The economy starts out at a full-employment equilibrium. Some events then occur that
generate a cost-push inflation. Which of the following events might start a cost-push
inflation?
A) a decrease in exports
B) an increase in the quantity of money
C) a decrease in government expenditure
D) an increase in the money wage rate or an increase in the money prices of raw
materials
E) an increase in taxes
If Katie purchases two slices of pizza and six breadsticks to maximize her total utility,
then
A) a slice of pizza costs three times as much as a breadstick.
B) her marginal utility from the second slice of pizza divided by the price of a slice of
pizza is equal to her marginal utility from the sixth breadstick divided by the price of a
breadstick.
C) a breadstick costs three times as much as a slice of pizza.
D) she spends more on pizza than she spends on breadsticks.
E) her marginal utility from the second slice of pizza equals her marginal utility from
the sixth breadstick.
The introduction of a tariff ________ consumer surplus and ________ total surplus.
A) increases; decreases
B) increases; increases
C) decreases; does not change
D) decreases; decreases
E) decreases; increases
Harold can consume either pens or milkshakes. The price of a pen is $1, and the price
of a milkshake is $1. Harold figures that when his income is spent, his marginal utility
from pens will be 10 and his marginal utility from milkshakes will be 8. Harold is better
off
A) by consuming more pens and fewer milkshakes.
B) by consuming more pens and more milkshakes.
C) by consuming fewer pens and fewer milkshakes.
D) by consuming fewer pens and more milkshakes.
E) only if he makes more income.
The distribution of annual income
A) understates the degree of inequality because it does not take into account the
family’s stage in its life cycle.
B) understates the degree of inequality because it does not take into account the
distribution of human capital.
C) overstates the degree of inequality because it does not take into account the family’s
stage in its life cycle.
D) overstates the degree of inequality because it does not take into account the
distribution of human capital.
E) is an accurate measure of the degree of inequality.
A duopoly occurs when
A) there are only two producers of a particular good competing in the same market.
B) there are two producers of two goods competing in an oligopoly market.
C) there are numerous producers of two goods competing in a competitive market.
D) the one producer of two goods sells the goods in a monopoly market.
E) a competitive market produces two goods.
If a union and the monopsonist in Figure 18.3.2 agree to bargaining, the outcome is an
hourly wage rate
A) of $7.
B) between $4 and $7.
C) between $4 and $9.
D) between $7 and $9.
E) of $9.
The implicit rental rate
A) is the firm’s opportunity cost of using the capital it owns.
B) is paid with cash.
C) has two components: economic depreciation and foregone interest.
D) both A and C are correct.
E) both B and C are correct.
In 2011, what percentage of households received the mode income in Canada?
A) 5 percent
B) 6 percent
C) 7 percent
D) 17.4 percent
E) 20 percent
Use the information below to answer the following questions.
Fact 24.4.2
The Bank of Hobbiton has chosen the following initial balance sheet:
Refer to Fact 24.4.2. Based on the Bank of Hobbiton’s initial balance sheet, what is its
desired reserve ratio?
A) 10 percent
B) 100 percent
C) 20 percent
D) 5 percent
E) not calculable with the available information
If AE = 100 + 0.7Y and Y = 300, then unplanned inventories
A) increase by 10.
B) increase by 200.
C) decrease by 10.
D) decrease by 200.
E) do not change and equilibrium exists.
Consider a monopolistically competitive industry which is in long-run equilibrium.
Which of the following is true?
A) All firms charge a price equal to average total cost.
B) All firms charge a price equal to marginal cost.
C) All firms make an economic profit.
D) The demand, average total cost, and marginal cost curves all intersect at the same
point.
E) Firms have an incentive to enter the industry.
Which one of the following statements is false?
A) Indifference curves are negatively sloped.
B) A preference map consists of a series of indifference curves.
C) Indifference curves are bowed out from the origin.
D) The marginal rate of substitution is the magnitude of the slope of an indifference
curve.
E) The marginal rate of substitution increases as a consumer moves up along an
indifference curve for ordinary goods.
Refer to Figure 1A.1.5. Which graph or graphs indicates a negative relationship
between x and y?
A) (a)
B) (b)
C) (c)
D) (d)
E) (b) and (d)
Use the table below to answer the following questions.
Table 10.2.1
Refer to Table 10.2.1, which shows three methods for making photon torpedoes. Which
method is technologically efficient?
A) 1 only
B) 2 only
C) 3 only
D) all of the methods
E) 1 and 3 only
Refer to the table below to answer the following question.
Table 23.3.5
Refer to Table 23.3.5. The table shows an economy’s demand for loanable funds
schedule and supply of loanable funds schedule when the government’s budget is
balanced. If the government budget surplus is $2.0 trillion, the real interest rate is
________ percent a year, the quantity of investment is ________ trillion, and the
quantity of private saving is ________ trillion.
A) 10; $5.5; $7.5
B) 10; $7.5; $5.5
C) 8; $6.5; $6.5
D) 6; $7.5; $7.5
E) 6; $7.5; $5.5
The sum of wages, salaries and supplementary labour income, and other factor incomes
is
A) gross domestic product.
B) gross domestic income.
C) net domestic income at factor cost.
D) net domestic product.
E) total output of the economy.
Consider Fact 10.2.1. Choose the best statement.
A) When your wage rate is $5 per hour, the economically efficient method is method C.
B) When your wage rate is $50 per hour, the economically efficient method is method
B.
C) When your wage rate is $500 per hour, the economically efficient method is method
A.
