The proposition that the outcome of a majority vote is likely to represent the
preferences of the voter who is in the political middle is called
A) the mean (or average) voter theorem.
B) the voting paradox.
C) the Arrow impossibility theorem.
D) the median voter theorem.
Which of the following tools of monetary policy is used least often?
A) open market operations
B) setting the required reserve ratio
C) setting the discount rate
D) acting as a lender of last resort
During the expansion phase of the business cycle, which of the following eventually
increases?
A) production
B) employment
C) income
D) all of the above
What is the dominant strategy in a second-price auction?
A) bidding below one’s true value
B) bidding above one’s true value
C) bidding one’s true value
D) There is no dominant strategy.
OPEC periodically meets to agree to restrict the cartel’s oil output, and yet almost every
member of OPEC produces more than its own output quota. This suggests that OPEC
has
A) a cooperative equilibrium.
B) a noncooperative equilibrium.
C) new potential entrants.
D) a threat of substitute goods.
Disease, poor nutrition, and substandard health care in developing nations can reduce
growth in an economy by
A) reducing physical capital.
B) reducing human capital.
C) increasing labor productivity.
D) increasing technological change.
Currency traders expect the value of the dollar to fall. What effect will this have on the
demand for dollars and the supply of dollars in the foreign exchange market?
A) Demand for dollars will increase, and supply of dollars will decrease.
B) Demand for dollars will increase, and supply of dollars will increase.
C) Demand for dollars will decrease, and supply of dollars will increase.
D) Demand for dollars will decrease, and supply of dollars will decrease.
Which one of the following about a monopoly is false?
A) A monopoly could make profits in the long run.
B) A monopoly could break even in the long run.
C) A monopoly must have some kind of government privilege or government imposed
barrier to maintain its monopoly.
D) A monopoly status could be temporary.
If we use a narrow definition of monopoly, then a monopoly is defined as a firm
A) that has been granted special production rights by the government.
B) that can ignore the actions of all other firms because it produces a superior product
compared to its rivals’ products.
C) that can ignore the actions of all other firms because it produces a product for which
there are no close substitutes.
D) that has the largest market share in an industry.
Typically, the ________ in a country, the higher the level of spending per person on
health care.
A) higher the level of income per person
B) larger the population
C) higher the level of income taxes
D) lower the median age of the population
Which of the following would cause the short-run aggregate supply curve to shift to the
left?
A) an increase in the price level
B) an increase in inflation expectations
C) a technological advance
D) a decrease in interest rates
Table 2-9
Table 2-9 shows the output per week of two jewelers, Serena and Haley. They can either
devote their time to making bracelets or making necklaces. What is Serena’s
opportunity cost of making a necklace?
A) 2 necklaces
B) 1/2 of a bracelet
C) 1/2 of a necklace
D) 3/4 of a bracelet
Human capital refers to which of the following?
A) the quantity of goods and services that can be produced by one worker or by one
hour of work
B) the accumulated knowledge and skills workers acquire from education and training
or from their life experiences
C) manufactured goods that are used to produce other goods and services
D) physical equipment that is made by human laborers, not machines