Figure 9-4. The domestic country is Nicaragua.
Refer to Figure 9-4. With trade, Nicaragua
a. imports 150 calculators.
b. imports 250 calculators.
c. exports 100 calculators.
d. exports 250 calculators.
Figure 8-3
The vertical distance between points A and C represents a tax in the market.
Refer to Figure 8-3. The per-unit burden of the tax on sellers is
a. P3 – P1.
b. P3 – P2.
c. P2 – P1.
d. P4 – P3.
Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of
Charlie Chaplin’s first movie. Each has in mind a maximum amount that he will bid.
This maximum is called
a. a resistance price.
b. willingness to pay.
c. consumer surplus.
d. producer surplus.
Taxes are of interest to
a. microeconomists because they consider how to balance equality and efficiency.
b. microeconomists because they consider how best to design a tax system.
c. macroeconomists because they consider how policymakers can use the tax system to
stabilize economic activity.
d. All of the above are correct.
Table 6-2
Refer to Table 6-2. A price floor set at $5 will
a. be binding and will result in a surplus of 50 units.
b. be binding and will result in a surplus of 75 units.
c. be binding and will result in a surplus of 125 units.
d. not be binding.
The Economy in 2008
In the first half of June 2008 the effects of a housing and financial crisis and an increase
in world prices of oil and foodstuffs were affecting the economy.
Refer to the Economy in 2008. In the short-run the housing and financial crises
a. raised both the price level and output.
b. raised the price level and reduced output.
c. reduced the price level and raised output.
d. reduced both the price level and output.
Fundamental analysis shows that stock in Cedar Valley Furniture Corporation has a
price that exceeds its present value.
a. This stock is overvalued; you should consider adding it to your portfolio.
b. This stock is overvalued; you shouldn’t consider adding it to your portfolio.
c. This stock is undervalued; you should consider adding it to your portfolio.
d. This stock is undervalued; you shouldn’t consider adding it to your portfolio.
The position of the long-run Phillips curve depends on
a. the inflation rate and the natural rate of unemployment.
b. the inflation rate but not the natural rate of unemployment.
c. the natural rate of unemployment, but not the inflation rate.
d. neither the natural rate of unemployment nor the inflation rate.
A key determinant of the price elasticity of supply is
a. the ability of sellers to change the price of the good they produce.
b. the ability of sellers to change the amount of the good they produce.
c. how responsive buyers are to changes in sellers’ prices.
d. the slope of the demand curve.
Figure 5-5
Refer to Figure 5-5. The maximum value of total revenue corresponds to a price of
a. $18.
b. $30.
c. $42.
d. $48.
The labor-force participation rate is computed as
a. (Employed +Adult Population) x
b. (Employed +Labor Force) x
c. (Labor Force +Adult Population) x
d. (Adult Population +Labor Force) x
When the Fed conducts open-market purchases,
a. it buys Treasury securities, which increases the money supply.
b. it buys Treasury securities, which decreases the money supply.
c. it borrows money from member banks, which increases the money supply.
d. it lends money to member banks, which decreases the money supply.
There is a
a. short-run tradeoff between inflation and unemployment.
b. short-run tradeoff between the actual unemployment rate and the natural rate of
unemployment.
c. long-run tradeoff between inflation and unemployment.
d. long-run tradeoff between the actual unemployment rate and the natural rate of
unemployment.
Figure 3-11
The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
Refer to Figure 3-11. In the nation of Cropitia, the opportunity cost of a pound of
cheese is 1.5 pounds of ham. Based on this information, if Bonovia and Cropitia want
to trade, Bonovia should specialize in the production of
a. ham and import cheese.
b. cheese and import ham.
c. both goods and import neither good.
d. neither good and import both goods..
If the minimum wage is currently above the equilibrium wage, then a decrease in the
minimum wage
a. increases both the quantity demanded and the quantity supplied of labor.
b. decreases both the quantity demanded and the quantity supplied of labor.
c. increases the quantity of labor demanded but decreases the quantity of labor supplied.
d. decreases the quantity of labor demanded but increases the quantity of labor supplied.
When Mario’s income decreases, he buys more pasta. For Mario, pasta is a normal
good.
Table 3-5
Assume that England and Spain can switch between producing cheese and producing
bread at a constant rate.
Labor Hours Needed
to Make 1 Unit of Number of Units
Produced in 40 Hours
Refer to Table 3-5. Assume that England and Spain each has 40 labor hours available.
Originally, each country divided its time equally between the production of cheese and
bread. Now, each country spends all its time producing the good in which it has a
comparative advantage. As a result, the total output of cheese increased by
a. 15.
b. 20.
c. 25.
d. 40.
