During a period of rapid growth in output,
a. employment generally increases and unemployment decreases.
b. employment generally decreases and unemployment increases.
c. both employment and unemployment generally increase.
d. both employment and unemployment generally decrease.
For a monopolist that does not price discriminate, economic profit is maximized in the
short run at a price of $140. Marginal revenue at that output level is
a. equal to $140.
b. greater than $140.
c. less than $140.
d. less than marginal cost.
e. greater than average revenue.
Figure 8-7
Which of the following is true for Figure 8-7?
a. Firms in this industry begin to experience diminishing returns to their variable factors
at output q1.
b. Between q1 and q2, firms in this industry experience economies of scale.
c. Firms producing output rates less than q1 or more than q2 will find it difficult to
survive.
d. The largest firms in this industry have the lowest per-unit cost.
When the Hometown football team is winning by a lot of points after halftime, they
often play their second and third team players. One of the coaches notices that when the
third team plays that Oklahoma wins by a bigger margin than when just the first team
plays. He recommends that the third team see more playing time as a result. What is
wrong with his way of thinking?
a. association is not causation
b. it is a violation of ceteris paribus
c. the fallacy of composition
d. good intentions do not guarantee desirable outcomes
If the Fed wants to shift toward a more expansionary policy, it often announces that it is
going to change the federal funds interest rate. The Fed controls the federal funds
interest rate
a. by imposing legal restrictions that prohibit exchanges at interest rates other than the
ones designated by the Fed.
b. by having the U.S. Treasury fix this interest rate
c. through its policy of open market operations.
d. by altering the size of the federal budget deficit or surplus.
According to the Keynesian view, if policy makers thought the economy was about to
enter an inflationary boom, which of the following would be most appropriate?
a. a tax increase
b. a planned increase in the budget deficit
c. an increase government expenditures
d. a tax decrease
Assume the demand curve for shampoo is downward sloping. If the price of shampoo
falls from $1.50 to $1.25 per dozen,
a. the demand for shampoo will fall.
b. the demand for shampoo will rise.
c. a larger quantity of shampoo will be demanded.
d. a smaller quantity of shampoo will be demanded.
Government decisions tend to be biased against actions that have
a. current costs and future benefits that are both easily observable.
b. future costs that are difficult to identify and current benefits that are easily
observable.
c. future costs and future benefits that are both difficult to identify.
d. current costs that are easily observable and future benefits that are difficult to
identify.
Figure 3-22
Refer to Figure 3-22. Graph A shows which of the following?
a. An increase in demand and an increase in quantity supplied.
b. An increase in demand and an increase in supply.
c. An increase in quantity demanded and an increase in quantity supplied.
d. An increase in supply and an increase in quantity demanded.
If there is surplus of loanable funds, then
a. the supply for loanable funds shifts right and the demand shifts left.
b. the supply for loanable funds shifts left and the demand shifts right.
c. neither curve shifts, but the quantity of loanable funds supplied increases and the
quantity demanded decreases as the interest rate rises to equilibrium.
d. neither curve shifts, but the quantity of loanable funds supplied decreases and the
quantity demanded increases as the interest rate falls to equilibrium.
A fruit packing plant usually shuts down for three months each year. During that period,
what happens to its costs?
a. Its fixed costs are greater than zero.
b. Its variable costs are greater than zero.
c. Its total costs are zero.
d. Its fixed costs are zero.
The Affordable Care Act will subsidize the purchase of health insurance for which of
the following groups?
a. Doctors and nurses regardless of income.
b. Individuals and families with incomes between 133 percent and 400 percent of the
poverty level.
c. Employees who belong to a labor union.
d. All workers employed by firms with fewer than 50 full-time employees.
Suppose demand decreases and supply decreases. Which of the following will happen?
a. Equilibrium price will rise, fall, or stay the same while equilibrium quantity will
decrease.
b. Equilibrium price will rise, fall, or stay the same while equilibrium quantity will
increase
c. Equilibrium quantity will rise, fall, or stay the same and equilibrium price will
increase.
d. Equilibrium quantity will rise, fall, or stay the same while equilibrium price will
decrease.
e. The change in equilibrium price and quantity cannot be determined.
During the last several decades the labor force participation rate
a. of women has increased substantially.
b. of men has increased substantially.
c. of women has steadily declined.
d. of both men and women has steadily declined.
Additional investments in machines that enhance the ability to produce goods and
services imply that
a. the owners of the investments will necessarily have to borrow funds.
b. the owners of the investments will necessarily have to reduce their current
consumption.
c. someone will have to reduce current consumption.
d. future consumption will have to be reduced.
Use the figure below to answer the following question(s).
Figure 9-2
Which of the following is true for the economy depicted in Figure 9-2?
a. Output equals potential real GDP.
b. The actual rate of unemployment equals the natural rate of unemployment.
c. The output is sustainable in the long run.
d. All of the above statements are true.
Refer to Table 11-1. To maximize profit, the monopolist sets price at
a. $10
b. $15
c. $20
d. $25
An excise tax levied on a product will impose a smaller relative burden on consumers
(and a larger relative burden on sellers) when
a. the supply of the product is relatively inelastic.
b. the supply of the product is relatively elastic.
c. the demand for the product is relatively elastic.
d. either a or c is true.
