Economic theory indicates that the growth of subsidies to healthcare consumers and
accompanying expansion in third-party payments will
a. place downward pressure on the prices of healthcare services.
b. lead to higher healthcare prices.
c. increase the incentive of consumers to economize on their purchases of healthcare
services.
d. increase the incentive of healthcare providers to provide their services at economical
prices.
Which of the following is true of resources?
a. Resources are inputs used to produce goods and services.
b. Human resources reflect the skills and productive knowledge of human beings.
c. With the passage of time, investment activities can increase the availability of
resources.
d. All of the above are true.
Historically, Keynesian economists have argued that government spending will
stimulate aggregate demand more than tax cuts because
a. government spending will stimulate aggregate demand more quickly than a tax cut.
b. there are fewer adverse side effects to an increase in government spending.
c. all of the spending will add to aggregate demand, but a portion of the tax cut will be
saved.
d. an increase in government spending can quickly be reversed once the economy has
recovered.
Suppose all banks are subject to a uniform reserve requirement of 20 percent and that
the Union Bank has no excess reserves. If a new customer deposits $50,000, the bank
could extend new loans up to a maximum of
a. $10,000.
b. $40,000.
c. $50,000.
d. $250,000.
Use the figure below to answer the following question(s).
Figure 4-12
Refer to Figure 4-12. The exhibit illustrates the impact of granting a subsidy on a
particular good. Which of the following is true for this subsidy given the information
provided in the exhibit?
a. The subsidy has been statutorily (legally) paid to buyers.
b. The subsidy results in an increase in the selling price of the good.
c. Sellers will receive a larger proportion of the benefit from this subsidy than buyers.
d. All of the above are true.
Use the figure below to answer the following question(s).
Figure 14-1
In Figure 14-1, an unanticipated shift to a more expansionary monetary policy will shift
a. AD to the right and temporarily increase real GDP.
b. AD to the left and temporarily reduce real GDP.
c. AD to the right and SRAS to the left and lead to higher prices (inflation).
d. both AD and SRAS to the right and lead to an increase in real GDP.
The law of diminishing marginal returns explains the general shape of the firm’s
a. long-run cost curves.
b. short-run cost curves.
c. both short-run and long-run cost curves.
d. The law of diminishing returns has nothing to do with cost curves.
When female/male earnings differentials are adjusted for age, education, language, and
locational characteristics, the
a. differential between the earnings of males and those of females increases
substantially.
b. differential between the earnings of males and those of females does not change
much.
c. corrected earnings of males are equal to those of similar females.
d. corrected earnings of females are greater than those of similar males.
Which of the following options would be most likely to cause an increase in short-term
real interest rates?
a. The Federal Reserve cuts the discount rate.
b. The Federal Reserve lowers the reserve requirement.
c. The Federal Reserve sells bonds in the open market.
d. The federal budget is shifted toward a surplus.
Private ownership and competitive markets are important for economic growth because
they provide individuals with a strong incentive to:
a. care for resources and use them beneficially.
b. innovate and introduce new products that are highly valued relative to their cost.
c. produce goods efficiently.
d. all of the above are correct.
To move up the income ladder and achieve high-income status, countries must
a. have sustained economic growth.
b. restrict international trade.
c. encourage the production of consumption goods rather than investment goods.
d. maintain high inflation.
The law of comparative advantage explains why
a. specialization and exchange will make it possible for trading partners to expand their
combined output.
b. there will be an inverse relationship between the price of a product and the quantity
of it that will be demanded.
c. larger firms will have lower per unit costs than smaller firms.
d. an increase in the price of a good will lead to an expansion in the quantity supplied
by business firms.
If money were not used as a medium of exchange,
a. the gains from trade would be severely limited.
b. our standard of living would probably improve.
c. the transaction costs of exchange would be lower.
d. economic efficiency would increase.
Which one of the following factors will most likely cause an increase in aggregate
demand?
a. an increase in the expected inflation rate
b. an increase in the real interest rate
c. a decrease in net exports due to falling incomes abroad
d. a technological development that decreases the cost of producing computer chips
If the firms in an oligopolistic industry can collude effectively (from the firms’
viewpoints), the resulting price and output in the market will be most similar to that of
a. a competitive price-searcher market.
b. pure monopoly.
c. bilateral monopoly.
d. a competitive price-taker market.
