A decrease in quantity supplied
a. results in a movement downward and to the left along a fixed supply curve.
b. results in a movement upward and to the right along a fixed supply curve.
c. shifts the supply curve to the left.
d. shifts the supply curve to the right.
In a certain economy, when income is $200, consumer spending is $145. The value of
the multiplier for this economy is 6.25. It follows that, when income is $230, consumer
spending is
a. $151.25.
b. $166.75.
c. $170.20.
d. $175.00.
Given the market for illegal drugs, when the government is successful in reducing the
flow of drugs into the United States,
a. supply decreases, demand is unaffected, and price increases.
b. demand decreases, supply is unaffected, and price decreases.
c. demand and supply both decrease, leaving price essentially unchanged.
d. supply decreases, demand increases, and price increases substantially.
Figure 17-3. On the graph, MS represents the money supply and MD represents money
demand. The usual quantities are measured along the axes.
Refer to Figure 17-3. Which of the following events could explain a shift of the
money-supply curve from MS1 to MS2?
a. an increase in the value of money
b. a decrease in the price level
c. an open-market purchase of bonds by the Federal Reserve
d. None of the above is correct.
Figure 3-5
Hosne’s Production Possibilities Frontier Merve’s Production Possibilities Frontier
Refer to Figure 3-5. If Hosne and Merve each divides her time equally between
making purses and making wallets, then total production is
a. 4 purses and 8 wallets.
b. 7 purses and 7 wallets.
c. 10 purses and 6 wallets.
d. 14 purses and 14 wallets.
Suppose the economy is in long-run equilibrium. In a short span of time, there is a
sharp decline in the stock market, a tax cut, an increase in the money supply and a
decline in the value of the dollar. In the short run
a. the price level and real GDP will both rise.
b. the price level and real GDP will both fall.
c. neither the price leave nor real GDP will change.
d. All of the above are possible.
Figure 9-15
Refer to Figure 9-15. With the tariff, the domestic price and domestic quantity
demanded are
a. P1 and Q1.
b. P1 and Q4.
c. P2 and Q2.
d. P2 and Q3.
Figure 7-2
Refer to Figure 7-2. When the price is P2, consumer surplus is
a. A.
b. B.
c. A+B.
d. A+B+C.
Table 6-1
Refer to Table 6-1. Which of the following price ceilings would be binding in this
market?
a. $2
b. $3
c. $4
d. $5
Which of the following is not an example of the principle that trade can make everyone
better off?
a. Americans buy tube socks from China.
b. Residents of Maine drink orange juice from Florida.
c. A homeowner hires the kid next door to mow the lawn.
d. All of the above are examples of the principle that trade can make everyone better
off.
If a country removed an import quota on cotton, then overall that country’s
a. exports and imports would rise.
b. exports would rise and imports would fall.
c. exports would fall and imports would rise.
d. exports and imports would fall.
Over the past century, the average income in the United States has risen about
a. twofold.
b. fivefold.
c. eightfold.
d. tenfold.
Suppose that neither textile workers nor shoemakers are unionized. If textile workers
unionize, then the supply of shoemakers will
a. rise and their wages will rise.
b. rise and their wages will fall.
c. fall and their wages will fall.
d. fall and their wages will rise.
Table 15-1
Labor Data for Aridia
Refer to Table 15-1. The unemployment rate of Aridia in 2010 was
a. 10%.
b. 12.5%.
c. 14.3%.
d. 80%.
Which of the following allows you to provide information about the relationship
between two variables?
a. coordinate system.
b. pie chart
c. bar graph
d. time-series graph
Which of the following does not help reduce frictional unemployment?
a. government-run employment agencies
b. public training programs
c. unemployment insurance
d. All of the above help reduce frictional unemployment.
If buyers today become more willing and able than before to purchase larger quantities
of Vanilla Coke at each price of Vanilla Coke, then
a. we will observe a movement downward and to the right along the demand curve for
Vanilla Coke.
b. we will observe a movement upward and to the left along the demand curve for
Vanilla Coke.
c. the demand curve for Vanilla Coke will shift to the right.
d. the demand curve for Vanilla Coke will shift to the left.
Figure 2-2
Refer to Figure 2-2. If households are sellers in the markets represented by Box D of
this circular-flow diagram, then
a. Box D must represent the markets for factors of production.
b. Box C must represent the markets for goods and services.
c. firms are buyers in the markets represented by Box D.
d. All of the above are correct.
