From November 1993 to December 1994, the Democratic Republic of the Congo
experienced an inflation rate of 69,502 percent. This economic condition would best be
described as:
A. a cost-of-living adjustment.
B. anticipated inflation.
C. cost-push inflation.
D. hyperinflation.
When external or spillover benefits occur in the production of a particular product, the
private market tends to provide:
A.none of the product.
B.too much of the product.
C.too little of the product.
D.the socially optimal amount of the product.
More than half the growth of real GDP in the United States is caused by:
A. a falling price level.
B. the reallocation of labor from manufacturing to agriculture.
C. increases in the productivity of labor.
D. the use of fewer inputs of labor.
Assume that in the short run a firm is producing 100 units of output, has average total
costs of $200, and has average variable costs of $150. The firm’s total fixed costs are:
A. $5,000.
B. $500.
C. $.50.
D. $50.
A nation has a population of 260 million people. Of these, 60 million are retired, in the
military, in institutions, or under 16 years old. There are 188 million who are employed
and 12 million who are unemployed. What is the unemployment rate?
A. 4 percent
B. 6 percent
C. 9 percent
D. 27 percent
Recessions have contributed to the public debt by:
A. reducing national income and therefore tax revenues.
B. increasing real interest rates.
C. increasing the international value of the dollar.
D. increasing national saving.
Complete income inequality using the Gini ratio would be reflected by a value of:
A. 2.
B. 3.
C. 0.
D. 1.
The passage of new legislation requiring more extensive government regulation of
business will most likely:
A. increase aggregate demand.
B. increase aggregate supply.
C. decrease aggregate demand.
D. decrease aggregate supply.
If in the short run the demand for mass transit is inelastic and in the long run the
demand is elastic, then a price:
A. increase will decrease total revenue in the short run but increase total revenue in the
long run.
B. increase will increase total revenue in the short run but decrease total revenue in the
long run.
C. decrease will increase total revenue in the short run but decrease total revenue in the
long run.
D. decrease will decrease total revenue in the short run and decrease total revenue in the
long run.
What function is money serving when you deposit money in a savings account?
A. A store of value.
B. A unit of account.
C. A checkable deposit.
D. A medium of exchange.
Consumers in an economy buy only three general types of products, A, B, and C.
Quantity purchased and changes in the prices of these items over a period are shown
below:
Using year 1 as a base, the value of the country’s price index in year 2 is:
A. 100.0.
B. 103.9.
C. 113.2.
D. 106.3.
Which is a demand factor in economic growth?
A. More human and natural resources.
B. Technological progress and innovation.
C. An increase in the economy’s stock of capital goods.
D. An increase in total spending in the economy.
Which situation would most likely shift the production possibilities curve for a nation in
an outward direction?
A. A decrease in the quality of products
B. An increase in the supply of resources
C. A decrease in the state of technology
D. An increase in the amount of discrimination
At a price of $4 per unit, Gadgets Inc. is willing to supply 20,000 gadgets, while United
Gadgets is willing to supply 10,000 gadgets. If the price were to rise to $8 per unit, their
respective quantities supplied would rise to 45,000 and 25,000. If these are the only two
firms supplying gadgets, what is the elasticity of supply in the market for gadgets?
A. 1.2
B. 1.0
C. 0.833
D. 0.80
The Organization of Petroleum Exporting Countries (OPEC) behaves in many ways
like an international cartel. If the cartel were to hire a consulting firm to monitor the
production rates of member countries, the economic reason for this monitoring is to:
A. make sure that each member country is producing at an output level at which price
equals marginal cost.
B. make sure all the member countries produce at least their quotas so that there will be
no oil shortage.
C. detect those member countries that are depressing prices by producing more than
their assigned quotas.
D. make sure that the marginal revenue for the last barrel of oil sold by each member
country is less than its price.
Which of the following does not explain why the command systems of the Soviet
Union and Eastern Europe failed?
A. Coordination problems.
B. Prices and profits did not fluctuate to reflect wants for a different allocation of
resources.
C. Incentive problems.
D. The failure to use money for most exchanges.
If a product’s price falls and the consumer buys 4 units, as they did before the price
change, then the:
A. budget line will be unaffected.
B. budget line must shift inward to the origin.
C. budget line may shift either outward from or inward to the origin.
D. consumer will no longer be in equilibrium.
An increase in personal income tax rates will cause a(n):
A. decrease in the quantity of real domestic output demanded.
B. increase in the quantity of real domestic output demanded.
C. decrease in aggregate demand.
D. increase in aggregate demand.
Overall, the U.S. tax system (combined federal, state, and local) is:
A. highly progressive.
B. slightly progressive.
C. slightly regressive.
D. highly regressive.
If the cyclically adjusted deficit as a percentage of GDP is zero in one year and 1
percent of GDP the next year, it can be concluded that:
A. fiscal policy is expansionary.
B. fiscal policy is contractionary.
C. the federal government is borrowing money.
D. the federal government is lending money.
In the circular economic flow diagram, households:
A. make consumption expenditures and pay for land, labor, and capital.
B. make consumption expenditures and receive goods and services.
C. buy resources and receive goods and services.
D. receive money income and supply resources.
Other things equal, if the fixed costs of a firm were to increase by $100,000 per year,
which of the following would happen?
A. Marginal costs and average variable costs would both rise.
B. Average fixed costs and average variable costs would rise.
C. Average fixed costs and average total costs would rise.
D. Average fixed costs would rise, but marginal costs would fall.
The supply curve for a pure monopolist:
A. is the portion of the marginal cost curve that lies above the average variable cost
curve.
B. is perfectly price-elastic at the market price.
C. is upsloping across all relevant ranges of output.
D. does not exist because there is no fixed relationship between price and quantity
supplied.
Which country is the United States’ most important trading partner?
A. Germany
B. Japan
C. China
D. Canada
Refer to the above data. Over which price range is the price elasticity of demand
unitary?
A. $16-$14
B. $14-$12
C. $12-$10
D. $10-$8
Answer the next question on the basis of the following table for a commercial bank or
thrift:
Refer to the above table. When the legal reserve ratio is 30 percent, the monetary
multiplier is:
A. 5.
B. 4.
C. 3.33.
D. 2.5.
Given the above graph, the competitive firm’s short run supply curve is the:
A. MC curve above F.
B. MC curve above G.
C. MC curve above H.
D. MC curve above J.
The above diagram shows the short-run average total cost curves for five different plant
sizes of a firm. The position of these five curves in relation to one another reflects:
A. economies and diseconomies of scale.
B. the effect of fixed costs on ATC as output increases.
C. the law of constant costs.
D. the law of diminishing returns.
Answer the next question on the basis of the following table, which indicates the dollar
price of libras, the currency used in the hypothetical nation of Libra. Assume that a
system of freely floating exchange rates is in place.
The exchange rate is:
A. 4 libras for one dollar.
B. .25 libra for one dollar.
C. .40 libra for one dollar.
D. 3 libras for one dollar.
In 2010, U.S. exports of services ______ U.S. imports of services by about _____.
A. exceeded; $146B
B. fell short of; $146B
C. exceeded; $257B
D. fell short of; $257B