Suppose that real domestic output in an economy is 2400 units, the quantity of inputs is
60, and the price of each input is $30. The per-unit cost of production is:
A. $0.25.
B. $0.50.
C. $0.75.
D. $2.00.
Of the following groups, which had the highest incidence of poverty in 2009?
A. Whites
B. Hispanics
C. Children under 18
D. Persons 65 or older
Refer to the above graph. At output level H, the area:
A. 0CGH represents the firm’s total cost of production.
B. ACGE represents the firm’s economic profit.
C. 0AEH represents the firm’s economic profit.
D. BCGF represents the firm’s fixed costs of production.
If the equilibrium exchange rate changes so that fewer dollars are needed to buy a South
Korean won, then:
A. Americans will buy fewer Korean goods and services.
B. the won has appreciated in value.
C. fewer U.S. goods and services will be demanded by the South Koreans.
D. the dollar has depreciated in value.
The Social Security trust fund currently is in:
A. deficit, and its inclusion in the federal budget increases the stated size of the budget
deficit.
B. deficit, and its inclusion in the federal budget reduces the stated size of the budget
deficit.
C. surplus, and its inclusion in the federal budget reduces the stated size of the budget
deficit.
D. surplus, and its inclusion in the federal budget increases the stated size of the budget
deficit.
Suppose that an economy produces 500 units of output. It takes 10 units of labor at $15
a unit and 4 units of capital at $50 a unit to produce this output. The per-unit cost of
production is:
A. $1.42.
B. $1.24.
C. $0.70.
D. $0.40.
A major argument for economic growth is that it:
A. creates an equal distribution of income.
B. protects common property resources.
C. leads to a higher standard of living.
D. reduces the amount of taxation.
A prediction from the kinked-demand curve model of noncollusive oligopoly is that, for
an individual firm, small changes in:
A. demand will not lead to changes in price or output.
B. marginal revenue will lead to changes in price and output.
C. marginal cost will lead to changes in price and output.
D. marginal cost will not lead to changes in price or output.
Critics of the minimum wage argue that an increase in the minimum wage rate above
the equilibrium rate of a purely competitive labor market would:
A. increase unemployment in the labor market.
B. increase firms’ demand for labor.
C. decrease the supply of labor.
D. cause firms to substitute labor for capital.
From 1993 to 2000, the poverty rate:
A. increased from 4 percent to 11.3 percent.
B. increased from 11.3 percent to 15 percent.
C. decreased from 11.3 percent to about 4 percent.
D. decreased from 15 percent to 11.3 percent.
Which would be considered a macroeconomic study? A study of the effect of:
A. a decrease in the price of automobiles on automobile sales.
B. changing government spending to increase employment.
C. a new tax on the profits of a business.
D. lower interest rates on a firm’s investment.
The rationale for ability-to-pay taxation and the contention that those with large
incomes should pay more taxes both absolutely and relatively is that:
A. high-income receivers are generally in a better position to shift taxes than are
low-income receivers.
B. the transfer system is regressive and it is therefore essential to have an offsetting
progressive tax structure.
C. rational consumers spend their first dollars of income on the most urgently desired
goods and successive dollars on less essential goods.
D. taxes should be paid for financing public goods in direct proportion to the
satisfaction an individual derives from those goods.
A nondiscriminating pure monopolist is generally viewed as:
A. productively efficient but allocatively inefficient.
B. productively inefficientp, but allocatively efficient.
C. both productively and allocatively inefficient.
D. both productively and allocatively efficient.
Refer to the above figure. If box A represents businesses and box D represents the
product market in this circular flow model, then money flow in the model would be
represented by:
A. (1), (2), (3), and (4).
B. (5), (6), (7), and (8).
C. (1), (3), (6), and (8).
D. (7), (5), (4), and (2).
The U.S. tax-transfer system (as distinct from the tax system alone) is:
A. progressive.
B. proportional.
C. bimodal.
D. regressive.
The economy experiences a decrease in the price level and an increase in real domestic
output. Which is a likely explanation?
