Under oligopoly, a kinked-demand curve would explain why firms:
A. avoid price wars.
B. undertake new investment.
C. have different levels of efficiency.
D. are approximately the same size.
Which factor has most contributed to the increased concentration in the U.S. beer
industry?
A. Increased demand for strong beers.
B. New technology for filling beer kegs.
C. Economies of scale in production.
D. Increased demand for soft drinks.
With no inflation, a bank would be willing to lend a business firm $5 million at an
annual interest rate of 6 percent. But, if the rate of inflation was anticipated to be 4
percent, the bank would most likely charge the firm an annual interest rate of:
A. 2 percent.
B. 4 percent.
C. 6 percent.
D. 10 percent.
Assuming pizza and hamburgers are substitutes, when the price of pizza increases, what
must always happen?
A. Total revenue received by pizza sellers increases.
B. Total revenue received by pizza sellers decreases.
C. Total revenue received by hamburger sellers increases.
D. Total revenue received by hamburger sellers decreases.
In 2009, the poverty line for a family of four was:
A. $8300.
B. $10,460.
C. $21,954.
D. $26,541.
The value of the monetary multiplier is:
A. 1/MPS.
B. 1/Excess reserves.
C. 1/MPC.
D. 1/Required reserve ratio.
The degree of inequality in the distribution of annual income is:
A. understated because it does not take into account wages and salaries.
B. overstated because it does not take into account how income changes over time.
C. understated because it does not take into account how income changes over time.
D. overstated because it does not take into account wages and salaries.
Refer to the above diagram. The equilibrium price and quantity in this market will be:
A. $1.00 and 200.
B. $1.60 and 130.
C. $.50 and 130.
D. $1.60 and 290.
What primary function is money serving when you keep it in a bank account until you
need it to purchase a product?
A. A store of value.
B. A unit of account.
C. A medium of exchange.
D. A double coincidence of wants.
A budget surplus means that:
A. government expenditures are greater than revenues in a given year.
B. government revenues are greater than expenditures in a given year.
C. government revenues are greater than expenditures throughout time.
D. government expenditures are falling and government revenues are rising.
Which one of the following is a tool of monetary policy for altering the reserves of
commercial banks?
A. Issuing currency.
B. Check collection.
C. Open-market operations.
D. Acting as the fiscal agent for the federal government.
According to a study by economists Ian Ayres and Steven Levitt, the division of the
total benefit of the Lojack to its owners and all other car owners is:
A.100 percent to the car owner with a Lojack, 0 percent to other car owners.
B.75 percent to the car owner with a Lojack, 25 percent to other car owners.
C.50 percent to the car owner with a Lojack, 50 percent to other car owners.
D.10 percent to the car owner with a Lojack, 90 percent to other car owners.
Refer to the above graph. If the interest rate is 2 percent, the supply of money would be:
A. $100 billion.
B. $150 billion.
C. $200 billion.
D. $250 billion.
The best example of a “frictionally unemployed” worker is one who:
A. reduces productivity by causing frictions in a business.
B. is laid off during a recessionary period in the economy.
C. is in the process of voluntarily switching jobs.
D. is discouraged and not actively seeking work.
The market system is an economic system that:
A. produces more consumer goods than capital goods.
B. produces more capital goods than consumer goods.
C. gives private individuals and institutions the right to own resources used in
production.
D. gives the government the right to tax individuals and corporations for the production
of capital goods.
When the demand for a good is price-elastic at a given output level:
A. total revenue is negative.
B. total revenue for the good will increase if its price decreases.
C. an increase in price will lead to an increase in total revenue for firms selling the
good.
D. a large change in price will result in a relatively small change in the quantity
demanded.
The data in the table show the marginal costs and marginal benefits to a city for five
different levels of pollution control.
Refer to the above table. If the city seeks an optimal reduction of the externality, then it
will select how many tons of pollution abatement?
A.500
B.600
C.700
D.800
A union representative observed that if the union members’ wages were increased by
some proportion, the workers would eventually suffer a greater than proportional
decline in employment. This statement could best be explained if:
A. the new wages are to take effect immediately.
B. union labor can easily be replaced with capital.
C. union labor is an insignificant portion of the total cost of production.
D. the demand for the final product the workers produce is relatively inelastic.
Which are liabilities to a bank?
A. Capital stock and reserves.
B. Property and capital stock.
C. Vault cash and demand deposits.
D. Capital stock and demand deposits.
A cumulative wage-price spiral that produces a rapid increase in the price level of over
100 percent can be characterized as:
A. anticipated inflation.
B. demand-pull inflation.
C. cost-push inflation.
D. hyperinflation.
One reason the public debt will not bankrupt the federal government is that the:
A. cost is shifted to future generations.
B. debt has a procyclical effect on the economy.
C. debt can be refinanced by selling new bonds.
D. burden of the debt will be crowded out by new investment.
Price leadership represents a situation where oligopolistic firms:
A. reduce their reliance on nonprice competition.
B. conspire to form a cartel.
C. face a kinked-demand curve.
D. tacitly collude.
Refer to the above graph of a representative firm in monopolistic competition. What
does line 4 represent?
A. Demand
B. Marginal cost
C. Marginal revenue
D. Average total cost
Refer to the above graph, which shows the supply and demand for money where Dm1,
Dm2, and Dm3 represent different demands for money and Sm1, Sm2, and Sm3 represent
different levels of the money supply. The initial equilibrium point is A. What will be the
new equilibrium point following a decrease in the asset demand for money?
A. B.
B. E.
C. F.
D. I.
If a monopolistically competitive industry is in long-run equilibrium, a firm in that
industry might be able to increase its economic profits by:
A. decreasing the price of its product.
B. increasing the price of its product.
C. increasing the demand for its product.
D. decreasing the demand for its product.
The demand curve confronting a nondiscriminating pure monopolist is:
A. horizontal.
B. the same as the industry’s demand curve.
C. more elastic than the demand curve confronting a competitive firm.
D. derived by vertically summing the individual demand curves competitors.
In 2010, approximately what percentage of the public debt was held by foreign
individuals and institutions?
A. 7 percent
B. 25 percent
C. 17 percent
D. 32 percent
Compared to a purely competitive firm, a monopsonist will pay:
A. a higher wage rate to its workers.
B. lower wages but hire more workers than the purely competitive firm.
C. lower wage rates and hire fewer workers than the purely competitive firm.
D. lower wages while hiring the same quantity of workers as the purely competitive
firm.
The Federal Reserve System performs many functions, but its most important one is:
A. issuing currency.
B. controlling the money supply.
C. supervision of commercial banks.
D. lending money to banks and thrifts.
An increase in business taxes would tend to:
A. increase aggregate demand and decrease aggregate supply.
B. increase aggregate demand and increase aggregate supply.
C. decrease aggregate demand and increase aggregate supply.
D. decrease aggregate demand and decrease aggregate supply.