As a result of a war in the country of Omega, refugees flee to the country of Alpha to
seek employment. Holding other factors constant, the influx of refugees will ______ the
real wage in Alpha and ______ employment in Alpha.
A. increase; increase
B. increase; decrease
C. decrease; decrease
D. decrease; increase
Suppose that there are two employers in Tinytown. CareCo offers a generous health
insurance package to all employees, while ApathyInc pays slightly higher wages than
CareCo, but does not offer health insurance. All else equal, a person who is unhealthy
and expects to have high healthcare costs will:
A. prefer to work for CareCo.
B. stop going to the doctor.
C. be equally happy working for either firm.
D. prefer to work for ApathyInc.
Holding other factors constant, if new environmental regulations increase firms’ cost of
operating capital, then the real interest rate will ______ and the equilibrium quantity of
national saving and investment will ____.
A. increase; increase
B. increase; decrease
C. decrease; decrease
D. decrease; increase
In Macroland, currency held by the public is 2,000 econs, bank reserves are 300 econs,
and the desired (and current) reserve/deposit ratio is 15 percent. If commercial banks
borrow 100 econs in reserves from the Central Bank through discount window lending,
then the money supply in Macroland will ______, assuming that the public does not
wish to change the amount of currency it holds.
A. increase to 3,133econs
B. increase to 4,100econs
C. increase to 4,667econs
D. decrease to 1,900 econs
All of the following are characteristics of independent central banks except:
A. long terms for central bankers.
B. the lack of an obligation to finance the national deficit.
C. budgetary independence.
D. the ability of executive branch to overrule central bank actions.
Suppose you camped out in front of an electronics store to be one of the 200 lucky
people able to purchase the latest gaming system. You bought the system for $350. Two
weeks later you see that the same system can be sold on e-Bay for $600, so you sell
your system. Your market role is as:
A. a consumer in both of these markets.
B. a consumer at the electronics store and as a seller on e-Bay.
C. a consumer at the electronics store; the e-Bay transaction did not occur in a market.
D. a seller in both of these markets.
Two methods used to adjust nominal values for inflation are:
A. substituting and complementing.
B. indexing and deflating.
C. aggregating and disaggregating.
D. real and nominal.
Growth in real GDP per capita has:
A. been steady over the course of human history.
B. slowed since the mid-nineteenth century compared to before.
C. been more rapid since the mid-nineteenth century than ever before.
D. increased over the last 150 years only in the United States and Canada.
For a signal to convey credible information about the quality of a good, the signal must:
A. not be costly to send.
B. be equally costly to send, regardless of the good’s quality.
C. be less costly to send if the good is low quality than high quality.
D. be less costly to send if the good is high quality than low quality.
The rate of return that financial investors require to hold a risky asset minus the rate of
return on a safe asset is called the:
A. real interest rate.
B. nominal interest rate.
C. risk premium.
D. discount rate.
Holding constant risk and the real returns available abroad, lower domestic real interest
rates ______ capital inflows, ______ capital outflows, and ______ net capital inflows.
A. increase; increase; increase
B. increase; increase; decrease
C. increase; decrease; increase
D. decrease; increase; decrease
Refer to the table below. According to the table, Julia has the absolute advantage in:
A. pies.
B. neither pies nor cakes.
C. cakes.
D. both pies and cakes.
Arthur is an unskilled worker who is currently unemployed. He has been offered a job
that pays $40 a day, but he is currently receiving unemployment insurance benefits
equal to $50 a day, so he chooses not to accept the job and to continue looking for a
better job. Arthur is ______ unemployed.
A. frictionally
B. structurally
C. cyclically
D. not
Refer to the figure below. If Mallory and Rick are the only two consumers in this
market and the price of soda is $0.25 per can, then what will be the market demand for
soda each week?
