1) economy a: gross investment equals depreciation economy b: depreciation exceeds
gross investment economy c: gross investment exceeds depreciation
other things equal, the above information suggests that the production capacity in
economy:
a.b is growing more rapidly than either a or c.
b.a is growing more rapidly than either b or c.
c.a is growing less rapidly than economy b.
d.c is growing more rapidly than economy b.
2)
refer to the above table and graph. suppose that the price of x falls from $2 to $1, while
the price of y remains at $4. which of the following represents the demand curve for x if
the consumer has money income of $10 to spend on x and y?
a.d1
b.d2
c.d3
d.d4
3) in economics, a group of firms that produce identical or similar products is called
a(n):
a.industry.
b.plant.
c.conglomerate.
d.firm.
4) Farm share of U.S. GDP has:
A.declined from about 14 percent in 1950 to 1 percent today.
B.declined from about 14 percent in 1950 to 7 percent today.
C.declined from about 7 percent in 1950 to 1 percent today.
D.remained relatively stable over the past fifty years.
5) The following table shows the total costs and total benefits facing a city of five
different potential baseball stadiums of increasing size. All figures are in millions of
dollars.
Refer to the above table. Based on cost-benefit analysis, the city should:
A.not build any of these stadiums.
B.build stadium E.
C.build stadium C.
D.build stadium D.
6)
refer to the above diagram. this firm’s average fixed costs are:
a.not shown.
b.the vertical distance between avc and mc.
c.the vertical distance between avc and atc.
d.equal to the per unit change in mc.
7) The following diagram is a flexible exchange market for foreign currency:
Refer to the above diagram. Other things equal, a leftward shift of the supply curve
would:
A.appreciate the euro.
B.cause a shortage of euros.
C.increase the equilibrium quantity of euros.
D.appreciate the dollar.
8)
Refer to the above diagram and assume the economy is operating at equilibrium point
w. If wages and other resource prices are flexible downward, in the long run a decrease
in the price level from P2 to P1 would move the economy from point w to point:
A.v
B.x
C.t
D.y
9)
Refer to row 4 in the above table. The number appropriate for space Z is:
A.$10,000.
B.$70,000.
C.$48,000.
D.zero.
10) How do entrepreneurs differ from “other innovators?”
A.entrepreneurs bear risk; “other innovators” do not.
B.”other innovators” bear risk; entrepreneurs do not.
C.entrepreneurs only invent; “other innovators” find new markets for inventions.
D.entrepreneurs develop entirely new products; “other innovators” focus on product
improvements.
11) Other things equal, the multiplier effect associated with a change in government
spending is:
A.the same as that associated with a change in taxes.
B.equal to that associated with a change in investment or consumption.
C.less than that associated with a change in investment.
D.greater than that associated with a change in investment.
12) Which of the following statements is true?
A.The Federal Reserve sets the Federal funds rate.
B.The Federal Reserve sets the target for the Federal funds rate, and then uses the
reserve ratio to push banks toward that target.
C.The Federal Reserve does not set the Federal funds rate, but it influences it through
the use of open market operations.
D.The Federal Reserve will set a higher target for the Federal funds rate if pursuing an
expansionary monetary policy.
13) The following consolidated balance sheet of the commercial banking system.
Assume that the reserve requirement is 20 percent. All figures are in billions and each
question should be answered independently of changes specified in all preceding ones.
Refer to the above data. If the Fed reduced the reserve requirement from 20 percent to
16 percent, excess reserves in the commercial banking system would increase by _____
and the monetary multiplier would rise to ____.
A.$10 billion; 5
B.$40 billion; 6.25
C.$10 billion; 10
D.$40 billion; 12.5
14) In which of the following cases did the final court decision result in a breakup of
the firm into competing businesses?
A.Microsoft case
B.Standard Oil case
C.U.S. Steel case
D.DuPont cellophane case
15) In a mixed open economy, which of the following all affect the equilibrium GDP in
the same direction?
A.Ca, Ig, Sa, and M
B.Sa, T, and M
C.Ig, T, and Ca
D.Sa, Ig, and X
16)
refer to the above diagram, where variable inputs of labor are being added to a constant
amount of property resources. average variable cost will be at a minimum when the
firm is hiring:
a.q3 workers.
b.q2 workers.
c.q1 workers.
d.more than q3 workers.