If people speculate that a run on one bank will cause a run on all banks in the financial
system, and this speculation proves accurate, then the financial system would
experience what is known as a
A) commodity crisis.
B) securitization meltdown.
C) bank panic.
D) institutional death spiral.
If net foreign investment in the United States is positive, how must national saving and
domestic investment be related? (Assume that the capital account is zero and net
transfers are zero.)
A) Domestic investment and national saving must also be positive.
B) Domestic investment must be less than national saving.
C) Domestic investment must be greater than national saving.
D) Domestic investment can be greater than or less than national saving.
How do the owners of a partnership relate to the business?
A) The owners and the business are not separate legal entities.
B) The owners and the business are separate legal entities.
C) The assets of the owners are considered separate from the asset of the business.
D) None of these describe the legal relationship of the owners to the business.
The automatic mechanism ________ the price level in the case of ________ and
________ the price level in the case of ________.
A) raises; recession; lowers; expansion
B) raises; expansion raises; recession
C) lowers; expansion; lowers; recession
D) lowers; recession; raises; expansion
Why is a typical person likely to gather more information when buying a new car than
when voting for a member of Congress?
A) because a person’s preferences are more likely to be met with little effort in the
political sphere, but this is not the case when buying a car in the private marketplace
B) because it is less costly to acquire information about consumer items than it is about
political candidates
C) because buying a new car affects a person more immediately and personally
compared to voting for a member of Congress; in the latter, a person’s vote is only one
of many voters and therefore, not likely to have a large impact on the outcome
D) because the effects of buying a car are long term while a member of Congress has a
relatively short tenure
Consider the market for blackjack dealers in Las Vegas. In each of the following cases,
explain what happens to the equilibrium wage rate and the quantity of blackjack dealers
hired.
a. Three new large resort casinos open in Las Vegas.
b. Fewer students are attending classes to learn to become blackjack dealers.
c. Traditionally, blackjack dealing is a field that attracts foreign workers. However,
changes in immigration laws have made it more difficult for foreign workers to come to
Las Vegas to obtain jobs. The demand for blackjack dealers, however, does not change.
d. Advances in technology have increased the popularity of electronic blackjack
machines and decreased the popularity of live table games which require the use of a
dealer.
Table 4-7
Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley.
If a minimum wage of $12.50 an hour is mandated, what is the quantity of labor
demanded?
A) 80,000
B) 550,000
C) 630,000
D) 1,180,000
Successful price discrimination cannot take place if
A) the market is perfectly competitive.
B) the market can be segmented into different buyer groups.
C) customers are not able to resell the product.
D) the demand curve facing the firm is downward-sloping.
An increase in frictional unemployment will
A) shift the long-run Phillips curve to the right.
B) increase the natural rate of unemployment.
C) shift the short-run Phillips curve to the right.
D) All of the above are correct.
E) None of the above is correct.
Robert Lucas argues that there are ________ returns to human capital, and these
productivity increases are not completely captured by individuals as they decide how
much education to purchase. As a result, the market produces ________ education and
training.
A) increasing; too much
B) decreasing; too much
C) increasing; too little
D) decreasing; too little
The unemployment rate equals the number of unemployed divided by the ________, all
times 100.
A) number of employed
B) labor force
C) working-age population
D) total population
Which of the following is a normative economic statement?
A) Rising global demand for diesel and heating oil has led to increases in the price of
crude oil.
B) With falling home prices and rising mortgage interest rates, the amount of
foreclosures has increased.
C) The federal government is considering raising the gasoline tax to promote the use of
public transportation.
D) Fashion designers should be allowed to copyright designs to promote innovation.
What is the “omitted variable” problem in determining cause and effect?
A) It is a problem that arises when an insignificant variable is given too much weight in
an economic analysis leading to skewed conclusions about cause and effect.
B) It is a problem that arises when a significant variable is not given enough weight in
an economic experiment leading to skewed conclusions about cause and effect.
C) It is a problem that arises when an insignificant economic variable that should have
been omitted is included in an economic experiment leading to false conclusions about
cause and effect.
D) It is a problem that arises when an economic variable that affects other variables is
omitted from an analysis and its omission leads to false conclusions about cause and
effect.
Figure 16-1
What is the price charged under perfect price discrimination?
A) P3
B) P4
C) a range of prices corresponding to the demand curve from P3 and above
D) a range of prices corresponding to the demand curve from P4 and above
Figure 2-4
Figure 2-4 shows various points on three different production possibilities frontiers for
a nation. A movement from ________ is the result of negative technological change in
plastic production.
A) V to X
B) X to W
C) W to Z
D) Z to Y
A situation in which each firm chooses the best strategy given the strategies chosen by
other firms is called a
A) Nash equilibrium.
B) dominant strategy.
C) collusion.
D) payoff matrix.
A sunk cost is
A) another term that means opportunity cost.
B) a term used to describe the cost of capital that the owners of a firm sink into their
business.
C) the highest valued alternative that must be given up to engage in an activity.
D) a cost that has already been paid and cannot be recovered.
Some economists and policymakers who are in favor of government-provided health
care believe that providing health care will
A) generate additional moral hazard.
B) create negative externalities.
C) reduce asymmetric information.
D) generate more adverse selection.