Table 2-2
Production choices for Nadia’s Neckware
Refer to Table 2-2. Assume Nadia’s Neckware only produces ascots and bowties. A
combination of 16 ascots and 6 bowties would appear
A) along Nadia’s production possibilities frontier.
B) inside Nadia’s production possibilities frontier.
C) outside Nadia’s production possibilities frontier.
D) at the horizontal intercept of Nadia’s production possibilities frontier.
Which of the following is an example of an economic trade-off that a firm has to make?
A) whether it is cheaper to produce with more machines or with more workers
B) deciding why consumers want its products
C) whether or not consumers will buy its products
D) deciding what profit margin it desires for its products
GDP in a country grew from $10 billion to $14 billion over the span of 5 years. The
average annual growth rate of GDP was
A) 4%.
B) 7%.
C) 10%.
D) 40%.
An increase in the price of MP3 players will result in
A) a smaller quantity of MP3 players supplied.
B) a larger quantity of MP3 players supplied.
C) a decrease in the demand for MP3 players.
D) an increase in the supply of MP3 players.
If Brazil has a comparative advantage relative to Cuba in the production of sugar cane,
then
A) the average cost of production for sugar cane is lower in Brazil than in Cuba.
B) the implicit costs of production for sugar cane are lower in Brazil than in Cuba.
C) the opportunity cost of production for sugar cane is lower in Brazil than in Cuba.
D) the explicit cost of production for sugar cane is lower in Brazil than in Cuba.
If the demand for letters written by Abraham Lincoln is higher than the demand for
letters written by John Wilkes Booth, what would have to be true for the market
equilibrium prices for these letters to be equal?
A) The supply of Lincoln letters would have to be less than the supply of Booth letters.
B) The supply of Booth letters would have to be less than the supply of Lincoln letters.
C) The supply of Lincoln letters and the supply of Booth letters would have to be equal.
D) If the demand for Lincoln letters is greater than the demand for Booth letters, the
market equilibrium price for Lincoln letters will always be greater than the market
equilibrium price for Booth letters.
Figure 15-1
Refer to Figure 15-1. In the figure above, the money demand curve would move from
Money demand1 to Money demand2 if
A) real GDP decreased.
B) the price level increased.
C) the interest rate decreased.
D) the Federal Reserve sold Treasury securities.
Which of the following is one reason for the decline in aggregate demand that led to the
recession of 2007-2009?
A) falling oil prices
B) an increase in net exports
C) the end of the housing bubble
D) a decline in government spending
In 2013, infant mortality in the United States was ________ per 1,000 live births.
A) 5.9
B) 45.4
C) 82.7
D) 228.9
With which of the following statements would a “real business cycle” theorist most
closely agree?
A) “Monetary policies have greatest impact on real GDP when they are anticipated.”
B) “Expansionary monetary policy allows the central bank to control inflation and
unemployment simultaneously.”
C) “Wages adjust slowly to changes in inflation as long as expectations are formed
rationally.”
D) “Technological shocks to the economy explain deviations of real GDP from its
potential level.”
Robert Lucas, a Nobel laureate in economics, argues that there are increasing returns to
A) knowledge capital.
B) physical capital.
C) financial capital.
D) human capital.
Proponents of the new classical macroeconomics do not believe which of the
following?
A) Expansionary monetary policy can be an effective policy tool.
B) Workers and firms use information contained in Fed policy to form inflation
expectations.
C) Wages and prices will adjust rapidly in the economy.
D) The economy will normally be at its potential level.
An HMO hires radiology services from India to cut costs. If all else remains equal, this
will
A) decrease net exports.
B) decrease the balance of trade.
C) increase the current account balance.
D) decrease the financial account.
A recession begins with a(n) ________ in spending by firms on capital goods and a(n)
________ in spending on durable goods by households.
A) increase; decrease
B) increase; increase
C) decrease; increase
D) decrease; decrease