turn down the first job offer he or she
receives?
A) They do not wish to begin working.
B) They’d rather continue straight into graduate school.
C) They expect a better job offer is right around the corner.
D) All of the above.
The overwhelming unpopularity of inflation among citizens is largely a result of the
fact that
A) inflation raises the real cost of such basic necessities as food, housing, and clothing.
B) inflation reduces the value of real wealth.
C) no one knows what causes it.
D) no one (or almost no one) gains from inflation.
E) people who gain from inflation often erroneously conclude that they are losing as a
result of it.