Figure 3-23
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 Figure3-23. 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.
According to the Phillips curve, unemployment and inflation are negatively related in
a. the short run and in the long run.
b. the short run, but not in the long run.
c. the long run, but not in the short run.
d. neither the long run nor the short run.
Consider two cars manufactured by Chevrolet in 2014. During 2014, Chevrolet sells
one of the two cars to Emily for $20,000. Later in the same year, Emily sells the car to
Jim for $18,000. The second automobile, with a market value of $19,000, is unsold at
the end of 2014 and it remains in Chevrolet’s inventory. The transactions just described
contribute how much to GDP for 2014?
a. $20,000
b. $37,000
c. $38,000
d. $39,000
All else equal, if there are diminishing returns, then if a country raised its capital by 100
units last year and by 100 units this year,
a. the increase in output was greater for this year than last year.
b. the increase in output was greater last year than this year.
c. the increase in output is the same in both years.
d. None of the above is necessarily correct.
What would happen in the market for loanable funds if the government were to
decrease the tax rate on interest income?
a. There would be an increase in the amount of loanable funds borrowed.
b. There would be a reduction in the amount of loanable funds borrowed.
c. There would be no change in the amount of loanable funds borrowed.
d. The change in loanable funds is uncertain.
Figure 2-7
RefertoFigure2-7. This economy has the ability to produce at which point(s)?
a. N, O, P
b. L, M
c. L, M, N, O, P
d. L, M, Q
A corporation’s earnings are
a. the amount of revenue it receives for the sale of its products minus its costs of
production as measured by its accountants minus the dividends paid out.
b. the amount of revenue it receives for the sale of its products minus its direct and
indirect costs of production as measured by its economists minus the dividends paid
out.
c. the amount of revenue it receives for the sale of its products minus its costs of
production as measured by its accountants.
d. the amount of revenue it receives for the sale of its products minus its direct and
indirect costs of production as measured by its economists.
The willingness of citizens to pay for vaccinations does not include the benefit society
receives from having vaccinated citizens who cannot transmit an illness to others. This
extra benefit society gets from vaccinating its citizens is known as
a. productivity.
b. an externality.
c. market power.
d. property rights.
Table 28-2
Labor Data for Aridia
RefetoTable28-2.The number of adults not in the labor force of Aridia in 2010 was
a. 200.
b. 400.
c. 600.
d. 1,800.
Which of the following countries had the highest level of real GDP per person in 2010?
a. Germany
b. Canada
c. United States
d. Japan
Table 4-2
Refer toTable4-2. Whose demand does notobey the law of demand?
a. Abby’s
b. Brandi’s
c. Carrie’s
d. DeeDee’s
It is difficult for economists to make observations and develop theories, but it is easy
for economists to run experiments to generate data to test their theories.
a. True
b. False
Mike, a U.S. citizen, buys $1,000 worth of olives from Greece. By itself this purchase
a. increases U.S. imports by $1,000 and increases U.S. net exports by $1,000.
b. increases U.S. imports by $1,000 and decreases U.S. net exports by $1,000.
c. increases U.S. exports by $1,000 and increases U.S. net exports by $1,000.
d. increases U.S. exports by $1,000 and decreases U.S. net exports by $1,000.
Dave, a U.S. citizen buys a bicycle manufactured in China. Dave’s purchase is
a. both a U.S. and Chinese export.
b. both a U.S. and Chinese import.
c. a U.S. import and a Chinese export.
d. a U.S. export and a Chinese import.
Which of the following statements is correct?
a. As a group, economists see no purpose in distinguishing between the nominal interest
rate and the real interest rate.
b. The interest rate that is usually reported is the nominal interest rate.
c. If the nominal interest rate increases and the inflation rate remains unchanged, then
the real interest rate decreases.
d. All of the above are correct.
If there is a surplus in the market for loanable funds, the resulting change in the real
interest rate
a. reduces both the quantity of loanable funds supplied and the quantity of loanable
funds demanded.
b. reduces the quantity of loanable funds supplied and raises the quantity of loanable
funds demanded
c. raises both the quantity of loanable funds supplied and the quantity of loanable funds
demanded.
d. raises the quantity of loanable funds supplied and reduces the quantity of loanable
funds demanded.
