1) The Federal government has a large public debt that it finances through borrowing.
As a result, real interest rates are higher than otherwise and the volume of private
investment spending is lower. This illustrates the:
A.equation-of-exchange effect.
B.paradox of thrift.
C.crowding-out effect.
D.net export effect.
2) As applied to agriculture, the special-interest effect suggests that:
A.urban legislators support farm legislation in exchange for rural legislators supporting
urban-oriented legislation.
B.a relatively small number of farmers receive large benefits at the expense of a much
larger group of taxpayers who individually suffer small losses.
C.politicians support farm subsidies because most of the associated costs are hidden
rather than explicit.
D.the size of farm subsidies should vary directly with a farmer’s earned income.
3) What are the political and economic limitations upon (a) fiscal policy and (b)
monetary policy?
4) “offshoring:”
a.is the movement of money to foreign bank accounts.
b.is the shifting work previously done by domestic workers to workers located in other
countries.
c.applies only to manufactured goods.
d.hurts all domestic industries in a country.
5) the following marginal utility data for products x and y. assume that the prices of x
and y are $4 and $2 respectively and that the consumer’s income is $18.
refer to the above data. if the price of x decreases to $2, then the utility-maximizing
combination of the two products is:
a.2 of x and 5 of y
b.4 of x and 6 of y
c.6 of x and 3 of y
d.4 of x and 5 of y
6) In a labor market generally biased against African-Americans, a reduction in the
collective discrimination coefficients of employers will:
A.reduce the African-American wage rate, increase African-American employment, and
lower the actual African-American-white wage ratio.
B.reduce the African-American wage rate, decrease African-American employment,
and lower the actual African-American-white wage ratio.
C.increase the African-American wage rate, increase African-American employment,
and increase the actual African-American-white wage ratio.
D.increase the African-American wage rate, reduce African-American employment, and
increase the actual African-American-white wage ratio.
7)
refer to the above diagram. economists would argue that health care should be provided
to patients in:
a.some amount less than q1.
b.amount q1.
c.some amount between q1and q2.
d.amount q2.
8) in moving along a given budget line:
a.the prices of both products and money income are assumed to be constant.
b.each point on the line will be equally satisfactory to consumers.
c.money income varies, but the prices of the two goods are constant.
d.the prices of both products are assumed to vary, but money income is constant.
9) (Last Word) Major countries in which citizens hold and use large quantities of U.S.
dollars are:
A.Germany, England, and France.
B.Russia, Argentina, and Turkey.
C.Canada, Australia, and New Zealand.
D. Egypt, Spain, and Italy.
10) marginal cost is the:
a.rate of change in total fixed cost that results from producing one more unit of output.
b.change in total cost that results from producing one more unit of output.
c.change in average variable cost that results from producing one more unit of output.
d.change in average total cost that results from producing one more unit of output.
11) What is the dilemma of regulation in the case of a regulated monopoly?
12) What is national income? List its components.
13) What are the major differences between industrial regulation and social regulation?
Cite examples of Federal commissions that address the two types of regulation.
14) Define the consumption and saving schedules.
15) Why would a farmer continue farming in the short run, even though his ATC was
greater than the price he received for his crops?
16)
The graph below shows a change in the demand for Swiss francs from D1 to D2. What
would happen when D1 shifted to D2 under a flexible exchange rate system compared
to a fixed exchange rate system?
17) The following table shows the price of a specific stereo receiver for a five-year
period. Using Year 1 as the base year, calculate the price index for each year.