Economists have helped modify the debate over the environment
a. by pointing out that nature is invaluable.
b. by focusing discussion on issues of resource allocation.
c. by lobbying Congress for acid rain legislation.
d. by arguing against tradeable permits for pollution.
Which of the following is not an example of the opportunity cost of going to school?
a. The money a student could have earned by working if he had not gone to college.
b. The nap a student could have enjoyed if he had not attended class.
c. The party a student could have enjoyed if he had not stayed in to study for his exam.
d. The money a student spends on rent for his apartment while attending school.
The Council of Economic Advisers
a. was created in 1946.
b. advises the president of the United States on economic policy matters.
c. writes the annual Economic Report of the President.
d. All of the above are correct.
Figure 3-10
Alice and Betty’s Production Possibilities in one 8-hour day.
Alice’s Production Possibilities Frontier Betty’s Production Possibilities Frontier
Refer to Figure 3-10. Which of the following statements is correct regarding
comparative advantage?
a. Alice has a comparative advantage in the production of both lemonade and pizzas.
b. Betty has a comparative advantage in the production of both lemonade and pizzas.
c. Alice has a comparative advantage in the production of pizzas while Betty has a
comparative advantage in the production of lemonade.
d. Alice has a comparative advantage in the production of lemonade while Betty has a
comparative advantage in the production of pizzas.
Which tools allow economists to determine if the allocation of resources determined by
free markets is desirable?
a. profits and costs to firms
b. consumer and producer surplus
c. the equilibrium price and quantity
d. incomes of and prices paid by buyers
Which of the following is one of the basic reasons why economists often appear to give
conflicting advice to policymakers?
a. similar opinions about the validity of economic theories
b. significant differences in education
c. differences in personal values
d. a reliance on normative statement for research theories
In a recent research paper published by the European Central Bank, two economists
concluded that U.S. tax revenues would
a. increase if labor taxes were increased or if capital income taxes were increased.
b. increase if labor taxes were increased, but tax revenues would decrease if capital
income taxes were increased.
c. decrease if labor taxes were increased, but tax revenues would increase if capital
income taxes were increased.
d. decrease if labor taxes were increased or if capital income taxes were increased.
The Dow Jones Industrial Average has been computed regularly since
a. 1976.
b. 1948.
c. 1913.
d. 1896.
Which two groups of decision makers are included in the simple circular-flow diagram?
a. markets and government
b. households and government
c. firms and government
d. households and firms
In the United States, currency holdings per person average about
a. $125; one explanation for this relatively small average is that many people use credit
and debit cards to make transactions.
b. $125; one explanation for this relatively small average is that U.S. citizens hold a lot
of foreign currency.
c. $3,700; one explanation for this relatively large amount is that criminals probably
prefer currency as a medium of exchange.
d. $3,700; one explanation for this relatively large average is that U.S. citizens hold a
lot of foreign currency.
If the government institutes policies that diminish incentives to save, then in the
loanable funds market
a. the demand for loanable funds shifts rightward.
b. the demand for loanable funds shifts leftward.
c. the supply of loanable funds shifts rightward.
d. the supply of loanable funds shifts leftward.
The quantity sold in a market will increase if the government
a. decreases a binding price floor in that market.
b. decreases a binding price ceiling in that market.
c. increases a tax on the good sold in that market.
d. More than one of the above is correct.
Rent-control laws dictate
a. the exact rent that landlords must charge tenants.
b. a maximum rent that landlords may charge tenants.
c. a minimum rent that landlords may charge tenants.
d. both a minimum rent and a maximum rent that landlords may charge tenants.
The 1990 amendment to the Clean Air Act
a. banned all forms of pollution.
b. implemented tradable allowances for acid rain.
c. created a research council on asthma.
d. made global warming a national priority.
Other things the same, if the long-run aggregate supply curve shifts left, prices
a. and output both increase.
b. and output both decrease.
c. increase and output decreases.
d. decrease and output increases.
