The historical rise in living standards of American workers is primarily a result of
a. the influence of labor unions in America.
b. tariff protection imposed by the American government.
c. the enactment of minimum-wage laws in America.
d. the rise in American productivity.
Figure 9-1
The figure illustrates the market for wool in Scotland.
Refer to Figure 9-1. When trade in wool is allowed, producer surplus in Scotland
a. increases by the area B + D.
b. increases by the area B + D + G.
c. decreases by the area C + F.
d. decreases by the area G.
If the natural rate of unemployment is 6%, but the Fed thinks it is 5% and attempts to
use monetary policy to move unemployment from 6% to 5% then in the short run which
of the following variables will the Fed’s policy raise above their long-run levels?
a. the price level and real GDP
b. the price level but not real GDP
c. real GDP but not the price level
d. neither real GDP nor the price level
Figure 22-2
Use the pair of diagrams below to answer the following questions.
Refer to Figure 22-2. If the economy starts at C and 1, then in the short run, a decrease
in taxes moves the economy to
a. D and 2.
b. D and 3.
c. back to C and 1.
d. None of the above is correct.
Suppose a basket of goods and services has been selected to calculate the CPI and 2002
has been selected as the base year. In 2002, the basket’s cost was $50; in 2004, the
basket’s cost was $52; and in 2006, the basket’s cost was $57.25. The value of the CPI
in 2006 was
a. 91.6.
b. 104.6.
c. 109.2.
d. 114.5.
Which type of money has intrinsic value?
a. commodity money
b. fiat money
c. both commodity money and fiat money
d. neither commodity money nor fiat money
Figure 3-2
Peru’s Production Possibilities Frontier
Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that
a. for Peru, it is more costly to produce emeralds than it is to produce rubies.
b. Peru will produce more emeralds and fewer rubies as time goes by.
c. Peru faces a tradeoff between producing emeralds and producing rubies.
d. Peru should specialize in producing rubies.
Suppose that there are diminishing returns to capital. Suppose also that two countries
are the same except one has less capital and so less real GDP per person. Suppose that
both increase their saving rate from 3 percent to 4 percent. In the long run
a. both countries will have permanently higher growth rates of real GDP per person, and
the growth rate will be higher in the country with more capital.
b. both countries will have permanently higher growth rates of real GDP per person,
and the growth rate will be higher in the country with less capital.
c. both countries will have higher levels of real GDP per person, and the temporary
increase in growth in the level of real GDP per person will have been greater in the
country with more capital.
d. both countries will have higher levels of real GDP per person, and the temporary
increase in growth in the level of real GDP per person will have been greater in the
country with less capital.
Table 10-1
The table below contains data for country A for the year 2010.
Refer to Table 10-1. What was country A’s investment in 2010?
a. $1178
b. $1295
c. $1882
d. $1999
Most economists believe that money neutrality holds
a. in the short run but not the long run.
b. in the long run but not the short run.
c. in both the short run and the long run.
d. in neither the short run nor the long run.
Total surplus
a. can be used to measure a market’s efficiency.
b. is the sum of consumer and producer surplus.
c. is the to value to buyers minus the cost to sellers.
d. All of the above are correct.
When a country that exported a particular good abandons a free-trade policy and adopts
a no-trade policy,
a. consumer surplus increases and total surplus increases in the market for that good.
b. consumer surplus increases and total surplus decreases in the market for that good.
c. consumer surplus decreases and total surplus increases in the market for that good.
d. consumer surplus decreases and total surplus decreases in the market for that good.
Demand is said to have unit elasticity if the price elasticity of demand is
a. less than 1.
b. greater than 1.
c. equal to 1.
d. equal to 0.
Figure 3-5
Hosne’s Production Possibilities Frontier Merve’s Production Possibilities Frontier
Refer to Figure 3-5. If the production possibilities frontier shown for Merve is for 8
hours of work, then how long does it take Merve to make one purse?
a. 1/2 hour
b. 2 hours
c. 4 hours
d. 8 hours
Figure 5-11
Refer to Figure 5-11. Using the midpoint method, the price elasticity of demand
between point A and point B is about
a. 0.33.
b. 0.5.
c. 2.0.
d. 3.0.
Table 5-1
Refer to Table 5-1. Which of the following is consistent with the elasticities given in
Table 5-2?
a. A is grapes, and B is fruit.
b. A is T-shirts, and B is socks.
c. A is train tickets before cars were invented, and B is train tickets after cars were
invented.
d. A is diamond necklaces, and B is beds.
