The number of dollars that the commercial banking system can add to the money
supply for each dollar of new reserves created by the Fed
A) cannot legally be greater than 8 nor less than 2.
B) is governed largely by reserve requirements and the form in which the public
chooses to hold money.
C) is less than one because a portion of new reserves must be retained in bank vaults or
on deposit with the Fed.
D) would increase if the public decided to transfer the amounts currently in commercial
bank savings accounts into checking accounts.
Fill in the blank: Your authors argue that focusing on the market as a ________ process
helps to better explain the haggling and negotiation activities, which are at the core of
our production and consumption plans in the real world.
A) monopolized
B) oligopolized
C) perfectly competitive
D) competitive
Skis and snowboards are close substitute goods. Fill in the blanks: A ________ in the
price of snowboards would tend to ________ the demand for ________.
A) rise; increase; snowboards
B) rise; decrease; snowboards
C) rise; decrease; skis
D) rise; increase; skis
E) fall; increase; snowboards
The author of An Inquiry Into the Nature and Causes of the Wealth of Nations was
A) Duncan Bradstreet.
B) Dow Jones.
C) John Maynard Keynes.
D) Karl Marx.
E) Adam Smith.
Which Fed policy would be part of a restrictive monetary policy?
A) Raising tax rates.
B) Lowering the discount rate.
C) Selling government bonds.
D) Reducing the required reserve ratio.
E) None of the above.
The time it takes for an additional dollar of net government expenditures to work its
way through the economy and have its full effect
A) is about one quarter of a year.
B) is between one and two years.
C) is not yet known precisely because little empirical research has been done on the
question.
D) probably cannot be predicted from an examination of historical data.
“I’m telling you, instead of charging $50 each, they could give the opera tickets away
for free, and I myself still wouldn’t goever!” What can we say about this person’s
demand for opera tickets?
A) His price elasticity is infinite, which means his demand curve is upward sloping.
B) His price elasticity is exactly equal to 1, which means his demand curve is unit
elastic.
C) His price elasticity is exactly equal to 50, which means his demand curve is very
elastic.
D) He doesn’t have a demand for opera tickets.
An event is productive as long as
A) it is incurred without any opportunity cost.
B) it increases wealth.
C) the value of the inputs exactly equals the value of the output.
D) it creates a new material object.
E) all of the above are true.
When a business fails to cover sunk costs, it usually
A) declares a stock split.
B) declares bankruptcy.
C) does not immediately stop operating.
D) stops operating until sunk costs are recovered.
Quantity supplied means
A) the amount of a good consumers plan to purchase.
B) the amount of a good suppliers plan to sell at a given price.
C) the only level of output that producers can produce.
D) the same thing as “supply.”
You would be more likely to find a motel room than a camping site if you were
traveling through the West during the height of the tourist season and had no advance
reservation if
A) camping sites are expensive to maintain.
B) camping sites are less numerous.
C) most camping sites were managed by government agencies.
D) most motels do not accept advance reservations.
E) motels more often accept credit cards.
In the economic way of thinking, the right to coerce adults is
A) immoral.
B) a property right.
C) the most efficient way for management to control labor.
D) necessarily antithetical to a free and open society.
E) good because it’s rooted in the Old Testament.
According to your text, when a shortage exists,
A) buyers compete with buyers.
B) buyers compete with sellers.
C) sellers compete with sellers.
D) the price of the good would tend to fall in order to eliminate the shortage.
It may be misleading to call water a necessity because
A) the amount of water a community consumes does not vary with the price people
must pay for water.
B) the demand for water does not obey the law of demand.
C) the demand for water is highly elastic.
D) the demand for water is highly inelastic.
E) there are many uses of water for which good substitutes exist.
We can experience a shortage of any good or service if
A) the price of using it is too high.
B) the price of using it is too low.
C) people demand more than they need.
D) if people need more than they demand.
Wealthy people are more likely than poor people to use airplanes rather than busses for
interurban travel because
A) their demand for transportation is more elastic.
B) their demand for transportation is more inelastic.
C) they can better afford to use a higher-cost mode of transportation.
