1) When the inflation rate is 4 percent and the nominal interest rate on long-term
government bonds is 8 percent, the real interest rate is 12 percent.
2) Firms are more likely to collude when the economy is in a recession.
3) People feel losses about 2.5 more intensely than they feel gains.
4) Large, well-established firms are more likely to use retained earnings to finance
R&D, while small start-up firms are more likely to rely on venture capital.
5) In a market system, entrepreneurs start up businesses in order to earn a high salary.
6) Technological advance may lead to new monopolies, and may also destroy existing
monopolies.
7)
Refer to the diagram. If this firm is producing at the profit-maximizing level of output
in the short run, then it is achieving productive and allocative efficiency.
8) In terms of trade volume, China is the largest trading partner of the United States.
9) A child is given $4 of pocket money to be spent on either hard candies or chocolates.
Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived
from each product are as shown in the following table:
Refer to the above table. Which combination would give the child the maximum utility
out of spending $4?
A.6 chocolates and 2 hard candies
B.4 chocolates and 3 hard candies
C.2 chocolates and 4 hard candies
D.0 chocolates and 5 hard candies
10) In which instances will total revenues decline?
A.Price rises and Ed equals .41
B.Price rises and demand is of unit elasticity
C.Price falls and demand is elastic
D.Price rises and Ed equals 2.47
11) Assume that U.S. and European governments adopt a system of flexible exchange
rates, and the figure below shows the market for euros.
Refer to the graph above. If more people in Europe decide to purchase U.S. cars, what
effect will this have on the market for euros?
A.Demand will decrease
B.Demand will increase
C.Supply will increase
D.Supply will decrease
12) Theft and burglary:
A.can be viewed as attempts to maximize utility, given certain marginal costs and
marginal benefits.
B.are examples of irrational behavior.
C.are applications of the law of increasing opportunity cost.
D.are less economically rational than crimes of passion and violence.
13) When the exchange rate between pounds and dollars moves from $2 = 1 pound to
$1 = 1 pound, we say that the dollar has:
A.Depreciated
B.Appreciated
C.Inflated
D.Deflated
14) Which of the following is least likely to be considered economic immigration?
A.Bob migrates to Canada to improve his access to health care.
B.Manuela migrates to the United States to open an authentic Italian cooking school.
C.Myklos migrates to Switzerland because the public pension system is more generous
than in his home country.
D.Alexander migrates to the United States because his political writings are censored in
his home country.
15) Which of the following is a labor resource?
A.A computer programmer.
B.A computer.
C.Silicon (sand) used to make computer chips.
D.A piece of software used by a firm.
16) Airlines charge business travelers more than leisure travelers because there is a
more:
A.Elastic supply of business travel
B.Inelastic supply of business travel
C.Elastic demand for business travel
D.Inelastic demand for business travel
17) Which of the following is correct about the U.S. tax system?
A.The primary federal tax system is regressive, while the primary state and local tax
systems are progressive.
B.Both the primary federal tax system and the primary state and local tax systems are
regressive.
C.The primary federal tax system is progressive, while the primary state and local tax
systems are regressive.
D.Both the primary federal tax system and the primary state and local tax systems are
progressive.
18) Jennifer buys a piece of costume jewelry for $33 for which she was willing to pay
$42. The minimum acceptable price to the seller, Nathan, was $30. Jennifer
experiences:
A.a consumer surplus of $12 and Nathan experiences a producer surplus of $3.
B.a producer surplus of $9 and Nathan experiences a consumer surplus of $3.
C.a consumer surplus of $9 and Nathan experiences a producer surplus of $3.
D.a producer surplus of $9 and Nathan experiences a producer surplus of $12.
19) Mutual interdependence would tend to limit control over price in which market
model?
A.Monopolistic competition
B.Pure competition
C.Pure monopoly
D.Oligopoly
20) Broadly defined, technological advance:
A.can occur in the short run, long run, or very long run.
B.comprises new and improved goods and services and/or new and improved ways of
producing or distributing them.
C.includes invention but not innovation or diffusion.
D.includes product innovation but not process innovation.
21) How does the pricing of medical care in the United States affect the quantity
consumed?
22) Describe two types of specialization in production.
23) What is the DRG system?
24) In what cases would the market share held by the dominant firm be or not be an
especially relevant or important factor in determining whether a firm has too much
market power?
25) Describe the origins and reasons for the establishment of health savings accounts.
26) (Consider This) What is the Prisoners Dilemma? How is this dilemma similar to the
one for two firms competing for market share as described in the text?
27) How will a change in productivity change the demand for a resource? What three
factors will affect productivity?
28) Discuss the political pressures associated with fiscal policy.
29) Discuss the allocation of direct foreign aid from IACs to the lowest-income DVCs
and its issues.
30) What were four major provisions of the Temporary Assistance to Needy Families
(TANF) reform of the welfare system?