A. 60 cans
B. 70 cans
C. 90 cans
D. 130 cans
Minimum wage laws contribute to structural unemployment by:
A. keeping wages above the market-clearing level.
B. keeping wages below the market-clearing level.
C. allowing unemployed workers to search longer or less intensively for jobs.
D. forcing unemployed workers to take the first job offered to them.
Unplanned inventory investment equals zero when:
A. planned investment is greater than actual investment.
B. planned investment is less than actual investment.
C. planned investment equals actual investment.
D. expected sales are greater than actual sales.
The table below shows a pizzeria’s fixed cost and variable cost at different levels of
output. Pizza’s sell for $20 each.
When the pizzeria makes 25 pizzas a day, its average fixed cost is ______.
A. $5
B. $6
C. $10
D. $20
Refer to the figure below. If this economy is currently producing at point C, then the
opportunity cost of providing 100 additional units of medical care would be:
A. 800 warheads.
B. 400 warheads.
C. 200 warheads.
D. 100 warheads.
Most economists believe that the reduced variability of inflation in the U.S. is the result
of:
A. globalization.
B. better management of inventories.
C. improved monetary policymaking by the Fed.
D. deregulation.
Refer to the figure below. The current level of GDP in this economy is ______; the
potential level of GDP is ______.
A. Y1; Y1
B. Y2; Y2
C. Y1; Y2
D. Y2; Y1
The introduction of word processing software that increases the demand for workers
with computer skills relative to those without such skills is an example of:
A. increasing reservation prices.
B. skill-biased technological change.
C. the diminishing marginal product of labor.
D. globalization.
The amount of money in the United States is determined by:
A. the Federal Reserve.
B. the combined behavior of commercial banks and the public, as well as actions of the
Federal Reserve.
C. the public
D. the combined behavior of commercial banks and the public.
Frank owns an apple farm and plans to spend 4 hours today picking apples. The number
of apples he can pick per hour depends on the total number of hours he spends working
in either the east orchard or the west orchard in the manner shown in the table below.
How should Frank divide his time between the east and the west orchard?
A. He should spend all 4 hours in the east orchard.
B. He should spend 3 hours in the east orchard and 1 hour in the west orchard.
C. He should spend 2 hours in east orchard and 2 hours in the west orchard.
D. He should spend 1 hour in the east orchard and 3 hours in the west orchard.
The figure below shows Becky’s daily production possibilities curve for dresses and
skirts.
Point U is:
A. attainable.
B. efficient.
C. unattainable.
D. inefficient.
You save $10 on gas every week because you take the bus to school. You have class 5
days a week. What is your average benefit per day of taking the bus to school?
A. $10
B. $5
C. $2
D. $0
Suppose Chris is a potter who makes mugs. His total costs depend on the number of
mugs he makes each day, as shown in the table below.
Chris’s fixed cost is ______ per day.
A. $0
B. $10
C. $39
D. $49
In which of the following markets is the presence of asymmetric information most
critical for the buyers?
A. The market for computers
B. The market for used textbooks
C. The market for paint
D. The market for existing houses
Refer to the figure below. If the market for doughnuts is perfectly competitive, then
assuming this firm can earn enough revenue to cover its variable cost, it should
produce:
A. 50 doughnuts per day.
B. the quantity of doughnuts at which average total cost equals the market price.
C. the quantity of doughnuts at which marginal cost equals the market price.
D. the quantity of doughnuts at which average total cost is minimized.
If potential output equals 8,000 and short-run equilibrium output equals 8,500, there is
a(n) ______ gap and the Federal Reserve must ______ real interest rates in order to
close the gap.
A. recessionary; raise
B. recessionary reduce
C. recessionary; not change
D. expansionary; raise
Suppose Chris is a potter who makes mugs. His total costs depend on the number of
mugs he makes each day, as shown in the table below.
The marginal cost if the 4th mug per day is ______.
A. $5
B. $7
C. $8
D. $32
One reason for the ________ slope of the demand curve is that as prices fall ________.
A. upward; people expect goods to be of lower quality.
B. upward; more people purchase the good.
C. downward; more people find that the price is less than their reservation price.
D. downward; fewer people find that the price equals their reservation price.