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Oil and Natural Gas can each be used as a source of energy and are, for many purposes
interchangeable. Which of the following best explains the increase in the price of
natural gas that accompanied the increase in the price of oil during the 1990-1991
Persian Gulf War?
a. Increased oil prices raised demand for natural gas, a substitute good.
b. Increased oil prices raised the quantity demanded of natural gas by movement along
the natural gas demand curve.
c. Increased oil prices reduced supply of natural gas, a substitute good.
d. Increased oil prices reduced supply of natural gas, an alternate good.
e. Increased oil prices raised supply of natural gas, a substitute good.
Credit cards are considered to be money because they facilitate exchange.
Which of the following best describes the foreign exchange market? It is a market
where one country's
a. exports are traded for another country's imports
b. currency is traded for that of another
c. goods are traded for another country's services
d. imports are traded for another country's exports
e. services are traded for another country's goods
Say's law promises that each and every firm in the economy will be able to sell all of
the particular output it produces.
If the unemployment rate has reached an all-time high, the production of output is
probably
a. high
b. low
c. stable
d. fluctuating
e. equal to its potential
Since producers must be compensated for the rising opportunity cost that accompanies
increases in output,
a. the law of demand applies to most markets
b. supply curves usually slope downward
c. demand curves usually slope downward
d. supply curves usually slope upward
e. technical inefficiency would not exist in the long run
What is the value of any index in the base period?
a. 200
b. 150
c. 110
d. 100
e. 105
Assume that there is a proposed tax cut by the U.S. House of Representatives. A
problem is
a. how to distribute the benefits of the total tax cut among different groups within the
country.
b. that the process occurs very quickly without much time to study any negative effects.
c. that tax cuts are harder to implement than tax increases.
d. that the Federal Reserve has almost invariably been in favor of moderate tax
increases rather than tax cuts.
e. this statement is wrong, as tax bills originate in the U.S. Senate.
Which of the following is the best definition of the unemployment rate?
a. a percentage of people who were recently working but laid off or want to work
(willing, able, and searching for work) but without jobs.
b. a percentage of people discouraged with the labor market and without work
c. a percentage of people not working
d. a percentage of people that do not need to work
e. a percentage of people willing and able to work
In every economic system, scarcity imposes limitations on
a. households, business firms, governments, and the nation as a whole
b. households and business firms, but not the governments
c. local and state governments, but not the federal government
d. households and governments, but not business firms
e. business firms, governments, and the nation as a whole
Within the context of the housing market, what does MBS stand for?
a. Multi-Banking System
b. Mortgage Backed Security
c. Mortgage Bubble System
d. Mixed Bracket Securities
Which of the following people would be considered structurally unemployed?
a. A computer operator who loses his job due to obsolete job skills
b. A landscaper who loses her job in the winter
c. A construction worker who cannot work due to rainy weather
d. A college graduate entering the labor force for the first time
e. An auto worker who is laid off due to a drop in the demand for a certain type of car
If a commercial bank has assets valued at $200 million and a net worth of $20 million,
what is the value of the bank's liabilities?
a. There is not enough information to determine.
b. $20 million
c. $220 million
d. $180 million
e. $200 million
What is the effect of diminishing returns to labor on the slope of the aggregate
production function (where output is measured on the vertical axis and employment is
measured on the horizontal axis)?
a. It implies that the slope of the curve increases as the number of workers employed
increases.
b. It implies that the slope of the curve becomes negative as the number of workers
employed increases.
c. It implies that the slope of the curve decreases (or becomes flatter) as the number of
workers employed increases.
d. It keeps the slope the same throughout.
e. It has nothing to do with the slope of the aggregate production function.
