The Congressional Budget Office estimates that ________ account(s) for less than 1
percent of health care costs in the United States.
A) the aging population
B) uninsured patients receiving treatment in hospital emergency rooms that could have
been provided less expensively at doctor’s offices
C) the payments to settle malpractice lawsuits and the premiums doctors pay for
malpractice insurance
D) advances in medical technology
Table 7-4
Output Per Hour of Work
Table 7-4 shows the output per hour of work for light bulbs and flash drives in Mexico
and in Canada.
Refer to Table 7-4.
a. Which country has an absolute advantage in the production of light bulbs and flash
drives?
b. Which country has a comparative advantage in the production of light bulbs?
c. Which country has a comparative advantage in the production of flash drives?
By 2013, how many European countries were members of the European Union?
A) 12
B) 17
C) 28
D) 57
Which of the following describes actual trends in the U.S. labor force participation rate?
A) The labor force participation rate of adult men has risen since 1950.
B) The labor force participation rate of adult women has fallen since 1950.
C) The labor force participation rate of adult men not in school, but too young to retire
has risen since 1950.
D) The labor force participation rate of adult women has risen since 1950.
E) The labor force participation rate of all adults has fallen since 1950.
Table 2-10
Refer to Table 2-10. This table shows the number of labor hours required to produce a
wristwatch and a bushel of rice in Japan and Thailand.
a. Which country has an absolute advantage in the production of wristwatches?
b. Which country has an absolute advantage in the production of rice?
c. What is Japan’s opportunity cost of producing one wristwatch?
d. What is Thailand’s opportunity cost of producing one wristwatch?
e. What is Japan’s opportunity cost of producing one pound of rice?
f. What is Thailand’s opportunity cost of producing one pound of rice?
g. If each country specializes in the production of the product in which it has a
comparative advantage, who should produce wristwatches?
h. If each country specializes in the production of the product in which it has a
comparative advantage, who should produce rice?
Fluctuating exchange rates can alter a multinational firm’s profits and losses. The U.S.
corporation, Motorola, produces cell phones and sells cell phones in Mexico. If the
dollar appreciates against the peso, then Motorola’s revenues from these operations
should ________ and its costs from these operations should ________.
A) rise; fall
B) rise; rise
C) fall; fall
D) fall; rise
Figure 16-10
Refer to Figure 16-10. In the graph above, suppose the economy in Year 1 is at point A
and expected in Year 2 to be at point B. Which of the following policies could the
Congress and the president use to move the economy to point C?
A) increase income taxes
B) increase government spending
C) buy Treasury bills
D) decrease the discount rate
Compared to a situation in which there is no change in the value of the dollar relative to
the peso, in which of the following situations would you be worse off?
A) you borrow 10,000 pesos, you earn income in dollars, the dollar appreciates against
the peso, you must pay back the loan in pesos
B) you borrow $10,000, you earn income in pesos, the dollar depreciates against the
peso, you must pay back the loan in dollars
C) you borrow $10,000, you earn income in pesos, the dollar appreciates against the
peso, you must pay back the loan in dollars
D) you borrow 10,000 pesos, you earn income in pesos, the dollar depreciates against
the peso, you must pay back the loan in pesos
Assume a closed economy with fixed taxes and the marginal propensity to consume is
equal to 0.9. What is the government spending multiplier?
A) 10
B) 9
C) 5
D) 1
Which is the largest component of aggregate expenditure?
A) planned investment expenditures
B) consumption expenditures
C) government expenditures
D) net export expenditures
During the month of May, 10 million workers moved from being classified as
“unemployed” to being classified as “employed.” As a result,
A) the unemployment rate rose.
B) the labor force participation rate fell.
C) the unemployment rate fell.
D) the labor force participation rate rose.
Which of the following did not help Thailand maintain its peg against the dollar in the
1990s?
A) borrowing dollars from the International Monetary Fund in exchange for baht
B) buying baht on the foreign exchange market to support higher demand for the baht
C) increasing domestic interest rates to attract more foreign investors
D) foreigners selling off new investments in Thailand
A copyright grants the creator of a book, film, or piece of software exclusive legal
rights to use the creation for how long?
A) 10 years
B) 20 years
C) 50 years
D) the creator’s lifetime plus 70 years for the creator’s heirs
Economists refer to the actions people take after they have entered into a transaction
that makes the other party to the transaction worse off as
A) bad faith.
B) economic inefficiency.
C) moral hazard.
D) market failure.
Identify each of the following as (i) part of an expansionary fiscal policy, (ii) part of a
contractionary fiscal policy, or (iii) not part of fiscal policy.
a. The personal income tax rate is lowered.
b. Congress cuts spending on defense.
c. College students are allowed to deduct tuition costs from their federal income taxes.
d. The corporate income tax rate is lowered.
e. The state of Nevada builds a new tollway in an attempt to expand employment and
ease traffic in Las Vegas.
Tanesha sells homemade candles over the Internet. Her annual revenue is $64,000 per
year, the explicit costs of her business are $17,000, and the opportunity costs of her
business are $22,000. What is her accounting profit?
A) $17,000
B) $22,000
C) $47,000
D) $64,000