The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and
machine-made cigars for $2.50 each. What is the opportunity cost of buying a
hand-rolled cigar?
A) 4 machine-made cigars
B) one-quarter of a machine-made cigar
C) $10.00
D) $2.50
If the central bank can act as a lender of last resort during a banking panic, banks can
A) call in their loans to their customers and eventually restore the public’s faith in the
banking system.
B) satisfy customer withdrawal needs and eventually restore the public’s faith in the
banking system.
C) borrow more and more money from the central bank, and this will lower its reserves
and decrease the public’s faith in the banking system.
D) encourage the public to borrow directly from the central bank, and this will worsen
the banking panic.
Which of the following describes a situation in which the person is hurt by inflation?
A) a retiree whose pension is adjusted for inflation
B) a person who borrows money during a period when inflation is under-predicted
C) a person who lends money during a period when inflation is over-predicted
D) a person paid a fixed income during an inflationary period
If we include consideration of potential effects of a proposed tax reduction and
simplification on the labor supply, we would expect crowding out of investment and net
exports brought about by the tax cut to be
A) less than it would be without the supply-side effects.
B) increased as aggregate real income and output rise in the long run.
C) unaffected by the shifting long-run aggregate supply curve.
D) dependent upon the impact of this tax change on consumer disposable income.
Deflation will
A) increase aggregate demand.
B) increase the quantity of real GDP demanded.
C) decrease aggregate demand.
D) decrease the quantity of real GDP demanded.
Table 7-1
Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where
they had to find and make their own food. Rob and Bill spent one day each fishing and
picking berries. The table lists the pounds of output Rob and Bill produced.
Refer to Table 7-1. Use the table above to select the statement that accurately interprets
the data in the table.
A) Rob has a comparative advantage in catching fish.
B) Bill has an absolute advantage in catching fish.
C) Bill has a comparative advantage in catching fish.
D) Rob has a comparative advantage in picking berries and catching fish.
If the current unemployment rate is 5%, under which of the following circumstances
would you expect the Fed to use expansionary monetary policy?
A) if the natural rate of unemployment is below 5%
B) if the natural rate of unemployment is above 5%
C) if the inflation rate is above 5%
D) if the inflation rate is below 5%
As the economy nears the end of a recession, which of the following do we typically
see?
A) further decreases in consumer spending
B) increased spending on capital goods by firms
C) increasing interest rates
D) all of the above
From 1983-2013, ________ for the United States were negative.
A) planned inventories
B) net exports
C) unplanned inventories
D) transfer payments
Figure 4-4
Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that
this is a competitive market. If the price of iced tea is $1, what changes in the market
would result in an economically efficient output?
A) The price would increase, the quantity supplied would increase, and the quantity
demanded would decrease.
B) The quantity supplied would increase, the quantity demanded would decrease and
the equilibrium price would increase.
C) The price would increase, the demand would increase and the supply would
decrease.
D) The price would increase, quantity demanded would increase and quantity supplied
would decrease.
Inventories refer to
A) goods which have been presold before they are produced.
B) goods that have been produced but not yet sold.
C) goods that have been planned but not yet produced.
D) goods that have been produced and sold in the same year.