Which of the following changes would not shift the demand curve for a good or
service?
a. a change in income
b. a change in the price of the good or service
c. a change in expectations about the future price of the good or service
d. a change in the price of a related good or service
If people correctly anticipate that inflation will fall by 1%, then
a. the short-run Phillips curve shifts right and unemployment is unchanged.
b. the short-run Phillips curve shifts right and unemployment rises.
c. the short-run Phillips curve shifts left and unemployment is unchanged.
d. the short-run Phillips curve would shift left and unemployment falls.
The Soviet government in the 1980’s never abandoned the ruble as the official currency.
However, the people of Moscow preferred to accept
a. cigarettes in exchange for goods and services, because they were convinced that
cigarettes were going to soon become hard to come by.
b. American dollars in exchange for goods and services, because rubles were extremely
hard to come by.
c. goods such as cigarettes or American dollars in exchange for goods and services,
reminding us of the fact that government decree by itself is not sufficient for the success
of a commodity money.
d. All of the above are correct.
Table 7-1
Refer to Table 7-1. If the price of the product is $51, then who would be willing to
purchase the product?
a. Lori
b. Lori and Audrey
c. Lori, Audrey, and Zach
d. no one
Figure 22-5
Use the graph below to answer the following questions.
Refer to Figure 22-5. The money supply growth rate is greatest at
a. A.
b. B.
c. C.
d. F.
Suppose France subsidizes French wheat farmers, while Germany offers no subsidy to
German wheat farmers. As a result of the French subsidy, sales of French wheat to
Germany
a. may prompt German farmers to invoke the unfair-competition argument.
b. increase the consumer surplus of German buyers of wheat.
c. increase the total surplus of the German people.
d. All of the above are correct.
Your professor loves her work, teaching economics. She has been offered other
positions in the corporate world that would increase her income by 25 percent, but she
has decided to continue working as a professor. Her decision would not change unless
the marginal
a. cost of teaching increased.
b. benefit of teaching increased.
c. cost of a corporate job increased.
d. benefit of a corporate job decreased.
A tax on sellers will shift the
a. demand curve upward by the amount of the tax.
b. demand curve downward by the amount of the tax.
c. supply curve upward by the amount of the tax.
d. supply curve downward by the amount of the tax.
If the price elasticity of demand for tuna is 0.7, then a 1.5% increase in the price of tuna
will decrease the quantity demanded of tuna by
a. 1.05%, and tuna sellers’ total revenue will increase as a result.
b. 1.05%, and tuna sellers’ total revenue will decrease as a result.
c. 2.14%, and tuna sellers’ total revenue will increase as a result.
d. 2.14%, and tuna sellers’ total revenue will decrease as a result.
Figure 9-6
Refer to Figure 9-6. Without trade, the equilibrium price of carnations is
a. $8 and the equilibrium quantity is 300.
b. $6 and the equilibrium quantity is 200.
c. $6 and the equilibrium quantity is 400.
d. $4 and the equilibrium quantity is 500.
If the price elasticity of demand for a good is 0.25, then a 20 percent decrease in price
results in a
a. 0.0125 percent increase in the quantity demanded.
b. 4 percent increase in the quantity demanded.
c. 5 percent increase in the quantity demanded.
d. 80 percent increase in the quantity demanded.
If the exchange rate falls, U.S. residents pay
a. more dollars for foreign bonds and get more dollars from interest payments.
b. more dollars for foreign bonds but get fewer dollars from interest payments.
c. fewer dollars for foreign bonds and also get fewer dollars from interest payments.
d. fewer dollars for foreign bonds but get more dollars from interest payments.
Figure 7-19
Refer to Figure 7-19. The efficient price-quantity combination is
a. P1 and Q1.
b. P2 and Q2.
c. P3 and Q1.
d. P4 and 0.
Jill, a U.S. citizen, uses some euros to purchase a bond issued by a French vineyard.
This exchange
a. decreases U.S. net capital outflow.
b. increases U.S. net capital outflow by more than the value of the bond.
c. increases U.S. net capital outflow by the value of the bond.
d. does not change U.S. net capital outflow.
Figure 9-17
Refer to Figure 9-17. When comparing no trade to free trade, the gains from trade
amount to
a. $400.
b. $600.
c. $750.
d. $1,000.
Figure 6-6
Refer to Figure 6-6. In which of the following cases would sellers have to develop a
rationing mechanism?
a. a price ceiling set at $8
b. a price ceiling set at $12
c. a price floor set at $8
d. a price floor set at $12
Figure 7-12
Refer to Figure 7-12. When the price falls from P2 to P1, which of the following
would not be true?
a. The sellers who still sell the good are worse off because they now receive less.
b. Some sellers leave the market because they are not willing to sell the good at the
lower price.
c. The total cost of what is now sold by sellers is actually higher than it was before the
decrease in the price.
d. Producer surplus would fall by area A + B.
