If the current unemployment rate is 5%, under which of the following circumstances
would you expect the Fed to use contractionary monetary policy?
A) if the natural rate of unemployment is below 5%
B) if the natural rate of unemployment is above 5%
C) if the inflation rate is above 5%
D) if the inflation rate is below 5%
A demand curve that is horizontal indicates that the commodity
A) has few substitutes.
B) must be very cheap.
C) is a necessity.
D) has a large number of substitutes.
The Congressional Budget Office estimates that most of the increase in federal
spending on Medicare and Medicaid will be due to
A) the aging population.
B) increases in the cost of providing health care.
C) increases in immigration.
D) declining income levels.
Which of the following statements about utility and preferences is false?
A) If Sidra prefers tea to coffee and coffee to hot chocolate, then she must prefer tea to
hot chocolate.
B) Preferences can be ranked.
C) If two individuals, Ingrid and Inez, each consume the same bundle of goods, then
both Inez and Ingrid must receive the same utility from the bundle.
D) Utility cannot be compared across consumers.
Wage differences can be explained by all of the following except
A) compensating differentials.
B) differences in marginal revenue products.
C) economic discrimination.
D) comparable worth.
Textbook examples of trade between two nations are simplified in order to show how
two nations both benefit from trade. These examples are misleading because
A) in the real world, rich countries can take advantage of poor countries.
B) they do not account for the reduction in wages that occurs in both countries as a
result of trade.
C) some individuals in both countries may be made worse off because of trade.
D) trade restrictions are likely to be imposed as trade grows over time.
Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the
opportunity cost of her decision?
A) zero, since she will no longer be earning a salary
B) It depends on the “going rate” for home-care providers.
C) at least $125,000
D) the value she attributes to the satisfaction she receives from taking care of her
parents
If, in a perfectly competitive industry, the market price facing a firm is above its
average total cost at the output where marginal revenue equals marginal cost, then
A) firms are breaking even.
B) new firms are attracted to the industry.
C) existing firms will exit the industry.
D) market supply will remain constant.
A four-firm concentration ratio measures
A) the extent to which industry sales are concentrated among the four largest firms in
the industry.
B) the price elasticity of demand among the four largest firms in an industry.
C) the number of firms in an industry.
D) the price elasticity of demand in an industry.
eBay is an online auction site where more than 200 million items are auctioned
annually. What type of auctions are run on eBay?
A) noncooperative auctions
B) second-price auctions
C) cooperative auctions
D) double-blind auctions