Fill in the blank: ________ leads to speculation.
A) Love
B) Uncertainty
C) Greed
D) Money
E) Sin
At the moment, the Federal Reserve keeps the discount rate above the fed funds rate. In
so doing, they are
A) discouraging commercial banks from borrowing from the Fed.
B) encouraging commercial banks to borrow from each other.
C) doing both A and B.
D) doing none of the above.
An economist might emphasize that our everyday use of natural resources is the product
of knowledge by saying:
A) “Money is the root of all that is good about the world.”
B) “Usable oil comes from our minds’ innovations.”
C) “A bird in the hand is worth two in the bush.”
D) “You’re fired.”
In the economic way of thinking, which statement makes the most sense?
A) Costs determine prices.
B) Prices determine costs.
C) Costs determine demand.
D) Demand determines supply.
Is the following quote correct? “Here’s the law of demand in a nutshell: The higher the
price, the lower the demand.”
A) Yes, it is totally correct.
B) No. It would be correct if it were to also say “other things constant.”
C) No, because it confuses demand and quantity demanded.
D) No, because the law of demand does not apply to nutshells.
Externalities occur
A) only when a person acts out of greed.
B) only when a person acts out of selfish interest.
C) only when a person is concerned with personal profit.
D) only when the decision maker does not take into account all the benefits or costs
from an action.
Fill in the blank: Other things constant, the introduction of generic (non-brand name)
drugs on the market tends to ________ the price elasticity of demand for brand name
drugs.
A) increase
B) decrease
C) leave unchanged
D) alter for the better
The economic theory of government predicts elected officials at the federal level will
have incentives to act in ways that
A) cause inflation.
B) increase uncertainty and the instability of total demand.
C) secure short-term economic gains with deferred costs.
D) result in all of the above.
E) result in none of the above because they will usually want to be reelected.
Of the following, pick the year the U.S. enjoyed a budget surplus.
A) 1970
B) 1980
C) 1990
D) 2000
E) 2010
Suppose the average person needs 8 glasses of water each day to maintain optimal
health. What would an economist conclude?
A) The average person will therefore drink 8 glasses each day.
B) The average person will therefore drink more than 8 glasses each day, just to play it
safe.
C) There are no substitutes for water.
D) The amount the average person drinks will depend upon the opportunity cost of
acquiring water.
Who is “selling short”?
A) The scientist who collects a $150,000 research grant before undertaking her research
B) The housecleaner who collects her payment at the end of the workweek
C) The firm that advertises it will meet or beat its competitor’s prices
D) The retailer who promotes a back-to-school sale two weeks before school begins
According to the authors of your text,
A) society could continue to exist even if people were totally selfish.
B) genuine concern for the well-being of others is essential if any social cooperation at
all is to occur.
C) anarchism, or a society without a coercive government, is the only socio-political
system consistent with free markets.
D) rules are necessary for government institutions, but not for market institutions.
Which of the following economic systems requires some form of competition to better
coordinate the plans and projects of households and enterprises?
A) capitalism.
B) socialism.
C) fascism.
D) totalitarianism
E) all of the above.
Capital is
A) liquidity.
B) interest.
C) produced goods that can be used to produce future goods.
D) non-existent in a socialist economy.
E) all of the above.
Theory is to data as
A) economics is to the price of iPads.
B) economics is to art.
C) economics is to sociology.
D) accounting is to economics.
People who “sell short” are selling goods
A) at below-market prices.
B) of poor quality.
C) to purchasers who cannot afford to pay for them.
D) they do not yet own.
E) with the expectation of buying them back again.
In the economic way of thinking, countries are poor because they lack
A) money.
B) access to the New York Stock Exchange.
C) foreign aid.
D) productive knowledge and ideas.
E) effective minimum wage legislation.
Ed Sike is tired of working as a special events manager at the college. He quits his
price-searcher job to devote himself to studying full time. Ed Sike is now
A) a price taker.
B) a price giver.
C) unemployed.
D) no longer employed.
E) All of the above.
If Robinson makes 40 purses or 5 wallets per week, and Chamberlin makes 16 purses or
2 wallets per week, then
A) neither Robinson nor Chamberlin stands to gain by specialization and exchange.
B) both would gain through exchange if Robinson specialized in purses, Chamberlin in
wallets.
C) both would gain through exchange if Robinson specialized in wallets, Chamberlin in
purses.
