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Figure 7.2 Refer to Figure 7.2. According to classical economists if the wage rate is:
A) $12, the wage rate will decline to eliminate the surplus.
B) $12, the wage rate will increase to eliminate the shortage.
C) $7, the wage rate will decline to eliminate the surplus.
D) $12, the wage rate will decline to eliminate the shortage.
According to the Laffer curve, higher tax rates will result in lower tax revenues if:
A) economic activity is severely discouraged.
B) only the rich are taxed.
C) only the poor are taxed.
D) workers are encouraged to work more hours.
The marginal propensity to consume is:
A) the change in consumption divided by the change in income.
B) consumption divided by income.
C) the change in consumption divided by the change in saving.
D) the change in saving divided by the change in income.
Refer to Figure 4.1, which shows Molly's and Ryan's individual demand curves for
compact discs per month. Assuming Molly and Ryan are the only consumers in the
market, if the market quantity demanded is 5, the price must be
A) $3.
B) $6.
C) $9.
D) $12.
The most commonly used tool in monetary policy is
A) changes in required reserve ratios.
B) changes in the discount rate.
C) open market operations.
D) express lending transactions.
In a market system profits:
A) are unfair.
B) are too high.
C) signal to entrepreneur what to produce.
D) all of the above.
Assuming all excess reserves are loaned out, currency holdings by the public are zero,
and a reserve ratio of 25 percent, an initial deposit of $3,000 will lead to a total increase
in deposits of
A) $750.
B) $2,250.
C) $12,000.
D) $36,000.
Recall the Application about why the U.S. federal government took over the debt of the
state governments in the late 1700s to answer the following question(s).According to
this Application, when the states got into fiscal difficulties in the 1840s through overly
ambitious infrastructure projects, the federal government
A) again bailed out all the states.
B) only bailed out the states which comprised the original 13 colonies.
C) bailed out only the northern states, but not the southern states.
D) did not bail out any of the states.
Under current WTO rules, a country can adopt:
A) any environmental standard it chooses, even if it discriminates against foreign
producers.
B) any environmental standard it chooses as long as it does not discriminate against
foreign producers.
C) only WTO-approved environmental standards.
D) only the same environmental standards as its immediate geographic neighbors.
The main rationale for anti-dumping policies is to prevent:
A) predatory pricing.
B) economies of scale.
C) free-trade.
D) comparative disadvantage.
Recall Application 3, "Oil Supply Disruptions, Speculation and Supply Shocks," to
answer the following questions:
According to the Application, the changes in the price of oil may be caused by:
A) changes in supply of oil.
B) changes in the worldwide demand for oil.
C) activities of oil speculators.
D) all of the above are correct.
Table 6.12 Refer to
Table 6.12. If 1998 is the base year, the inflation rate between 1998 and 1999 is
________ %, and the inflation rate between 1998 and 2000 is ________ %.
A) 18.3; 20
B) 20.5; 10.5
C) 12.7; 5.9
D) 24.1; 8.4
If demand for a product increases, ceteris paribus, the equilibrium
A) price increases.
B) price decreases.
C) price remains unchanged.
D) quantity decreases.
Which of the following trade agreements took effect in 1994 and, over a 15-year period,
will eliminate all tariffs and other trade barriers between its members?
A) North American Free Trade Agreement
B) World Trade Organization
C) Asian Pacific Economic Cooperation
D) GATT
Figure 7.4
From Figure 7.4, crowding in did not occur between:
A) points A and B.
B) points B and C.
C) points C and D.
D) points D and E.
If the quantity equation holds, then a country operating under a gold standard will
experience inflation:
A) during a gold rush similar to California's gold rush in 1849.
B) when the price of gold increases.
C) when people find other non-monetary uses for gold.
D) when it buys more goods from another country using gold.
An appreciation of the U.S. dollar will likely cause U.S. exports to ________ and U.S.
imports to ________.
A) decrease; decrease
B) increase; decrease
C) increase; increase
D) decrease; increase
Assuming no government or foreign sector, if the marginal propensity to consume is
0.8, the multiplier is:
A) 0.2.
B) 0.8.
C) 1.25.
D) 5.
