Data for an economy show that the unemployment rate is 6 percent, the participation
rate is 60 percent, and 200 million people 16 years or older are not in the labor force.
How many people are in the working-age population in this economy?
A. 333 million
B. 500 million
C. 800 million
D. 1.20 billion
Money market mutual funds are ______ the M1 measure of money and ______ the M2
measure of money.
A. included in; excluded from
B. included in; included in
C. excluded from; excluded from
D. excluded from; included in
The fundamental reason firms outsource is that:
A. low-wage workers in other countries are more productive than are U.S. workers.
B. hiring low-wage workers overseas reduces firms’ costs.
C. outsourcing increases employment overseas.
D. U.S. workers cannot perform the tasks performed by workers in other countries.
You have two options for how to spend the afternoon. You can either go see a movie
with your roommate or work as a tutor for the Math Department. From experience, you
know that going to see a movie gives you $20 worth of enjoyment, and with your
student discount, a movie ticket only costs $12. If you spend the afternoon working as a
math tutor, you will get paid $45. On a typical day, you wouldn’t be willing to spend the
afternoon working as a math tutor for less than $35. Should you go see a movie or work
as a math tutor?
A. You should work as a math tutor.
B. You should go to the movies.
C. You should do neither.
D. Both options are equally good.
The market value of all domestically produced final goods and services arealso equal to
the total amount spent by ______________ less spending on imported goods and
services.
A. households and firms
B. households, firms, and governments
C. households, firms, and the foreign sector
D. households, firms, governments, and the foreign sector
Refer to the figure below. Suppose a consumer protection group convinces the
government to impose price controls in this market. If the government requires cheese
to be sold for less than the equilibrium price, then, relative to before the price controls,
total consumer surplus in the market:
A. would increase because consumers would be able to purchase the same quantity of
cheese at a lower price.
B. would increase because consumers would be able to purchase more cheese at a lower
price.
C. could either increase or decrease.
D. would decrease because of the reduction in equilibrium price.
According to the textbook, the real mean income of the top 5% of families increased by
______ percent from 1980 to 2012.
A. 10
B. 13
C. 90
D. 55
Macroeconomics differs from microeconomics in that macroeconomics focuses on:
A. individual choices and group behavior in individual markets.
B. the performance of national economies and ways to improve that performance.
C. production in specific markets.
D. prices in specific markets.
If a monopolist calculates its marginal revenue to be $15 and marginal cost to be $16,
then the monopolist should:
A. lower its price.
B. increase its output.
C. leave its output and price unchanged.
D. decrease its output.
Policymakers’ use of stabilization policy to eliminate output gaps is more appropriate
when an economy self corrects very ______ and when the output gap is very ____.
A. rapidly; large
B. rapidly; small
C. slowly; small
D. slowly; large
The tendency for nominal interest rates to be high when inflation is high and low when
inflation is low is known as:
A. the consumer price index.
B. deflating.
C. shoe leather costs.
D. the Fisher effect.
Refer to the figure below.
Based on the figure and starting from an initial short-run equilibrium where output
equals 20,000, if autonomous consumption spending increases by 1,000, then the new
short-run equilibrium output (Y) is equal to:
A. 24,000.
B. 6,000.
C. 14,000.
D. 16,000.
A perfectly competitive firm’s supply curve is the portion of its ______ cost curve that
lies above its ______ cost curve.
A. average total; marginal
B. average variable; marginal
C. marginal; average total
D. marginal; average variable
Jody has purchased a non-refundable $75 ticket to attend a Miley Cyrus concert on
Friday night. Subsequently, she is asked to go to out dinner at no expense to her. If she
uses cost-benefit analysis to choose between going to the concert and going out to
dinner, the opportunity cost of going out to dinner should include:
A. only the entertainment value of the concert.
B. the cost of the ticket plus the entertainment value of the concert.
C. only the cost of concert ticket.
D. neither the cost of the ticket nor the entertainment value of the concert.
The financial system consists of financial _____, such as commercial banks, and
financial markets, such as the stock market.