According to classical macroeconomic theory,
a. output is determined by the supplies of capital and labor and the available production
technology.
b. for any given level of output, the interest rate adjusts to balance the supply of, and
demand for, loanable funds.
c. given output and the interest rate, the price level adjusts to balance the supply of, and
demand for, money.
d. All of the above are correct.
Holding the nonprice determinants of demand constant, a change in price would
a. result in either a decrease in demand or an increase in demand.
b. result in a movement along a stationary demand curve.
c. result in a shift of supply.
d. have no effect on the quantity demanded.
If there is a shortage of loanable funds, then
a. the quantity of loanable funds demanded is greater than the quantity of loanable
funds supplied and the interest rate is above equilibrium.
b. the quantity of loanable funds demanded is greater than the quantity of loanable
funds supplied and the interest rate is below equilibrium.
c. the quantity of loanable funds supplied is greater than the quantity of loanable funds
demanded and the interest rate is above equilibrium.
d. the quantity of loanable funds supplied is greater than the quantity of loanable funds
demanded and the interest rate is below equilibrium.
Most financial decisions involve two related elements:
a. advice and consent.
b. investment and taxes.
c. time and risk.
d. saving and consumption.
If a country experienced deflation, then
a. the nominal interest rate would be greater than the real interest rate.
b. the real interest rate would be greater than the nominal interest rate.
c. the real interest rate would equal the nominal interest rate.
d. None of the above is necessarily correct.
Which of the following is not an example of a public policy?
a. rent-control laws
b. minimum-wage laws
c. taxes
d. equilibrium laws
Table 4-5
Refer to Table 4-5. If these are the only four sellers in the market, then the market
quantity supplied at a price of $4 is
a. 4 units.
b. 5 units.
c. 20 units.
d. 80 units.
Which of the following is a correct way to measure productivity?
a. Divide the number of hours worked by the quantity of output.
b. Divide the quantity of output by the number of hours worked.
c. Determine how much output is produced in a given time.
d. Determine how much time it takes to produce a unit of output.
Interest rates fall and investment falls. Which of the following could explain these
changes?
a. The government goes from a surplus to a deficit.
b. The government repeals an investment tax credit.
c. The government replaces a consumption tax with an income tax.
d. None of the above is correct.
Trade between countries tends to
a. reduce both competition and specialization.
b. reduce competition and increase specialization.
c. increase competition and reduce specialization.
d. increase both competition and specialization.
Figure 2-14
Refer to Figure 2-14. The curves shown are
a. supply curves.
b. demand curves.
c. preference curves.
d. income-consumption curves.
Economists are particularly adept at understanding that people respond to
a. laws.
b. incentives.
c. punishments more than rewards.
d. rewards more than punishments.
There is no shortage of scarce resources in a market economy because
a. the government makes shortages illegal.
b. resources are abundant in market economies.
c. prices adjust to eliminate shortages.
d. quantity supplied is always greater than quantity demanded in market economies.
Which of the following will not change the U.S. real interest rate?
a. capital flight from the United States
b. the government budget deficit increases
c. the U.S. imposes import quotas
d. None of the above is correct.
You observe a closed economy that has a government deficit and positive investment.
Which of the following is correct?
a. Private and public saving are both positive.
b. Private saving is positive; public saving is negative.
c. Private saving is negative; public saving is positive.
d. Both private saving and public saving are negative.
Table 11-5
The table below pertains to Napandsnack, an economy in which the typical consumer’s
basket consists of 2 pillows and 15 hotdogs.
Refer to Table 11-5. If the base year is 2010, then the economy’s inflation rate in 2010
was
a. 10.5 percent.
b. 15.0 percent.
c. 20.0 percent.
d. 25.00 percent.
Efficiency is attained when
a. total surplus is maximized.
b. producer surplus is maximized.
c. all resources are being used.
d. consumer surplus is maximized and producer surplus is minimized.
Figure 5-11
Refer to Figure 5-11. If the price rises from point D to point C, total revenue
a. increases, and demand is price elastic.
b. decreases, and demand is price elastic.
c. increases, and demand is price inelastic.
d. decreases, and demand is price inelastic.