The unemployment rate in an economy is 12 percent. The civilian labor force is 50
million. The number of employed workers in the economy is:
A. 6 million.
B. 24 million.
C. 42 million.
D. 44 million.
Which fundamental question about a competitive market system primarily focuses on
technological progress and capital accumulation?
A. What goods and services will be produced?
B. How will the goods and services be produced?
C. How will the system promote progress?
D. Who will get the goods and services?
Which would be evidence of more income inequality over time in the United States?
A. An increase in the percentage of total personal income received by the lowest
quintile.
B. An increase in the percentage of total personal income received by the highest
quintile.
C. An increase in the percentage of total personal income received by the four lowest
quintiles.
D. A decrease in the percentage of total personal income received by the highest
quintile.
In the above diagram curves 1, 2, and 3 represent the:
A. average, marginal, and total product curves respectively.
B. marginal, average, and total product curves respectively.
C. total, average, and marginal product curves respectively.
D. total, marginal, and average product curves respectively.
A bank has $2 million in checkable deposits. In the bank’s balance sheet, this would be
an example of:
A. an asset.
B. a liability.
C. net worth.
D. capital stock.
Refer to the above supply and demand graph for a public good. Line segment ad
represents the amount at Q1 by which the:
A.marginal benefit of this public good is less than the marginal cost.
B.total benefit of this public good is less than the total cost.
C.marginal benefit of this public good is greater than the marginal cost.
D.total benefit of this public good is greater than the total cost.
The Consumer Price Index was 115 one year and 120 the next year. The rate of inflation
from one year to the next was approximately:
A. 2.2 percent.
B. 2.9 percent.
C. 3.4 percent.
D. 4.3 percent.
Suppose the economy is at full employment with a high inflation rate. Which
combination of government policies is least likely to reduce the inflation rate?
A. Buy government securities in the open market and increase taxes.
B. Buy government securities in the open market and decrease taxes.
C. Sell government securities in the open market and increase government spending.
D. Sell government securities in the open market and decrease government spending.
Cost-push inflation is characterized by a(n):
A. increase in aggregate supply and a decrease in aggregate demand.
B. increase in aggregate demand and no change in aggregate supply.
C. decrease in aggregate supply and no change in aggregate demand.
D. decrease in both aggregate supply and aggregate demand.
State government wants to increase the taxes on cigarettes to increase tax revenue. This
tax would only be effective in raising new tax revenues if the price elasticity of demand
is:
A. unity.
B. elastic.
C. inelastic.
D. perfectly elastic.
Refer to the above graph. Which factor will shift AS1 to AS3?
A. An increase in productivity.
B. An increase in input prices.
C. A decrease in business taxes.
D. A decrease in household indebtedness.
If the price of a product increases, we would expect:
A. demand to decrease.
B. quantity supplied to increase.
C. supply to decrease.
D. quantity demanded to increase.
Refer to the figure above. Which demand curve above is relatively more elastic between
P1 and P2?
A. D1
B. D2
C. D3
D. D4
The following are national income account data for a hypothetical economy in billions
of dollars: government purchases ($1130), personal consumption expenditures ($4800),
imports ($370), exports ($240), and gross private domestic investment ($1150).
Personal consumption expenditures are approximately what percentage of this
economy?
A. 60 percent.
B. 65 percent.
C. 69 percent.
D. 75 percent.
In 2007, the 20 percent of families with the lowest incomes paid an average federal tax
rate (on all federal taxes) of about ____, whereas the 20 percent of families with the
highest incomes paid an average tax rate of about ____.
