1)
refer to the above diagram. if actual production and consumption occur at q3:
a.efficiency is achieved.
b.an efficiency loss (or deadweight loss) of e + f occurs.
c.an efficiency loss (or deadweight loss) of a + b + c + d occurs.
d.an efficiency loss (or deadweight loss) of a + c occurs.
2) In making an investment decision a business firm is most interested in the:
A.nominal interest rate.
B.real interest rate.
C.nominal interest rate minus the real interest rate.
D.the future supply of loanable funds.
3) a firm that makes computer chips at several locations across the country best
illustrates a:
a.vertically integrated firm.
b.multinational corporation.
c.multiplant firm.
d.conglomerate.
4) in deciding whether to study for an economics quiz or go to a movie, one is
confronted by the idea(s) of:
a.scarcity and opportunity costs.
b.money and real capital.
c.complementary economic goals.
d.full production.
5) The following information for a hypothetical economy. All values are in nominal
terms.
M = $100
V = 2
Ca = $160
Xn = $10
G = $10
Refer to the above information. Nominal GDP is:
A.$100.
B.$200.
C.$180.
D.$50.
6) Assume in a private closed economy that the equilibrium level of income is $380 and
the MPS is 0.25. Now suppose government collects taxes of $50 and spends the entire
amount. As a result:
A.the equilibrium level of real income and the price level will both remain unchanged.
B.nominal wage rates will fall.
C.the equilibrium level of income will rise to $420.
D.the equilibrium level of income will rise to $430.
7) Over the past decade, U.S. per capita consumption of water:
A.and energy have both increased.
B.has increased, while per capita consumption of energy has fallen.
C.and energy have leveled off or fallen.
D.has fallen, while per capita consumption of energy has increased.
8)
Refer to the above information. In this economy a 3 percentage point decrease in the
interest rate will:
A.increase equilibrium GDP by $200.
B.increase equilibrium GDP by $50.
C.increase equilibrium GDP by $100.
D.decrease equilibrium GDP by $50.
9) The equations for the demand and supply curves for a particular product are P = 10
.4Q and P = 2 + .4Q, where P is price and Q is quantity expressed in units of 100. After
an excise tax is imposed on the product the supply equation is P = 3 + .4Q.
Refer to the above information. Government’s revenue from this tax is:
A.$750.
B.$1,500.
C.$875.
D.$800.
10) when a consumer shifts purchases from product x to product y the marginal utility
of:
a.x falls and the marginal utility of y rises.
b.x rises and the marginal utility of y falls.
c.both x and y rises.
d.both x and y falls.
11) Which of the following is not a DVC policy that might increase DVC economic
growth?
A.privatizing state industries
B.controlling population growth
C.restricting direct foreign investment from abroad
D.building human capital
12) The greater the legal reserve ratio, the:
A.higher is the spending multiplier.
B.lower is the spending multiplier.
C.lower is the monetary multiplier.
D.higher is the monetary multiplier.
13)
refer to the above data for a nondiscriminating monopolist. at its profit-maximizing
output, this firm’s price will exceed its marginal cost by ____ and its average total cost
by ____.
a.$20; $27.33
b.$10; $10.40
c.$24; $27.33
d.$30; $20.50
14) the largest goods imports of the united states (in dollar volume) are:
a.chemicals, consumer durables, aircraft, and grain.
b.petroleum, automobiles, metals, and household appliances.
c.iron and steel, clothing, electronic equipment, and sugar.
d.aircraft, paper products, television sets, and furniture.
15) In the U.S. economy the money supply is controlled by the:
A.U.S. Treasury.
B.Federal Reserve System.
C.Senate Committee on Banking and Finance.
D.Congress.
16) Disinflation occurs when:
A.the price level is falling.
B.investment plans exceed saving.
C.a speculative investment “bubble” is bursting.
D.the inflation rate is declining.
17) for which of the following goods or services would a government subsidy be most
likely to improve the allocation of resources?
a.wheat
b.cancer research
c.newspaper publishing
d.toys
18) Consider the following situations related to a sports stadium in a city. Assume this
is the primary venue for sports games. Decide whether the city government is likely to
intervene to enforce antitrust law or not.
(a)In response to slow sales of memorabilia in its sport shop, the stadium management
decides to require patrons to buy one item of memorabilia over $5 along with their
ticket.
(b)The stadium management decides to charge different prices for students, regular
patrons and senior citizens.
(c)The stadium is purchased by a soft drink company, who will only provide their
products at games.
(d)A company is coming into the town wanting to build a new sports complex. The
stadium management decides to fund a smear campaign against the new development,
as well as threaten to pull funding from key city council members campaign funds.
19) a trade deficit occurs for a nation when it:
a.exports more than it imports.
b.imports more than it exports.
c.receives more foreign currency than it sends out in domestic currency.
d.loans out u.s. dollars to foreign buyers of domestically produced goods.
20) If severe demand-pull inflation was occurring in the economy, proper government
policies would involve a government:
A.deficit and the purchase of securities in the open market, a higher discount rate, and
higher reserve requirements.
B.deficit and the sale of securities in the open market, a higher discount rate, and lower
reserve requirements.
C.surplus and the sale of securities in the open market, a higher discount rate, and
higher reserve requirements.
D.surplus and the purchase of securities in the open market, a lower discount rate, and
lower reserve requirements.
21) What economic functions do rent, interest, and profit payments perform? How
effective are they in performing these functions?
22) Trade deficits are a mixed blessing. Interpret and elaborate.
23) How does the time dimension affect income inequality?
24) Differentiate between the Federal deficit and the Federal debt.
25) Explain how market failures such as the lack of property rights affect extraction of
resources by business firms.
26) Define a sequential game.
27) GDP figures can be used to make international comparisons of living standards.
What are three adjustments made by the International Monetary Fund (IMF) to each
countrys GDP to allow for meaningful comparisons of living standards between
countries? Explain.
28) Why might a lottery winner decide to take a large lump sum payment rather than
receive installments of their winnings over time? How does the concept of present value
influence this decision?