Chapter 15 suggests that the Community Reinvestment Act (CRA) provides an example
of
A) bad intentions and bad unintended consequences.
B) good intentions and bad unintended consequences.
C) bad intentions and good unintended consequences.
D) good intentions and good unintended consequences.
A person who refuses an offer of employment in order to keep looking for a better job is
counted by the BLS as
A) a discouraged worker.
B) a shirker.
C) eligible for unemployment compensation.
D) not in the labor force.
E) unemployed.
Spot market is to futures market as
A) rice is to beans.
B) today is to tomorrow.
C) squares are to circles.
D) quarters are to dollars.
The existence of a shortage means
A) people are buying more than is available.
B) people cannot buy as much as they plan to buy at the prevailing money price.
C) prices are too high.
D) there is not enough to satisfy everyone’s needs.
According to your authors, which action below clearly restricts competition?
A) A large firm raises its price.
B) A large firm lowers its price.
C) Government deregulates an industry.
D) Antitrust legislation restricting other suppliers from entering into a market.
Gus happens to spot a couple of sunbathers during his walk in the park. The sunbathers
generate
A) a negative externality if Gus is disturbed by their activity.
B) a positive externality if Gus enjoys witnessing their activity.
C) both of the above.
D) neither of the above, as long as no monetary payment was involved.
According to your text, the economic way of thinking focuses on
A) actions, interactions, and consequences.
B) intentions, motivations, and results.
C) hypothesis generation, determination of control group, and testing of hypothesis.
D) id, ego, and superego.
Net revenue is defined as
A) marginal revenue minus marginal cost.
B) total revenue minus marginal cost.
C) total revenue minus total cost.
D) gross revenue minus depreciation.
If you pay $400 in taxes when you earn $10,000 and $600 in taxes when you earn
$12,000, you are subject to a marginal tax rate of
A) 4%.
B) 5%.
C) 6%.
D) 8%.
E) 10%.
When prices are allowed to fluctuate after a crisis, such as Hurricane Katrina, the high
prices
A) provide information to suppliers about where goods and services are most highly
desired.
B) are evidence of price gouging.
C) justify government intervention.
D) All of the above.
An effective minimum wage tends to create unemployment among unskilled workers
because it
A) reduces the demand for their labor services.
B) increases the supply of their labor services.
C) reduces the marginal productivity of their labor services.
D) reduces the quantity demanded for their labor services while increasing the quantity
supplied of their labor services.
E) generates all of the above.
In a community where poor people do not associate with members of the opposite sex
until they are 21 years old, the cost of hiring a babysitter on weekends will be
A) higher than in other communities.
B) lower than in other communities.
C) prohibitive.
D) zero.
According to economic theory, a person
A) wants to advance his or her own interests and will try to do it rationally.
B) would not generate negative externalities if one has a properly-developed social
conscience.
C) acts in a profit-seeking way in the market process and in a social-seeking way in
government processes.
D) necessarily behaves as an individualist in markets and as a socialist in government.
Keynesian analysis may have contributed to chronic federal budget deficits by
A) advocating transfer payments to redistribute income.
B) persuading the public that any given deficit could be a result of responsible policy
decisions.
C) putting economists in charge of fiscal policy.
D) reducing the power of the government to finance expenditures through taxation.
A horizontal merger is a merger between firms
A) earning roughly the same amount of profit.
B) producing roughly the same products.
C) regularly doing business of any sort with each other.
D) standing in a supplier-purchaser relationship.
E) that were previously independent.
Which of the following is clearly being sold below cost?
A) 2-for-the-price-of-one theatre tickets
B) Senior-citizens discounts on meals at the local diner
C) The free software included in the purchase of a new personal computer
D) The magazine subscription offering 30% off the regular newsstand price
E) None of the above.
Who among the following enjoys some form of property rights?
A) A common homebody
B) A small business owner
C) A bondholder
D) A state senator
E) All of the above.
A commercial society, as described by Adam Smith, develops when
A) maximizing income becomes the ultimate objective for most people.
B) more people are employed in service industries than in agriculture and
manufacturing.
C) private interest replaces the public interest.
D) the division of labor extends itself throughout the society.