What will happen to the equilibrium price and quantity of traditional camera film if
traditional cameras become more expensive, digital cameras become cheaper, the cost
of the resources needed to manufacture traditional film falls, and more firms decide to
manufacture traditional film?
a. Price will fall, and the effect on quantity is ambiguous.
b. Price will rise, and the effect on quantity is ambiguous.
c. Quantity will fall, and the effect on price is ambiguous.
d. Quantity will rise, and the effect on price is ambiguous.
Figure 3-11
The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
Refer to Figure 3-11. Whenever Bonovia increases its production of ham by 1 pound
per month, then it must decrease its production of cheese by
a. 0.75 pound.
b. 0.80 pound.
c. 1.00 pounds.
d. 1.25 pounds.
In recent decades, average income in some East Asian countries, such as South Korea,
Singapore, and Taiwan, has risen about
a. 2 percent per year.
b. 4 percent per year.
c. 7 percent per year.
d. 10 percent per year.
If the real exchange rate for coal is 1.5, the price of coal in the U.S. is $50 per ton, and
the price of coal in Britain is 20 British pounds per ton, what is the nominal exchange
rate?
a. 15/4
b. 5/3
c. 3/5
d. 4/15
Suppose the government taxes the wealthy at a higher rate than it taxes the poor and
then develops programs to redistribute the tax revenue from the wealthy to the poor.
This redistribution of wealth
a. is more efficient and more equal for society.
b. is more efficient but less equal for society.
c. is more equal but less efficient for society.
d. is less equal and less efficient for society.
In a particular country in 2000, the average worker needed to work 40 hours to produce
55 units of output. In that same country in 2008, the average worker needed to work 30
hours to produce 45 units of output. In that country, the productivity of the average
worker
a. decreased by about 6 percent between 2000 and 2008.
b. remained unchanged between 2000 and 2008.
c. increased by about 9 percent between 2000 and 2008.
d. increased by about 18 percent between 2000 and 2008.
In the open-economy macroeconomic model, if the supply of loanable funds shifts
right, then
a. net capital outflow increases so the demand for dollars in the market for
foreign-currency exchange shifts right.
b. net capital outflow increases so the supply of dollars in the market for
foreign-currency exchange shifts right.
c. net capital outflow decreases so the demand for dollars in the market for
foreign-currency exchange shifts left.
d. net capital outflow decreases so the supply of dollars in the market for
foreign-currency exchange shifts right.
In competitive markets, buyers
a. are price takers, but sellers are price setters.
b. are price setters, but sellers are price takers.
c. and sellers are price takers.
d. and sellers are price setters.
Table 10-1
The table below contains data for Bahkan for the year 2010.
Refer to Table 10-1. Personal income for Bahkan in 2010 is
a. $87.
b. $89.
c. $103.
d. $105.
Figure 22-6
Use the two graphs in the diagram to answer the following questions.
Refer to Figure 22-6. Starting from C and 3, in the long run, an increase in money
supply growth moves the economy to
a. A and 1.
b. back to C and 3.
c. D and 4.
d. F and 5.
Figure 9-3. The domestic country is China.
Refer to Figure 9-3. Relative to a no-trade situation, which of the following comes
with trade?
a. Consumer surplus increases by $1,800 and producer surplus increases by $1,600.
b. Consumer surplus decreases by $1,000 and producer surplus increases by $1,500.
c. Consumer surplus decreases by $1,000 and producer surplus increases by $1,750.
d. Total surplus increases by $400.
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. The opportunity cost of 1 toaster for Maya is
a. 0.625 mixers.
b. 1.6 hours of labor.
c. 1.6 mixers.
d. 8 hours of labor.
Suppose that over the past year, the real interest rate was 6 percent and the inflation rate
was 4 percent. It follows that
a. the dollar value of savings increased at 6 percent, and the purchasing power of
savings increased at 2 percent.
b. the dollar value of savings increased at 6 percent, and the purchasing power of
savings increased at 10 percent.
c. the dollar value of savings increased at 10 percent, and the purchasing power of
savings increased at 2 percent.
d. the dollar value of savings increased at 10 percent, and the purchasing power of
savings increased at 6 percent.
Central planning refers to
a. markets guiding economic activity. Today many countries that had this system have
abandoned it.
b. markets guiding economic activity. Today many countries that did not have this
system have implemented it.
c. government guiding economic activity. Today many countries that had this system
have abandoned it.
d. government guiding economic activity. Today many countries that did not have this
system have implemented it.
Figure 8-11
Refer to Figure 8-11. The price labeled as P2 on the vertical axis represents the
a. difference between the price paid by buyers after the tax is imposed and the price
paid by buyers before the tax is imposed.
b. difference between the price received by sellers before the tax is imposed and the
price received by sellers after the tax is imposed.
c. price of the good before the tax is imposed.
d. price of the good after the tax is imposed.