1) normative statements are expressions of facts.
2) insurance companies use deductibles and copayments to control increases in the
amount of health care demanded.
3) Unlike most demand curves, the demand curve for loanable funds is upsloping.
4) the simplest way to calculate gdp is to sum the total sales of all business firms.
5) In the new classical theory, a fully anticipated change in aggregate demand and the
price level will temporarily change real output, but an unanticipated change will not.
6)
refer to the above diagrams. if drawn, firm a’s average revenue curve would lie below
its demand curve.
7) rising health care costs have prompted workers to change jobs with greater
frequency.
8) The time-value of money refers to the idea that a given amount of money is more
valuable to a person the sooner it is received.
9) it is generally agreed that the most promising reform of the health care system is for
government to fix doctors’ fees below current levels.
10) if demand increases and supply simultaneously decreases, equilibrium price will
rise.
11) the free-rider problem refers to the possibility that someone may benefit from a
good without paying for it.
12)
Refer to the above diagram in which T is tax revenues and G is government
expenditures. All figures are in billions. This diagram portrays the idea of:
A.progressive taxation.
B.built-in stability.
C.the multiplier.
D.discretionary fiscal policy.
13)
Refer to the above diagrams, in which AD1 and AS1 are the “before” curves and AD2
and AS2 are the “after” curves. Cost-push inflation is depicted by:
A.panel (A) only.
B.panel (B) only.
C.panel (C) only.
D.panels (B) and (C).
14) the basic formula for the price elasticity of demand coefficient is:
a.absolute decline in quantity demanded/absolute increase in price.
b.percentage change in quantity demanded/percentage change in price.
c.absolute decline in price/absolute increase in quantity demanded.
d.percentage change in price/percentage change in quantity demanded.
15) marginal revenue is the:
a.change in product price associated with the sale of one more unit of output.
b.change in average revenue associated with the sale of one more unit of output.
c.difference between product price and average total cost.
d.change in total revenue associated with the sale of one more unit of output.
16) if we say that two variables are inversely related, this means that:
a.the two graph as an upsloping line.
b.an increase in one variable is associated with a decrease in the other.
c.an increase in one variable is associated with an increase in the other.
d.the resulting relationship can be portrayed by a straight line parallel to the horizontal
axis.
17)
refer to the above diagram. the slope of the line:
a.is – 1/4
b.is + 1/4
c.is .40
d.cannot be determined from the information given
18)
refer to the above diagram. at output level q total fixed cost is:
a.0beq
b.bcde
c.0beq – 0afq
d.0cdq
19) Which one of the following is concerned with social regulation?
A.Equal Employment Opportunity Commission
B.Federal Communications Commission
C.Sherman Commission
D.Federal Energy Regulatory Commission
20) For a private closed economy, an unintended decline in inventories suggests that:
A.aggregate expenditures are less than the business sector expected them to be.
B.aggregate expenditures exceed production.
C.actual investment exceeds saving.
D.planned investment is greater than consumption.
21)
The Federal Reserve System regulates the money supply primarily by:
A.controlling the production of coins at the United States mint.
B.altering the reserve requirements of commercial banks and thereby the ability of
banks to make loans.
C.altering the reserves of commercial banks, largely through sales and purchases of
government bonds.
D.restricting the issuance of Federal Reserve Notes because paper money is the largest
portion of the money supply.
22) an improvement in production technology will:
a.increase equilibrium price.
b.shift the supply curve to the left.
c.shift the supply curve to the right.
d.shift the demand curve to the left.
23) An example of a social insurance program is ____________, whereas an example
of public assistance program is _______.
A.Temporary Assistance for Needy Families; unemployment compensation
B.Supplemental Security Income; unemployment compensation
C.Social Security; food stamps
D.Medicaid; Medicare
24) Suppose Copernicus Corporation hires Damon Danielson rather than Elmer Ellison,
simply because Damon is a graduate of an Ivy League school while Elmer is a graduate
of a small public university. Elmer is actually more qualified than Damon. This is an
example of:
A.statistical discrimination.
B.irrational behavior.
C.monopsony exploitation.
D.human-capital discrimination.
25) the most crucial determinant of the legal form of an enterprise will usually be the:
a.ability of the firm to sell bonds to the public.
b.amount of financial capital required by the line of production.
c.amount of unemployment in the particular industry.
d.state in which it is located.
26) The crowding-out effect of expansionary fiscal policy suggests that:
A.tax increases are paid primarily out of saving and therefore are not an effective fiscal
device.
B.increases in government spending financed through borrowing will increase the
interest rate and thereby reduce investment.
C.it is very difficult to have excessive aggregate spending in the U.S. economy.
D.consumer and investment spending always vary inversely.
27) the federal government requires automobile manufacturers to install pollution
control equipment. this is an illustration of the:
a.intrusion problem.
b.production of public goods.
c.internalization of external benefits.
d.internalization of external costs.
28) The following table contains hypothetical data for the 2010 U.S. balance of
payments. Answer the next question(s) on the basis of this information. All figures are
in billions of dollars.
Refer to the above data. The United States’ balance on financial account is a:
A.$20 billion surplus.
B.$15 billion surplus.
C.$30 billion deficit.
D.$20 billion deficit.
29)
Which of the above diagrams best portrays the effects of a substantial reduction in
government spending?
A.A
B.B
C.C
D.D
30) Why is there a large amount of U.S. currency circulating abroad? What are the
economic effects on the global economy?
31) Describe three major features of the Taylor rule.
32) Why is land reform of significant concern for developing countries and what
restricts its implementation?
33) Why do supporters of social regulation need to remember that there is no free
lunch?
34) Political logrolling solves the problem of inefficient outcomes in the provision of
public goods. Evaluate.
35) Define GDP and its characteristics.
36) What were four major provisions of the Temporary Assistance to Needy Families
(TANF) reform of the welfare system?
37) Why does a new car lose substantial market value when it is purchased, but a new
car left on the car dealer lot still retains its market value?
38) What is the goal of monetary policy?