Recall the Application about the level of real wages for laborers in England from 1350
to 1550 to answer the following question(s). In 1348, the bubonic plague, also known as
the Black Death, arrived in England from Asia and caused a long decline in total
population through the 1450s.
According to this Application, the decline in population resulting from the Black Death
caused the ________ curve for labor to shift to the ________.
A) demand; right
B) demand; left
C) supply; right
D) supply; left
In a market economy, what is the role of the government with regards to public goods?
A) The government has to facilitate the collective decision making in the production of
public goods.
B) The government must force the firms to produce all the public goods.
C) The government must take over the production of all goods in the market, public or
private.
D) The government must hold a referendum before any public good is produced.
If the marginal propensity to consume is 0.75 and marginal propensity to import is 0.15,
then an increase in government spending by 200 will increase GDP by:
A) 500.
B) 800.
C) 400.
D) 200.
You are an employee of the Bureau of Labor Statistics involved in the monthly survey
of households used to estimate the unemployment rate. In each of the following cases,
classify the individual as employed, unemployed, or not in the labor force. Explain your
classification.
(a) During the entire week containing the 12th of the month, Rosie the Riveter misses
work simply because she didn’t feel like going in to work.
(b) Jenny Wren is a volunteer 20 hours a week on a Rape Crisis telephone hotline. She
feels she makes an important contribution to society and would not accept a paying job
if one was offered to her.
(c) McCauley Culkin is a hugely successful film star, age 12, who has earned over
$5,000,000 each year for the past five years. Currently, McCauley is filming a new
movie on location in Tenerife.
(d) Maxwell Edison, a full-time Ph.D. student, is involved in groundbreaking research
in fiber optics. His dissertation advisor has already claimed that Maxwell’s work will
revolutionize telecommunications.
(e) Maggie Madd, 84, works 10 hours a week doing cleaning services for her son,
Norman Neurotic. He pays her minimum wage.
In which market would the price be least likely to be ‘sticky”?
A) refrigerators
B) steel rods
C) fresh fruit
D) trucks
Recessions occur because of
A) real adverse shocks to the economy.
B) shocks to technology.
C) difficulties in coordinating economic affairs.
D) all of the above
The U.S. tax system discourages savings because:
A) taxpayers pay taxes only on their wages.
B) taxpayers pay a federal tax on their consumption spending.
C) taxpayers pay taxes on both their wages and on the earnings from their savings.
D) taxpayers pay a value-added tax on their savings.
As punishment to Europe for refusing to remove their ban on U.S. and Canadian
hormone-treated beef, the WTO allowed the U.S. and Canada:
A) to ban only European beef from entering their countries.
B) to ban all goods and services imported from Europe.
C) to impose retaliatory tariffs on a wide range of European products.
D) to impose retaliatory quotas on a wide range of European products.
In the circular flow diagram, firms ________ inputs and households ________ goods
and services.
A) demand; supply
B) demand; demand
C) supply; demand
D) supply; supply
Jacinda quit her job as a blackjack dealer where she made $42,000 per year to start her
own florist business. Her business expenses are $14,000 per year on rent, $21,000 per
year on supplies, and $9,000 per year on part time help. As for her personal expenses,
her apartment costs her $12,000 per year and her personal bills are an extra $6,000 per
year. What is Jacinda’s opportunity cost of running the business?
A) $104,000
B) $86,000
C) $62,000
D) $44,000
Critics of the real business cycle theory find it difficult to understand:
A) why the unemployment rate is always high.
B) why technological changes affect labor productivity.
C) how adverse changes in technology are so frequent.
D) what makes potential output change over time.
If Cowland can produce milk at a lower opportunity cost than any other nation,
Cowland is said to have a(n) ________ in the production of milk.
A) autarky
B) absolute advantage
C) comparative advantage
D) comparative disadvantage
If incomes increase and Honda Civics are considered inferior goods, then:
A) the demand for Honda Civics will increase.
B) the quantity demanded for Honda Civics will increase.
C) the demand for Honda Civics will decrease.
D) the quantity demanded for Honda Civics will decrease.