1) what is the primary reason that changes in total spending lead to cyclical changes in
output and employment?
a.government is unable to respond by changing the amount of money in circulation.
b.changes in total spending cause supply shocks that cause cyclical variation.
c.prices are sticky in the short run.
d.prices are flexible in the long run.
2) Compared with fiscal policy, monetary policy is:
A.quicker and easier to implement.
B.slower and more cumbersome to implement.
C.more dependent on Congressional action.
D.more likely to produce an offsetting net export effect.
3) according to dallas federal reserve economist w. michael cox, taken to its extreme,
the logic of “buying american” implies that:
a.we should buy everything from abroad.
b.people should only consume what they can produce themselves.
c.consumers should only buy goods from other states.
d.the best quality goods are found in the united states.
4) Answer the next question(s) on the basis of the following table for a particular
country in which C is consumption expenditures, Ig is gross investment expenditures, G
is government expenditures, X is exports, and M is imports. All figures are in billions of
dollars. Each question is independent of the other questions.
Refer to the above table. The interest-rate effect of changes in the price level is shown
by columns:
A.(1) and (4) of the table.
B.(5) and (6) of the table.
C.(1) and (3) of the table.
D.(2) and (4) of the table.
5) the term productive efficiency refers to:
a.any short-run equilibrium position of a competitive firm.
b.the production of the product-mix most desired by consumers.
c.the production of a good at the lowest average total cost.
d.fulfilling the condition p = mc.
6) These five schedules represent income tax schedules for an economy. All figures are
in billions of dollars.
Which of the above schedules represent(s) a progressive tax?
A.V only
B.III and V
C.II and III
D.III only
7) Traveling sales representative Harold Hill only calls on clients four days a week
rather than the five days expected by his employer. This is an example of:
A.equalizing differences.
B.a nonmonetary job disadvantage.
C.shirking.
D.the free-rider problem.
8) Commercial banks monetize claims when they:
A.collect checks through the Federal Reserve System.
B.make loans to the public.
C.accept repayment of outstanding loans.
D.borrow from the Federal Reserve Banks.
9) The demand for agricultural products:
A.has a price elasticity coefficient of about .20 to .25.
B.is elastic with respect to income but inelastic with respect to price.
C.has been decreasing about 8 percent per year.
D.has been rising more rapidly than the national income.
10)
Refer to the above diagram. Point b would not be permanent because the:
A.economy would move from b to a on PC1.
B.short-run Phillips Curve would shift from PC1 to PC2 and unemployment would
increase to the natural rate at c
C.economy would immediately move from b to c to d
D.economy would move from b directly to d
11)
refer to the above diagram for a nondiscriminating monopolist. marginal revenue will
be zero at output:
a.q1.
b.q2.
c.q3.
d.q4.
12) In the real world, specialization is rarely complete because:
A.nations normally experience increasing opportunity costs in producing more of the
product in which they are specializing.
B.production possibilities curves are straight lines rather than curves bowed outward as
viewed from the origin.
C.one nation’s imports are necessarily another nation’s exports.
D.international law prohibits monopolies.
13) real gdp refers to:
a.the value of the domestic output after adjustments have been made for environmental
pollution and changes in the distribution of income.
b.gdp data that embody changes in the price level, but not changes in physical output.
c.gdp data that reflect changes in both physical output and the price level.
d.gdp data that have been adjusted for changes in the price level.
14) the demand for commodity x is represented by the equation p = 100 – 2q and supply
by the equation p = 10 + 4q.
refer to the above information. the equilibrium price is:
a.$50
b.$70
c.$80
d.$130
15) mrs. arnold is spending all her money income by buying bottles of soda and bags of
pretzels in such amounts that the marginal utility of the last bottle is 60 utils and the
marginal utility of the last bag is 30 utils. the prices of soda and pretzels are $.60 per
bottle and $.40 per bag respectively. it can be concluded that:
a.the two commodities are substitute goods.
b.mrs. arnold should spend more on pretzels and less on soda.
c.mrs. arnold should spend more on soda and less on pretzels.
d.mrs. arnold is buying soda and pretzels in the utility-maximizing amounts.
16) real gdp per capita in the united states (as of 2004) exceeds that of france primarily
because:
a.the united states had higher annual rates of growth than france from 1960 through
2004.
b.the united states has a much larger population than france.
c.the united states has a higher percentage of the working-age population in the labor
force and because u.s. employees average about 20 percent more hours worked per
year.
d.european union rules severely limit france’s access to technologies developed outside
the region.
17) A private closed economy will expand when:
A.actual GDP is less than potential GDP.
B.unplanned decreases in inventories occur.
C.aggregate expenditures are less than GDP.
D.unplanned increases in inventories occur.
18) Why is land rent a surplus payment from the perspective of economists?
19) Suppose the economy is experiencing inflation. What would be the interpretation of
how a restrictive monetary policy would address this problem?
20) Use a leaky bucket to discuss the tradeoff between income equality and economic
efficiency.
21) What is the difference between the demand curve for a resource under pure
competition and under imperfect competition?
22) Compensating wage differentials will attract U.S. workers even to otherwise
undesirable work. Explain.
23) What was the importance of the Federal Trade Commission Act of 1914?
24) What ways do firms have to finance R&D activities? What is the cost of these
forms of funding?
25) What is the difference in the explanation of the shape of the aggregate demand
curve and a single product demand curve? After all, both demand curves show an
inverse relationship between price and quantity.
26) Explain: Antitrust is basically pro-business, because it is antimonopoly. To believe
that it is antibusiness is to believe that monopoly is pro-business.