1) The real interest rate can be estimated by:
A.subtracting the pure interest rate from the nominal interest rate.
B.dividing the nominal interest rate by the consumer price index.
C.subtracting the nominal interest rate from the rate of inflation.
D.subtracting the rate of inflation from the nominal interest rate.
2) When LCD televisions first came on the market, they sold for at least $1,000, and
some for much more. Now many units can be purchased for under $400. These facts
imply that:
A.the LCD television industry was once competitive but is now monopolistic.
B.fewer firms produce LCD televisions than was the case five or ten years ago.
C.the demand curve for LCD televisions has shifted leftward.
D.the LCD television industry is a decreasing-cost industry.
3) Governments’ main economic concern about low birthrates is that:
A.in a few decades there will not be enough working-age adults to support pension
responsibilities to retirees.
B.the smaller population makes the economy more vulnerable to foreign takeover.
C.a declining population will reduce worker productivity.
D.smaller populations are more susceptible to epidemics.
4)
Suppose the elasticity of labor demand is 1.4. Then a decrease in the wage rate will:
A.Decrease total wage income
B.Increase total wage income
C.Have no impact on total wage income
D.Have an indeterminate impact on total wage income
5) Answer the question based on the following supply and demand schedules in units
per week for a product.
Refer to the above table. If the government introduced a guaranteed price floor of $40
and agreed to purchase surplus output, then the government’s total support payments to
producers would be:
A.$3,000 per week
B.$3,500 per week
C.$4,000 per week
D.$2,500 per week
6) In a market economy, private parties are more willing to do transactions when they
know that the government is able to:
A.Investigate and arrest people at random
B.Force people to do or not do things involuntarily
C.Discriminate against one group or another in society
D.Revoke private agreements and contracts
7) Rapid population growth since 1800 has occurred primarily because of:
A.a significant increase in total fertility rates as living standards have risen.
B.a significant reduction in death rates as living standards have risen.
C.a significant increase in replacement rates as living standards have risen.
D.all of these.
8) Which of the following statements about insurance and risk is true?
A.Insurance inhibits economic growth and investment by discouraging risk-taking.
B.Insurance transfers risk from those with a high tolerance for risk to those with a low
tolerance for risk.
C.Insurance companies always earn profits because insurance premiums always exceed
the payout for insured events.
D.Insurance transfers risk from those with a low tolerance for risk to those with a
higher tolerance for risk.
9) The financial account balance is a nation’s:
A.net investment income minus its net transfers.
B.exports of goods and services minus its imports of goods and services.
C.sale of real and financial assets to people living abroad minus its purchases of real
and financial assets from foreigners.
D.domestic investment spending minus domestic saving.
10) Politicians seeking reelection tend to do the following, except:
A.Inserting “earmarks” in legislation
B.Favoring projects with clear benefits and hidden costs
C.Favoring long-term projects over short-term ones
D.Engaging in pork-barrel politics
11) The argument that an industry that is highly concentrated will act like an
anti-competitive monopolist would support the case that the application of antitrust
laws should be based on industry:
A.Mergers
B.Structure
C.Regulation
D.Behavior
12) The cross elasticity of demand between digital cameras and memory cards is likely
to be:
A.Zero
B.A negative number
C.A positive number greater than 1
D.A positive number between zero and 1
13) Joe complains that 32% of his income last year went to taxes. He is referring to his:
A.Average tax rate
B.Marginal tax rate
C.Proportional tax rate
D.Progressive tax rate