Did the fiscal policy of the 1930s bring an end to the Great Depression?
a. No, government spending and budget deficits as a share of GDP were relatively small
during the 1930s, and there is little evidence that fiscal policy did much to stimulate
output.
b. No, even though budget deficits steadily rose from 2 percent of GDP in the early
1930s to more than 10 percent of GDP in 1939, this expansionary fiscal policy had little
effect on output.
c. Yes, even though the spending programs of the New Deal led to budget deficits, they
also led to a steady reduction in the rate of unemployment during the latter half of the
1930s.
d. Yes, the fiscal policy that kept the federal budget balanced throughout the 1930s
created a stable business climate and eventually stimulated investment.
Which of the following factors weakens the case for private-sector provision of goods
and services relative to public-sector provision?
a. constitutional rules
b. the shortsightedness effect
c. the special-interest effect
d. public goods
If a 10 percent rise in price leads to a reduction in quantity demanded of more than 10
percent,
a. demand is elastic.
b. demand is inelastic.
c. elasticity of demand is unitary.
d. None of the above is correct.
If the Federal Reserve unexpectedly decides to sell bonds, which of the following will
most likely happen in the short run?
a. The demand for loanable funds will increase, which will exert upward pressure on the
interest rate.
b. The supply of loanable funds will decrease, which will exert upward pressure on the
interest rate.
c. The supply of loanable funds will increase, which will exert downward pressure on
the interest rate.
d. The natural rate of unemployment will increase.
The purchasing power parity method of comparing income levels across countries
a. calculates the cost of purchasing a common bundle of goods in each country and then
uses this price index to convert each country’s income to a common currency.
b. uses the exchange rate to convert the income level of each country to a common
currency.
c. uses the prime interest rate in each country to convert the income level of each
country to a common currency.
d. calculates the ratio of imports relative to exports in each country and then uses this
ratio to convert each country’s income to a common currency.
An unanticipated reduction in the level of prices in the goods and services market,
which results in a temporary increase in real wage rates, will
a. increase the natural rate of unemployment.
b. reduce the natural rate of unemployment.
c. result in an actual rate of unemployment that is less than the natural rate of
unemployment.
d. result in an actual rate of unemployment that is greater than the natural rate of
unemployment.
The situation in which actual output exceeds potential output
a. is impossible because all resources are employed to produce potential output
b. is possible only in times of high unemployment
c. is possible only if the unemployment rate is negative
d. is possible only in the long run
e. creates pressure for inflation
Between 1960 and 1980, the female/male annual earnings ratio of full-time workers
____. Between 1980 and 2011, the female/male annual earnings ratio of full-time
workers ____.
a. changed very little; fell
b. changed very little; rose
c. fell; changed very little
d. rose; changed very little
Third-party payments by either the government or an insurance company accounted for
____ of the 2011 healthcare expenditures, compared to ____ paid by third parties in
1960.
a. 40 percent; 20 percent
b. 20 percent; 40 percent
c. 86 percent; 45 percent
d. 96 percent; 73 percent
Use the figure to answer the following question(s).
Figure 9-8
At the market price of $3 in Figure 9-8, indicate the firm’s total revenue and total cost at
its profit-maximizing level of output.
a. total revenue, $45; total cost, $37 (approx.)
b. total revenue, $45; total cost, $45
c. total revenue, $60; total cost, $45
d. total revenue, $80; total cost, $65 (approx.)
The primary benefits derived from tariffs usually accrue to the
a. domestic consumers of goods protected by the tariffs.
b. foreign producers of goods protected by the tariffs.
c. domestic producers of export goods.
d. domestic suppliers of goods protected by the tariffs.
Under which of the following market conditions is it most difficult to maintain a cartel
agreement?
a. There are many firms in the industry and these firms have similar costs.
b. There are many firms in the industry and these firms have different costs.
c. There are few firms in the industry and these firms have similar costs.
d. There are few firms in the industry and these firms have different costs.
Use the information in the table below to answer the following question(s). The firm
hires labor competitively and sells its product in a competitive price-taker market.
Table 12-6
Refer to Table 12-6. What is the marginal revenue product of the fifth unit of labor?
a. $6
b. $36
c. $54
d. $324
Figure 2-9
Refer to Figure 2-9. Suppose the economy is producing at point B. Which of the
following statements would best explain this situation?
a. The economy lacks the resources to produce at a more desirable point.
b. The economy’s available technology prevents it from producing at a more desirable
point.
c. There is widespread unemployment in the economy.
d. Any of the above statements would be a legitimate explanation for this situation.
If the dollar appreciates,
a. imports to the United States become more expensive for foreigners.
b. exports from the United States become more expensive for foreigners.
c. imports become more expensive for U.S. citizens.
d. exports from the United States become cheaper.
e. the dollar will exchange for fewer units of a foreign currency.