In a competitive market, the quantity of a product produced and the price of the product
are determined by
a. buyers.
b. sellers.
c. both buyers and sellers.
d. None of the above is correct.
Table 4-2
Refer to Table 4-2. Whose demand does not obey the law of demand?
a. William’s
b. Fergie’s
c. Taboo’s
d. apl.de.ap’s
Which of the following events must cause equilibrium price to fall?
a. demand increases and supply decreases
b. demand and supply both decrease
c. demand decreases and supply increases
d. demand and supply both increase
On a downward-sloping linear demand curve, total revenue reaches its maximum value
at the
a. midpoint of the demand curve.
b. lower end of the demand curve.
c. upper end of the demand curve.
d. It is impossible to tell without knowing prices and quantities demanded.
Which of the following is downward-sloping?
a. both the long-run Phillips curve and the short-run Phillips curve
b. neither the long-run Phillips curve nor the short-run Phillips curve
c. the long-run Phillips curve, but not the short-run Phillips curve
d. the short-run Phillips curve, but not the long-run Phillips curve
The Federal Reserve
a. was created in 1836.
b. serves as a lender of last resort.
c. was created to facilitate the federal government’s collection of taxes as well as its
expenditures.
d. All of the above are correct.
A country has net capital outflow of -10 billion euros and domestic investment of 20
billion euros. What is its national saving?
a. 30 billion euros
b. 10 billion euros
c. -10 billion euros
d. -30 billion euros
If inflation expectations rise, the short-run Phillips curve shifts
a. right, so that at any inflation rate unemployment is higher in the short run than
before.
b. left, so that at any inflation rate unemployment is higher in the short run than before.
c. right, so that at any inflation rate unemployment is lower in the short run than before.
d. left, so that at any inflation rate unemployment is lower in the short run than before.
In order to include many different goods and services in an aggregate measure, GDP is
computed using, primarily,
a. values of goods and services based on surveys of consumers.
b. market prices.
c. quantities purchased by a typical urban household.
d. profits from producing goods and services.
Figure 7-6
Refer to Figure 7-6. What happens to the consumer surplus if the price rises from $100
to $150?
a. The new consumer surplus is half of the original consumer surplus.
b. The new consumer surplus is 25 percent of the original consumer surplus.
c. The new consumer surplus is double the original consumer surplus.
d. The new consumer surplus is triple the original consumer surplus.
Germany could have avoided the high inflation that it experienced in the 1920s by
a. not directing so many of its resources toward preparation for World War II.
b. not increasing taxes so much on the German middle class.
c. not allowing the quantity of money to increase so rapidly.
d. using government policies to stimulate the economy more so than what was done.
Figure 3-5
Hosne’s Production Possibilities Frontier Merve’s Production Possibilities Frontier
Refer to Figure 3-5. Merve should specialize in the production of
a. purses.
b. wallets.
c. both goods.
d. neither good.
Figure 13-2. The figure depicts a supply-of-loanable-funds curve and two
demand-for-loanable-funds curves.
Refer to Figure 13-2. What is measured along the horizontal axis of the graph?
a. the quantity of loanable funds
b. the size of the government budget deficit or surplus
c. the real interest rate
d. the nominal interest rate
Milton Friedman argued that the Fed’s control over the money supply could be used to
peg
a. the level or growth rate of a nominal variable, but not the level or growth rate of a
real variable.
b. the level of a nominal or real variable, but not the growth rate of a real or nominal
variable.
c. the level or growth rate of a real variable, but not the level or growth rate of a
nominal variable.
d. both levels and growth rates of both real and nominal variables.
Monetary Policy in Highland
Highland has had inflation of 15% for many years. Highland establishes a new central
bank, the Bank of Highland, with the hopes of reducing the inflation rate.
Refer to Monetary Policy in Highland. The Bank of Highland reduced inflation to its
announced goal of 5%. However its efforts made the unemployment rate rise by 10
percentage points for a year while output fell by 30 percent for a year. Which of the
following is correct?
a. Initially people’s inflation expectations had been higher than 5%. The sacrifice ratio
was 3.
b. Initially people’s inflation expectations had been higher than 5%. The sacrifice ratio
was 1.
c. Initially people’s inflation expectations had been lower than 5%. The sacrifice ratio
was 3.
d. Initially people’s inflation expectations had been lower than 5%. The sacrifice ratio
was 1.
