If the demand for a good falls by less than the supply of the good rises, then the good€s
equilibrium price will __________ and its equilibrium quantity will __________.
a. rise; fall
b. rise; rise
c. fall; fall
d. fall; rise
There is a flexible exchange rate system and only two countries in the world, the United
States and Mexico. An increase in income growth in Mexico relative to income growth
in the United States will cause the
a. dollar to appreciate.
b. peso to depreciate.
c. dollar to depreciate.
d. a and b
e. There is not enough information to answer the question.
Which of the following statements isfalse?
a. Discouraged workers are a subset of a larger group termedmarginally attached
workers.
b. Discouraged workers are counted as unemployed in the official unemployment rate
calculation.
c. A person is consideredunderemployed if he is working at a job for which his skills far
exceed the skills required for his job.
d. People who are underemployed are not counted as unemployed.
In 2014, the federal government disbanded the practices of fixed direct payments and
countercyclical payments to farmers.
a. True
b. False
The long-run aggregate supply (LRAS) curve is
a. horizontal.
b. vertical.
c. positively sloped.
d. negatively sloped.
Suppose the government increases spending on public education by $700 million and
individual spending on private education drops by $500 million. This is an example of
a. incomplete crowding out.
b. complete crowding out.
c. zero crowding out.
d. a and c
e. none of the above
In every economy people vie for the economy’s rationing device, a process called
a. competition.
b. entrepreneurship.
c. marginal benefit.
d. positive economics.
Which scenario below most accurately describes the process by which a technological
change can affect employment patterns across industries?
a. A technological advance makes it possible to produce more of good X with less labor.
As a result, labor is released from producing good X. Some of this labor ends up
producing goods Y and Z.
b. A technological advance makes it possible to produce less of good X with less labor.
As a result, labor is released from producing good X. Some of this labor ends up
producing good Y.
c. A technological advance makes it possible to produce more of good X with more
labor. As a result, more labor is needed to produce good X. There is less labor available
to produce goods Y and Z.
d. A technological advance makes it possible to produce more of good X with less labor.
As a result, labor becomes more important to the production of good X. More labor
ends up producing good X.
e. none of the above
When the government _____________ mortgage lending standards, the indirect result
is likely to be _____________ home prices.
a. lowers; higher
b. increases; lower
c. lowers; lower
d. increases; higher
e. a and b
If the law of increasing opportunity costs is operable, and currently the opportunity cost
of producing the 1,000th unit of good X is 0.5Y, then the opportunity cost of producing
the 2,001st unit of good is X is most likely to be
a. less than 0.5Y.
b. more than 0.5Y but less than 2Y.
c. more than 0.5Y
d. less than 0.5Y but more than zero.
e. none of the above
North Korea has ____________ the process of globalization, while South Korea has
_______________ it.A likely result of this is that South Koreans have a much
______________ standard of living than North Koreans.
a. embraced; avoided; higher
b. embraced; avoided; lower
c. avoided; embraced; lower
d. avoided; embraced; higher
Rational ignorance exists primarily because
a. voters are apathetic.
b. politicians tend to voice the same general views, so there is no reason to learn more
about the issues.
c. the costs of becoming informed outweigh the benefits of doing so.
d. any of the above
Which of the following is most likely to be an unintended effect of placing safety caps
on medicines?
a. It is now harder for people to open their medicine containers.
b. People leave their medicine containers open more often, which ends up making it
easier for children to get into the medicine.
c. Fewer people get sick and need medicine.
d. Medicine prices fall sharply.
The policy ineffectiveness proposition (PIP) argument states that under certain
circumstances, neither expansionary demand-side fiscal policy nor expansionary
monetary policy is effective at achieving macroeconomic goals.
a. True
b. False
If the current unemployment rate is equal to the natural unemployment rate, then
current Real GDP is
a. greater than Natural Real GDP.
b. equal to Natural Real GDP.
c. equal to the Real GDP produced at full employment.
d. less than Natural Real GDP.
e. b and c
It is possible for the economy to be producing at a point that lies beyond its institutional
production possibilities frontier (PPF), but not its physical PPF.
a. True
b. False
Compared to the Keynesian transmission mechanism, the monetarist transmission
mechanism is
a. direct.
b. indirect.
c. inverse.
d. none of the above