A. corporations
B. allocations
C. intermediaries
D. brokers
According to the law of demand, when the price of shoes ______ people will consume
______ shoes.
A. rises; more
B. falls; more
C. rises; the same amount
D. falls; the same amount
Chris earns $1,500 per week and spends $1,000 per week on living expenses, puts $200
in a savings account, and buys $300 worth of shares in a stock mutual fund. Chris’s
saving is _____, and Chris’s saving rate is _____.
A. $200; 13.3%
B. $200; 20.0%
C. $300; 20.0%
D. $500; 33.3%
In Macroland, 500,000 of the 1 million people in the country are employed. Average
labor productivity in Macroland is $20,000 per worker. Real GDP per person in
Macroland totals:
A. $1,000.
B. $10,000.
C. $15,000.
D. $40,000.
The general rule governing the hiring of workers is to:
A. minimize average labor costs.
B. equate marginal labor costs to marginal labor benefits.
C. equate total labor costs to total labor benefits.
D. maximize the marginal product of labor.
Goods and services that are consumed by the ultimate user are called ______ goods and
services.
A. intermediate
B. final
C. value added
D. nominal
Suppose the table below describes the relationship between price and quantity
demanded for a monopolist.
The marginal revenue of the fifth unit of output is:
A. $30.
B. $6.
C. $2.
D. -$2.
If a consumer reallocates his or her spending away from good A and towards good B,
then the consumer’s total utility will increase if:
A. MUA/PA > MUB/PB
B. MUA/PA < MUB/PB
C. MUA/PA > 0 and MUB/PB > 0
D. MUA/PA < 0 and MUB/PB < 0
One potential problem with using fiscal policy to close recessionary output gaps is that:
A. sustained government deficits can be harmful to long-run economic growth.
B. decreased government spending can cause inflationary pressure to build.
C. reductions in interest rates can reduce savings and, therefore, investment.
D. it may be offset by automatic stabilizers.
Higher nominal interest rates ______ the amount of money demanded and a higher
price level ______ the amount of money demanded.
A. increase; increases
B. increase; decreases
C. decrease; increases
D. decrease; decreases
Refer to the figure below.
If a price ceiling were imposed at point G, then producer surplus would be represented
by the area ______.
A. DBC
B. DGF
C. 0GFQ2
D. 0DFQ2
The aggregate demand curve shifts when there are changes in:
A. the inflation rate.
B. planned spending that are not caused by changes in output or the inflation rate.
C. planned spending that are caused only by changes in output or the inflation rate.
D. real GDP.
In a small town of 100 people, there are 10 children under 16, 10 retired people, 60
people with full-time jobs, 3 people with part-time jobs, 3 full-time students over 16,
and 4 full-time homemakers. The remaining people did not have jobs, but wanted jobs.
What is the unemployment rate in this town?
A. 10.0%
B. 11.0%
C. 13.7 %
D. 14.5%
Espresso Yourself Coffee Shop hires workers in a competitive labor market to make
coffee. The ingredients required to make each cup of coffee cost 50 cents. The coffee
shop’s hourly output of coffee varies with the number of workers hired, as shown in the
table below. Each cup of coffee sells for $2.00.
The marginal product of the fourth worker is ______ cups of coffee per hour.
A. 70
B. 60
C. 17.5
D. 10
The following graph depicts demand.
The price elasticity of demand at point C is:
A. 3/16.
B. 16/3.
C. 3/4.
D. 3/8.
All else being equal, if the prospect of a recession leads the Federal Reserve to ease
monetary policy, the equilibrium value of the exchange rate for the U.S. dollar will:
A. rise.
B. fall.
C. remain fixed.
D. either rise or fall depending on whether the supply or demand for dollars changes
more.
Suppose you bought three tickets to a concert in advance at the University ticket
window. At the last minute one friend cancelled, so you could use only two of those
tickets. You scalped, or sold, the third ticket just outside the entrance to the concert for
slightly more than the price you had originally paid. Which transaction occurred in a
market?
A. Only the advance purchase and sale at the University window was a market
transaction.
B. Only the transaction that occurred the evening of the concert was a market
transaction.
C. Both transactions, the one at the University ticket window as well as the sale at the
concert entrance, occurred in markets.
D. Neither the advance sale at the University ticket window nor the sale the night of the
concert occurred in markets.