Automatic stabilizers refer to
A) the money supply and interest rates that automatically increase or decrease along
with the business cycle.
B) government spending and taxes that automatically increase or decrease along with
the business cycle.
C) changes in the money supply and interest rates that are intended to achieve
macroeconomic policy objectives.
D) changes in federal taxes and purchases that are intended to achieve macroeconomic
policy objectives.
Which of the following statements is true?
A) Anytime you have to decide which action to take you are experiencing economic
equity.
B) Trade-offs do not apply when the consumers purchase a product for which there is
excess supply, such as a stock clearance sale.
C) Every individual, no matter how rich or poor, is faced with making trade-offs.
D) Economics is a social science that studies the trade-offs we are forced to make
because resources are unlimited.
If actual inflation is greater than expected inflation, what is the relationship between the
actual real wage and the expected real wage?
A) The actual real wage will be lower than the expected real wage.
B) The actual real wage will be higher than the expected real wage.
C) The actual real wage will be equal to the expected real wage.
D) The relationship between the actual real wage and the expected real wage cannot be
predicted.
The Bretton Woods system of fixed exchange rates was set up in
A) the 1890s.
B) the 1920s.
C) the 1940s.
D) the 1970s.
The production possibilities frontier shows
A) the various products that can be produced now and in the future.
B) the maximum attainable combinations of two products that may be produced in a
particular time period with available resources.
C) what an equitable distribution of products among citizens would be.
D) what people want firms to produce in a particular time period.
The underground economy can be described as
A) production of intermediate goods and services.
B) economic production that includes mining.
C) economic activity that is hidden from the government to avoid taxes or because the
activity is illegal.
D) production of infrastructure that spurs growth in the rest of the economy.
A quota
A) makes domestic consumers better off.
B) makes both domestic producers and consumers better off.
C) makes everyone worse off.
D) makes domestic producers better off.
In the principal-agent relationship, the principal is
A) the owner of a resource that has hired a third party to act in the best interest of that
third party.
B) the person who is placed in control over resources that are not his own, with a
contractual obligation to use these resources in the interests of some other party.
C) the person who is placed in control over resources that are not his own and agrees to
compensate the resource owner in the event of outcomes that do not satisfy the resource
owner.
D) the person who places his resources in professional hands in exchange for the
professional’s promise to act on the resource owner’s behalf.
In the United States from 1981 to 2011, deaths from all of the following declined
substantially except
A) cancer.
B) kidney disease.
C) heart attacks.
D) strokes.
In economics, the optimal level of pollution is
A) zero.
B) the level for which the total benefit from reducing the pollution is the greatest.
C) the level for which the marginal benefit from reducing the pollution is the greatest.
D) the level for which the net benefit from reducing the pollution is the greatest.
Economists working at federal government agencies have estimated that the marginal
social cost of carbon is about
A) $2 per ton.
B) $9 per ton.
C) $21 per ton.
D) $47 per ton.
Corporate governance involves the way in which
A) the government nationalizes corporations.
B) the government licenses corporations.
C) a corporation is subject to government regulations.
D) a corporation is structured.
Bank reserves include
A) vault cash and deposits with the Federal Reserve.
B) loans to bank customers and deposits with the Federal Reserve.
C) vault cash and loans to bank customers.
D) customer checking accounts and vault cash.
E) deposits with the Federal Reserve and holdings of securities.
Goods that have been produced but not yet sold are referred to as
A) understocks.
B) inventories.
C) pre-sold goods.
D) capital goods.
If the absolute value of the price elasticity of demand for aspirin equals 0.8 then
A) aspirin is a normal good.
B) the demand for aspirin is inelastic.
C) aspirin has few substitutes.
D) the demand for aspirin is elastic.
Zane’s Vanes is a service that restores old weather vanes. Zane has just spent $125
purchasing a 1920s era weather vane which he expects to restore and sell for $500 once
the work is completed. After having spent $125, Zane realizes that he will need to spend
an additional $200 on materials to complete the restoration. Alternatively, he can sell
the weather vane without restoring it for $200. What is his marginal cost to complete
the restoration?
A) $75
B) $125
C) $200
D) $300
Assume that the price for lawn care has fallen and sales of lawn care services have also
fallen. One can conclude that
A) the law of supply has been violated.
B) the number of lawn care service companies has increased.
C) the demand for lawn care service has decreased.
D) lawn care services are deliberately charging low prices because they want to
discourage people from maintaining their own lawns.
The short-run Phillips curve is ________ than the long-run Phillips curve.
A) flatter
B) steeper
C) less stable
D) Both B and C are correct.
The efficient output level of a public good occurs where the
A) greatest number of free riders occurs.
B) marginal cost of producing the last unit is equal to the marginal benefit realized by
consumers.
C) total cost of production is affordable.
D) marginal cost of production is at its lowest.