Mortgages issued to borrowers who fail to document that their incomes are high enough
to afford their mortgage payments are known as ________ mortgages.
A) subprime
B) Alt-A
C) gray market
D) reciprocal
Table 9-8
Suppose that the data in the table above reflect the price levels in the economy. What is
the inflation rate in between 2012 and 2013?
A) 2%
B) 5%
C) 10%
D) 12%
E) 20%
Article Summary. The article describes three key ways startup companies can get
the most benefit from celebrity endorsements. One way is choosing a celebrity that
can bring credibility to the company and then incorporating the celebrity into the
company’s marketing strategy. Second, get public relations value from the
celebrity by offering exclusive interviews, contests, and photos and videos of the
celebrity with the product. Finally, make sure to choose a celebrity who will
represent the product at all times, giving the product maximum exposure.
Source: Kevin Tighe II, “3 Ways Startups Can Turn Celebrity Endorsements Into
Big Gains,” Forbes, March 8, 2013.
One explanation for the increase in product sales because of celebrity endorsements is
that people seem to receive ________ from goods they believe are popular.
A) more utility
B) diminishing utility
C) greater network externalities
D) increased path dependency
Making optimal decisions “at the margin” requires
A) making decisions according to one’s whims and fancies.
B) making consistently irrational decisions.
C) weighing the costs and benefits of a decision before deciding if it should be pursued.
D) making borderline decisions.
Which type of businesses earns the majority of revenues in the United States?
A) corporations
B) partnerships
C) sole proprietorships
D) none of these
Your roommate, Serafina, a psychology major, said, “The problem with economics is
that it assumes that consumers and firms always make the correct decision. But we
know that everyone’s human, and we all make mistakes.” Do you agree with her
comment?
A) Yes, I agree with her. One cannot make predictions about economic behavior
because in reality people make incorrect choices in many situations.
B) I disagree with her. Economics does not study correct or incorrect behaviors but
rather it assumes that economic agents behave rationally, meaning they make the best
decisions given their knowledge of the costs and benefits.
C) Yes, I agree with her. Economic theory should allow for irrational behavior so that
we can have more reliable predictions.
D) I disagree with her. If we cannot assume that decisions are correct, then we will not
be able to examine the moral implications of these decisions.
Economics promotes which of the following as the way to make the best decision?
A) Continue an enjoyable activity as long as you do not have to pay for it.
B) Continue an enjoyable activity until it is no longer enjoyable.
C) Continue an enjoyable activity until you cannot afford to pursue it.
D) Continue an enjoyable activity up to the point where its marginal benefit equals its
marginal cost.
What happens in the primary market?
A) Primary inputs like electricity are sold.
B) A corporate financial manager will resell previously issued shares of stock.
C) Newly issued claims are sold by the borrowing firm to the initial buyer.
D) Already issued claims are sold from one investor to another.
Figure 23-2
If the U.S. economy is currently at point K, which of the following could cause it to
move to point N?
A) The price level in the United States falls relative to the price level in other countries.
B) Congress abolishes investment tax incentives.
C) The interest rate rises.
D) Household wealth declines.
Which of the following best explains why productivity growth in the United States has
been faster than in other leading industrialized nations?
A) There are fewer government regulations in the United States regarding the way firms
can hire and fire workers.
B) The financial systems of foreign countries are generally more efficient than those in
the United States.
C) European countries have more flexible policies regarding the number of hours
employees are permitted to work.
D) Job mobility in the United States is more restricted than it is in many foreign
countries.
Which of the following is a key determinant of the price elasticity of supply?
A) the slope of the supply curve
B) the availability of substitutes in production
C) the available technology
D) the time it takes to change output in response to a change in price
In a report made to the U.S. Congress in 2001, the National Academy of Sciences
cautioned that if fuel economy encourages the production of smaller and lighter cars,
“Some additional traffic fatalities would be expected.” This statement suggests that
A) U.S. auto manufacturers are more concerned about producing fuel efficient cars to
compete with their Japanese and South Korean rivals than about consumer safety.
B) there is a tradeoff between safety and fuel economy.
C) society should value safety more highly than fuel economy.
D) society should value fuel economy more highly than consumer safety because of the
long term environment benefits generated by less gasoline use.