D) all of the above
E) B and C only
At the beginning of the year, your wealth is $10,000. During the year, you have an
income of $80,000 and you spend $90,000 on consumption goods and services. You pay
no taxes. Your wealth at the end of the year is
A) $20,000.
B) $0.
C) $90,000.
D) $100,000.
E) $10,000.
According to the Ricardo-Barro effect,
A) government deficits raise the real interest rate.
B) taxpayers fail to foresee that government deficits imply higher future taxes.
C) households increase personal saving when governments run budget deficits.
D) government budget deficits increase households’ expected future disposable income.
E) a government deficit decreases the supply of loanable funds.
As we move down the bowed-out production possibilities frontier,opportunity cost
A) increases.
B) decreases.
C) remains constant.
D) initially decreases, then increases.
E) decreases but at an increasing rate.
Samir consumes apples and bananas and is in consumer equilibrium. The marginal
utility from his last apple is 10 and the marginal utility from his last banana is 5. If the
price of an apple is $0.50, then what is the price of a banana?
A) $0.05
B) $0.10
C) $0.25
D) $0.50
E) $1.00
Canada produces both lumber and wine. Canada exports lumber and imports wine. The
rest of the world imports Canadian lumber and exports wine to Canada. Canada has a
comparative advantage in producing ________. The rest of the world has a comparative
advantage in producing ________.
A) lumber; wine
B) wine; lumber
C) wine; wine
D) lumber; lumber
E) both lumber and wine; neither lumber nor wine
Consider the market demand curve in Figure 13.3.3. If the market is perfectly
competitive, which area indicates the deadweight loss?
A) ABD
B) BCD
C) KDI
D) ADC
E) None of the above
Real GDP will increase only if the
A) average level of prices rises.
B) quantity of goods and services produced increases.
C) unemployment rate rises.
D) employment rate rises.
E) employment rate falls.
Bill and Ted each consume 15 chocolate bars at the current price. If Bill’s demand for
chocolate bars is more elastic than Ted’s demand, then
A) Bill’s willingness to pay for the last chocolate bar is greater than Ted’s.
B) Ted’s willingness to pay for the last chocolate bar is greater than Bill’s.
C) Bill’s consumer surplus is greater than Ted’s.
D) Ted’s consumer surplus is greater than Bill’s.
E) Bill’s consumer surplus equals Ted’s.
When compared to a monopsony labour market with the same value of marginal
product curve and labour supply curve, a perfectly competitive labour market will pay a
A) lower wage and employ fewer workers.
B) lower wage and employ more workers.
C) higher wage and employ fewer workers.
D) higher wage and employ more workers.
E) higher wage and employ the same amount of workers.
When a monopoly practices price discrimination
A) it charges different prices to different consumers and transfers some of the consumer
surplus to economic profit.
B) it produces a smaller quantity than when it is a single-price monopoly which
decreases consumer surplus.
C) new firms enter the industry, so buyers have more goods from which to choose and
consumer surplus increases.
D) consumer surplus increases because the monopoly increases the quantity available
for sale.
E) firms exit the industry and consumer surplus decreases.
Consider Devon’s total utility from snorkeling and windsurfing in Table 8.2.1. Suppose
Devon’s total income is $35. If the price of windsurfing rises to $20 per hour, what is
Devon’s elasticity of demand for windsurfing?
A) 1.0
B) 0.67
C) 1.5
D) 10
E) 1.33
Mexico and Canada produce both oil and apples using labour only. A barrel of oil is
produced with 4 hours of labour in Mexico and 8 hours of labour in Canada. A bushel
of apples is produced with 8 hours of labour in Mexico and 12 hours of labour in
Canada. Canada has
A) an absolute advantage in oil production.
B) an absolute advantage in apple production.
C) a comparative advantage in oil production.
D) a comparative advantage in apple production.
E) a comparative advantage in oil production and a comparative advantage in apple
production.
Which of the following is part of a firm’s opportunity cost of production?
I. wages
II. utility costs
III. interest on a bank loan
IV. interest forgone on funds used to buy capital equipment
A) I only
B) II only
C) III only
D) IV only
E) I, II, III, and IV
Which of the following does not occur as a result of the Bank of Canada raising the
overnight loans rate?
A) The supply of loanable funds decreases.
B) The long-term real interest rate rises.
C) Exports decrease.
D) Aggregate demand increases.
E) Imports increase.
Refer to Figure 18.3.1. This figure shows the value of marginal product of labour curve,
the labour supply curve, and the marginal cost of labour curve. If this labour market is
controlled by a monopsony, then the monopsonist hires
A) zero hours of labour.
B) 50 hours of labour.
C) 75 hours of labour.
D) 100 hours of labour.
E) greater than 100 hours of labour.
Use the information below to answer the following question.
Fact 24.7.1
The Bank of Speedy Creek has chosen the following initial balance sheet:
Refer to Fact 24.7.1. Suppose all the banks in the banking system have the same desired
reserve ratio as the Bank of Speedy Creek. If the currency drain ratio is 32 percent,
what is the size of the money multiplier?
A) 3.3
B) 1.25
C) 5.0
D) 4.0
E) 2.7
Use the table below to answer the following questions.
Table 20.4.1
Refer to Table 20.4.1. In this table, at 2013 prices, the value of production from 2013 to
2014 has increased by
A) 77.3 percent.
B) 54.5 percent.
C) 10.8 percent.
D) 91.7 percent.
E) 56 percent.