If the best lawyer in town is also the best at operating a word processor, then according
to economic reasoning, this person should
A) split her time evenly between being a lawyer and a word processor.
B) specialize in being a lawyer because its opportunity cost is lower.
C) pursue the activity she enjoys more.
D) specialize in being a word processor because it is more capital-intensive.
An increase in a perfectly competitive firm’s demand for labor could be caused by
A) a decrease in the market wage rate.
B) an increase in the market demand for the firm’s product.
C) a decrease in the marginal product of workers.
D) an increase in the quantity of labor supplied.
If the dollar appreciates, how will aggregate demand in the United States be affected?
A) Aggregate demand will increase as exports increase and imports decrease.
B) Aggregate demand will increase as imports increase and exports decrease.
C) Aggregate demand will decrease as imports increase and exports decrease.
D) Aggregate demand will decrease as exports increase and imports decrease.
Which of the following is not an example of a monopolistically competitive market?
A) automobile producers
B) supermarkets
C) video stores
D) makers of women’s clothing
During recessions, government expenditure automatically
A) falls because of programs such as unemployment insurance and Medicaid.
B) rises because of programs such as unemployment insurance and Medicaid.
C) falls because of the progressive income tax system.
D) rises because of the progressive income tax system.
Which of the following would cause the equilibrium price of ketchup to increase and
the equilibrium quantity of ketchup to decrease?
A) a decrease in the price of tomatoes
B) an increase in the price of tomatoes
C) an increase in the price of mustard, a substitute for ketchup
D) an increase in the price of french fries, a complement for ketchup
Which of the following statements about economic resources is true?
A) Economic resources include financial capital and money.
B) Economic resources are also called factors of production.
C) Economic resources are used only by businesses.
D) All economic resources are man-made.
Figure 7-1 Figure 7-1 represents the
market for vaccinations. Vaccinations are considered a benefit to society, and the figure
shows both the marginal private benefit and the marginal social benefit from
vaccinations.
Marginal private benefit is represented by which curve?
A) D1
B) D2
C) Supply
D) All of the above represent marginal private benefit.
Figure 24-2
Ceteris paribus, an increase in the price level would be represented by a movement
from
A) SRAS1 to SRAS2.
B) SRAS2 to SRAS1.
C) point A to point B.
D) point B to point A.
Suppose the Fed pursues a policy that leads to higher interest rates in the United States.
How will this policy affect real GDP in the short run if the United States is an open
economy? This policy
A) reduces investment spending, consumption spending and net exports, all of which
reduce GDP.
B) reduces investment spending and consumption spending, both of which reduce GDP.
Net exports rise which increases GDP.
C) reduces investment spending and consumption spending, both of which reduce GDP.
Net exports fall which increases GDP.
D) increases investment spending, consumption spending, and net exports, all of which
increase GDP.
Which of the following correctly comments on the following statement? “The only way
to increase the revenue from selling a product is to increase the product’s price.”
A) It is not true. Revenue will increase as the price of the product increases only if
demand is elastic.
B) This statement is not true. Revenue will increase as the price of the product increases
only if demand is inelastic.
C) The statement is true.
D) This statement is not true. Revenue will decrease as the price of the product
increases because quantity demanded will fall.
The production possibilities frontier model assumes which of the following?
A) Labor, capital, land and natural resources are unlimited in quantity.
B) The economy produces only two products.
C) Any level of the two products that the economy produces is currently possible.
D) The level of technology is variable.
Total dividend payments plus retained earnings divided by outstanding stock shares
equals
A) the price-earnings ratio.
B) earnings per share.
C) the dividend yield.
D) the year-to-date percentage change.
If the required reserve ratio is RR, the simple deposit multiplier is defined as
A) .
B) .
C) change in bank reserves.
D) change in bank reserves.
Scarcity
A) stems from the incompatibility between limited resources and unlimited wants.
B) can be overcome by discovering new resources.
C) can be eliminated by rationing products.
D) is a bigger problem in market economies than in socialist economies.
If you own a $1,000 face value bond with one year remaining to maturity and a five
percent coupon rate and new bonds are paying 12 percent, what is the most you can get
for your old bond?
A) $1,120
B) $1,000
C) $937.50
D) impossible to determine without additional information
Demand in factor markets differs from demand in product markets in that
A) the demand for a factor of production is difficult to determine.
B) the demand for a factor of production is influenced by workers’ productivity and by
the producers’ expected sales revenues, not by tastes and preferences of consumers.
C) demand for a factor of production is based on the tastes and preferences of firms.
D) demand for a factor of production is based on the tastes and preferences of resource
owners.
Although based in the United States, McDonald’s is a global company with more than
________ of its sales coming from outside of the United States.
A) one-fourth
B) one-third
C) one-half
D) two-thirds