1) refer to the above diagram. the equation that shows the relationship between y and x
is:
a.y = 50 + 1/4 x
b.x = 1/4y
c.y = .4x
d.y = 1/4 x – 50
2) The interest rate that banks charge one another on overnight loans is called the:
A.discount rate.
B.prime lending rate.
C.overnight lending rate.
D.Federal funds rate.
3) assume an economy is incurring unemployment. the effect of resolving this problem
will be to:
a.move the level of actual output to the economy’s production possibilities curve.
b.create a less equal distribution of income.
c.shift its production possibilities curve to the left.
d.shift its production possibilities curve to the right.
4) The Lorenz curve:
A.plots graphically the poverty rate over time.
B.is located closer to the diagonal today than it was in 1970.
C.plots graphically the distribution of income.
D.is located farther from the diagonal when income is defined to include the value of
noncash transfers.
5)
refer to the above diagram. the quantity difference between areas a and c for the
indicated price reduction measures:
a.marginal cost.
b.marginal revenue.
c.monopoly price.
d.a welfare or efficiency loss.
6)
Refer to the above diagrams. The firm:
A.is a monopsonist in the hiring of labor.
B.must be selling its product in an imperfectly competitive market.
C.is a “wage taker.”
D.must pay a higher marginal resource cost for each successive worker.
7)
Refer to the above diagram that relates to Firm X. Which of the following would
illustrate process innovation by X?
A.a downshift in the total product curve from TP1 to TP2
B.an upshift in the total product curve from TP2 to TP1
C.a move from a to b on TP1
D.a move from c to d on TP2
8) Alex and Ben are both loggers wanting to harvest timber from the same forest. Alex
prefers to harvest and replant at a sustainable rate; Ben wants to harvest as many trees
as possible to maximize short-run profit, and then move on. They face the same
production costs.
Refer to the information above. If property rights are well-defined and enforced:
A.Alex could buy Ben’s part of the land and harvest and replant in a sustainable
manner.
B.Ben could buy Alex’s part of the land and harvest all the timber as quickly as
possible.
C.incentives to harvest and replant in a sustainable manner are greater than with no
property rights.
D.all of these could occur.
9) If the nominal wages of carpenters rose by 5 percent in 2008 and the price level
increased by 3 percent, then the real wages of carpenters:
A.decreased by 2 percent.
B.increased by 2 percent.
C.increased by 3 percent.
D.increased by 8 percent.
10) (last word) a burst stock market bubble might adversely affect the economy by:
a.causing rapid inflation.
b.greatly reducing net exports.
c.causing a severe negative wealth effect and engendering pessimism about the
economy’s future.
d.raising interest rates.
11) New classical economists say that an unanticipated decrease in aggregate demand
first:
A.decreases the price level and real output, and then decreases long-run aggregate
supply.
B.decreases long-run aggregate supply, and then decreases the price level and real
output.
C.reduces short-run aggregate supply, and then reduces long-run aggregate supply.
D.decreases the price level and real output, and then increases short-run aggregate
supply such that the economy returns to the full employment level of output.
12) If in the market for money the amount of money supplied exceeds the amount of
money households and businesses want to hold, the interest rate will:
A.fall, causing households and businesses to hold less money.
B.rise, causing households and businesses to hold less money.
C.rise, causing households and businesses to hold more money.
D.fall, causing households and businesses to hold more money.