If the relative price of one unit of good Y is 0.25 units of good Z, then it follows that the
absolute price of good Z can be __________ and the absolute price of good Y can be
__________.
a. $4,000; $2,000
b. $1,000; $2,000
c. $2,000; $1,000
d. a and c
e. none of the above
The typical face value of a corporate bond is $1,000.
a. True
b. False
When the official dollar price of a foreign currency is lowered, the dollar is being
a. appreciated.
b. overvalued.
c. undervalued.
d. devalued.
e. revalued.
Which of the following statements is false?
a. Capital consists of produced goods that can be used as inputs for further production.
b. The terms resources, inputs, and factors of production are synonyms.
c. Labor consists of the physical, but not mental, talents of people who contribute to the
production process.
d. Entrepreneurship is one of the four categories of resources.
e. The resource category land includes natural resources, such as minerals, forests,
water, and unimproved land.
What is the approximate present value of $500 four years from now if the interest rate
is 2 percent?
a. $462
b. $508
c. $510
d. $541
e. $485
As the interest rate falls,
a. the quantity demanded of loanable funds rises.
b. the quantity demanded of loanable funds falls.
c. the demand for loanable funds rises.
d. the supply of loanable funds falls.
Uncertainty
a. is the result of economic rent seeking.
b. is the same thing as risk.
c. exists when the probability of a given event can be estimated.
d. exists when the probability of a given event cannot be estimated.
e. none of the above
The total wage bill of a union will be maximized when the elasticity of demand for
labor is unit elastic.
a. True
b. False
Which economist said, “This focus on distribution makes the significance of
distributional issues (transfer issues) in political life relatively greater and the
significance of widespread common interest in political life relatively smaller.”?
a. John Maynard Keynes
b. Milton Friedman
c. David Friedman
d. Mancur Olson
e. David Ricardo
The cost of building a new interstate highway system is reported to be high at $25
billion. Does it necessarily follow that the interstate highway is not worth building?
a. Yes, because it is better to spend $25 billion on ending poverty than on building
another interstate highway system.
b. No, because building a new interstate highway system promotes economic growth,
which helps everyone.
c. No, because the benefits of building a new interstate highway system may be greater
than $25 billion.
d. Yes, because the benefits of building a new interstate highway system may be greater
than $25 billion.
Scarcity is defined as the condition in which
a. both wants and resources are limited.
b. wants are finite and resources infinite.
c. both wants and resources are infinite.
d. wants are infinite and resources finite.