In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labor. What
was Alpha Cabinet Company’s productivity?
a. 1/8 cabinet per hour
b. 8 hours per cabinet
c. 40 cabinets
d. None of the above is correct.
The Economy in 2008
In the first half of June 2008 the effects of a housing and financial crisis and an increase
in world prices of oil and foodstuffs were affecting the economy.
Refer to The Economy in 2008. The short-run effects of the housing and financial
crisis are shown by
a. moving to the right along the short-run Phillips curve.
b. moving to the left along the short-run Phillips curve.
c. shifting the short-run Phillips curve right.
d. shifting the short-run Phillips curve left.
Which of the following is correct?
a. Deficits always require people to consume at the expense of their children.
b. If the government uses funds to pay for investment programs, on net the debt need
not burden future generations.
c. If the government is in debt it must be running a deficit currently.
d. The current government debt is a large share of lifetime income.
Figure 3-3
Arturo’s Production Possibilities Frontier Dina’s Production Possibilities Frontier
Refer to Figure 3-3. If the production possibilities frontier shown for Arturo is for 100
hours of production, then how long does it take Arturo to make one burrito?
a. 1/4 hour
b. 1/3 hour
c. 3 hours
d. 4 hours
Figure 7-19
Refer to Figure 7-19. The equilibrium price is
a. P1.
b. P2.
c. P3.
d. P4.
All saving in the U.S. economy shows up as
a. investment in the U.S. economy.
b. U.S. net capital outflow.
c. either investment in the U.S. economy or U.S. net capital outflow.
d. None of the above is correct.
Suppose that because of legal and financial reforms in the country of Belats, foreigners
find business opportunities there more attractive. We would expect the more attractive
opportunities would cause Belats’
a. net exports and net capital outflows to increase.
b. net exports to increase and its net capital outflows to decrease.
c. net exports and net capital outflow to decrease.
d. net exports to decrease and its net capital outflow to increase.
An economist would be more likely to argue for reducing inflation if she thought that
a. the central bank lacked credibility and if bonds were usually not indexed for
inflation.
b. the central bank lacked credibility and if bonds were usually indexed for inflation.
c. the central bank had credibility and if bonds were usually not indexed for inflation.
d. the central bank had credibility and if bonds were usually indexed for inflation.
The circular-flow diagram
a. is an economic model.
b. incorporates two types of decision makers: households and firms.
c. represents the flows of inputs, outputs, and dollars.
d. All of the above are correct.
Which of the following statements regarding the Federal Open Market Committee is
correct?
a. Only the five voting regional Fed presidents attend the meetings.
b. All regional Fed presidents attend and vote at the meetings.
c. All regional Fed presidents attend the meetings, but only five get to vote.
d. Regional Fed presidents may neither attend nor vote the meetings.
Table 7-2
This table refers to five possible buyers’ willingness to pay for a case of Vanilla Coke.
Refer to Table 7-2. If the market price is $3.80,
a. David’s consumer surplus is $4.70 and total consumer surplus for the five individuals
is $9.50.
b. Megan’s consumer surplus is $1.70 and total consumer surplus for the five
individuals is $9.80.
c. David, Laura, and Megan will be the only buyers of Vanilla Coke.
d. the demand curve for Vanilla Coke, taking the five individuals into account, is
horizontal.
In the economy of Ukzten in 2010, consumption was $5000, exports were $100,
government purchases were $900, imports were $200, and investment was $1000. What
was Ukzten’s GDP in 2010?
a. $6700
b. $6800
c. $7000
d. $7200
Figure 5-5
Refer to Figure 5-5. At a price of $48 per unit, sellers’ total revenue equals
a. $150.
b. $200.
c. $288.
d. $364.
When production costs rise,
a. the short-run aggregate supply curve shifts to the right.
b. the short-run aggregate supply curve shifts to the left.
c. the aggregate demand curve shifts to the right.
d. the aggregate demand curve shifts to the left.
Which of the following events could explain a decrease in interest rates together with
an increase in investment?
a. The government went from surplus to deficit.
b. The government instituted an investment tax credit.
c. The government reduced the tax rate on savings.
d. None of the above is correct.
A Starbucks Grande Latte costs $3.75 in the U.S. and 28 yuan in China. The nominal
exchange rate is 6.75 yuan per dollar. The real exchange rate is
a. 1.106. If purchasing power partiy held the nominal exchange rate would be higher.
b. 1.106. If purchasing power parity held the nominal exchange rate would be lower.
c. 0.904. If purchasing power partiy held the nominal exchange rate would be higher.
d. 0.904. If purchasing power parity held the nominal exchange rate would be lower.
