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A basic characteristic of a command system is that:
A. wages paid to labor are higher.
B. government owns most economic resources.
C. markets function mostly free from government intervention.
D. government planners play a limited role in deciding what goods will be produced.
The value of corporate stocks and bonds traded in a given year is:
A. included in the calculation of GDP because they make a contribution to the current
production of goods and services.
B. excluded from the calculation of GDP because they make no contribution to current
production of goods and services.
C. included in the calculation of net private domestic investment.
D. included in the calculation of gross private domestic investment.
Refer to the above diagram, in which S1 and D1 represent the original supply and
demand curves and S2 and D2 the new curves. In this market the indicated shift in
demand may have been caused by:
A. a decline in the number of buyers in the market.
B. a decline in the price of a substitute good.
C. an increase in incomes if the product is a normal good.
D. an increase in incomes if the product is an inferior good.
A firm is faced with the following schedules of employment, revenue, and wages.
How many workers will be employed by the profit-maximizing firm?
A. 6.
B. 7.
C. 8.
D. 9.
Refer to the above graph. If the MRC increased:
A. quantity would increase.
B. quantity would decrease.
C. the firm would operate as a monopsonist.
D. the firm would increase the supply of labor.
From 2008 to 2018, it is estimated that there will be a fall in demand for:
A. sewing machine operators.
B. medical assistants.
C. desktop publishers.
D. personal care aides.
The World Trade Organization:
A. is also known as the International Monetary Fund (IMF).
B. is also known as NAFTA.
C. was established to resolve disputes arising under world trade rules.
D. enhances world trade by providing interest rate subsidies to foreign borrowers who
buy exports on credit.
The following is budget information for a hypothetical economy. All data are in billions
of dollars.
Refer to the above data. The budget deficit was $75 billion in:
A. year 2.
B. year 3.
C. year 4.
D. year 5.
Unanticipated inflation arbitrarily:
A. "subsidizes" those who receive fixed money incomes.
B. "taxes" those who receive fixed money incomes.
C. "penalizes" those who borrow money.
D. "benefits" those who save money.
The cigarette industry in the United States would be an example of a:
A. duopoly.
B. noncollusive oligopoly.
C. homogeneous oligopoly.
D. differentiated oligopoly.
A fall in prices of imported resources will cause aggregate:
A. supply to increase.
B. demand to increase.
C. supply to decrease.
D. demand to decrease.
If nominal GDP is $4000 billion and the amount of money demanded for transactions
purposes is $800 billion, it can generally be concluded that:
A. the asset demand for money will be $3200 billion.
B. the total demand for money will be $4800 billion.
C. on average, each dollar will be spent five times a year.
D. the supply of money needs to be increased to meet the demand.
The primary copper industry in the United States would be an example of a:
A. duopoly.
B. noncollusive oligopoly.
C. homogeneous oligopoly.
D. differentiated oligopoly.
Price discrimination is more common in service industries because:
A. low-price buyers will find it virtually impossible to resell the products of such
industries to high-price buyers.
B. the costs of providing such industries' products to different groups of buyers vary
dramatically.
C. the price elasticity of demand is the same for all groups of buyers in these industries.
D. all firms in these industries have significant monopoly power over price.
Refer to the above diagram. All data are for the short run. The firm represented in this
diagram is selling under conditions of:
A. pure monopoly.
B. pure competition.
C. monopolistic competition.
D. oligopoly.
The legal concept of limited liability is important in which of the following types of
business organizations?
A. Monopolies
B. Corporations
C. Partnerships
D. Sole proprietorships
Refer to the above data. At the profit-maximizing output, the firm's total revenue is:
A. $48.
B. $38.
C. $80.
D. $64.
If the supply of labor in a purely competitive labor market increases, the labor:
A. supply curve for a single employer will shift downward.
B. supply curve for a single employer will shift upward.
C. demand curve for a single employer will shift upward.
D. demand curve for a single employer will shift downward.
Refer to the above table. Suppose that demand is represented by columns (3) and (2)
and supply is represented by columns (3) and (5). If the price were artificially set at $9:
A. the market would clear.
B. a surplus of 20 units would occur.
C. a shortage of 20 units would occur.
D. demand would change from columns (3) and (2) to columns (3) and (1).
Refer to the above figure. If you know that flow (8) is revenues and flow (4) is
economic resources (land, labor, capital, and entrepreneurial ability), then box:
A. A is the resource market and box B is the product market.
B. B is the resource market and box A is the product market.
C. C is the product market and box B is the resource market.
D. D is the product market and box B is the resource market.
In 2007, the top 1 percent of all taxpayers in the United States faced an overall federal
tax rate of:
A. 29.5 percent.
B. 33.0 percent.
C. 45.1 percent.
D. 60.9 percent.
The case against economic growth is often made using which of the following
arguments?
A. Limiting growth will contribute to more income equality across nations.
B. Common property resources need to be protected by the price system.
C. Economic growth permits us to "make a living," but it does not provide us with "the
good life."
D. Economic growth will contribute to more economic security, but it will also produce
more boring life styles.
An expansionary fiscal policy can be illustrated by a(n):
A. change in the price level.
B. increase in aggregate supply.
C. increase in aggregate demand.
D. decrease in aggregate demand.
Refer to the above diagram. At output level Q total cost is:
A. 0BEQ.
B. BCDE.
C. 0BEQ plus BCDE.
D. 0AFQ plus BCDE.
A headline reads: "Economy Still in Recession." The type of unemployment most
closely associated with this economic condition would be:
A. search.
B. cyclical.
C. frictional.
D. structural.
The financing of a government deficit increases interest rates and, as a result, reduces
investment spending. This statement describes:
A. the supply-side effects of fiscal policy.
B. built-in stability.
C. the crowding-out effect.
D. the net export effect.
One of the timing problems with fiscal policy is an "operational lag" that occurs
between the:
A. beginning of a recession and the time that it is recognized that the event is occurring.
B. time the need for fiscal action is recognized and the time that action is actually taken.
C. time that fiscal action is taken and the time that action has an impact on output,
employment, and the price level.
D. time that fiscal action has an impact on output, employment, and the price level and
the time by which it can be determined if the policy is effective.
One main complaint about the official income thresholds for defining poverty is that
they:
A. fail to account for the effects of the minimum wage.
B. have remained fixed for over the past two decades.
C. include noncash benefits such as food stamps and rent subsidies.
D. are inadequate to meet basic needs in major metropolitan areas.
The monetary value of all final goods and services produced by the U.S. economy
during a year is:
A. NDP.
B. GDP.
C. NI.
D. DI.
Compared to the 1970s, the poverty rate in the early 1980s was:
A. significantly lower.
B. slightly lower.
C. higher.
D. about the same.
Allocative inefficiency due to unregulated monopoly is characterized by the condition:
A. P = MC.
B. P = MR.
C. P > MC.
D. P > AVC.
The reason that unskilled construction workers typically receive higher wages than
retail sales clerks is best explained by:
A. discrimination.
B. geographic immobilities.
C. compensating differences.
D. noncompeting labor groups.
Refer to the above diagram. If price is reduced from P1 to P2, total revenue will:
A. increase by A minus C.
B. increase by C minus A.
C. decrease by A minus C.
D. decrease by C minus A.
The law of diminishing returns describes the:
A. relationship between total costs and total revenues.
B. profit-maximizing position of a firm.
C. relationship between resource inputs and product outputs in the short run.
D. positive relationship between resource inputs and product outputs in the long run.
