Which of the following could explain why there is an increase in potential GDP but the
equilibrium level of GDP falls?
A) SRAS shifted to the right by more than LRAS.
B) AD shifted to the right by more than SRAS.
C) AD shifted to the right by less than SRAS.
D) AD did not shift and SRAS shifted to the left.
Prior to the 1998 World Cup, France banned the use of all soccer balls made by child
workers. Several economists criticized the ban. Which of the following is an argument
these economists used to justify the use of child labor in some countries?
A) Soccer balls are easy to carry and workers were given soccer balls to play with.
B) Child workers were allowed to attend school during the periods they worked.
C) Child workers were given gloves to protect their hands while they stitched soccer
balls.
D) Some of the alternatives to stitching soccer balls include begging and prostitution.
The quantity theory of money seeks to explain the connection between money and
A) interest rates.
B) unemployment.
C) output.
D) prices.
Of the following high-income countries, which has the highest obesity rate?
A) Canada
B) Japan
C) the United Kingdom
D) the United States
Jake sells Star Wars memorabilia on eBay. His annual revenue is $42,000 per year, the
explicit costs of his business are $10,000, and the opportunity costs of his business are
$18,000 per year. What are the implicit costs of his business?
A) $8,000
B) $18,000
C) $24,000
D) $32,000
Scenario 1-1
Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit
of $3,000 per week. The plant foreman observes, “Although the last 500 cell cigars we
produced and sold increased our revenue by $7,500 and our costs by $7,000, we are
only making an overall profit of $3,000 per week so I think we need to cut back on
production.
Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic
term for the incremental revenue received from the sale of the last 500 cigars?
A) gross earnings
B) marginal revenue
C) sales revenue
D) gross profit
Table 2-1
Production Choices for Dina’s Diner
Refer to Table 2-1. Assume Dina’s Diner only produces sliders and hot wings. A
combination of 50 sliders and 50 hot wings would appear
A) along Dina’s production possibilities frontier.
B) inside Dina’s production possibilities frontier.
C) outside Dina’s production possibilities frontier.
D) at the vertical intercept of Dina’s production possibilities frontier.
Figure 17-1
Refer to Figure 17-1. Suppose that the economy is currently at point A. If the Federal
Reserve engaged in expansionary monetary policy, where would the economy end up in
the short run?
A) It would remain at point A.
B) point B
C) point C
D) point D
E) point E
Which factors explain labor productivity?
A) technological change; the quantity of labor per hour worked
B) diminishing returns; the quantity of labor per hour worked
C) diminishing returns; the quantity of capital per hour worked
D) technological change; the quantity of capital per hour worked
Empirical evidence from 1960 to 2010 shows that convergence in economic growth is
occurring in which of the following cases?
A) Low-income industrial countries are catching up to high-income industrial countries.
B) Low-income developing countries are catching up to high-income industrial
countries.
C) Low-income industrial countries are catching up to high-income developing
countries.
D) All low-income countries are catching up to all high-income countries.
Table 7-2
Madison and Austin own Cafe Ole’. Table 7-2 lists the number of empanadas and tacos
Madison and Austin can each make in one hour.
Refer to Table 7-2. Select the statement that accurately interprets the data in the table.
A) Madison has a greater opportunity cost than Austin for making tacos.
B) Madison’s opportunity cost for making tacos is less than Austin’s.
C) Austin has a greater opportunity cost than Madison for making empanadas.
D) Austin’s opportunity cost for making tacos and making empanadas are both greater
than Madison’s.
During the Great Depression, cyclical unemployment increased as the recession
continued. This increase in cyclical unemployment
A) increased the natural rate of unemployment.
B) decreased the natural rate of unemployment.
C) had no effect on the natural rate of unemployment.
D) could have increased or decreased the natural rate of unemployment.
The key to understanding the short-run trade-off behind the Phillips curve is that an
increase in inflation will decrease unemployment if the inflation is ________ by both
workers and firms.
A) unexpected
B) expected
C) perfectly predicted
D) ignored
Growth in labor productivity in the economy as a whole has been ________ labor
productivity in health care.
A) approximately equal to
B) slightly faster than
C) almost twice as slow as
D) more than twice as fast as
Table 9-19
Refer to Table 9-19. Looking at the table above, what is the rate of growth of the
average price level from 2012 to 2013?
A) 1%
B) 2%
C) 3.5%
D) 4.76%
E) 5.25%
Figure 4-3
Figure 4-3 shows the market for granola. The market is initially in equilibrium at a price
of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order
to raise the price to P2.
Refer to Figure 4-3. What area represents the deadweight loss at P2?
A) C + E + H
B) G + H
C) C + E
D) B + C
If the minimum wage is set above the market wage,
A) the quantity of labor supplied will be below the quantity of labor demanded.
B) unemployment will rise.
C) highly-skilled workers will have a harder time finding jobs.
D) All of the above are correct.