According to the textbook, the evidence indicates that NAFTA has:
A. reduced the wages of skilled workers in the United States.
B. reduced the employment of unskilled workers in the United States significantly.
C. stopped illegal immigration from Mexico.
D. not reduced the employment of unskilled workers in the United States.
The dates of the “official” peaks and troughs of business cycles in the United States are
determined by the:
A. Federal Reserve.
B. Congressional Budget Office.
C. National Bureau of Economic Research.
D. Council of Economic Advisers.
The price of a gallon of gasoline at the pump increased by 10 percent at the same time
that the inflation rate was 5 percent. The nominal price of gasoline _____, and the real
price of gasoline _____.
A. increased; also increased
B. increased; decreased
C. increased; did not change
D. decreased; increased
In the above decision tree, Tracy picks first, and Amy picks second. Tracy knows Amy’s
payoffs to each choice, and Amy knows Tracy’s payoffs.
Refer to the figure above. If before Tracy chose, Amy could make a credible
commitment to choose either the top or bottom branch when her turn came, Tracy
would make the decision to give Amy the choice at _______ and Amy would choose
the ______.
A. Z; top branch
B. Z; lower branch
C. Y; lower branch
D. Y; top branch
If a good can be consumed by one person without reducing the availability of the good
to others, this good is a(n) __________ good.
A. nonexcludable
B. pure public
C. common
D. nonrival
A measure of GDP in which quantities produced are valued at current-year prices is
called:
A. real GDP.
B. nominal GDP.
C. base GDP.
D. physical GDP.
Assume the demand for coffee increases while the supply decreases. Which of the
following outcomes is certain to occur?
A. The equilibrium price of coffee will rise.
B. The equilibrium quantity of coffee will rise.
C. The equilibrium price of coffee will fall.
D. The equilibrium quantity of coffee will fall.
You originally required a risk premium of 6 percent in addition to the rate of return on
safe assets before you would purchase shares of Techno Company stock. If you and
other investors reduce the risk premium you require to 4 percent, the price of Techno
Company stock will:
A. increase.
B. decrease.
C. equal the old risk premium plus the new risk premium.
D. equal the new risk premium plus the rate of return on safe assets.
You are the Minister of Trade for a small island country in the South Pacific with the
following annual production possibilities curve:
You are negotiating a deal with a neighboring island that has the following annual PPC:
Refer to the figure above. You have arrived with 300 coconuts to trade. The minimum
number of fish you would be willing to accept in exchange for those coconuts:
A. is 1,500 fish, because that’s how many you can catch without trade.
B. is 1,200 fish, because that is just enough to offset the opportunity cost of harvesting
the coconuts.
C. is 301 fish, because anything better than a one-for-one trade benefits your island.
D. is 901 fish, because that is just a little more than the opportunity cost of harvesting
the coconuts.
Suppose that the total expenditures for a typical household in 2000 equaled $5,500 per
month, while the cost of purchasing exactly the same items in 2005 was $6,87 If 2000
is the base year, the CPI for the year 2005 equals:
A. 0.80
B. 1.00
C. 1.20
D. 1.25
A measure of 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 is called a:
A. real price.
B. real quantity.
C. rate of inflation.
D. price index.
If you consume less of a good as your income increases:
A. your demand curve is not downward sloping for that good.
B. the good must be an inferior good.
C. the good must not have any close substitutes.
D. your quantity demanded changed by a movement along the demand function.
All of the following are examples of the independence of the U.S. Federal Reserve
System EXCEPT that:
A. the Federal Reserve Act does not explicitly prohibit legislative interference in
monetary policy.
B. Federal Reserve Governors are appointed for 14-year terms.
C. the Federal Reserve controls its own budget.
D. the Federal Reserve is under no obligation to finance the national deficit.
The fact that the average price of a gallon of gasoline in England is much higher than
the price in the U.S. would lead to which of the following predictions?
A. Average miles per gallon for new cars will be lower in England.
B. English drivers will tend to drive a greater average number of miles.
C. American drivers will tend to make fewer trips with more stops.
D. Large cars with poorer gas mileage will be less popular with consumers in England.
A lower real interest rate ______ saving and ______ consumption spending.