D) only Robinson would gain through specialization and exchange.
When a man with a lawnmower in his trunk stops at Bill’s house and offers to mow
Bill’s yard, economists assume the man
A) expects to be made better off by mowing Bill’s yard for a fee.
B) is desperate.
C) is being exploited.
D) both A and B.
Suppose in Italy producers can make 10,000 dresses or 1,000 coats per day, while in
Canada producers can make 14,000 similar dresses or 2,000 similar coats per day.
Therefore
A) the Italians are relatively more efficient at producing coats.
B) the Italians are relatively more efficient at producing dresses.
C) the Italians are relatively less efficient at producing both coats and dresses.
D) the Canadians have a comparative advantage in both coats and dresses.
Suppose the economy of Georgia can produce pecans and peanuts. Suppose the
economy can either produce 10,000 pecans or 15,000 peanuts if full specialization in
one good were to occur. What is the opportunity cost of increasing pecan production
from 5,000 to 10,000 pecans?
A) 1,000 peanuts
B) 5,000 peanuts
C) 7,500 peanuts
D) 10,000 peanuts
Rank the following goods from least to most elastic: Christian books, religious books,
the Bible.
A) Christian books, religious books, the Bible
B) Religious books, Christian books, the Bible
C) The Bible, Christian books, religious books
D) The Bible, religious books, Christian books
E) None of the above.
The costs of a recession are largely
A) losses to some people but gains to others.
B) made up in the subsequent recovery.
C) the consequences of falling prices.
D) the costs of disappointed expectations.
E) welcomed by advocates of zero economic growth.
Which of the following would not shift the supply curve?
A) A rise in the expected future price of the good
B) A fall in the costs of production of the good
C) A fall in the price of the good
D) A negative supply shock that destroys a portion of output
People who give erroneous explanations of how they themselves perform a particular
task, such as tying their shoelaces or setting prices,
A) cannot be performing the task successfully.
B) may nonetheless perform the task successfully.
C) must be lying.
D) would necessarily perform the task more successfully if they understood it correctly.
Suppose the nominal interest rate is 4% and the rate of inflation is 3%. The real interest
rate is therefore
A) 7%.
B) 1%.
C) 0%.
D) -1%.
E) none of the above.
The substitution of machines for labor
A) does not reduce employment opportunities because labor is required to produce the
machines.
B) is not likely to reduce employment opportunities because as many or more workers
will usually be demanded to produce, service, and operate the machines.
C) will proceed more rapidly in a society the more rapidly the cost of hiring workers
rises.
D) will reduce employment opportunities if increased competition associated with the
introduction of machinery lowers product prices.
The opportunity cost to a cab driver of taking the day off increases when
A) it rains.
B) more cabs enter the business.
C) the price of gasoline rises.
D) the weather is so pleasant everyone prefers to walk.
E) many other cabs are out on the streets.
What effect would a reduction in the U.S. selling price of Japanese-made cars have on
the U.S. demand for American-made cars?
A) No effect, because price changes affect quantity demanded, not demand.
B) The demand would decrease.
C) The demand would increase.
D) We cannot tell unless we know the elasticities of demand for Japanese-made and
American-made cars.
E) We cannot tell unless we know what happened to the price of American-made cars.
According to your text, the plans of all buyers and sellers would always be perfectly
coordinated under
A) perfectly competitive market conditions.
B) imperfectly competitive market conditions.
C) monopolized market conditions.
D) oligopolized market conditions.
E) any market condition.
Fill in the blanks: Other things constant, a ________ price ________ quantity
demanded.
A) higher; increases
B) lower; increases
C) higher; decreases
D) lower; decreases
E) both B and C above.
If a price ceiling on coffee is set above the market-clearing price, then
A) the quantity of coffee demanded will decrease.
B) the quantity of coffee supplied will increase.
C) the quantity demanded for coffee will increase.
D) all of the above will occur.
E) none of the above will occur.
Economic theory defines capital as
A) anything that is scarce.
B) non-human resources.
C) produced resources used to produce future goods.
D) resources containing a positive opportunity cost.
E) stocks and bonds.
Why are harder forms of liquor produced in “dry” counties in the U.S.?
A) Drinkers in dry counties only prefer liquor to beer and wine.
B) Producers only prefer to drink liquor.
C) Producers find liquor more efficient to produce, given the rules of the game.
D) Trick question: No liquor is produced in “dry” counties.