Which of the following would likely be studied by a microeconomist rather than a
macroeconomist?
a. the effect of foreign direct investment on economic growth
b. the effect of a sales tax on the cigarette industry
c. the effect of an investment tax credit on the economy’s capital stock
d. the effect of a war on government spending
A country has $60 million of saving and domestic investment of $40 million. Net
exports are
a. $20 million.
b. -$20 million.
c. $100 million.
d. -$100 million.
What would happen to the equilibrium price and quantity of lattés if the cost of
producing steamed milk, which is used to make lattés, rises?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
Suppose the price index was 105 in 2007, 115.5 in 2008, and the inflation rate was
lower between 2008 and 2009 than it was between 2007 and 2008. This means that
a. the price index in 2009 was lower than 115.5.
b. the price index in 2009 was lower than 126.
c. the price index in 2009 was lower than 127.05.
d. the inflation rate between 2008 and 2009 was lower than 1.1 percent.
Bill created a new software program he is willing to sell for $200. He sells his first copy
and enjoys a producer surplus of $150. What is the price paid for the software?
a. $50.
b. $150.
c. $200.
d. $350.
People who buy newly issued stock in a corporation such as Crate and Barrel provide
a. debt finance and so become part owners of Crate and Barrel.
b. debt finance and so become creditors of Crate and Barrel.
c. equity finance and so become part owners of Crate and Barrel.
d. equity finance and so become creditors of Crate and Barrel.
An economic theory about international trade that is based on the assumption that there
are only two countries trading two goods
a. is useless, since the real world has many countries trading many goods.
b. can be useful only in situations involving two countries and two goods.
c. can be useful in the classroom, but is useless in the real world.
d. can be useful in helping economists understand the complex world of international
trade involving many countries and many goods.
Labor Market Data
Below is some hypothetical data on the labor market.
Refer to Labor Market Data. If the government imposed a minimum wage of $7,
what would unemployment be?
a. 0
b. 2,000
c. 3,000
d. 5,000
When taxes decrease, consumption
a. decreases as shown by a movement to the left along a given aggregate-demand curve.
b. decreases as shown by a shift of the aggregate demand curve to the left.
c. increases as shown by a movement to the right along a given aggregate-demand
curve.
d. increases as shown by a shift of the aggregate demand curve to the right.
Table 15-3
2010 Labor Data for Adults (age 16 and older) in Meditor
Refer to Table 15-3. What is the adult male population in Meditor?
a. 50 million
b. 90 million
c. 130 million
d. 135 million
When the consumer price index rises, the typical family
a. has to spend more dollars to maintain the same standard of living.
b. can spend fewer dollars to maintain the same standard of living.
c. finds that its standard of living is not affected.
d. can offset the effects of rising prices by saving more.
When the Fed sells government bonds, the reserves of the banking system
a. increase, so the money supply increases.
b. increase, so the money supply decreases.
c. decrease, so the money supply increases.
d. decrease, so the money supply decreases.
Last year Panglossia had real GDP of 27.0 billion. This year it had real GDP of 31.5
billion. Which of the following changes in population is consistent with a 5 percent
growth rate of real GDP per person over the last year?
a. The population decreased from 88 million to 84 million.
b. The population decreased from 75 million to 73 million.
c. The population increased from 45 million to 50 million.
d. The population increased from 60 million to 62 million.
In economics, graphs serve two purposes: they offer a way to visually express ideas,
and they provide a way of finding and interpreting patterns when analyzing economic
data.
Suppose banks decide to hold more excess reserves relative to deposits. Other things
the same, this action will cause the
a. money supply to fall. To reduce the impact of this the Fed could lower the discount
rate.
b. money supply to fall. To reduce the impact of this the Fed could raise the discount
rate.
c. money supply to rise. To reduce the impact of this the Fed could lower the discount
rate.
d. money supply to rise. To reduce the impact of this the Fed could raise the discount
rate.
Producer surplus directly measures
a. the well-being of society as a whole.
b. the well-being of buyers and sellers.
c. the well-being of sellers.
d. sellers’ willingness to sell.
In 2009 the federal debt was about
a. $17 billion.
b. $710 billion.
c. $7.6 trillion.
d. $76 trillion.