1)
Refer to the above diagram for the Federal funds market. If the quantity of reserves falls
from $150 billion to $125 billion, we can expect:
A.the Federal funds rate to rise to 4.0 percent.
B.the discount rate to rise to 3.5 percent.
C.the prime interest rate to rise.
D.banks to loan more to each other.
2) In effect tariffs on imports are:
A.special taxes on domestic producers.
B.subsidies to domestic consumers.
C.subsidies to foreign producers.
D.subsidies for domestic producers.
3) Price supports:
A.decrease pollution because participants must practice organic farming.
B.neither increase nor decrease environmental pollution.
C.increase pollution because supports encourage the cultivation of marginal land and
the use of more pesticides and fertilizers.
D.discourage rent-seeking activity.
4)
Which diagram above best represents the problem faced by farms in the long-run?
A.A
B.B
C.C
D.D
5) Suppose that the dollar-pound exchange rate is $1 = 2. According to the Big Mac
index, the pound is overvalued if the price of a Big Mac sandwich is $2 in the United
States and:
A.4 in the United Kingdom.
B.5 in the United Kingdom.
C.3 in the United Kingdom.
D.2 in the United Kingdom.
6) a normal good is one:
a.whose amount demanded will increase as its price decreases.
b.whose amount demanded will increase as its price increases.
c.whose demand curve will shift leftward as incomes rise.
d.the consumption of which varies directly with incomes.
7) In forestry, in countries where property rights are not secure, there is:
A.an incentive to harvest trees quickly.
B.little incentive to replant trees.
C.a tendency for deforestation to occur.
D.all of these.
8) Below is the information for Manfred’s Shoe Shine Parlor. Assume Manfred hires
labor, its only variable input, under purely competitive conditions. Shoe shines are also
sold competitively.
Refer to the above data. If the wage rate is $11 and Manfred’s only fixed input is
capital, the total cost of which is $30, then what will be his economic profit?
A.$62
B.$42
C.$28
D.$32
9) Subprime mortgage loans refer to home loans:
A.made by less-than-reputable lenders.
B.made to home buyers with higher-than-average credit risk.
C.with interest rates below the prime interest rate.
D.D.for houses in poor neighborhoods.
10)
refer to the above diagram. other things equal, an increase of product price would be
shown as:
a.an increase in the steepness of curve (3), an upward shift in curve (2), and upward
shift in curve (1).
b.a decrease in the steepness of curve (3), a downward shift in curve (2), and an upward
shift in curve (1).
c.an downward shift in curve (4) and an upward shift in curve (1), with no changes in
lines (2) and (3).
d.an upward shift in line (2) only.
11)
Refer to the diagram above. Assuming it represents the overall supply of energy, at what
per barrel price of oil does the production of biodiesel become economically viable?
A.$50.
B.$60.
C.$70.
D.$80.
12) (Last Word) A section of the 2003 Appropriations bill contained a provision to
qualify catfish farmers for livestock compensation payments for disaster relief. This is
an example of the:
A.special-interest effect.
B.benefits-received principle.
C.paradox of voting.
D.principal-agent problem.
13)
the above diagram shows two product supply curves. it indicates that:
a.over range q1q2price elasticity of supply is greater for s1than for s2.
b.over range q1q2price elasticity of supply is greater for s2than for s1.
c.over range q1q2price elasticity of supply is the same for the two curves.
d.not enough information is given to compare price elasticities.
14) In 2007, the U.S. Federal debt held by the public was:
A.held largely by foreign governments.
B.about four times as large as the GDP.
C.about twice as large as the GDP.
D.about a third as large as the GDP.
15) the theory of consumer behavior assumes that:
a.consumers behave rationally, attempting to maximize their satisfaction.
b.consumers have unlimited money incomes.
c.consumers do not know how much marginal utility they obtain from successive units
of various products.
d.marginal utility is constant.
16)
Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. With free trade, that is, assuming no
tariff, the outputs produced by domestic and foreign producers respectively would be:
A.v and vz
B.w and wy
C.w and wz
D.vx and xz