Rory receives, from an insurance company, a payment of $5,000 each year, and he will
continue to receive these payments until he dies. This series of payments is called a(n)
a. portfolio.
b. bond.
c. dividend.
d. annuity.
Table 23-6
The table below contains data for the country of Batterland, which produces only
waffles and pancakes. The base year is 2013.
RefertoTable23-6.In 2011, this country’s GDP deflator was
a. 57.9.
b. 100.0.
c. 137.5.
d. 169.2.
Figure 28-5
RefetoFigure28-5. If the minimum wage is set at $125, then
a. the quantity of labor demanded will equal 20.
b. the quantity of labor supplied will equal 35.
c. the surplus of labor will equal 25.
d. unemployment will equal 10.
Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5
empty rooms for tonight. The marginal cost per room per night
a. is $40.
b. is $80.
c. is $120.
d. cannot be determined from the information given.
If the reserve ratio is 10 percent, the money multiplier is
a. 100.
b. 10.
c. 9/10.
d. 1/10.
The famous observation that households and firms interacting in markets act as if they
are guided by an “invisible hand” that leads them to desirable market outcomes comes
from whose 1776 book?
a. David Ricardo
b. Thorstein Veblen
c. John Maynard Keynes
d. Adam Smith
Retained earnings are
a. earnings of a company that are not paid out to stockholders.
b. the amount of revenue a corporation receives for the sale of its products minus its
costs of production as measured by its accountants.
c. the single most important piece of information about a stock.
d. computed by multiplying the dividend yield by the price of the stock.
Scenario 26-1. Assume the following information for an imaginary, closed economy.
GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving =
$15,000.
RefertoScenario26-1.For this economy, consumption amounts to
a. $68,000.
b. $38,000.
c. $53,000.
d. $60,000.
Which of the following defines an annuity?
a. For a fee, an insurance company provides you with regular income until you die.
b. A surcharge is added to life-insurance premiums paid by persons in dangerous
occupations.
c. Annuity is another name for stock funds managed by mutual fund managers.
d. Annuity is another name for any diversified portfolio.
The circular flow model is not used anymore because it fails to perfectly replicate real
world situations.
a. True
b. False
An increase in the overall level of prices in an economy is referred to as
a. the income effect.
b. inflation.
c. deflation.
d. the substitution effect.
Which of the following both shift aggregate demand right?
a. net exports rise for some reason other than a price change and government purchases
rise.
b. net exports rise for some reason other than a price change and taxes increase.
c. net exports fall for some reason other than a price change and government purchases
fall.
d. net exports fall for some reason other than a price change and taxes fall.
According to 2012 data on the U.S. population, which of the following groups of adults
of prime working age (ages 25-54) had the highest labor-force participation rate?
a. white males
b. white females
c. black males
d. black females
Which of the following is correct?
a. Real GDP is the variable most commonly used to measure short-run economic
fluctuations. These fluctuations can be predicted with some accuracy.
b. Real GDP is the variable most commonly used to measure short-run economic
fluctuations. It is almost impossible to predict these fluctuations with much accuracy.
c. Nominal GDP is the variable most commonly used to measure short-run economic
fluctuations. These fluctuations can be predicted with some accuracy.
d. Nominal GDP is the variable most commonly used to measure short-run economic
fluctuations. It is almost impossible to predict these fluctuations with much accuracy.
Which of the following is an example of a normative, as opposed to positive,
statement?
a. Universal health care would be good for U.S. citizens.
b. An increase in the cigarette tax would cause a decrease in the number of smokers.
c. A decrease in the minimum wage would decrease unemployment.
d. A law requiring the federal government to balance its budget would increase
economic growth.
“If all economists were laid end to end, they would not reach a conclusion.” Who made
this whimsical observation?
a. Harry Truman
b. George Bernard Shaw
c. John Maynard Keynes
d. Ronald Reagan