A. Consumer incomes and the quantity of labor have decreased.
B. Interest rates and wage rates have decreased.
C. The prices of imported resources have increased.
D. National income abroad has increased.
The utility of a specific product:
A. is determined by consumer income.
B. is determined by the price of the product.
C. varies from person to person using the product.
D. is constant from person to person using the product.
Economic growth can best be portrayed as a:
A. leftward shift of the production possibilities curve.
B. movement from a point inside to a point outside of the production possibilities curve.
C. movement from a point near the vertical axis to a point near the horizontal axis on
the production possibilities curve.
D. rightward shift of the production possibilities curve.
What has been the range for the duration in months of U.S. recessions since 1950?
A. 0 months to 5 months
B. 6 months to 16 months
C. 17 months to 25 months
D. 26 months to 30 months
A checkable deposit at a commercial bank is a(n):
A. liability to the depositor and an asset to the bank.
B. liability to both the depositor and the bank.
C. asset to the depositor and a liability to the bank.
D. asset to both the depositor and the bank.
To reduce the Federal funds rate, the Fed can:
A. buy government bonds from the public.
B. increase the discount rate.
C. increase the prime interest rate.
D. sell government bonds to commercial banks.
Assume a drought in the Great Plains reduces the supply of wheat. Since wheat is a
basic ingredient in the production of bread and potatoes are a consumer substitute for
bread, we would expect the price of wheat to:
A. rise, the supply of bread to increase, and the demand for potatoes to increase.
B. rise, the supply of bread to decrease, and the demand for potatoes to increase.
C. rise, the supply of bread to decrease, and the demand for potatoes to decrease.
D. fall, the supply of bread to increase, and the demand for potatoes to increase.
Consider the demand curve above. If area 0ABC is smaller than area 0DEF, we may
conclude that demand in this range is:
A. price-inelastic.
B. income-inelastic.
C. price-elastic.
D. income-elastic.
A rightward shift in the demand curve for product C might be caused by:
A. an increase in income if C is an inferior good.
B. a decrease in income if C is a normal good.
C. a decrease in the price of a product that is a close substitute for C.
D. a decrease in the price of a product that is complementary to C.
A nation’s capital stock was valued at $500 billion at the start of the year and $575
billion at the end. Consumption of private fixed capital in the year was $35 billion.
Assuming stable prices, net investment was:
A. $35 billion.
B. $40 billion.
C. $45 billion.
D. $75 billion.
What policy tool of the Federal Reserve relies on bank borrowing to be effective?
A. Open-market operations.
B. Check collection.
C. The reserve ratio.
D. The discount rate.
A firm is both hiring labor and selling output in purely competitive markets and is
maximizing profits. It is currently operating in the elastic range of its MRP curve. If the
wage rate increases, its total spending on wages at the new equilibrium will:
A. be larger.
B. be smaller.
C. be unchanged.
D. change, but it is impossible to determine the direction.
Refer to the above diagram. At output level Q total variable cost is:
A. 0BEQ.
B. BCDE.
C. 0CDQ.
D. 0AFQ.
(GDP figures are in billions of dollars.)
Refer to the above table. What was real GDP in year 2?
A. $4820 billion.
B. $4875 billion.
C. $4911 billion.
D. $5320 billion.
Which of the following is not a precondition for price discrimination?
A. The commodity involved must be a durable good.
B. The good or service cannot be resold by the original buyers.
C. The seller must be able to distinguish buyers with different elasticities of demand.
D. The seller must possess some degree of monopoly power.
Which of the following best expresses the law of diminishing returns?
A. Because large-scale production allows the realization of economies of scale, the real
costs of production vary directly with the level of output.
B. Population growth automatically adjusts to that level at which the average product
per worker will be at a maximum.
C. As successive amounts of one resource (labor) are added to fixed amounts of other
resources (capital), beyond some point the resulting extra output will decline.
D. Proportionate increases in the inputs of all resources will result in a
less-than-proportionate increase in total output.