Historically, as recessions have ended the unemployment rate declined
a. gradually to near zero.
b. rapidly to near zero.
c. gradually to a rate of about 5%-6%.
d. rapidly to a rate of about 5%-6%.
In the open-economy macroeconomic model, if a country’s interest rate rises, then its
a. net capital outflow and net exports rise.
b. net capital outflow rises and its net exports fall.
c. net capital outflow falls and its net exports rise.
d. net capital outflow and net exports fall.
Which of the following make(s) insurance premiums higher than otherwise?
a. adverse selection and moral hazard
b. adverse selection, but not moral hazard
c. moral hazard, but not adverse selection
d. neither adverse selection nor moral hazard
Changes in the interest rate bring the money market into equilibrium according to
a. both liquidity preference theory and classical theory.
b. neither liquidity preference theory nor classical theory.
c. liquidity preference theory, but not classical theory.
d. classical theory, but not liquidity preference theory.
Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the
values in the table, the production possibilities frontier is
a. bowed outward indicating increasing opportunity costs.
b. bowed outward indicating decreasing opportunity costs.
c. a straight line indicating constant opportunity costs.
d. bowed inward indicating decreasing opportunity costs.
The labor-force participation rate tells us the fraction of the population that
a. is able to participate in the labor market.
b. has ever been employed.
c. has chosen to participate in the labor market.
d. has chosen not to participate in the labor market.
Which of these terms are used interchangeably?
a. “goods and services” and “inputs”
b. “goods and services” and “factors of production”
c. “inputs” and “factors of production”
d. “land, labor, and capital” and “goods and services”
Which of the following statements is valid when supply is perfectly elastic at a price of
$4?
a. The elasticity of supply approaches infinity.
b. The supply curve is vertical.
c. At a price below $4, quantity supplied is infinite.
d. At a price above $4, quantity supplied is zero.
The price elasticity of supply measures how responsive
a. sellers are to a change in price.
b. sellers are to a change in buyers’ income.
c. buyers are to a change in production costs.
d. equilibrium price is to a change in supply.
Kelly is willing to pay $68 for a pair of shoes for a wedding. She finds a pair at her
favorite outlet shoe store for $58. Kelly’s consumer surplus is
a. $10.
b. $28.
c. $58.
d. $68.
Other things the same, the aggregate quantity of goods demanded in the U.S. increases
if
a. real wealth rises.
b. the interest rate rises.
c. the dollar appreciates.
d. All of the above are correct.
Suppose the real exchange rate is such that the market for foreign-currency exchange
has a surplus. This surplus will lead to
a. an appreciation of the dollar, an increase in U.S. net exports, and so an increase in the
quantity of dollars demanded in the foreign exchange market.
b. an appreciation of the dollar, a decrease in U.S. net exports, and so a decrease in the
quantity of dollars demanded in the foreign exchange market.
c. a depreciation of the dollar, an increase in U.S. net exports, and so an increase in the
quantity of dollars demanded in the foreign exchange market.
d. a depreciation of the dollar, a decrease in U.S. net exports, and so a decrease in the
quantity of dollars demanded in the foreign exchange market.
Table 10-4
The country of Caspir produces only cereal and milk. Quantities and prices of these
goods for the last several years are shown below. The base year is 2008.
Prices and Quantities
Refer to Table 10-4. In 2011, this country’s
a. real GDP was $900, and the GDP deflator was 150.2.
b. real GDP was $900, and the GDP deflator was 177.8.
c. real GDP was $1065, and the GDP deflator was 177.8.
d. real GDP was $1065, and the GDP deflator was 150.2.
The slope of a line that passes through the points (10, 15) and (20, 7) is
a. -5/4.
b. -4/5.
c. 4/5.
d. 5/4.
Economists use the term “money” to refer to
a. all wealth.
b. all assets, including real assets and financial assets.
c. all financial assets, but not real assets.
d. those types of wealth that are regularly accepted by sellers in exchange for goods and
services.
When he was 18, Hussam put $100 into an account at an interest rate of 8 percent. He
now has $158.69 in this account. For how many years did Hussam leave this money in
his account?
a. 5 years
b. 6 years
c. 7 years
d. 8 years
An increase in the budget surplus
a. raises net exports and domestic investment.
b. raises net exports and reduces domestic investment.
c. reduces net exports and raises domestic investment.
d. reduces net exports and domestic investment.
In the open-economy macroeconomic model, the amount of net capital outflow
represents the quantity of dollars
a. supplied for the purpose of selling assets domestically.
b. supplied for the purpose of buying foreign assets.
c. demanded for the purpose of buying U.S. net exports of goods and services.
d. demanded for the purpose of importing foreign goods and services.