Exhibit 34-7
The world price of good X is $15. Under a policy of free trade, the U.S. production of
good X would be
a. 10 units.
b. 20 units.
c. 25 units.
d. 50 units.
e. none of the above
The Real GDP of country X doubled in 10 years. It follows that
a. the per-capita Real GDP doubled during this time, too.
b. the per-capita Real GDP remained stable during this time.
c. the per-capita Real GDP fell during this time.
d. disposable income also doubled during this time.
e. none of the above
Exhibit 10-3
The marginal propensity to consume (MPC) is
a. 0.80.
b. 0.75.
c. 0.20.
d. 0.25.
e. 0.90.
An increase in U.S. real interest rates causes the dollar to _________________, which
tends to __________________ U.S. Real GDP.
a. appreciate; raise
b. appreciate; lower
c. depreciate; raise
d. depreciate; lower
As long as some people anticipate policy, the economic consequences may be the same
as if all persons do so.
a. True
b. False
A change in labor productivity shifts the __________ curve and a change in the
exchange rate shifts the __________ curve.
a. SRAS; SRAS
b. AD; AD
c. SRAS; AD
d. AD; SRAS
e. none of the above
Suppose that there are two laws proposed for eviction notices. Plan A requires landlords
to give a renter 30 days to vacate an apartment once he has been served an eviction
notice. Under Plan B, he has 60 days to vacate an apartment once he has been served an
eviction notice. It follows that landlords will find
a. Plan A more expensive than Plan B.
b. Plan B more expensive than Plan A.
c. both plans to be equally expensive.
d. none of the above
International trade policies are largely advocated, argued, and lobbied for based more
on their distributional effects than on their aggregate or overall effects. What does this
imply?
a. Producers will lobby for protectionism even though they may know that their gains
from protectionism will be outweighed by the losses to consumers.
b. Consumers care more about how policies affect them than how policies affect them
and everyone else, too.
c. Tariffs are more effective than quotas.
d. Consumers’ surplus will rise (when it rises) more than producers’ surplus will fall
(when it falls).
e. none of the above
The short-run Phillips curve holds that
a. high inflation and high unemployment can occur together.
b. low inflation and low unemployment can occur together.
c. high inflation and low unemployment can occur together.
d. b and c
How do countries know when they have a comparative advantage in the production of a
good?
a. Government accountants collect cost data from countries and analyze it to find out
which country has a comparative advantage in the production of which good.
b. They know as the result of individuals trying to earn profits and buying low and
selling high in the process.
c. The United Nations Economic Conference Group analyzes cost data from countries
and determines which country has a comparative advantage in the production of which
good.
d. There is not one major way that countries acquire this information.
A quota is
a. a tax imposed on imported goods.
b. a legal limit on the amount of a good that can be produced by foreign owners of a
firm located in a host country.
c. a legal limit on the amount of a good that can be imported.
d. an agreement between two countries in which the exporting country voluntarily
agrees to limit its exports to the importing country.
A positive externality exists and government wants to apply a per-unit subsidy in order
to bring about an efficient outcome. Under what condition will the solution (the
subsidy) be worse than the problem (the market failure)?
a. Under the condition that the subsidy is greater than the marginal external benefit
(associated with the positive externality).
b. Under the condition that the post-subsidy output is not farther away from the efficient
level of output than the pre-subsidy output is from the efficient level of output.
c. Under the condition that the post-subsidy output is farther away from the efficient
level of output than the pre-subsidy output is from the efficient level of output.
d. Under the condition that the subsidy is less than the marginal external benefit
(associated with the positive externality).
e. none of the above
Exhibit 4-9
Suppose that the government imposes a price ceiling at a price of $10._________ units
would be exchanged in a free market, and ____________ units would be exchanged
with the price ceiling in effect.
a. 150; 220
b. 150; 70
c. 110; 180
d. 150; 90
When wage rates rise the short-run aggregate supply curve shifts to the right.
a. True
b. False
Competition for votes between two political parties will cause those parties to
a. produce quite different policy proposals.
b. have very similar policy proposals.
c. find ways to clearly distinguish themselves in order to give voters a clear choice.
d. a and c
e. none of the above