1) an effective ceiling price will:
a.induce new firms to enter the industry.
b.result in a product surplus.
c.result in a product shortage.
d.clear the market.
2) Other things equal, if the national incomes of the major trading partners of the
United States were to rise, the U.S.:
A.aggregate demand curve would shift to the right.
B.aggregate supply curve would shift to the left.
C.aggregate supply curve would shift to the right.
D.aggregate demand curve would shift to the left.
3) Overnight loans from one bank to another for reserve purposes entail an interest rate
called the:
A.prime rate.
B.discount rate.
C.Federal funds rate.
D.treasury bill rate.
4) the study of economics is primarily concerned with:
a.keeping private businesses from losing money.
b.demonstrating that capitalistic economies are superior to socialistic economies.
c.choices that are made in seeking the best use of resources.
d.determining the most equitable distribution of society’s output.
5) Many demographers expect world population to:
A.increase exponentially into the foreseeable future.
B.decline from its current level in the next two decades.
C.peak at 9 billion or fewer, and then decline.
D.plateau at around 7.5 billion, and then continue to increase rapidly.
6) Suppose that interest payments are $140 per year on a $1,000 loan and $1,188 per
year on a $8,485 loan. The interest rates on the two loans are:
A.14 percent and 20 percent, respectively.
B.14 percent on both loans.
C.18.8 percent on both loans.
D.1.4 percent and 11.8 percent, respectively.
7) the process by which economists test hypotheses against facts to develop theories,
principles, and models is called:
a.the economic perspective.
b.the scientific method.
c.policy economics.
d.microeconomics.
8) because there are costs to migration:
a.complete wage equalization is unlikely to occur, even if national governments impose
no restrictions on migration.
b.migrants are more likely to move to countries far from their origin nation.
c.migrant and domestic-born workers are unlikely to be substitute resources.
d.wage equalization will only occur if migrant and domestic-born workers are
complementary resources.
9)
refer to the above data. the equilibrium price of this product is somewhere between $6
and $7.
10) Which of the following supports of the contention that pure competitors have a
weak incentive to engage in R&D?
A.Entry to purely competitive industries is easy and thus profit from innovation is
quickly competed away.
B.In pure competition, products are already highly differentiated.
C.Most purely competitive industries are increasing-cost industries.
D.Pure competitors are happy to earn only a normal profit.
11) assume that in year 1 you pay an average tax rate of 20 percent on a taxable income
of $20,000. in year 2, you pay an average tax rate of 25 percent on a taxable income of
$30,000. assuming no change in tax rates, the marginal tax rate on your additional
$10,000 of income is:
a.5 percent.
b.12 percent.
c.35 percent.
d.42 percent.
12) suppose a product creates substantial negative externalities. if government adopts a
policy that forces producers to pay these costs, the:
a.output of the product will decrease.
b.initial misallocation of resources will be intensified.
c.output of the product will increase.
d.price of the product will decrease.
13) barter:
a.is the major means of exchange in centrally planned economies.
b.accounts for over 30 percent of the dollar volume of all exchange in the u.s. economy.
c.entails the exchange of goods for goods.
d.is used to circumvent the problem of a lack of coincidence of wants among potential
buyers and sellers.
14) Expansionary fiscal policy is so named because it:
A.involves an expansion of the nation’s money supply.
B.necessarily expands the size of government.
C.is aimed at achieving greater price stability.
D.is designed to expand real GDP.
15) as it relates to a public good, nonrivalry means that:
a.the public sector is able to provide the good profitably.
b.there is no need or demand for the good.
c.either the public sector or the public sector can produce the good, but not both.
d.one person’s benefit from the good does not reduce the benefit available to others.
16) as it relates to owners and managers, the principal-agent problem results from the:
a.separation of corporate ownership and control.
b.double taxation of corporate profit.
c.limited liability of corporate owners.
d.differing interests of corporate stockholders and bondholders.