Table 3-10
Juanita and Shantala run a business that programs and tests cellular phones. Assume
that Juanita and Shantala can switch between programming and testing cellular phones
at a constant rate. The following table applies.
Minutes Needed to Number of Cellular Phones
Programmed or Tested in a
40-Hour Week
Program 1
Cellular Phone Test 1
Cellular Phone Cellular Phones
Programmed Cellular Phones
Refer to Table 3-10. Juanita’s opportunity cost of programming one cellular phone is
testing
a. 7.5 cellular phones and Shantala’s opportunity cost of programming one cellular
phone is testing 5/2 cellular phones.
b. 2/15 cellular phones and Shantala’s opportunity cost of programming one cellular
phone is testing 5/2 cellular phones.
c. 7.5 cellular phones and Shantala’s opportunity cost of programming one cellular
phone is testing 2/5 cellular phones.
d. 2/15 cellular phones and Shantala’s opportunity cost of programming one cellular
phone is testing 2/5 cellular phones.
Suppose some country had an adult population of about 46 million, a labor-force
participation rate of 75 percent, and an unemployment rate of 8 percent. How many
people were employed?
a. 2.76 million
b. 31.74 million
c. 34.5 million
d. 42.32 million
Paul Samuelson, a famous economist, said that
a. “the bond market has predicted zero out of the past nine recessions.”
b. “the stock market has predicted zero out of the past nine recessions.”
c. “the bond market has predicted nine out of the past five recessions.”
d. “the stock market has predicted nine out of the past five recessions.”
The Federal Reserve will tend to tighten monetary policy when
a. interest rates are rising too rapidly.
b. it thinks the unemployment rate is too high.
c. the growth rate of real GDP is quite sluggish.
d. it thinks inflation is too high today, or will become too high in the future.
Table 10-7
The table below contains data for the country of Togogo. The base year is 1974.
Refer to Table 10-7. Which of the following is not correct?
a. This economy experienced growth from 1974 to 1975.
b. This economy experienced growth from 1975 to 1976.
c. This economy experienced growth from 1976 to 1977.
d. This economy experienced inflation from 1974 to 1975, from 1975 to 1976, and from
1976 to
Which of the following is likely to have the most price elastic demand?
a. gasoline in the short run
b. dentist’s visits
c. ice cream
d. deodorant
The term inflation is used to describe a situation in which
a. the overall level of prices in the economy is increasing.
b. incomes in the economy are increasing.
c. stock-market prices are rising.
d. the economy is growing rapidly.
Suppose New Zealand goes from being an isolated country to being an exporter of
wool. As a result,
a. consumer surplus increases for consumers of wool in New Zealand.
b. producer surplus increases for producers of wool in New Zealand.
c. total surplus remains unchanged in the wool market in New Zealand.
d. it is reasonable to infer that other countries have a comparative advantage over New
Zealand in wool production.
All Fed purchases and sales of
a. corporate stocks and bonds are conducted at the New York Fed’s trading desk.
b. government bonds are conducted at the New York Fed’s trading desk.
c. real estate and other real assets are conducted by the Federal Open Market
Committee.
d. All of the above are correct.
William and Jamal live in the country of Dumexia. As a result of Dumexia’s legalization
of international trade in bananas, William becomes better off and Jamal becomes worse
off. It follows that William is a seller, and Jamal is a buyer, of bananas.
Instead of conducting laboratory experiments to generate data to test their theories,
economists often
a. ask winners of the Nobel Prize in Economics to evaluate their theories.
b. argue that data is impossible to collect in economics.
c. gather data from historical episodes of economic change.
d. assume that data would support their theories.
Figure 8-3
The vertical distance between points A and C represents a tax in the market.
Refer to Figure 8-3. The amount of tax revenue received by the government is equal to
the area
a. P3ACP1.
b. ABC.
c. P2DAP3.
d. P1CDP2.
Figure 17-3. On the graph, MS represents the money supply and MD represents money
demand. The usual quantities are measured along the axes.
Refer to Figure 17-3. What quantity is measured along the vertical axis?
a. the price level
b. the velocity of money
c. the value of money
d. the quantity of money
Supply-side economists believe that changes in government purchases affect
a. only aggregate demand.
b. only aggregate supply.
c. both aggregate demand and aggregate supply.
d. neither aggregate demand nor aggregate supply.
Which of the following is correct?
a. Workers determine the supply of labor, and firms determine the demand for labor.
b. Workers determine the demand for labor, and firms determine the supply of labor.
c. The labor market is a single market for all different types of workers.
d. The price of the product produced by labor adjusts to balance the supply of labor and
the demand for labor.