A. increases; increases
B. increases; decreases
C. does not change; does not change
D. decreases; increases
High expected inflation leads to ____ increases in wages and costs and to ____ actual
inflation.
A. large; high
B. large; low
C. small; low
D. small; high
By changing the incentives, reductions in marginal tax rates can increase potential
output in each of the following ways EXCEPT by encouraging households to:
A. enjoy more hours of leisure.
B. work more hours.
C. take more entrepreneurial risk.
D. invest in more human capital.
Changes in the expected rate of inflation will:
A. not shift the AS curve.
B. shift the AS curve upward or downward.
C. shift the AS curve leftward or rightward.
D. cause the AS curve to become downward-sloping.
Your state is considering enacting a law requiring that all motorcycle operators and their
passengers wear a helmet. Motorcyclists vary in the degree to which they value being
able to ride helmet-less and in the extent to which they value the safety provided by a
helmet.
If ___ external costs are incurred if a cyclist is involved in an accident, the optimal level
of helmet wearing will be ___ provided by private markets.
A. zero; efficiently
B. zero; under
C. substantial; efficiently
D. substantial; over
Campus Bookstore is the only textbook supplier in the town, a profit-maximizing
business. The table below represents the reservation prices for the eight students
enrolled in the class for which this book is required.
Assume that the marginal and average total cost for each book is $12.
Refer to the information above. If the bookstore can charge two different prices for this
book, the list price for the book will be _____ and the discounted price for the book will
be ____.
A. $18; less than $12
B. $60; $36
C. $36; less than $36
D. more than $36; less than $12
The real exchange rate is the:
A. price of the average domestic good or service relative to the price of the average
foreign good or service, when prices are expressed in terms of a common currency.
B. quantity of foreign currency assets held by a government for the purpose of
purchasing the domestic currency in the foreign exchange market.
C. rate at which two currencies can be traded for each other.
D. nominal exchange rate adjusted for domestic inflation.
If the demand for a good decreases as income decreases, it is a(n):
A. complementary good.
B. normal good.
C. inferior good.
D. substitute good.
Suppose that average labor productivity in Country C is $6,000, and that Countries C
and A have the same real GDP per capita. Based on the information in the table, what
must be the average labor productivity in Country A?
A. $1,800
B. $2,400
C. $5,000
D. $7,200
Which of the following is an example of a positional arms control agreement?
A. Campaign spending limits
B. Highly selective admissions standards at colleges
C. Regulating acts of free speech that cause more harm than good
D. Olympic records
The amount by which taxes increase when before-tax income rises by an additional
dollar is called the:
A. average tax rate.
B. substitution effect.
C. opportunity cost.
D. marginal tax rate.
The growth of medical insurance in general and first-dollar coverage specifically has
reduced the marginal cost of treatment paid by the consumer. Therefore, the current
level of medical treatment in the United States is
A. equal to the efficient level.
B. less than the efficient level.
C. greater than the efficient level.
D. less than or equal to the efficient level.
All of the following are characteristics of short-term economic fluctuations EXCEPT:
A. expansions and recessions are felt in only a few sectors of the economy.
B. expansions and recessions are irregular in length and severity.
C. unemployment rises during recessions.
D. durable-goods industries are more sensitive to short-term fluctuations than service
and non-durable industries.
Refer to the figure above. On the basis of the above graphs, it appears that __________
has the strongest demand for hamburger.
A. Chris
B. Laura
C. Laura and Chris both
D. neither Laura nor Chris
An increase in the price of hamburger from $3 to $4 leads to an increase in quantity
supplied from 100 units to 150 units. At the original price, the price elasticity of supply
for hamburgers is _____ and at this point the supply curve is _______.
A. 2/3; elastic
B. 2/3; inelastic
C. 3/2; elastic
D. 3/2; inelastic
As the available technology improves, ______ shifts to the _____.
A. aggregate demand; left
B. aggregate demand; right
C. aggregate supply; left
D. aggregate supply; right