Which of the following is not an example of a graph of a single variable?
a. a pie chart
b. a bar graph
c. a time-series graph
d. a scatterplot
For economists, historical episodes
a. are not worthy of study because they offer few insights into current economic events
and problems.
b. are not worthy of study because laboratory experiments provide more reliable data.
c. are worthy of study because economists rely entirely on observation, rather than on
theory.
d. are worthy of study because they serve as valuable substitutes for laboratory
experiments.
To decrease the money supply, the Fed can
a. buy government bonds or increase the discount rate.
b. buy government bonds or decrease the discount rate.
c. sell government bonds or increase the discount rate.
d. sell government bonds or decrease the discount rate.
If the risk of buying U.S. assets rises because it is discovered that lending institutions
had not carefully evaluated borrowers prior to lending them funds, then
a. net capital outflow and the real exchange rate will rise.
b. net capital outflow will rise and the real exchange rate will fall.
c. net capital outflow will fall and the real exchange rate will rise.
d. net capital outflow and the exchange rate will fall.
Other things the same, which of the following responses would we expect to result from
an decrease in U.S. interest rates?
a. U.S. citizens decide to hold more foreign bonds.
b. People choose to hold more currency.
c. You decide to purchase a new oven for your cookie factory.
d. All of the above are correct.
If a country’s purchases of foreign assets exceeds foreign purchases of domestic assets,
that country has
a. positive net exports and positive net capital outflows.
b. positive net exports and negative net capital outflows.
c. negative net exports and positive net capital outflows.
d. negative net exports and negative net capital outflows.
Economists believe that production possibilities frontiers are often bowed because
a. trade-offs inevitably create unemployment.
b. resources are not completely adaptable.
c. opportunity costs are constant.
d. of improvements in technology.
The term “productivity”
a. means the same thing as “efficiency.”
b. is seldom used by economists, as its meaning is not precise.
c. refers to the quantity of goods and services produced from each unit of labor input.
d. refers to the variety of goods and services from which households can choose when
they shop.
In the U.S. a digital camera costs $200. The same camera in London sells for 90
pounds. If the exchange rate were .50 pounds per dollar, then which of the following
would be correct?
a. The real exchange rate is greater than 1. A person in London with $200 could
exchange them for pounds and have more than enough to buy the camera there.
b. The real exchange rate is greater than 1. A person in London with $200 could
exchange them for pounds but then wouldn”t have enough to buy the camera there.
c. The real exchange rate is less than 1. A person in London with $200 could exchange
them for pounds and have more than enough to buy the camera there.
d. The real exchange rate is less than 1. A person in London with $200 could exchange
them for pounds but then wouldn”t have enough to buy the camera.
Which of these activities will most likely result in an external benefit?
a. Jake purchases a dilapidated house and cleans up the yard and exterior of the house.
b. John purchases an iPhone and downloads new apps.
c. Jack purchases a new SUV and drives it to work every day.
d. Joe purchases a suit and wears it on his interviews.
Which of the following is consistent with the idea that high money supply growth leads
to high inflation?
a. the quantity theory and evidence from four hyperinflations during the 1920’s
b. the quantity theory but not evidence from four hyperinflations during the 1920’s
c. evidence from four hyperinflations during the 1920’s but not the quantity theory
d. neither the quantity theory nor evidence from four hyperinflation during the 1920’s
Figure 6-18
Refer to Figure 6-18. As the figure is drawn, who sends the tax payment to the
government?
a. The buyers send the tax payment.
b. The sellers send the tax payment.
c. A portion of the tax payment is sent by the buyers, and the remaining portion is sent
by the sellers.
d. The question of who sends the tax payment cannot be determined from the graph.
Figure 3-6
Maxine’s Production Possibilities Frontier Daisy’s Production Possibilities
Frontier
Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie, then her
production possibilities frontier is based on how many hours of work?
a. 6 hours
b. 7.5 hours
c. 37.5 hours
d. 50 hours
When the Fed decreases the money supply, we expect
a. interest rates and stock prices to rise.
b. interest rates and stock prices to fall.
c. interest rates to rise and stock prices to fall.
d. interest rates to fall and stock prices to rise.
Purchasing-power parity implies that the nominal exchange rate given as foreign
currency per unit of U.S. currency must rise if the price levels in
a. foreign countries rise.
b. the United States rises.
c. both countries rise.
d. both countries fall.
If there are diminishing returns to capital, then
a. capital produces fewer goods as it ages.
b. old ideas are not as useful as new ones.
c. increases in the capital stock eventually decrease output.
d. increases in the capital stock increase output by ever smaller amounts.