D) they are more likely to ignore the relative costs of busses and airplanes.
E) traveling by airplane usually costs them less than traveling by bus.
What’s the most efficient way to get from New York to L.A.?
A) By plane
B) By train
C) By automobile
D) By foot
E) Any of the above might be, depending on one’s circumstances.
People use water for trivial, unimportant purposes because
A) there is little demand for water.
B) its relative price is very low.
C) they don’t realize how essential water is to life.
D) they don’t realize the world’s supply of water is limited.
E) they underestimate the total demand for water.
When airlines overbook a flight and passengers are paid to take a later flight, which
category of passenger is most likely to give up their reservations?
A) Passengers not in a hurry
B) Poor passengers
C) Selfish passengers
D) Unselfish passengers
E) Wealthy passengers
What is both a necessary and sufficient condition for anything to become money?
A) Metallic backing
B) Government fiat
C) Acceptability
D) A stable price level
E) Seignorage
An increase in the stock of capital contributes to economic growth because it increases
A) federal funds rates.
B) labor productivity.
C) tax revenues.
D) the reserves of the banking system.
When the price of pizzle trees increased by 20 percent last year, consumers ended up
spending 10 percent more on the purchase of pizzle trees. This shows that the demand
for pizzle trees
A) was elastic.
B) was inelastic.
C) was unit elastic.
D) did not obey the law of demand.
Suppose a single-parent father with four children receives these welfare benefits from
the government each month: $400 in cash, $200 in food stamps, and $100 in medical
benefits. If the father takes a job paying $1000 per month he will lose all these benefits
and will also pay $100 in income and social security taxes. His earnings from the job
are consequently being taxed at an effective marginal rate of
A) 80%.
B) 60%.
C) 40%.
D) 20%.
E) 10%.
If we knew that nominal GDP was currently $7500 billion, and that current GDP in
dollars of 1992 purchasing power was $5000 billion, what would we know about the
GDP deflator?
A) It would be .667.
B) It would be 150.
C) Nothing until we had current information on the price level, such as consumer price
index figures.
D) Only that a dollar buys more currently than it bought in 1992.
E) Only that a dollar currently buys less than it bought in 1992.
Property rights
A) are essentially arbitrary. Therefore, rearranging them will have few effects.
B) do not really exist except in a capitalist society.
C) are a major part of the “rules of the game”, which govern economic activity.
D) prevent people from cooperating in the most effective way.
E) are different from human rights.
Barry Bonds and Jennifer Lopez have which of the following in common?
A) Neither of them faces the problem of scarcity.
B) Each of them acts solely in the public interest.
C) Each of them chooses to advance some projects over others.
D) None of the above.
Fill in the blanks: The percentage of money income earned by the lowest fifth of
families in the U.S. was ________ in 1960 and ________ in 2010.
A) 41.3%; 47.8%
B) 15.9%; 20.0%
C) 12.2%; 9.5%
D) 4.8%; 3.8%
If Safeway reduced its grocery prices below cost in a particular metropolitan area and
kept them there until all other grocery stores in the area had been forced into
bankruptcy, Walmart would almost certainly sustain huge net losses
A) in the short run and the long run because grocery stores would reappear quickly
when Walmart subsequently set high prices.
B) in the short run but not in the long run because it could charge very high prices
afterward.
C) in the short run but not in the long run because the policy would lower Walmart’s
costs of buying from suppliers.
D) only if the government enforced the antitrust laws in a fair and even-handed way.
If a used-car dealer enjoys economic profits, then
A) as a group, its customers necessarily suffered a like amount in economic losses.
B) as a group, its customers were necessarily made worse off.
C) as a group, its competitors necessarily suffered economic losses.
D) all of the above are true.
E) none of the above is true.
Economic growth requires
A) private foreign investment.
B) domestic budget deficits.
C) investment in human capital.
D) governance according to the will of whoever is in charge.
Both the Latin American countries and the sub-Saharan countries have poor economic
growth records due to
A) climate.
B) geography.
C) colonization.
D) arbitrary governance.
E) indifference from the World Bank.