1)
Refer to the above market for money diagrams. If the interest rate was at 3 percent,
people would:
A.sell bonds, which would cause bond prices to fall and the interest rate to rise.
B.buy bonds, which would cause bond prices to fall and the interest rate to rise.
C.sell bonds, which would cause bond prices to rise and the interest rate to rise.
D.buy bonds, which would cause bond prices to rise but have an uncertain effect upon
the interest rate.
2)
Refer to row 1 in the above table. The number appropriate for space W is:
A.4
B.6
C.10
D.12
3) if two goods are complements:
a.they are consumed independently.
b.an increase in the price of one will increase the demand for the other.
c.a decrease in the price of one will increase the demand for the other.
d.they are necessarily inferior goods.
4) other things equal, which of the following would increase the rate of economic
growth, as measured by changes in real gdp?
a.a decline in the average length of the work week.
b.a decrease in the labor force participation rate.
c.an increase in the size of the working age population.
d.a decline in the amount of capital per worker.
5) In “Slicing the Pizza” the shrinkage of the pizza refers to the:
A.fact that poor people are not helped by the income maintenance system.
B.efficiency losses-the losses of output and income-associated with the tax-transfer
system.
C.tendency of rich people in developing nations to hoard their wealth overseas.
D.failure of the Internal Revenue Service to collect all the tax revenues owed by
taxpayers.
6) In the table below are data on five different industries and the market shares for each
of the firms in the industry. Assume that there is no foreign competition, entry into the
industry is difficult, and that no firm in each industry is on the verge of bankruptcy. In
the column to the right of the table, calculate the Herfindahl index.
(a)Which industry has the most monopoly power and which industry has the least
monopoly power?
(b)If the sixth firm in the automotive industry sought to merge with the fifth firm in that
industry, would the government be likely to challenge the merger?
(c)Would a conglomerate merger between the first firm in the computer industry and the
second firm in the textiles industry likely be challenged by the government?
7) Which of the following measurement issues make interpretation of U.S. poverty rates
difficult?
A.Poverty statistics measure income rather than consumption, and some families may
be able to consume above the official poverty line.
B.The high cost of living in rural areas tends to result in the understatement of poverty.
C.Most people below the poverty line have substantial unreported income.
D.The poverty rate is adjusted for every urban and rural area, so people’s poverty status
changes whenever they move.
8) The proposed monetary rule that would specify how the Fed should respond to
changes in GDP and inflation rates is called the:
A.Keynesian rule.
B.Friedman rule.
C.Taylor rule.
D.Lucas rule.
9) the advent of dvds has virtually demolished the market for videocassettes. this is an
example of:
a.creative destruction.
b.derived demand.
c.capital accumulation.
d.the difference between normal and economic profits.
10)
refer to the above diagram. demand is relatively inelastic:
a.at price p3.
b.at any price below p2.
c.in the p2p4 price range.
d.in the p2p3 price range.
11) Assuming a competitive resource market, a firm is hiring resources in the
profit-maximizing amounts when the:
A.firm’s total outlay on resources is minimized.
B.marginal revenue product of each resource is equal to its price.
C.price of each resource employed is the same.
D.marginal revenue product of the last unit of each resource hired is the same.
12) suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at
$3.90 per unit. the monopolist will produce and sell the sixth unit if its marginal cost is:
a.$4 or less.
b.$3.90 or less.
c.$3.50 or less.
d.$3.40 or less.
13)
Refer to the above table. If per capita income increases by 10 percent over five years in
each of the nations shown, the per capita income gap between country C and country A:
A.will remain the same.
B.will rise from $30,934 to $34,027.
C.may rise or fall depending on the rate of population growth.
D.will rise from $31,555 to $34,710.
14)
refer to the above diagram. the vertical intercept:
a.is 40.
b.is 50.
c.is 60.
d.cannot be determined from the information given.
15) A contractionary fiscal policy is shown as a:
A.rightward shift in the economy’s aggregate demand curve.
B.rightward shift in the economy’s aggregate supply curve.
C.movement along an existing aggregate demand curve.
D.leftward shift in the economy’s aggregate demand curve.
16) Which of the following market structures do economists generally agree is the least
conducive to R&D and innovation?
A.monopolistic competition
B.pure competition
C.pure monopoly
D.oligopoly