Table 7-6
Production and
Consumption Production
Without Trade With Trade
Estonia and Morocco can produce both swords and belts. Table 7-6 shows the
production and consumption quantities without trade, and the production numbers with
trade.
Refer to Table 7-6. If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are
traded, how many belts will Estonia gain compared to the “without trade” numbers?
A) 10
B) 20
C) 50
D) 70
Figure 13-2
Refer to Figure 13-2. Ceteris paribus, a decrease in the labor force 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.
Tabitha shares a flea market booth with her sister. Her share of the rent is $150 per
month. She is considering moving to her own, larger booth which she will not have to
share with anyone. The larger booth rents for $450 per month. Recently, you ran into
Tabitha in the grocery store and she tells you that she has rented the larger booth.
Tabitha is as rational as any other person. As an economics major, you rightly conclude
that
A) Tabitha did not have a choice; her sister was overcharging her.
B) Tabitha figures that the additional benefit of having her own booth (as opposed to
sharing) is at least $300.
C) Tabitha figures that the benefit of having her own booth (as opposed to sharing) is at
least $450.
D) the cost of having one’s own booth outweighs the benefits.
On the 45-degree line diagram, the 45-degree line shows points where real aggregate
expenditure equals
A) unplanned investment.
B) planned investment.
C) real GDP.
D) nominal GDP.
If actual inflation is less than expected inflation, what is the relationship between the
actual real wage and the expected real wage?
A) The actual real wage is lower than the expected real wage.
B) The actual real wage is higher than the expected real wage.
C) The actual real wage is equal to the expected real wage.
D) The relationship between the actual real wage and the expected real wage cannot be
predicted.
Which of the following is an example of foreign direct investment?
A) You purchase a plane ticket to China on American Airlines.
B) American Airlines builds a hub in China.
C) You buy a plane that was made in China.
D) A stock broker from China sells you a Chinese government savings bond.
Gross domestic product in the economy is measured by the
A) total number of goods and services produced in the economy.
B) dollar value of all final goods and services produced in the economy.
C) total number of goods produced in the economy.
D) total number of services produced in the economy.
Farmers can raise either goats or ostriches on their land. Which of the following would
cause the supply of goats to decrease?
A) an increase in the price of ostriches
B) a decrease in the price of goats
C) an increase in the demand for goats
D) an increase in the price of ostrich feed
According to the National Bureau of Economic Research, the United States has
experienced ________ recessions since 1950.
A) 4
B) 7
C) 10
D) 15
Figure 12-2
Refer to Figure 12-2. If the U.S. economy is currently at point K, which of the
following could cause it to move to point N?
A) The price level in the United States rises relative to the price level in other countries.
B) Congress passes investment tax incentives.
C) The interest rate rises.
D) Household wealth declines.
Full-employment GDP is also known as
A) realized GDP.
B) potential GDP.
C) politico-economic GDP.
D) balanced-budget GDP.
Which of the following is (are) responsible for managing the money supply in the
United States?
A) the Federal Reserve Bank of New York
B) the twelve Federal Reserve Banks
C) the Federal Open Market Committee
D) the Board of Governors
Table 4-3
Refer to Table 4-3. The table above lists the marginal cost of polo shirts by Marko’s, a
firm that specializes in producing men’s clothing. If the price of polo shirts increases
from $15 to $20
A) consumers will buy no polo shirts.
B) the marginal cost of producing the third polo shirt will increase to $20.
C) producer surplus will rise from $13 to $28.
D) there will be a surplus of polo shirts.
When the economy enters into a recession, your employer is ________ to reduce your
wages because ________.
A) unlikely; output and input prices generally fall during recession
B) unlikely; lower wages reduce productivity and morale
C) likely; output prices always fall during recession
D) likely; aggregate demand is vertical in the long run