When a person engages in detailed analysis of a company to determine its value, he or
she is engaging in
a. standard deviation analysis.
b. informational analysis.
c. fundamental analysis.
d. efficiency analysis.
“When workers have a relatively small quantity of capital to use in producing goods
and services, giving them an additional unit of capital increases their productivity by a
relatively large amount.” This statement
a. is an assertion that production functions have the property of constant returns to
scale.
b. is consistent with the view that capital is subject to diminishing returns.
c. is inconsistent with the view that it is easier for a country to grow fast if it starts out
relatively poor.
d. All of the above are correct.
Figure 4-2
Refer to Figure 4-2. If Consumer A and Consumer B are the only consumers in the
market, then the market quantity demanded when the price is $10 is
a. 0 units.
b. 4 units.
c. 10 units.
d. 12 units.
If the government of a country with a zero trade balance started with a budget deficit
and moved to a budget surplus, domestic investment would
a. rise and there would be a trade surplus.
b. rise and there would be a trade deficit.
c. fall and there would be a trade surplus.
d. fall and there would be a trade deficit.
A tariff on a product
a. enhances the economic well-being of the domestic economy.
b. increases the domestic quantity supplied.
c. increases the domestic quantity demanded.
d. results in an increase in producer surplus that is greater than the resulting decrease in
consumer surplus.
In principle, we can
a. ignore positive statements when choosing among various public policy alternatives.
b. ignore normative statements when choosing among various public policy
alternatives.
c. confirm or refute positive statements by examining evidence.
d. confirm or refute normative statements by examining evidence.
A binding minimum wage tends to
a. cause a labor surplus.
b. cause unemployment.
c. have the greatest impact in the market for teenage labor.
d. All of the above are correct.
On a graph, the area below a demand curve and above the price measures
a. producer surplus.
b. consumer surplus.
c. deadweight loss.
d. willingness to pay.
For any country that allows free trade,
a. domestic quantity demanded is equal to domestic quantity supplied at the world
price.
b. domestic quantity demanded is greater than domestic quantity supplied at the world
price.
c. both producers and consumers in that country gain when domestic products are
exported, but both groups lose when foreign products are imported.
d. the domestic price is equal to the world price.
An American farm equipment dealer sells dollars to obtain euros. It then uses the euros
to buy farm equipment from a German company. This exchange
a. increases U.S. net capital outflow because Germans obtain U.S. assets.
b. decreases U.S. net capital outflow because Germans obtain U.S. assets.
c. increases U.S. net capital outflow because the U.S. buys capital goods.
d. decreases U.S. net capital outflow because the U.S. buys capital goods.
Governments may prefer an inflation tax to some other type of tax because the inflation
tax
a. is easier to impose.
b. reduces inflation.
c. falls mainly on high-income individuals.
d. reduces the real cost of government expenditure.
Figure 2-6
Refer to Figure 2-6. This economy has the ability to produce at which point(s)?
a. A, B
b. A, B, D
c. A, B, C, F, G
d. C, F, G
A rational decisionmaker takes an action if and only if
a. the marginal benefit of the action exceeds the marginal cost of the action.
b. the marginal cost of the action exceeds the marginal benefit of the action.
c. the marginal cost of the action is zero.
d. the opportunity cost of the action is zero.
Which of the following is not a reason that paying efficiency wages may increase a
firm’s profit?
a. Efficiency wages increase worker health and therefore increase worker productivity.
b. Efficiency wages decrease worker turnover and therefore decrease hiring and training
costs.
c. Efficiency wages decrease worker shirking and therefore increase worker
productivity.
d. Efficiency wages are below the equilibrium wage rate, but still attract a sufficient
number of workers.
If the supply of dollars in the market for foreign-currency exchange shifts right, then the
exchange rate
a. rises and the quantity of dollars exchanged falls.
b. rises and the quantity of dollars exchanged does not change.
c. falls and the quantity of dollars exchanged rises.
d. falls and the quantity of dollars exchanged does not change.
If Y and M are constant and V doubles, the quantity equation implies that the price level
a. falls to half it’s original level.
b. doubles.
c. more than doubles.
d. does not change.
