From the individual’s standpoint, participating in a positional arms race is a _________.
From society’s point of view, it is __________.
A. dominant strategy; efficient
B. tit-for-tat strategy; efficient
C. dominant strategy; inefficient
D. tit-for-tat strategy; inefficient
Assume that all firms in this industry have identical cost functions.
The firm depicted in the graph on the right faces a demand curve that
A. is horizontal at the market price.
B. is downward sloping, and less than market demand curve.
C. is the same as the marginal cost curve.
D. is the same as the market demand curve.
Refer to the figure above. Total consumer surplus received by the buyer is
A. $100
B. $125
C. $200
D. $625
Which of the following is true?
A. Lou has both an absolute advantage and a comparative advantage over Alex in both
tasks.
B. Alex has a comparative advantage over Lou in cleaning.
C. Lou has a comparative advantage over Alex in cleaning.
D. Lou has a comparative advantage over Alex in cooking.
Changes in business inventories are:
A. classified as consumption expenditures.
B. classified as investment expenditures.
C. classified as government purchases.
D. excluded from GDP.
Holding constant risk and the real returns available abroad, lower domestic real interest
rates ______ capital inflows, ______ capital outflows, and ______ net capital inflows.
A. increase; increase; increase
B. increase; increase; decrease
C. increase; decrease; increase
D. decrease; increase; decrease
If the percentage change in the price of a good is less than the percentage change in the
quantity demanded of that good then the demand for that good, with respect to price, is:
A. elastic.
B. inelastic.
C. unitary elastic.
D. perfectly inelastic.
Suppose you have one hour to catch a flight to Miami for spring break. It takes 45
minutes to drive to the airport. Your car is almost out of gas; the price of gas at the
closest gas station is higher than at the one on the other side of the town. To you, the
price elasticity of demand for gas is likely to be ______ than it would be if you had
several hours before the flight.
A. higher
B. more inelastic
C. more elastic
D. no different
Current welfare programs in the United States are
A. exclusively in-kind transfers.
B. exclusively tax credits.
C. means-tested.
D. exclusively cash transfers.
Price elasticity of demand is a measure of:
A. consumer response to a change in a good’s price.
B. a market’s ability to restore equilibrium after a change in a good’s price.
C. the demand for a good or service.
D. consumer response to excess demand.
If the price of textbooks increases by one percent and the quantity demanded falls by
one-half percent, then the price elasticity of demand has a value of:
A. 0.05.
B. 0.5.
C. 2.
D. 5.
If cross price elasticity is positive but less than one, the two goods are:
A. substitutes.
B. inelastically demanded.
C. complements.
D. normal.
If the actual rate of unemployment is 4 percent, what is the natural rate of
unemployment if output equals potential output?
A. 0 percent
B. 2 percent
C. 3 percent
D. 4 percent
Assume that all firms in this industry have identical cost functions.
Firms in this industry will shut down if the price is
A. higher in the short run than in the long run.
B. less than or equal to $15.
C. less than or equal to $10.
D. less than or equal to $5.
Product improvements make it difficult for the statisticians who construct the CPI to
distinguish between ______ changes and ______ changes.
A. price; quality
B. quantity; price
C. quantity; quality
D. income; price
Refer to the table above. The total labor cost of 4 employees is:
A. $21,500.
B. $22,000.
C. $38,000.
D. $43,121.
A government policy that allows retirement savings to accumulate tax-free is an
example of a policy to promote economic growth by:
A. increasing human capital.
B. increasing physical capital.
C. improving technology.
D. increasing the availability of natural resources.
The cyclical unemployment rate is zero when:
A. there is not a recessionary gap.
B. there is not an expansionary gap.
C. actual GDP and potential GDP are equal.
D. frictional unemployment equals structural unemployment.
Organizing production, obtaining financing, assigning workers to jobs, and dealing with
suppliers are among the ways that ______ increases average labor productivity.
A. human capital
B. physical capital
C. an entrepreneur
D. a manager
Two groups of workers not counted as unemployed in the official unemployment
statistics are ______ workers.
A. chronically unemployed and short-term unemployed
B. chronically-unemployed and discouraged
C. chronically unemployed and involuntary part-time
D. discouraged and involuntary part-time
When consumers substitute a cheaper good for a more expensive one, the CPI will
______ the change in the cost of living.
A. equal
B. understate
C. precisely measure
D. overstate
Consumer discrimination exists when consumers are willing to pay __________ for a
good or service produced by the favored group, even though the quality of the good or
service is __________.
A. more; better
B. less; worse
C. more; worse
D. more; the same
An economic recession in Japan ______ the demand for exports from East Asian
countries resulting in a reduction in autonomous expenditures in these East Asian
countries and a(n) ______ output gap in the East Asian countries.
A. reduces; expansionary
B. increases; expansionary
C. reduces; recessionary
D. increases; recessionary
Fiscal policy includes
A. tax policy only.
B. government expenditures only.
C. tax policy and government expenditures.
D. tax policy, government expenditures, and monetary policy.
Refer to the table above. The comparative advantage for pizza production belongs to
__________ and the comparative advantage for pizza delivery belongs to __________.
A. Corey; Corey
B. Pat; Pat
C. Pat; Corey
D. Corey; Pat
Starting from full employment at the initial target inflation rate, if there is a favorable
inflation shock, then the Federal Reserve must _____ in order to return output to
potential.
A. increase the target inflation rate.
B. decrease the target inflation rate.
C. maintain the initial target inflation rate.
D. shift the short-run aggregate supply curve up.
Lakeville is a small community that completely surrounds a scenic lake up north.
Lakeville’s zoning regulations require that residential lots have at least one hundred feet
of frontage, or shoreline, on the lake. The total shoreline of the lake is 5,000 feet.
There are currently 40 homes on the lake. If demand for lakefront property in Lakeville
increased,
A. the price of lakefront property would not change because there is excess supply.
B. the quantity supplied of lakefront property would decrease because there is excess
demand.
C. the quantity supplied of lakefront property would be zero because there is no room
for new residents.
D. the quantity supplied of lakefront property would increase, and the price per lot
would increase.
An increase in the aggregate demand for goods and services will result in an increase in
the amount of output firms are willing to produce, and this increase in output will be
accompanied by:
A. a decrease in the inflation rate.
B. an increase in the inflation rate.
C. a decrease in nominal GDP.
D. an increase in potential GDP.
Prior to World War II, most consumers in the United States
A. owned medical insurance for catastrophic illness but self insured against routine
medical care.
B. self insured against catastrophic illness but owned medical insurance for routine
medical care.
C. had no medical insurance of any type.
D. owned medical insurance covering both catastrophic and routine medical care.
The extra cost that results from an extra unit of an activity is the:
A. marginal benefit.
B. marginal cost.
C. reservation cost.
D. same as the opportunity cost.
All of the following are characteristics of short-term economic fluctuations EXCEPT:
A. expansions and recessions are felt throughout the economy.
B. expansions and recessions are irregular in length and severity.
C. unemployment rises during recessions.
D. durable-goods industries are less sensitive to short-term fluctuations than service and
non-durable industries.
Which is a more credible signal of integrity?
A. Publicly announcing that you are honest
B. Leaving a tip in a local restaurant
C. Reporting a fellow student that you observe cheating on an exam
D. Returning money to a store clerk who gave you too much change
In an expansion, the cyclical rate of unemployment is most often:
A. positive.
B. zero.
C. negative.
D. equal to the natural rate of unemployment.
An increase in aggregate supply is usually shown by a ______ shift of the AS curve.
A. upward
B. downward
C. leftward
D. rightward