An increase in the price level and a reduction in output would result from
a. an increase in the money supply.
b. an increase in government expenditures.
c. a fall in stock prices.
d. bad weather in farm states.
Which of the following statements is correct about the roles of economists?
a. Economists are best viewed as policy advisers.
b. Economists are best viewed as scientists.
c. In trying to explain the world, economists are policy advisers; in trying to improve
the world, they are scientists.
d. In trying to explain the world, economists are scientists; in trying to improve the
world, they are policy advisers.
Which of the following is not a question that macroeconomists address?
a. Why is average income high in some countries while it is low in others?
b. Why does the price of oil rise when war erupts in the Middle East?
c. Why do production and employment expand in some years and contract in others?
d. Why do prices rise rapidly in some periods of time while they are more stable in
other periods?
Table 3-4
Assume that the farmer and the rancher can switch between producing meat and
producing potatoes at a constant rate.
Labor Hours Needed
to Make 1 Pound of Pounds Produced
in 24 Hours
Refer to Table 3-4. Assume that the farmer and the rancher each has 24 labor hours
available. If each person spends all his time producing the good in which he has a
comparative advantage, then total production is
a. 3 pounds of meat and 4 pounds of potatoes.
b. 8 pounds of meat and 12 pounds of potatoes.
c. 11 pounds of meat and 16 pounds of potatoes.
d. 15 pounds of meat and 12 pounds of potatoes.
GDP per person tells us the income and expenditure of the
a. richest person in the economy.
b. poorest person in the economy.
c. average person in the economy.
d. entire economy.
On a graph, consumer surplus is represented by the area
a. between the demand and supply curves.
b. below the demand curve and above price.
c. below the price and above the supply curve.
d. below the demand curve and to the right of equilibrium price.
Which of the following scenarios is not consistent with the Laffer curve?
a. The tax rate is very low, and tax revenue is very low.
b. The tax rate is very high, and tax revenue is very low.
c. The tax rate is very high, and tax revenue is very high.
d. The tax rate is moderate (between very high and very low), and tax revenue is
relatively high.
Other things the same, an increase in the U.S. interest rate
a. raises net capital outflow which decreases the quantity of loanable funds demanded.
b. raises net capital outflow which increases the quantity of loanable funds demanded.
c. lowers net capital outflow which decreases the quantity of loanable funds demanded.
d. lowers net capital outflow which increases the quantity of loanable funds demanded.
Table 3-3
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and
producing hairbrushes at a constant rate.
Machine Minutes
Needed to Make 1
Refer to Table 3-3. Zimbabwe’s opportunity cost of one hairbrush is
a. 3/10 toothbrush and Portugal’s opportunity cost of one hairbrush is 5/6 toothbrush.
b. 3/10 toothbrush and Portugal’s opportunity cost of one hairbrush is 6/5 toothbrushes.
c. 10/3 toothbrushes and Portugal’s opportunity cost of one hairbrush is 5/6 toothbrush.
d. 10/3 toothbrushes and Portugal’s opportunity cost of one hairbrush is 6/5
toothbrushes.
Holding all other forces constant, if increasing the price of a good leads to a decrease in
total revenue, then the demand for the good must be
a. unit elastic.
b. inelastic.
c. elastic.
d. None of the above is correct because a price increase always leads to an increase in
total revenue.
The producer that requires a smaller quantity of inputs to produce a certain amount of a
good, relative to the quantities of inputs required by other producers to produce the
same amount of that good,
a. has a low opportunity cost of producing that good, relative to the opportunity costs of
other producers.
b. has a comparative advantage in the production of that good.
c. has an absolute advantage in the production of that good.
d. should be the only producer of that good.
Holding the nonprice determinants of supply constant, a change in price would
a. result in either a decrease in supply or an increase in supply.
b. result in a movement along a stationary supply curve.
c. result in a shift of demand.
d. have no effect on the quantity supplied.
An increase in which of the following would shift the supply curve for gasoline to the
right?
a. demand for gasoline
b. price of gasoline
c. number of producers of gasoline
d. price of oil, an input into the production of gasoline
Table 13-1
Refer to Table 13-1. Assume that the closing price was also the average price at which
each stock transaction took place. What was the total dollar volume of Gillette stock
traded that day?
a. $912,840,000
b. $91,284,000
c. $9,128,400
d. $912,840
Table 3-10
Juanita and Shantala run a business that programs and tests cellular phones. Assume
that Juanita and Shantala can switch between programming and testing cellular phones
at a constant rate. The following table applies.
Minutes Needed to Number of Cellular Phones
Programmed or Tested in a
40-Hour Week
Program 1
Cellular Phone Test 1
Cellular Phone Cellular Phones
Programmed Cellular Phones
Refer to Table 3-10. Shantala has an absolute advantage in
a. programming cellular phones and a comparative advantage in programming cellular
phones.
b. programming cellular phones and a comparative advantage in testing cellular phones.
c. testing cellular phones and a comparative advantage in programming cellular phones.
d. testing cellular phones and a comparative advantage in testing cellular phones.