Theindirect provision of funds by savers to borrowers is accomplished by
a. banks and other financial markets.
b. banks and other financial intermediaries.
c. stock markets and other financial markets.
d. All of the above are correct.
When the Federal Reserve conducts open-market operations to increase the money
supply, it
a. redeems Federal Reserve notes.
b. buys government bonds from the public.
c. raises the discount rate.
d. decreases its lending to member banks.
According to purchasing power parity, if the price of a basket of goods in the U.S. rose
from $1,500 to $2,000 and the price of the same basket of goods rose from 600 units of
some other country’s currency to 1,000 units of that country’s currency, then the
a. nominal exchange rate would appreciate.
b. nominal exchange rate would depreciate.
c. real exchange rate would appreciate.
d. real exchange rate would depreciate.
Which of the following changes would not shift the supply curve for a good or service?
a. a change in production technology
b. a change in the price of the good or service
c. a change in expectations about the future price of the good or service
d. a change in input prices
Firms in Saudi Arabia sell oil to the U.S. Other things the same, these oil sales
a. increase Saudi net exports and net capital outflow.
b. decrease Saudi net exports and net capital outflow.
c. increase Saudi net exports and decrease Saudi net capital outflow.
d. decrease Saudi net exports and increase Saudi net capital outflow.
The real interest rate is 8 percent and the nominal interest rate is 10.5 percent. Is there
inflation or deflation? What is the inflation or deflation rate?
a. deflation; 5 percent
b. deflation; 5 percent
c. inflation; 5 percent
d. inflation; 5 percent
Senator Smith says that in order to help poor countries develop, the United States
should: 1. Prevent U.S. corporations from investing in poor countries because they take
profits that the poor countries should have; 2. reduce or eliminate subsidizes to U.S.
producers when poor countries have a comparative advantage producing those goods
the U.S. subsidizes; 3. Work to promote political stability in poor countries; and 4.
Reduce poor countries reliance on market forces in their economies. How many of
these ideas are likely to help poor countries grow?
a. 1
b. 2
c. 3
d. 4
Table 13-1
Refer to Table 13-1. In dollar terms, which company paid the highest dividend per
share?
a. GenMills
b. Gillette
c. Graco
d. Hershey
In response to recession, who primarily raised expenditures rather than cut taxes?
a. President George W. Bush and President Barack Obama
b. President George W. Bush but not President Barack Obama
c. President Barack Obama but not President George W. Bush
d. Neither President George W. Bush and President Barack Obama
The vertical distance between points A and B represents a tax in the market.
Refer to Figure 8-7. Which of the following statements is correct?
a. The loss of producer surplus that is associated with some sellers dropping out of the
market as a result of the tax is $30.
b. The loss of consumer surplus for those buyers of the good who continue to buy it
after the tax is imposed is $60.
c. The loss of consumer surplus caused by this tax exceeds the loss of producer surplus
caused by this tax.
d. This tax produces $200 in tax revenue for the government.
Figure 15-1
Refer to Figure 15-1. At the equilibrium wage, how many workers are employed?
a. 0
b. 1000
c. 5000
d. 9000
The Carters’ oldest son attends Big State University. He and his parents pay all his fees
and tuition. These payments count in GDP as
a. investment.
b. government spending.
c. consumption of services.
d. consumption of durable goods.
Suppose the quality of beef changes over time, but the quality change goes unmeasured
for the purpose of computing the consumer price index. In which of the following
instances would the bias resulting from the unmeasured quality change be least severe?
a. The quality of beef deteriorates and beef becomes more expensive relative to other
goods.
b. The quality of beef deteriorates and beef becomes less expensive relative to other
goods.
c. The quality of beef improves and beef becomes more expensive relative to other
goods.
d. The quality of beef improves and the price of beef relative to other prices remains
unchanged.
Assume, for Singapore, that the domestic price of soybeans without international trade
is higher than the world price of soybeans. This suggests that, in the production of
soybeans,
a. Singapore has a comparative advantage over other countries and Singapore will
import soybeans.
b. Singapore has a comparative advantage over other countries and Singapore will
export soybeans.
c. other countries have a comparative advantage over Singapore and Singapore will
import soybeans.
d. other countries have a comparative advantage over Singapore and Singapore will
export soybeans.