The banking industry is heavily regulated because
a. banking is a monopoly industry.
b. most banks are owned by government agencies.
c. bankers do what is best for their stockholders, not necessarily what is best for the
economy.
d. All of the above are correct.
Affirmative action laws require employers to hire specified numbers of minorities.
a. True
b. False
Which of the following was true regarding sub-prime mortgages that were popular in
2005-2006?
a. More than 90% of these loans were made by regulated banks.
b. Bankers expected higher default rates on these loans.
c. They were generally fixed rate loans.
d. all of the above
The slope of the aggregate supply curve is
a. perfectly vertical.
b. perfectly horizontal.
c. upward.
d. downward.
Rent controls are most often designed to protect the investment made by apartment
building owners.
a. True
b. False
Table 11-2
In Table 11-2, marginal revenue at the profit-maximizing output is how much?
a. $5
b. $7
c. $8
d. $110
Laissez faire refers to a program of minimal interference in the market system.
a. True
b. False
If a firm is using optimal input proportions, it is minimizing its costs.
a. True
b. False
Labor productivity refers to the total amount of output a worker produces in some
period of time (an hour, a week, a month, a year).
a. True
b. False
Under a gold standard, a balance of payments deficit automatically
a. raised interest rates.
b. decreased exports.
c. increased domestic prices.
d. increased imports.
The worst post-World War II recession in the United States occurred in
a. 1964.
b. 1973.
c. 1981.
d. 2007.
Abstract terms like “cost of living” and “price level” are meaningless to ordinary
individuals.
a. True
b. False
You have just bought a used car, and drive away satisfied that you’ve made a good deal
on the purchase. What would an economist say about your “gain” on the deal?
a. Your gain has clearly meant that the seller lost on the deal.
b. The seller has clearly gained, and you have actually lost on the deal.
c. Both you and the seller have gained something.
d. If your gain is too large, then the deal should be re-negotiated.
e. If the seller’s loss is too large, then the deal should be re-negotiated.
The appropriate “medicine” for correcting payments imbalances under a fixed exchange
rate system is
a. inflation for deficit countries and recessions for surplus countries.
b. no change for surplus countries, tax cuts for deficit countries.
c. inflation for surplus countries and recessions for deficit countries.
d. sales of gold for deficit countries and revaluations for surplus countries.
If suppliers of garbage collection services charged the full costs of providing the
service, the supply curve would
a. change to a positive slope.
b. change to a negative slope.
c. shift to the left.
d. shift to the right.
In 2013, plowback accounted for nearly ____ in corporate financing.
a. $65 billion
b. $100 billion
c. $2 trillion
d. −$2 billion
It is possible to analyze education decisions in a manner similar to the decision to
acquire more
a. capital.
b. leisure.
c. work.
d. goods and services.
Which of the following is a source of income inequality?
a. differences in ability
b. differences in work intensity
c. risk taking
d. all of the above
A free market system tends to
a. produce a fairly equal distribution of income.
b. pay people exactly what they are worth.
c. produce a relatively unequal distribution of income.
d. pay most people more than they are worth, at the expense of reducing firms’ profits.
Marginal land is on the borderline of being used in production.
a. True
b. False
An explanation for the slowdown in U.S. productivity growth in the 1973-1995 period
was higher oil prices caused by
a. the CIA.
b. the WTO.
c. the IMF.
d. OPEC.
Most economists feel that overly strict financial regulation from 2000 to 2006
contributed to the financial crisis of 2007-2009.
a. True
b. False
If the production of a good generates a detrimental externality, then at that level of
production of the good under perfect competition,
a. MU = MSC.
b. P < MPC.
c. MPC < MSC.
d. MPC > MSC.
A production possibilities curve has a downward slope because
a. increased production of one good always reduces the additional profit of production.
b. decreased production of one good is associated with lower profit from that good.
c. economists have a negative view of life and human nature.
d. increased production of one good always reduces production of the other.
e. increased production of one good necessarily causes production of other goods to
increase.
The American Bar Association administers the bar examinations that prospective
lawyers must pass before being allowed to practice law. The exam system thus allows
the ABA to act like a
a. monopsony.
b. union that can restrict the supply of lawyers.
c. union that can increase the number of lawyers.
d. None of the above is correct.
When inflation occurs, consumers
a. realize gains in their wealth.
b. increase spending to catch up with higher prices.
c. automatically shift the consumption line upward.
d. suffer a decrease in real wealth.
If demand for a seller’s product is elastic, a price decrease will increase total revenue.
a. True
b. False
There are several reasons why incomes are unequal, including differences in luck,
experience, and schooling.
a. True
b. False
A principle that economists emphasize is that the ____ of decision makers are always
limited.
a. ideas
b. goals
c. resources
d. opportunities
e. offices
The aggregate supply curve slopes upward when the real wage falls initially as the price
level rises.
a. True
b. False
The unemployment rate is the number of unemployed people, expressed as
a. a ratio of total employed to the population.
b. a ratio of unemployed to the total employed.
c. a percentage of the labor force.
d. a percentage of the population.
If trade between two countries is voluntary, one can expect that
a. one country’s gain is necessarily the other’s loss.
b. one country will exploit the other one.
c. neither country really gains from trade.
d. the larger country will always gain at the expense of the smaller.
e. both countries expect to gain something.
The purchasing power parity theory is useful in making ____ predictions about
exchange rates and their fluctuations.
a. long-run
b. intermediate-run
c. medium-run
d. short-run
The concept of economic efficiency refers to the size of the “economic pie” whereas the
concept of equality refers to how the “pie” is distributed.
a. True
b. False