1) money functions as a medium of exchange by eliminating the need for a coincidence
of wants.
2) Anticompetitive mergers are illegal under provisions of the Clayton Act (as
amended).
3) The World Trade Organization (WTO) is an international organization designed to
provide short-term advances of foreign monies to those nations faced with trade
deficits.
4) price and marginal revenue are identical for an individual purely competitive seller.
5) In the immediate short run, both input and output prices are fixed.
6) within the circular flow model, the level of total resource income and total spending
on output will be approximately equal.
7) There is no evidence that unions are able to increase wage rates above those that the
market would otherwise provide.
8) Assuming government wishes to either increase or decrease the level of aggregate
demand, which of the following pairs are not consistent policy measures?
A.a tax increase and an increase in the money supply
B.a tax reduction and an increase in the money supply
C.a reduction in government expenditures and a decline in the money supply
D.a tax increase and an increase in the interest rate
9) answer the next question(s) on the basis of the following production possibilities
tables for two countries, north cantina and south cantina:
refer to the above tables. suppose that north cantina is producing 2 units of capital
goods and 17 units of consumer goods while south cantina is producing 2 units of
capital goods and 21 units of consumer goods. we can conclude that:
a.north cantina is fully and efficiently using its resources, but south cantina is not.
b.south cantina is fully and efficiently using its resources, but north cantina is not.
c.neither south cantina nor north cantina are fully and efficiently using their resources.
d.both south cantina and north cantina are fully and efficiently using their resources.
10) According to economist Milton Friedman (1912-2006), the source of instability in
the economy could be thought of as a:
A.baseball manager (the Fed) that removes his starting pitcher too soon and sees a 5-run
lead evaporate in a single inning.
B.duck hunter (the Fed) who starts shooting at ducks well before they fly over.
C.a camp councilor (the Fed) who is wearing a baseball cap that has two bills and says
“I am the leader, which way did they go?”
D.backseat car passenger (the Fed) who occasionally leans over the front seat and
abruptly jerks the steering wheel to the left or to the right.
11) the demand for a necessity whose cost is a small component of one’s total income
is:
a.perfectly inelastic.
b.perfectly elastic.
c.relatively inelastic.
d.relatively elastic.
12) The amount of land in the world covered by forest is changing at an average annual
rate of approximately:
A.negative 0.2 percent.
B.positive 0.2 percent.
C.negative 2.0 percent.
D.positive 2.0 percent.
13) in constructing a stable demand curve for product x:
a.consumer preferences are allowed to vary.
b.the prices of other goods are assumed constant.
c.money incomes are allowed to vary.
d.the supply curve of product x is assumed to be fixed.
14) the demand curve for a product might shift as the result of a change in:
a.consumer tastes.
b.consumer incomes.
c.the prices of related goods.
d.all of these.
15) rivalry and excludability are the main characteristics of:
a.capital goods.
b.private goods.
c.public goods.
d.consumption goods.
16) “Present value” refers to the:
A.value today of some amount of money to be received in the future.
B.current value of money held in a bank account.
C.amount to which some current amount of money will grow over time.
D.interest rate specified when a loan contract is signed.
17) Responsibility for enforcing the antitrust laws rests:
A.with the Interstate Commerce Commission.
B.with both the Department of Justice and the Federal Trade Commission.
C.solely with the Federal Trade Commission.
D.solely with the Department of Justice.
18) Which one of the following is not prohibited by the original Clayton Act?
A.the purchase of the stocks of rival firms that lessens competition
B.the purchase of the assets of rival firms that lessens competition
C.an exclusive dealer or tying agreements that lessen competition
D.price discrimination that lessens competition
19) as it relates to owners and managers, the principal-agent problem results from the:
a.separation of corporate ownership and control.
b.double taxation of corporate profit.
c.limited liability of corporate owners.
d.differing interests of corporate stockholders and bondholders.
20) The following schedule contains data for a private closed economy. All figures are
in billions. Use these data in answering the next question(s).
Refer to the above data. If a lump-sum tax of $20 is imposed, the consumption schedule
will become:
A.
B.
C.
D.
21) Refer to the above diagram. Assume that nominal wages initially are set on the
basis of the price level P2 and that the economy initially is operating at its
full-employment level of output Qf. In the short run, demand-pull inflation could best
be shown as:
A.a move from b to c on AS2.
B.a move from b to c to d.
C.a change of aggregate supply from AS2 to AS3.
D.a move from b to d.
22) The demand for most agricultural products:
A.is such that as price falls total revenue will increase.
B.is price inelastic.
C.declines as population increases.
D.is increasing faster in the United States than the supply of these products.
23) If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the:
A.saving schedule will shift upward by $5 billion.
B.consumption schedule will shift downward by $25 billion.
C.consumption schedule will shift downward by $20 billion.
D.consumption schedule will shift upward by $25 billion.
24) An adverse aggregate supply shock could result from:
A.a sharp rise in productivity.
B.a rapid rise in oil prices.
C.a decline in wages.
D.an appreciation of the dollar.
25) the period in the u.s. economy from 1995 to 2007 is characterized by:
a.a higher trend rate of saving.
b.a higher natural rate of unemployment.
c.a higher trend rate of productivity growth.
d.the end of the business cycle.
26) Purchasing common stock by writing a check best exemplifies money serving as a:
A.store of value.
B.unit of account.
C.medium of exchange.
D.index of satisfaction.
27) In what ways, if any, do the demand schedules for a purely competitive firm and a
pure monopolist differ? What significance does this have for the price-output behavior
of each?
28) What is the relationship between uninsurable risk and profit? What three general
sources contribute to uninsurable risk?
29) Why are reserves listed in the assets column of a banks balance sheet?
30) Describe the rationale behind supply and demand analysis for public goods.
31) Define the four categories of expenditures which comprise GDP.
32) What were the two basic means of control by government as substitute for, or to
supplements to, market forces in monopolized industries?
33) What two factors could reduce the net economic burden that might be shifted to
future generations from the public debt?
34) What are the two conflicting goals of bankers? How do these conflicting goals get
resolved in the federal funds market?
35) (Consider This) What are the benefits and costs to Indian citizens of allowing
Indian companies to copy and sell patent-protected drugs developed by U.S.
companies?
36) What are some extensions to the simplified model of the loanable funds market?