A demand shock is a change in planned spending that is:
A. caused by changes in output.
B. caused by changes in the inflation rate.
C. caused by changes in output and changes in the real interest rate.
D. not caused by changes in output or changes in the inflation rate.
Refer to the figure below.
This firm’s marginal revenue curve would intersect the vertical axis at ______.
A. $70
B. $0
C. $20
D. $35
If the government uses a head tax to finance a public good, then the:
A. proportion of income paid in taxes is constant.
B. dollar amount paid by each taxpayer declines as income rises.
C. proportion of income paid in taxes declines as income rises.
D. proportion of income paid in taxes increases as income rises.
Compared to the 1960 and 1973 period, average real earnings of workers ______ from
1973 to 1995 and then ______ from 1996 to 2010.
A. declined; grew more slowly
B. declined; declinedeven more
C. slowly; grew at about the same rate
D. grew more rapidly; declined
Suppose the table below describes the relationship between price and quantity
demanded for a monopolist.
At the monopolist’s profit-maximizing level of output, the monopolist produces ______
units of output than is socially optimal.
A. 3 fewer
B. 3 more
C. 2 fewer
D. 1 more
Suppose a market is in equilibrium. The area below the demand curve and above the
market price is:
A. total economic surplus.
B. producer surplus.
C. consumer surplus.
D. the loss in total economic surplus.
Whether studying the output of the U.S. economy or how many classes a student will
take, an unifying concept is that:
A. wants are limited and resources are unlimited, so trade-offs are unnecessary.
B. wants are unlimited and resources are scarce, so trade-offs have to be made.
C. wants are limited and resources are unlimited, so trade-offs have to be made.
D. both wants and resources are unlimited.
In a certain economy, the components of planned spending are given by:
C = 500 + 0.8(Y – T) – 300r
Ip = 200 – 400r
G = 200
NX = 10
T = 150
Given the information about the economy above, which expression below gives
autonomous expenditures?
A. 0.8Y
B. [790 – 700r]
C. [910 – 700r]
D. [760 – 700r]
Suppose the most you would be willing to pay for a plane ticket home is $250. If you
buy one for $175, then your economic surplus is:
A. $250.
B. $175.
C. $75.
D. $0.
Product improvements make it difficult for the statisticians who construct the CPI to
distinguish between ______ changes and ______ changes.
A. price; quality
B. quantity; price
C. quantity; quality
D. income; price
A long-term mismatch between the skills of some workers and the jobs available is a
principal cause of ______ unemployment.
A. cyclical
B. structural
C. global
D. frictional
The following data give the dates of successive turning points in U.S. economic activity
and the corresponding levels of real GDP at the time.
Which of the turning points are troughs?
A. (A), (B), and (C)
B. (C), (D), and (E)
C. (A), (C), and (E)
D. (B) and (D)
A movement along a demand curve from one price-quantity combination to another is
called:
A. a change in quantity demanded.
B. a shift in the demand curve.
C. a change in demand.
D. a change in quantity supplied.
Tracy and Amy are playing a game in which Tracy has the first move at X in the
decision tree shown below. Once Tracy has chosen either the top or bottom branch at X,
Amy, who can see what Tracy has chosen, must choose the top or bottom branch at Y or
Z. Both players know the payoffs at the end of each branch.
In the equilibrium of this game:
A. Tracy and Amy both get 125.
B. Tracy gets 75 and Amy gets 150.
C. Tracy gets 300 and Amy gets 200.
D. Tracy gets 25 and Amy gets 225.
Long-lived goods used for producing other goods and services are called:
A. consumption goods.
B. non-market goods.
C. value-added goods.
D. capital goods.
A firm is unlikely to hire a worker if:
A. the additional revenue generated by hiring the worker is less than his or her wage.
B. the additional output a firms gets by hiring the worker is greater than his or her
wage.
C. there are diminishing marginal returns to labor.
D. the minimum wage set by law is less than the equilibrium wage in the market.
Assume that average labor productivity is the same in each country. Based on the
information in the table, which country has the smallest real GDP per capita?
A. Country A
B. Country B
C. Country D
D. Country E
If workers received a 5 percent wage increase and the rate of inflation was 10 percent,
then their real wage:
A. increased.
B. decreased.
C. remained constant.
D. equaled the nominal wage.
This graph shows the cost curves for Moe’s mushroom gathering business, which is
perfectly competitive.
