Figure 3-12
Refer to Figure3-12. If Argentina and Peru each divides its time equally between
producing corn and fish, then total production is
a. 13 tons of corn and 15 tons of fish.
b. 13 tons of corn and 10 tons of fish.
c. 12 tons of corn and 16 tons of fish.
d. 12 tons of corn and 11 tons of fish
Which of the following events could shift the demand curve for gasoline to the left?
a. The income of gasoline buyers rises, and gasoline is a normal good.
b. The income of gasoline buyers falls, and gasoline is an inferior good.
c. Public service announcements run on television encourage people to walk or ride
bicycles instead of driving cars.
d. The price of gasoline rises.
If you believe that stock prices follow a random walk, then probably you
a. do not believe that there is positive relationship between risk and return.
b. do not believe that stock prices reflect all available information.
c. believe in the validity of the efficient markets hypothesis.
d. believe that it is a good idea to engage in fundamental analysis.
When a production possibilities frontier is bowed outward, the opportunity cost of the
second good in terms of the first good increases as more of the second good is
produced.
a. True
b. False
Moving from the late 1960s to 1970-1973,
a. inflation remained high while the unemployment rate was lower than in the late
1960s.
b. inflation remained high while the unemployment rate was higher than in the late
1960s.
c. inflation remained low while the unemployment rate was lower than in the late
1960s.
d. inflation remained low while the unemployment rate was higher than in the late
1960s.
John Maynard Keynes referred to economics as an easy subject,
a. at which very few excel.
b. but not as easy as philosophy or the pure sciences.
c. which very few can enjoy.
d. which deals primarily with common sense.
Which of the following is nota characteristic of a bond?
a. its tax treatment
b. its credit risk
c. its term
d. its dividend yield
The slope of a line that passes through the points (20, 30) and (40, 14) is
a. -5/4.
b. -4/5.
c. 4/5.
d. 5/4.
A demand schedule is a table that shows the relationship between
a. quantity demanded and quantity supplied.
b. income and quantity demanded.
c. price and quantity demanded.
d. price and income.
The term real GDP refers to a country’s actual GDP as opposed to its estimated GDP.
a. True
b. False
Annie is an excellent baker and Sam has a plentiful farm. If Sam trades eggs and butter
to Annie for some of Annie’s bread and pastries,
a. only Sam is made better off by trade.
b. only Annie is made better off by trade.
c. both Sam and Annie are made better off by trade.
d. neither Sam nor Annie are made better off by trade.
One thing economists do to help them understand how the real world works is
a. make assumptions.
b. ignore the past.
c. try to capture every aspect of the real world in the models they construct.
d. All of the above are correct.
Figure 2-7
RefertoFigure2-7. Efficient production is represented by which point(s)?
a. L, M
b. L, M, N, P, Q
c. N, O, P
d. Q
Human capital is
a. the same thing as technological knowledge.
b. the same thing as labor.
c. the tools and equipment operated by humans.
d. knowledge and skills that workers have acquired.
In the 1980s, both the U.S. government budget and U.S. trade deficits increased.
a. True
b. False
If the economy is at the point where the short-run Phillips curve intersects the long-run
Phillips curve,
a. unemployment equals the natural rate and expected inflation equals actual inflation.
b. unemployment is above the natural rate and expected inflation equals actual inflation.
c. unemployment equals the natural rate and expected inflation is greater than actual
inflation.
d. None of the above is necessarily correct.
According to the assumptions of the quantity theory of money, if the money supply
increases 5 percent, then
a. both the price level and real GDP would rise by 5 percent.
b. the price level would rise by 5 percent and real GDP would be unchanged.
c. the price level would be unchanged and real GDP would rise by 5 percent.
d. both the price level and real GDP would be unchanged.
It is possible for a country without a lot of domestic natural resources to have a high
standard of living.
a. True
b. False
A Swiss watchmaker opens a factory in the United States. This is an example of Swiss
a. exports.
b. imports.
c. foreign portfolio investment.
d. foreign direct investment.
In the United States, currency holdings per person average about
a. $110; one explanation for this relatively small average is that many people use credit
and debit cards to make transactions.
b. $110; one explanation for this relatively small average is that U.S. citizens hold a lot
of foreign currency.
c. $4,490; one explanation for this relatively large amount is that criminals probably
prefer currency as a medium of exchange.
d. $4,490; one explanation for this relatively large average is that U.S. citizens hold a
lot of foreign currency.