E) traditional values give way to commercial values.
Fiscal policy is policy aimed at controlling undesired fluctuations in overall spending
through changes in
A) government expenditures and taxes.
B) government subsidies to marginal business firms.
C) interest rates.
D) methods of making seasonal adjustments.
E) price and wage regulation.
If the current quantity demanded of John Deere tractors is 50,000 tractors, and the
quantity supplied is 75,000 tractors, then
A) there is a shortage of 25,000 tractors.
B) there is a surplus of 25,000 tractors.
C) there is a shortage of 125,000 tractors.
D) there is a surplus of 125,00 tractors.
Which activity of the Fed would tend to increase excess reserves throughout the
banking system?
A) Purchases of government bonds on a mass scale
B) An increase in the required reserve ratio
C) An increase of the discount rate
D) Sales of government bonds on a mass scale
What best determines the price a price searcher will charge?
A) Reputation
B) Demand
C) Revenue
D) Cost
Externalities could be eliminated from society if it were not for the existence of
A) conflicting interests.
B) government.
C) private property.
D) selfishness
E) transaction costs.
The efforts of individuals to protect themselves against losses as a result of inflation
A) are irrational because one person’s loss as a result of inflation is someone else’s gain.
B) can only succeed if everyone correctly anticipates the rate and timing of inflation.
C) cannot succeed because no private citizen has the ability to stop inflation.
D) use up valuable resources that could have been employed in other ways.
A free rider is someone who
A) uses a bus transfer after it has expired.
B) doesn’t have to pay transaction costs.
C) can obtain a desired good without paying for it and therefore has no incentive to
contribute to the costs of making it available.
D) can produce a good at zero marginal cost.
According to your authors, which of the following is necessary for real-world markets
to clear?
A) Supply and demand curves
B) The hard work of expert economists
C) A well-managed national economic plan
D) “Rules of the game,” which allow for competitive bidding on scarce goods
E) Nothing more than pure luck
When marginal revenue for a seller is more than marginal cost, the seller is
A) making a positive net revenue but not necessarily maximizing net revenue.
B) maximizing net revenue and making a positive net revenue.
C) maximizing net revenue even if net revenue is negative.
D) not maximizing net revenue.
Suppose a study finds most pot-smokers drank milk as young children. If we reach the
conclusion that because most pot smokers “started” on milk, milk drinking “leads” to
pot-smoking (at least among certain susceptible groups of milk users), we are most
likely
A) engaging in correct analysis.
B) confusing statistical correlation with causation.
C) following the axioms of selfish interests.
D) assuming people really do not know what is in their own interests.
A professor posts his course syllabi and past exams on the Internet. From the economic
point of view, the professor’s behavior
A) demonstrates the arrogance of the professor.
B) better informs prospective students.
C) is a costless use of scarce resources, because it avoids paper, ink, and mimeos.
D) is irrational.
A social system in which rights are clearly defined and participants are free to exchange
as they choose will tend to allocate resources to
A) their most efficient uses.
B) their most highly valued uses.
C) uses on which the highest monetary value is placed.
D) uses which maximize social welfare.
E) uses which produce the greatest good for the greatest member.
Suppose Maria can make 12 pizzas or 4 lasagnas every Saturday afternoon, while Gina
can make 10 pizzas or 2 lasagnas every Saturday afternoon. Which statement is true?
A) Nobody has a comparative advantage in pizza or in lasagna.
B) Maria has a comparative advantage only in lasagna.
C) Maria has a comparative advantage in pizza and in lasagna.
D) Gina has a comparative disadvantage in pizza and in lasagna.
When unions or legislation makes it necessary for a firm to pay higher wages,
A) efficiency declines.
B) income is transferred from wealthy people to poor people.
C) the marginal value of retained employees falls.
D) the marginal value of retained employees rises.
E) total purchasing power increases.
Which of the following would lead to an increase in the supply of ethnic restaurants in a
college town?
A) An increase in the wages paid to restaurant workers
B) An increase in the price of American chain restaurants, and consumers regard
American chain restaurants and ethnic restaurants as substitutes
C) An increase in the demand for ethnic restaurants
D) All of the above.
E) None of the above.