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The federal backing for the money in the United States comes from:
A. providing sufficient quantities of precious metals such as gold and silver to cover the
amount of paper money in circulation.
B. pledging physical assets, such as land, natural resources, and public buildings as
collateral for outstanding currency.
C. control over the money supply designed to keep the value of money relatively stable
over time.
D. protecting checkable deposits at financial institutions with deposit guarantees.
Under pure monopoly, a profit-maximizing firm will produce:
A. in the inelastic range of its demand curve.
B. in the elastic range of its demand curve.
C. only where total costs are zero.
D. only where marginal revenue is zero.
All but which one of the following are cash transfer programs?
A. TANF
B. Supplemental Security Income (SSI)
C. Subsidized public housing
D. Social Security
Collusive control over price may permit oligopolists to:
A. use new technology, achieve economies of scale, and get government subsidies.
B. achieve economies of scale, reduce costs, and prevent price cheating.
C. increase product demand, increase product supply, and lower cost.
D. reduce uncertainty, increase profits, and possibly limit entry of new firms.
The public debt is the:
A. difference between federal assets and liabilities over time.
B. difference between current tax revenues and government expenditures.
C. accumulation of federal budget surpluses and deficits over time.
D. accumulation of payments for goods and services purchased by the federal
government over time.
If average consumer incomes increase proportionately faster than the demand for a
product, then the income elasticity of demand for the product is:
A. zero.
B. greater than zero but less than 1.
C. greater than 1.
D. equal to 1.
The law of increasing opportunity cost explains why the shape of the production
possibilities curve is:
A. a straight line parallel to the horizontal axis.
B. a straight line from one axis to the other.
C. bowed out (concave) from the origin of the graph.
D. bowed inward (convex) to the origin of the graph.
Stock market price quotations best exemplify money serving as a:
A. store of value.
B. unit of account.
C. medium of exchange.
D. index of satisfaction.
The best example of an industrial union is the:
A. United Association of Plumbers and Pipefitters.
B. International Brotherhood of Electrical Workers.
C. American Medical Association.
D. United Auto Workers.
Which would not be considered as capital by an economist?
A. A share of corporate stock issued by General Motors
B. An automobile used by a salesperson at General Electric
C. A crane used by a building contractor
D. A razor used by a barber
Assume an economy is producing only one product. Year 2 is the base year. Output and
price data for a five-year period are given.
Refer to the above data. Nominal GDP for year 3 is:
A. $16.
B. $25.
C. $56.
D. $81.
In the expansion phase of a business cycle:
A. the inflation rate decreases, but productive capacity increases.
B. the inflation rate and productive capacity decrease.
C. employment increases, but output decreases.
D. employment and output increase.
Marginal revenue product describes the:
A. output produced by the last unit of input employed.
B. revenue received for the last unit of output produced.
C. price a consumer paid for the last unit of output produced.
D. revenue received for the output produced by the last unit of labor employed.
In 2009, the percentage of the total population that lived in poverty was approximately:
A. 5 percent and the percentage of African Americans who lived in poverty was
approximately 10 percent.
B. 7 percent and the percentage of African Americans who lived in poverty was
approximately 14 percent.
C. 12 percent and the percentage of African Americans who lived in poverty was
approximately 25 percent.
D. 21 percent and the percentage of African Americans who lived in poverty was
approximately 58 percent.
Refer to the above table. The size of the M2 money supply is:
A. $3730.
B. $3980.
C. $4330.
D. $4470.
An increase in product price will cause:
A. quantity demanded to decrease.
B. quantity supplied to decrease.
C. quantity demanded to increase.
D. the supply curve to shift to the left.
The Temporary Assistance for Needy Families (TANF) program:
A. put a limit on receiving welfare payments and required able-bodied adults to work
after receiving assistance for two years.
B. increased the number of people receiving welfare benefits and the amount of the
assistance.
C. required businesses to monitor low-income workers and used federal funds to
supplement their pay.
D. required the use of food stamps for food purchases by families but permitted cash
assistance to be given to the elderly.
Refer to the graph above. If the price of the product increases from $5 to $6 because of
a decrease in supply that is shown by curve S, total revenue would:
A. increase by $300.
B. increase by $100.
C. decrease.
D. stay the same.
The best example of a craft union would be the:
A. United Auto Workers.
B. United Steelworkers.
C. Teamsters.
D. International Brotherhood of Electrical Workers.
The poverty rate in 2000 was:
A. higher than in the previous decade.
B. lower than in the previous decade.
C. the same as in the previous decade.
D. the same as it was in 1959.
Assume the price of a product sold by a purely competitive firm is $5. Given the data in
the accompanying table, at what output is total profit highest in the short run?
A. 20
B. 30
C. 40
D. 50
Refer to the above graph, which shows four different Lorenz curves (I, II, III, and IV).
Which change would indicate that there has been an increase in income equality? A
movement from point:
A. c to a.
B. a to d.
C. d to a.
D. b to e.
When the receipts given by goldsmiths to depositors were used to make purchases:
A. the gold standard was created.
B. existing banking laws were violated.
C. the receipts became in effect paper money.
D. a fractional reserve banking system was created.
Refer to the above graph. What will shift D2 to D1?
A. An increase in productivity.
B. A decrease in product demand.
C. A decrease in the price of complementary input.
D. An increase in the price of a substitute input (if the substitution effect is greater than
the output effect).
A newspaper headline reads: "Fed Raises Discount Rate for Third Time This Year." This
headline indicates that the Federal Reserve is most likely trying to:
A. stimulate the economy.
B. increase the money supply.
C. reduce the cost of credit.
D. reduce inflationary pressures in the economy.
You are the sales manager for a software company and have been informed that the
price elasticity of demand for your most popular software is less than 1. To increase
total revenues, you should:
A. increase the price of the software.
B. decrease the price of the software.
C. hold the price of the software constant.
D. increase the supply of the software.
Inflation caused by a rise in per-unit production costs is referred to as:
A. cost-push inflation.
B. demand-pull inflation.
C. unanticipated inflation.
D. hyperinflation.
Which of the following helps finance the medical expenses of individuals receiving
TANF or SSI?
A. Medicare
B. Supplemental Security Income (SSI)
C. Medicaid
D. Social Security
One major advantage of credit cards used for transactions is that they:
A. offer discounts on most transactions.
B. charge a lower interest rate than other means of payment.
C. give consumers the lowest prices on products purchased.
D. allow consumers to coordinate timing and payment for purchases.
A firm's labor input, total output of labor, and product price schedules are given below.
Labor is the only variable input.
Refer to the above table and information. How many workers will the firm hire if the
wage rate is $8 per day?
A. 3.
B. 4.
C. 5.
D. 6.
The marginal revenue product is the change in revenue earned due to the hiring of one
more input. In this case, the fifth worker adds 4 units of output (i.e., 23 - 19) and $9 of
revenue because revenue rises from $152 to $161, but the worker only costs $8. At
higher levels of workers, the marginal revenue product is less than $8.