Figure 17-3. On the graph, MS represents the money supply and MD represents money
demand. The usual quantities are measured along the axes.
Refer to Figure 17-3. If the relevant money-supply curve is the one labeled MS1, then
the equilibrium price level is
a. 0.5 and the equilibrium value of money is 2.
b. 2 and the equilibrium value of money is 0.5.
c. 0.5 and the equilibrium value of money cannot be determined from the graph.
d. 2 and the equilibrium value of money cannot be determined from the graph.
If P denotes the price of goods and services measured in terms of money, then
a. 1/P represents the value of money measured in terms of goods and services.
b. P can be regarded as the “overall price level.”
c. an increase in the value of money is associated with a decrease in P.
d. All of the above are correct.
Unlike national income, personal income
a. includes retained earnings, indirect business taxes, corporate income taxes and social
insurance contributions, and excludes interest and transfer payments received by
households from the government.
b. excludes retained earnings, indirect business taxes corporate income taxes, social
insurance contributions and interest and transfer payments received by households from
the government.
c. excludes retained earnings, indirect business taxes, corporate income taxes and social
insurance contributions, and includes interest and transfer payments received by
households from the government.
d. includes retained earnings, indirect business taxes, corporate income taxes, social
insurance contributions, and interest and transfer payments received by households
from the government.
When the money market is drawn with the value of money on the vertical axis, the
money demand curve slopes
a. upward, because at higher prices people want to hold more money.
b. downward, because at higher prices people want to hold more money.
c. downward, because at higher price people want to hold less money.
d. upward, because at higher prices people want to hold less money.
Figure 7-16
Refer to Figure 7-16. For quantities greater than M, the value to the marginal buyer is
a. greater than the cost to the marginal seller, so increasing the quantity increases total
surplus.
b. less than the cost to the marginal seller, so increasing the quantity increases total
surplus.
c. greater than the cost to the marginal seller, so decreasing the quantity increases total
surplus.
d. less than the cost to the marginal seller, so decreasing the quantity increases total
surplus.
Suppose a shift in aggregate demand creates an economic contraction. If policymakers
can respond with sufficient speed and precision, they can offset the initial shift by
shifting
a. aggregate supply right.
b. aggregate supply left.
c. aggregate demand right.
d. aggregate demand left.
Figure 7-4
Refer to Figure 7-4. If the price of the good is $6, then consumer surplus is
a. $16.
b. $24.
c. $30.
d. $36.
Which of the following shifts the short-run aggregate supply curve to the right?
a. an increase in the money supply
b. an increase in the price level
c. a decrease in the expected price level
d. All of the above are correct.
If a person is risk averse, then as wealth increases, total utility of wealth
a. increases at an increasing rate.
b. increases at a decreasing rate.
c. decreases at an increasing rate.
d. decreases at a decreasing rate.
Figure 4-20
The graph below pertains to the supply of paper to colleges and universities.
Refer to Figure 4-20. All else equal, the return of college students to campus in the fall
would cause a move from
a. x to y.
b. y to x.
c. SA to SB.
d. SB to SA.
Which of the following events would shift money demand to the right?
a. an increase in the price level
b. a decrease in the price level
c. an increase in the interest rate
d. a decrease in the interest rate
After the 1980s, U.S. net capital outflow was
a. negative, meaning that foreigners were buying more capital assets from the United
States than Americans were buying abroad.
b. negative, meaning that Americans were buying more capital assets abroad than
foreigners were buying from the United States.
c. positive, meaning that foreigners were buying more capital assets from the United
States than Americans were buying abroad.
d. positive, meaning that Americans were buying more capital assets abroad than
foreigners were buying from the United States.
The size of a tax and the deadweight loss that results from the tax are
a. positively related.
b. negatively related.
c. independent of each other.
d. equal to each other.
The two words most often used by economists are
a. prices and quantities.
b. resources and allocation.
c. supply and demand.
d. efficiency and equity.
Which of the following is correct?
a. A period of hyperinflation is a period of extraordinarily low inflation.
b. A period of deflation is any period during which the inflation rate is decreasing.
c. During the 1990s, U.S. inflation averaged about 2 percent per year.
d. All of the above are correct.
Total income from the domestic production of final goods and services equals
a. only household expenditures for these goods.
b. only household and business expenditures for these goods.
c. only household and government expenditures for these goods.
d. the expenditures for these goods whoever buys them.
The price paid by buyers in a market will increase if the government
(i) increases a binding price floor in that market.
(ii) increases a binding price ceiling in that market.
(iii) decreases a tax on the good sold in that market.
a. (ii) only
b. (iii) only
c. (i) and (ii) only
d. (i), (ii), and (iii)