The share of the labor force that was unionized increased from 7.4 percent in 1930 to
more than 30 percent in 1955. During these 25 years, the share of national income
allocated to labor (in contrast to capital)
a. increased approximately 10 percent.
b. increased 17.6 percent.
c. fell 20 percent.
d. was virtually unchanged.
Other things constant, when the work opportunities in an occupation are unstable (that
is, layoffs are common), the hourly wages of workers in the occupation will tend to be
a. higher than the wages of workers with otherwise similar jobs.
b. lower than the wages of workers with otherwise similar jobs.
c. below market equilibrium.
d. above market equilibrium.
In which statement(s) is “supply” used correctly?
(I) “An increase in the price of flour will increase the supply of flour.”
(II) “As the cost of producing flour rises, the supply of flour will tend to fall.”
a. in both statements I and II
b. in statement I only
c. in statement II only
d. in neither statements I nor II
Use the figure to answer the following question(s).
Figure 11-13
If the firms in the industry depicted in Figure 11-13 compete with each other, what
would the industry’s price and output be?
a. price, $10; output, 600
b. price, $15; output, 500
c. price, $20; output, 400
d. price, $25; output, 300
During a sustained economic expansion,
a. the rate of unemployment will generally fall and the employment/population ratio
will generally rise.
b. the rate of unemployment will generally rise and the employment/population ratio
will generally fall.
c. both the rate of unemployment and the employment/population ratio will generally
decline.
d. both the rate of unemployment and the employment/population ratio will generally
rise.
Which of the following is true of profits and losses?
a. Profits direct entrepreneurs toward production of goods that are highly valued
relative to their cost, while losses direct them away from wealth-reducing activities.
b. Profits indicate that the firm is charging prices that are too high, while losses indicate
that the firm needs to raise its prices.
c. Profits indicate that the consumer is getting a bad deal, while losses indicate that the
consumer values the product highly relative to its cost.
d. Profits indicate that the suppliers of resources are underpaid, while losses indicate
they are overpaid.
The Economic Freedom of the World measure indicates that the United States
a. was the freest economy in the world in 2010.
b. has experienced a decline in economic freedom since 2000.
c. has experienced an increase in economic freedom since 2000.
d. continues to be substantially more free than Australia, Canada, and Chile.
If a country has attracted a relatively large number of foreign workers and a large
amount of foreign investment,
a. national income will generally exceed gross national product.
b. gross national product will generally exceed gross domestic product.
c. net domestic product will generally exceed gross domestic product.
d. gross domestic product will generally exceed gross national product.
Which of the following best explains why the Social Security system will face financial
difficulties in the future?
a. Too much Social Security revenue was invested in the private sector rather than in
government bonds.
b. In the next two decades, the number of workers paying into the system will decline
sharply relative to the number of retirees collecting benefits.
c. The federal government does not pay interest on the money it borrows from the
Social Security system.
d. The funds in the Social Security trust fund were invested in high-risk ventures that
failed to pay off.
The prospect of a recession in the United States would probably cause the dollar to
a. depreciate because interest rates would be expected to rise.
b. depreciate because imports would be expected to rise.
c. appreciate because imports would be expected to fall.
d. appreciate because interest rates would be expected to decrease.
A decrease in demand will cause
a. an increase in supply.
b. a decrease in supply.
c. an increase in quantity supplied.
d. a decrease in quantity supplied.
e. an increase in equilibrium price.
Which of the following is the most likely explanation for the imposition of a price floor
in the market for corn?
a. Policymakers have studied the effects of the price floor carefully and they recognize
that the price floor will improve the efficiency of resource use.
b. Buyers and sellers of corn have agreed that the price floor is good for both of them
and have therefore pressured policy makers into enacting the price floor.
c. Buyers of corn, recognizing that the price floor is good for them, have pressured
policy makers into enacting the price floor.
d. Sellers of corn, recognizing that the price floor is good for them, have pressured
policy makers into enacting the price floor.
While most industrial categories have experienced a decline in the percentage of
workers unionized, which one of the following categories has seen a significant
increase in unionization?
a. retail trades
b. the hotel and restaurant industry
c. the government sector
d. automobile manufacturing
Doomsday projections have generally
a. been correct.
b. been incorrect, but with better technology and the ability to predict the future, these
forecasts have become much more accurate in the last few decades.
c. been inconsistent. Some projections came true, others failed.
d. been wrong.
When aggregate demand exceeds current output, Keynesian analysis indicates that
a. unplanned inventory accumulation will cause output to rise.
b. unplanned inventory accumulation will cause output to fall.
c. unplanned inventory reductions will cause output to rise.
d. unplanned inventory reductions will cause output to fall.
When the price of steel rises, Ford uses more aluminum in the production of its cars.
This is an example of
a. substitution in consumption.
b. substitution in production.
c. a change in the marginal productivity of a resource.
d. derived demand.
Annual income data would be a better index of economic inequality if
a. all households filed tax returns revealing their real income.
b. households were more different with regard to age and size characteristics.
c. all households were more similar with regard to size, age, education, and other major
factors that are linked to income.
d. mathematicians could grasp the complexities of the calculations.