1) Which of the following is a tool of monetary policy?
A.open market operations
B.changes in banking laws
C.changes in tax rates
D.changes in government spending
2) Complete the accompanying table.
(a)What is the break-even level of income? How is it possible for households to dissave
at very low income levels?
(b)If the proportion of total income consumed decreases and the proportion saved
increases as income rises, explain how the MPC and MPS can be constant at various
levels of income.
3) The aggregate expenditures model and the aggregate demand curve can be reconciled
because, other things equal, in the aggregate expenditures model:
A.changes in the price level have no effect on the equilibrium level of GDP.
B.an increase in the price level increases the real value of wealth.
C.the level of aggregate expenditures and therefore the level of real GDP vary inversely
with the price level.
D.the level of aggregate expenditures and therefore the level of real GDP vary directly
with the price level.
4) (last word) the safest way for an individual to leave a burning theater is to run for the
nearest exit; it is therefore also the best means of escape for a large audience. this
assertion illustrates the:
a.”after this, therefore because of this” fallacy.
b.correlation fallacy.
c.fallacy of composition.
d.fallacy of limited decisions.
5) Development assistance as a percentage of GDP is greatest for which of the
following industrialized nations (as of 2007)?
A.U.S.
B.Norway
C.Canada
D.Netherlands
6) Assume you pay a tax of $4,000 on a taxable income of $24,000. If your taxable
income were $30,000, your tax payment would be $5,000. This suggests that the tax is:
A.progressive.
B.proportional.
C.regressive.
D.discriminatory.
7) It is generally easier to prevent deforestation than fishery collapse because:
A.it is easier to establish and enforce property rights on national lands than in
international waters.
B.there is greater incentive to have sustainable forests than sustainable fisheries.
C.the demand for wood products has dropped significantly while the demand for fish
has grown significantly.
D.all of these.
8)
in the above diagram the equation for this line is:
a.y = 4 – 11/3 x.
b.y = 3 + 3/4 x.
c.y = 4 – 3/4 x.
d.y = 4 + 11/3 x.
9) Defenders of social regulation point out that:
A.social regulation is a better alternative than unregulated natural monopoly.
B.critics who stress the high administrative and compliance costs of social regulation
underestimate the social benefits that the regulations produce.
C.the number of regulatory agencies has declined over the past two decades.
D.social regulations reduce product prices.
10)
refer to the above diagram. which of the following positions relative to pp1 would be
the most likely to result in a future production possibilities curve of pp3, rather than
pp2?
a.a.
b.b.
c.c.
d.d.
11) (Consider This) According to the Consider This box on catfish and art, which of the
following firms were recently convicted of price fixing?
A.Dell and Gateway (personal computer makers)
B.Boeing and Airbus (aircraft manufacturers)
C.Heinz and Del Monte (food product firms)
D.Sotheby’s and Christy’s (art auction houses)
12) Assuming pure competition, which of the following are equivalents?
A.MRPL/PL = MRPC/PC and Px = 1/MC
B.MRPL/PL = MRPC/PC and Px = AVC
C.Px = MC and MRPL/PL = MRPC/PC = 1
D.Px = MC and MPL/PL = MPC/PC
13)
Refer to the above graph. Each of the three labor demand curves shown slopes
downward because of the:
A.law of diminishing marginal utility.
B.law of increasing opportunity costs.
C.principal-agent problem.
D.law of diminishing returns.
14) the following is cost information for the creamy crisp donut company:
entrepreneur’s potential earnings as a salaried worker = $50,000
annual lease on building = $22,000
annual revenue from operations = $380,000
payments to workers = $120,000
utilities (electricity, water, disposal) costs = $8,000
value of entrepreneur’s talent in the next best entrepreneurial activity = $80,000
entrepreneur’s forgone interest on personal funds used to finance the business = $6,000
refer to the above data. creamy crisp’s implicit costs, including a normal profit are:
a.$136,000.
b.$150,000.
c.$94,000.
d.$156,000.
15) Which of the following is not included in the current account of a nation’s balance
of payments?
A.its goods exports
B.its goods imports
C.its net investment income
D.its purchases of real assets abroad
16) when the price of a product rises, consumers shift their purchases to other products
whose prices are now relatively lower. this statement describes:
a.an inferior good.
b.the rationing function of prices.
c.the substitution effect.
d.the income effect.
17) Landowners will not receive any rent so long as:
A.there is any tax on land.
B.the supply and demand curves for land intersect.
C.the supply curve of land is perfectly inelastic.
D.the supply curve lies entirely to the right of the demand curve.
18) Define the reserve ratio.
19) Why does aggregate demand shift outward by a greater amount than the initial
change in spending?
20) What is the difference between a change in resource demand and a change in the
quantity of a resource demanded? What factors contribute to a change in resource
demand or a change in the quantity of a resource demanded?
21) Why is workplace safety often an information failure? Explain.
22) What have been the major outcomes from deregulation of industry? Give three
examples of changes in particular industries.
23) Households are the principal source of savings. But businesses are the main
economic investors. Briefly explain.