Consider two labor markets in which jobs are equally attractive in all respects other
than the wage rate. All workers are equally able to do either job. Initially, both labor
markets are perfectly competitive. If a union organizes workers in one of the markets,
then the wage rates will tend to
a. rise in both markets.
b. fall in both markets
c. rise for the union jobs, but remain unchanged for the nonunion jobs.
d. rise for the union jobs and fall for the nonunion jobs.
When the money market is drawn with the value of money on the vertical axis, long-run
equilibrium is obtained when the quantity demanded and quantity supplied of money
are equal due to adjustments in
a. nominal interest rates.
b. real interest rates.
c. the price level.
d. the money supply.
A decrease in the price of a good will
a. increase demand.
b. decrease demand.
c. increase quantity demanded.
d. decrease quantity demanded.
If buyers and sellers in a certain market are price takers, then individually
a. they have no influence on market price.
b. they have some influence on market price but that influence is limited.
c. buyers will be able to find prices lower than those determined in the market.
d. sellers will find it difficult to sell all they want to sell at the market price.
In the United States during the 1970s, expected inflation
a. rose substantially.
b. rose slightly.
c. fell slightly.
d. fell substantially.
Suppose the U.S. supply of loanable funds shifts left. This will
a. increase U.S. net capital outflow and increase the quantity of loanable funds
demanded.
b. increase U.S. net capital outflow and decrease the quantity of loanable funds
demanded.
c. decrease U.S. net capital outflow and increase the quantity of loanable funds
demanded.
d. decrease U.S. net capital outflow and decrease the quantity of loanable funds
demanded.
If the budget deficit increases then
a. saving and the interest rate rise
b. saving rises and the interest rate falls
c. saving falls and the interest rate rises
d. saving and the interest rate falls
If aggregate demand shifts right and the President and Congress want to use fiscal
policy to reverse the change in output, they could
a. increase government expenditures. If by the time policy has been implemented the
economy has moved back to long-run equilibrium, then this policy will raise output
above its long-run level.
b. increase government expenditures. If by the time policy has been implemented the
economy has moved back to long-run equilibrium, then this policy will reduce output to
below its long-run level.
c. decrease government expenditures. If by the time policy has been implemented the
economy has moved back to long-run equilibrium, then this policy will raise output
above its long-run level.
d. decrease government expenditures. If by the time policy has been implemented the
economy has moved back to long-run equilibrium, then this policy will reduce output to
below its long-run level.
After 1980 in the United States,
a. national saving fell below investment and net capital outflow was a large positive
number.
b. national saving fell below investment and net capital outflow was a large negative
number.
c. investment fell below saving and net capital outflow was a large positive number.
d. investment fell below saving, so net capital outflow was a large negative number.
Other things the same, a decrease in the price level makes the dollars people hold worth
a. more, so they can buy more.
b. more, so they can buy less.
c. less, so they can buy more.
d. less, so they can buy less.
Figure 7-19
Refer to Figure 7-19. At equilibrium, producer surplus is represented by the area
a. F.
b. F+G.
c. D+H+F.
d. D+H+F+G+I.
Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef
at a constant rate.
Minutes Needed to Make 1
Refer to Table 3-1. Andia has a comparative advantage in the production of
a. wheat and Zardia has a comparative advantage in the production of beef.
b. beef and Zardia has a comparative advantage in the production of wheat.
c. both goods and Zardia has a comparative advantage in the production of neither
good.
d. neither good and Zardia has a comparative advantage in the production of both
goods.
Other things the same, which of the following would increase productivity?
a. an increase in either human or physical capital
b. an increase in human capital but not an increase in physical capital
c. an increase in physical capital but not an increase in human capital
d. neither an increase in human capital nor an increase in physical capital
A U.S. corporation builds an amusement park in France. Its expenditures are U.S.
a. foreign portfolio investment that increase U.S. net capital outflow.
b. foreign portfolio investment that decrease U.S. net capital outflow.
c. foreign direct investment that increase U.S. net capital outflow.
d. foreign direct investment that decrease U.S. net capital outflow.
As recessions begin, production
a. and unemployment both rise.
b. rises and unemployment falls.
c. falls and unemployment rises.
d. and unemployment both fall.
Which of the following is the largest?
a. the future value of $250 with 3% interest for 2 years
b. the future value of $250 at 2% interest for 3 years
c. the present value of $250 to be paid in two years when the interest rate is 3%
d. the present value of $250 to be paid in three years when the interest rate is 2%