A. 5.5 percent; 50 percent
B. 10.3 percent; 30.9 percent
C. 8.4 percent; 27.5 percent
D. 4.0 percent; 25.1 percent
The crowding-out effect of expansionary fiscal policy suggests that:
A. government spending is increasing at the expense of private investment.
B. imports are replacing domestic production.
C. private investment is increasing at the expense of government spending.
D. saving is increasing at the expense of investment.
The actual and cyclically adjusted budgets will be equal when:
A. the rate of inflation is zero.
B. the economy is at full employment.
C. the balanced-budget multiplier is 1.
D. taxes have no effect on fiscal policy.
In the chain of cause and effect between changes in the excess reserves of commercial
banks and the resulting changes in output and employment in the economy:
A. a decrease in aggregate demand will increase output and employment.
B. a decrease in the rate of interest will decrease aggregate demand.
C. an increase in the money supply will decrease the rate of interest.
D. an increase in excess reserves will decrease the money supply.
If the price index is 130, this means that:
A. prices are 130 percent higher than in the base year.
B. prices are .13 times higher than in the base year.
C. prices are 30 percent higher than in the base year.
D. nominal GDP must be inflated to determine the real GDP.
When total product is diminishing, marginal product is:
A. positive and increasing.
B. positive and decreasing.
C. constant.
D. negative.
Refer to the above graph, which shows the supply and demand for unionized
manufacturing workers. The initial equilibrium point is point 1. There is an increase in
the demand for manufactured goods while at the same time health benefits for
unionized manufacturing workers also increase. Which point would represent the new
equilibrium?
A. 3
B. 4
C. 5
D. 6
The following data show the relationship between output, total costs, and total revenue
for a pure monopoly
Within which of the following output ranges does the firm earn maximum economic
profits?
A. 50 to 60 units
B. 60 to 70 units
C. 70 to 80 units
D. 80 to 90 units
The term “consumer sovereignty” means that:
A. consumers are controlled by the actions of the marketplace.
B. what is produced is ultimately determined by what consumers purchase.
C. there are no limits on what consumers may buy under capitalism.
D. businesses produce with tax minimization as their primary goal.
Refer to the above graph. It represents a monopolistically competitive firm in a
constant-cost industry. The firm:
A. will produce less than Q0.
B. will produce more than Q0.
C. is earning an economic profit at Q0.
D. is suffering an economic loss at Q0.
Refer to the above diagram. The profit-maximizing level of output for this firm:
A. is at point a.
B. is at point b.
C. is at point c.
D. cannot be determined from the information given.
Refer to the above graph. A successful advertising campaign by a monopolistically
competitive firm will cause the demand curve for that firm to shift from:
A. A to B and become more elastic.
B. A to B and become less elastic.
C. B to A and become more elastic.
D. B to A and become less elastic.
A government is considering undertaking one or more construction projects. The
estimated marginal cost and benefit of each project are given in the table.
Refer to the above table and information. What is the total cost and total benefit of
projects 1, 2, and 3?
A.Total cost is $18 million and total benefit is $19 million.
B.Total cost is $24 million and total benefit is $27 million.
C.Total cost is $37 million and total benefit is $41 million.
D.Total cost is $65 million and total benefit is $66 million.
The organization created to oversee the provisions of multilateral trade agreements,
resolve disputes under the international trade rules, and meet periodically to consider
further trade liberalization is called the:
A. International Monetary Fund (IMF).
B. World Trade Organization (WTO).
C. Common Market Organization (CMO).
D. International Trade Commission (ITC).
Refer to the above diagrams. Which of the following is a feasible rate at which X and Y
might be exchanged?
A. 1X for 3Y
B. 1X for 1.5Y
C. 1X for 2.5Y
D. 1X for .5Y
A federal budget deficit exists when:
A. federal government assets are less than liabilities.
B. federal government spending exceeds tax revenues.
C. federal government spending is increasing.
D. federal government taxation is decreasing.
Refer to the above diagram. Assume that G and T1are the relevant curves and that the
economy is currently at B, which is its full-employment GDP. This economy has a:
A. cyclically adjusted budget surplus only.
B. cyclically adjusted budget deficit only.
C. cyclically adjusted budget surplus and an actual budget surplus.
D. cyclically adjusted deficit and an actual budget deficit.