If mushrooms sell for $10 per bushel, and Moe chooses the profit-maximizing quantity,
he will gather:
A. 50 bushels.
B. 20 bushels.
C. 30 bushels.
D. zero bushels.
The optimal number of workers for a perfectly competitive firm to hire occurs when
A. total labor cost equals total revenue.
B. diminishing marginal productivity is first experienced.
C. the wage rate equals the marginal product of the last worker.
D. the wage rate equals the value of marginal product of the last worker.
Suppose that this graph describes the current labor market for high school teachers:
Given an initial wage ofw*, then immediately following a decrease in supply:
A. there will be a shortage of high schoolteachers.
B. there will be an excess supply of high schoolteachers.
C. the reservation wage of each remaining teacher will fall.
D. the equilibrium wage will fall.
Suppose that the EPA has proposed strict controls on the amount of sulfur that diesel
fuel contains. These controls were designed to fully offset the cost of pollution
generated by diesel fuel vehicles. The effect of the regulation is estimated to increase
the equilibrium price of a gallon of diesel fuel by 10 cents. Assuming that the supply of
diesel fuel has a positive slope and demand has a negative slope, one can infer that the
EPA determined that:
A. the external benefit of using diesel fuel is less than 10 cents.
B. the external cost of using diesel fuel is greater than 10 cents.
C. the external cost of using diesel fuel is less than 10 cents.
D. the external cost of using diesel fuel is equal to 10 cents.
Suppose males place less importance on the social approval of their job and more on the
income they receive. The gender wage gap would therefore be ______ than if this
difference did not exist because of ______.
A. smaller; compensating wage differentials
B. larger; compensating wage differentials
C. larger; employer discrimination
D. smaller; employee discrimination
If a certain automotive part can be purchased in Mexico for 32 pesos or in the United
States for $5.25, and if the nominal exchange rate is 8 pesos per U.S. dollar, then the
automotive part:
A. is more expensive in Mexico.
B. is more expensive in the United States.
C. is less expensive in the United States.
D. costs the same in Mexico and the United States.
Based on the information in the table, how big is the labor force?
A. 576,000
B. 720,000
C. 800,000
D. 1,000,000
If all prices, including the price of beef, increase by 3%, then the relative price of beef
has ______ and inflation _____.
A. increased; has occurred
B. increased; has not occurred
C. remained constant; has occurred
D. remained constant; has not occurred
Suppose Vinnie is looking for a month-long vacation rental in San Diego. The first
vacation rental Vinnie finds costs $800 per month. If he looks for another vacation
rental, there’s a 75 percent chance he’ll find another one for $800 per month and a 25
percent chance he’ll find one for $600 per month. Other than price, all of the vacation
rentals are identical. Vinnie’s marginal cost of searching for an additional vacation
rental is $45. For Vinnie, the expected value of searching for another vacation rental is:
A. $200.
B. $50.
C. $45.
D. $5.
The Boy Scouts have so far sold 100 tickets for their upcoming raffle, but they sell an
additional 12 tickets every day. The ______ is a stock variable, and the ______ is a flow
variable.
A. number of tickets sold each day; number of tickets sold so far
B. number of tickets sold so far; total number of tickets sold by the time of the raffle
C. number of tickets sold each day; total number of tickets available
D. total number of tickets sold by the time of the raffle; number of tickets sold each day
Who from among the following is counted as employed?
A. Ray wants to work forty hours per week, but can only find work for twenty hours per
week.
B. Anna Marie spends all of her time taking care of her children at home.
C. Frank would like to work, but has not looked for work because he believes no jobs
are available.
D. Martin has been offered several jobs in the past four weeks, but has chosen not to
accept any of the offers.
The inflation rate can be calculated as the percentage change in:
A. real GDP.
B. nominal GDP.
C. the CPI.
D. the exchange rate.
Which of the following will cause a decrease the supply of jeans?
A. An increase in the wages paid to workers who make jeans.
B. A decrease in the demand for jeans.
C. A decrease in the price of jeans.
D. A decrease in the expected future price of jeans.
The figure below shows Becky’s daily production possibilities curve for dresses and
skirts.
Of the labeled points, only ______ are efficient.
A. T and U
B. X, Y, and Z
C. W, X, Y, Z, and V
D. W, X, Y, Z, V, and T
For many pure public goods like fireworks displays, weather forecasts, and television
broadcasts the marginal cost of serving one more consumer is ______, and the optimal
quantity of the public good occurs when ______.
A. zero; provision is infinite.
B. determined by average cost rather than marginal cost; price equals average cost.
C. greater than the average cost; the government provides the good.
D. zero; the marginal benefit of the public good equals zero.
Saving equals:
A. current spending minus current income.
B. wealth minus assets.
C. assets minus liabilities.
D. current income minus spending on current needs.