Figure 6-18
Refer to Figure 6-18. The equilibrium price in the market before the tax is imposed is
a. $3.50.
b. $5.
c. $6.
d. $7.
If the supply for loanable funds shifts to the left, then the equilibrium interest rate
a. and quantity of loanable funds rise.
b. and quantity of loanable funds fall.
c. rises and the quantity of loanable funds falls.
d. falls and the quantity of loanable funds rises.
A country has a comparative advantage in a product if the world price is
a. lower than that country’s domestic price without trade.
b. higher than that country’s domestic price without trade.
c. equal to that country’s domestic price without trade.
d. not subject to manipulation by organizations that govern international trade.
The vertical distance between points A and B represents a tax in the market.
Refer to Figure 8-7. As a result of the tax,
a. consumer surplus decreases from $150 to $60.
b. producer surplus decreases from $125 to $45.
c. the market experiences a deadweight loss of $45.
d. All of the above are correct.
The consumer price index was 200 in 2006 and 210 in 2007. The nominal interest rate
during this period was 6.5 percent. What was the real interest rate during this period?
a. 1.5 percent
b. 1.75 percent
c. 11.25 percent
d. 11.5 percent
Paul Volcker’s inflation reduction efforts
a. failed to reduce inflation.
b. failed to reduce expected inflation.
c. resulted in the highest unemployment rate since the Great Depression.
d. None of the above are correct.
On a given morning, Franco sold 40 pairs of shoes for a total of $80 at his shoe store.
a. The $80 is a real variable. The quantity of shoes is a nominal variable.
b. The $80 is a nominal variable. The quantity of shoes is a real variable.
c. Both the $80 and the quantity of shoes are nominal variables.
d. Both the $80 and the quantity of shoes are real variables.
Table 7-2
This table refers to five possible buyers’ willingness to pay for a case of Vanilla Coke.
Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will
be
a. $3.00.
b. $4.50.
c. $15.50.
d. $21.00.
When society requires that firms reduce pollution, there is
a. a tradeoff because of reduced incomes to the firms’ owners and workers.
b. a tradeoff only if some firms are forced to close.
c. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the
requirements.
d. no tradeoff, since everyone benefits from reduced pollution.
There is a clear consensus among economists that unions are
a. good for the economy because they result in higher wages for most workers.
b. good for the economy because they are a necessary antidote to the market power of
employers.
c. bad for the economy because they are cartels and therefore detrimental to an efficient
allocation of resources.
d. None of the above is correct; there is no clear consensus among economists about
whether unions are good or bad for the economy.
Figure 3-6
Maxine’s Production Possibilities Frontier Daisy’s Production Possibilities
Frontier
Refer to Figure 3-6. If Maxine and Daisy each divides her time equally between
making pies and making tarts, then total production is
a. 6 pies and 10 tarts.
b. 7.5 pies and 3 tarts.
c. 7.5 pies and 10 tarts.
d. 13.5 pies and 13 tarts.
Suppose some country had an adult population of about 50 million, a labor-force
participation rate of 60 percent, and an unemployment rate of 5 percent. How many
people were unemployed?
a. 1.425 million
b. 1.5 million
c. 2.5 million
d. 5 million
If the federal funds rate were above the level the Federal Reserve had targeted, the Fed
could move the rate back towards its target by
a. buying bonds. This buying would reduce reserves.
b. buying bonds. This buying would increase reserves.
c. selling bonds. This selling would reduce reserves.
d. selling bonds. This selling would increase reserves.
Suppose you are in charge of setting prices at a local sandwich shop. The business
needs to increase its total revenue, and your job is on the line. If the demand for
sandwiches is elastic, you
a. should increase the price of sandwiches.
b. should decrease the price of sandwiches.
c. should not change the price of sandwiches.
d. could not determine what to do with price until you determine whether supply is
elastic or inelastic.
Table 3-6
Assume that Maya and Miguel can switch between producing mixers and producing
toasters at a constant rate.
Hours Needed
To Make 1 Amount Produced
in 40 Hours
Refer to Table 3-6. Which of the following combinations of mixers and toasters could
Maya produce in 40 hours?
a. 1 mixers and 7 toasters.
b. 2 mixers and 5 toasters.
c. 2.5 mixers and 4 toasters.
d. 3 mixers and 4 toasters.
When new goods are introduced, consumers have more variety from which to choose.
As a result, each dollar is worth
a. more, and the cost of living increases.
b. more, and the cost of living decreases.
c. less, and the cost of living increases.
d. less, and the cost of living decreases.
Table 7-7
The following table represents the costs of five possible sellers.
Refer to Table 7-7. If the market price is $900, the producer surplus in the market is
a. $350.
b. $550.
c. $750.
d. $1,000.
Table 15-3
2010 Labor Data for Adults (age 16 and older) in Meditor
Refer to Table 15-3. What is the adult female labor force in Meditor?
a. 40 million
b. 65 million
c. 70 million
d. 100 million