Which of the following is correct concerning the long-run Phillips curve?
a. Its position is determined primarily by monetary factors.
b. If it shifts right, long-run aggregate supply shifts right.
c. It cannot be changed by any government policy.
d. Its position depends on the natural rate of unemployment.
A 1977 amendment to the Federal Reserve Act of 1913 says the Fed should “promote”
which of the following goals?
a. only price stability
b. only maximum employment
c. only price stability and maximum employment
d. price stability, maximum employment, and moderate long-term interest rates
The explanation for the slope of
a. the supply of loanable funds curve is based on the logic that a higher real interest rate
leads to higher saving.
b. the demand for loanable funds curve is based on the logic that a higher interest rate
leads to higher saving.
c. the supply of loanable funds curve is based on the logic that a higher real interest rate
leads to lower saving.
d. the demand for loanable funds curve is based on the logic that a higher interest rate
leads to lower saving.
Lead is an important input in the production of crystal. If the price of lead decreases,
then we would expect the supply of
a. crystal to be unaffected.
b. crystal to decrease.
c. crystal to increase.
d. lead to increase.
Scenario 21-1. Take the following information as given for a small, imaginary
economy:
When income is $10,000, consumption spending is $6,500.
When income is $11,000, consumption spending is $7,300.
Refer to Scenario 21-1. The multiplier for this economy is
a. 2.86.
b. 2.98.
c. 4.00.
d. 5.00.
Figure 8-15
Refer to Figure 8-15. Suppose the government imposes a $1 tax in each of the four
markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the
smallest in the market represented by
a. D1.
b. D2.
c. D3.
d. D4.
In a simple circular-flow diagram, firms use the money they get from a sale to
a. pay wages to workers.
b. pay rent to landlords.
c. pay profit to the firms’ owners.
d. All of the above are correct.
Other things the same, if the U.S. interest rate falls, then U.S. residents will want to
purchase
a. more foreign assets, which increases the quantity of loanable funds demanded.
b. fewer foreign assets, which decreases the quantity of loanable funds demanded.
c. more foreign assets, which increase the quantity of loanable funds supplied.
d. fewer foreign assets, which decreases the quantity of loanable funds supplied.
When the money market is drawn with the value of money on the vertical axis, the price
level decreases if
a. either money demand or money supply shifts right.
b. either money demand or money supply shifts left.
c. money demand shifts right or money supply shifts left.
d. money demand shifts left or money supply shifts right.
When the money market is drawn with the value of money on the vertical axis, the price
level increases if
a. either money demand or money supply shifts right.
b. either money demand or money supply shifts left.
c. money demand shifts right or money supply shifts left.
d. money demand shifts left or money supply shifts right.
When there is an increase in government expenditures, which of the following raises
investment spending?
a. the investment accelerator and crowding out
b. the investment accelerator but not crowding out
c. crowding out but not the investment accelerator
d. neither the investment accelerator or crowding out
If Freedonia changes its laws to allow international trade in software and the world
price is higher than its domestic price, then it must be the case that
a. both consumer surplus and producer surplus increase.
b. consumer surplus increases and producer surplus decreases.
c. consumer surplus decreases and producer surplus increases.
d. both consumer surplus and producer surplus decrease.
Which of the following is not correct?
a. Economists have two roles: scientist and policy adviser.
b. As scientists, economists develop and test theories to explain the world around them.
c. Economic policies rarely have effects that their architects did not intend or anticipate.
d. As policy advisers, economists use their theories to help change the world for the
better.
The x-coordinate is the
a. first number of an ordered pair and represents the point’s horizontal location.
b. second number of an ordered pair and represents the point’s horizontal location.
c. first number of an ordered pair and represents the point’s vertical location.
d. second number of an ordered pair and represents the point’s vertical location.
If the United States decides to trade with Mexico, we know that
a. Mexico will benefit, but trade with a less developed country could not benefit the
United States.
b. it will not benefit Mexico because workers in the United States are more productive.
c. Mexico and the United States can both benefit.
d. it will not benefit either country because their cultural differences are too vast.
Who accepts all of the risk associated with a mutual fund’s portfolio of stocks and/or
bonds?
a. the fund’s managers
b. the fund’s shareholders
c. the federal government
d. the corporations that originally issued the stocks and/or bonds held by the fund