According to the classical dichotomy, which of the following is affected by monetary
factors?
a. nominal wages
b. the price level
c. nominal GDP
d. All of the above are correct.
Which of the following areas of study typifies macroeconomics as opposed to
microeconomics?
a. the effects of rent control on the availability of housing in New York City
b. the economic impact of tornadoes on cities and towns in Oklahoma
c. how tariffs on shoes affects the shoe industry
d. the effect on the economy of changes in the nation’s unemployment rate
When wages are set by contract, inflation
a. reduces real wages; this likely makes labor markets more flexible.
b. reduces real wages; this likely makes labor markets less flexible.
c. raises real wages; this likely makes labor markets more flexible.
d. raises real wages; this likely makes labor markets less flexible.
The gains from specialization and trade are based on absolute advantage.
a. True
b. False
The sacrifice ratio of the Volcker disinflation was larger than previous estimates had
predicted.
a. True
b. False
Which of the following items is included in U.S. GDP?
a. final goods and services that are purchased by the U.S. federal government
b. intermediate goods that are produced in the U.S. but that are unsold at the end of the
GDP accounting period
c. goods and services produced by foreign citizens working in the U.S.
d. All of the above are included in U.S. GDP.
Your professor loves her work, teaching economics. She has been offered other
positions in the corporate world that would increase her income by 25 percent, but she
has decided to continue working as a professor. Her decision would not change unless
the marginal
a. cost of teaching increased.
b. benefit of teaching increased.
c. cost of a corporate job increased.
d. benefit of a corporate job decreased.
Volume, as reported in stock tables, refers to the
a. number of shares traded.
b. percentage of shares outstanding traded.
c. number of shares traded times the price they sold at.
d. number of shares of a company traded divided by the shares of all companies traded.
Table 29-2.
The information in the table pertains to an imaginary economy.
RefetoTable29-2. What is the M2 money supply?
a. $1,300 billion
b. $580 billion
c. $880 billion
d. $1,000 billion
The steps involved in calculating the consumer price index and the inflation rate, in
order, are as follows:
a. Choose a base year, update the basket, find the prices, estimate the basket’s cost,
compute the index, and compute the inflation rate.
b. Choose a base year, fix the basket, find the prices, compute the inflation rate,
compute the basket’s cost, and compute the index.
c. Fix the basket, find the prices, compute the basket’s cost, choose a base year and
compute the index, and compute the inflation rate.
d. Fix the basket, find the prices, compute the inflation rate, compute the basket’s cost,
and choose a base year and compute the index.
According to the doctrine of purchasing-power parity, which of the following should
depreciate if over the next year the inflation rate is higher in the U.S. than in the Euro
area?
a. both the U.S. real exchange rate and the U.S. nominal exchange rate
b. the U.S. real exchange rate, but not the U.S. nominal exchange rate
c. the U.S. nominal exchange rate, but not the U.S. real exchange rate
d. neither the U.S. nominal exchange rate nor the U.S. real exchange rate
If, at some interest rate, the quantity of money supplied is less than the quantity of
money demanded, people will desire to
a. sell interest-bearing assets, causing the interest rate to decrease.
b. sell interest-bearing assets, causing the interest rate to increase.
c. buy interest-bearing assets, causing the interest rate to decrease.
d. buy interest-bearing assets, causing the interest rate to increase.
Figure27-5. The figure shows a utility function for Dexter.
RefertoFigure27-5. From the appearance of the utility function, we know that
a. Dexter is risk averse.
b. Dexter gains more satisfaction when his wealth increases by Xdollars than he loses in
satisfaction when his wealth decreases by Xdollars.
c. the property of decreasing marginal utility applies to Dexter.
d. All of the above are correct.
Table 3-23
Assume that the farmer and the rancher can switch between producing pork and
producing tomatoes at a constant rate.
RefertoTable3-23.The rancher has an absolute advantage in the production of
a. pork.
b. tomatoes.
c. both goods.
d. neither good.
In a particular economy, the price index was 120 in 2012 and 130 in 2013. Which of the
following statements is correct?
a. The economy experienced a rising price level between 2012 and 2013.
b. The economy experienced a higher inflation rate between 2012 and 2013 than it had
experienced between 2011 and 2012.
c. The inflation rate between 2012 and 2013 was 10 percent.
d. The base year is 2011.