1) A decrease in the reserve ratio increases the:
A.amount of actual reserves in the banking system.
B.amount of excess reserves in the banking system.
C.number of government securities held by the Federal Reserve Banks.
D.ratio of coins to paper currency in the economy.
2) The mainstream view is that macro instability is caused by:
A.erratic growth of the nation’s money supply.
B.government interference in the economy.
C.significant changes in investment spending.
D.consumption “booms” and “busts.”
3) which of the following is not a barrier to entry?
a.patents
b.x-inefficiency
c.economies of scale
d.ownership of essential resources
4) a subsidy:
a.should be provided when there are external costs.
b.should be provided when there are external benefits.
c.should be provided only when a public good is being produced.
d.is appropriate when firms are guilty of pollution.
5) the production of durable goods varies more than the production of nondurable goods
because:
a.durables purchases are nonpostponable.
b.durables purchases are postponable.
c.the producers of nondurables have monopoly power.
d.producers of durables are highly competitive.
6) refer to the above data. if a new production technique is developed that enables a
firm to produce 20 units of output with 3 units of land, 3 of labor, 1 of capital, and 2 of
entrepreneurial ability, this technique would:
a.not be adopted because, although it reduces production costs, it does not increase
profit.
b.be adopted because it would lower production costs and increase economic profit.
c.not be adopted because it entails higher production costs than other available
techniques.
d.be adopted, even though economic profits would be reduced slightly.
7) which of the following is not a possible source of natural monopoly?
a.large-scale network effects
b.simultaneous consumption
c.greater use of specialized inputs
d.rent-seeking behavior
8) the study of economics is primarily concerned with:
a.keeping private businesses from losing money.
b.demonstrating that capitalistic economies are superior to socialistic economies.
c.choices that are made in seeking the best use of resources.
d.determining the most equitable distribution of society’s output.
9) what do the income effect, the substitution effect, and diminishing marginal utility
have in common?
a.all are required to explain the utility-maximizing position of a consumer.
b.they are all empirically measurable.
c.they all help explain the upsloping supply curve.
d.they all help explain the downsloping demand curve.
10) The principle that under some circumstances majority voting fails to make
consistent choices reflecting the community’s underlying preference is best
demonstrated by the:
A.paradox of voting.
B.concept of logrolling.
C.median-voter model.
D.Coase theorem.