Economists have found that union workers earn what percent more than similar
nonunion workers?
a. 0 to 5
b. 5 to 10
c. 10 to 20
d. 20 to 30
Which of the following agencies calculates the CPI?
a. the National Price Board
b. the Department Of Weight and Measurements
c. the Bureau of Labor Statistics
d. the Congressional Budget Office
The supply curve for liquor is the typical upward-sloping straight line, and the demand
curve for liquor is the typical downward-sloping straight line. When liquor is taxed, the
area on the relevant supply-and-demand graph that represents the deadweight loss is
a. larger than the area that represents consumer surplus in the absence of the tax.
b. larger than the area that represents government’s tax revenue.
c. a triangle.
d. All of the above are correct.
If P = 2 and Y = 1000, then which of the following pairs of values are possible?
a. M = 500, V = 4
b. M = 1500, V = 3
c. M = 2000, V = 2
d. M = 500, V = 1
Suppose that real GDP grew more in Country A than in Country B last year.
a. Country A must have a higher standard of living than country B.
b. Country A’s productivity must have grown faster than country B’s.
c. Both of the above are correct.
d. None of the above are correct.
Dilbert’s Incorporated produced 5,000,000 units of accounting software in 2008. At the
start of 2009 the pointy-haired boss reduced total annual hours of employment from
10,000 to 8,000 and production was 4,800,000. These numbers indicate that
productivity
a. fell by 4%.
b. fell by 20%.
c. rose by 12%.
d. rose by 20%.
Table 3-5
Assume that England and Spain can switch between producing cheese and producing
bread at a constant rate.
Labor Hours Needed
to Make 1 Unit of Number of Units
Produced in 40 Hours
Refer to Table 3-5. England should specialize in the production of
a. cheese and Spain should specialize in the production of bread.
b. bread and Spain should specialize in the production of cheese.
c. both goods and Spain should specialize in the production of neither good.
d. neither good and Spain should specialize in the production of both goods.
The term “market failure”
a. means the same thing as “market power.”
b. refers to the dissolution of a market when firms decide to quit producing a certain
product.
c. refers to the failure of a market to produce an efficient allocation of resources.
d. refers to government’s failure to enforce the property rights of households or firms
that participate in a certain market.
The U.S. president who referred to inflation as “public enemy number one” was
a. Richard Nixon.
b. Gerald Ford.
c. Jimmy Carter.
d. Ronald Reagan.
According to Friedman and Phelps, policymakers face a tradeoff between inflation and
unemployment
a. only in the long run.
b. only in the short run.
c. in neither the long run nor short run.
d. in both the short run and long run.
Who of the following would be included in the Bureau of Labor Statistics’
“unemployed” category?
a. Julie, who is on temporary layoff
b. Andrew, who worked only 15 hours last week
c. Ellen, who neither has a job nor is looking for one
d. None of the above is correct.
Figure 3-8
Chile’s Production Possibilities Frontier Colombia’s Production Possibilities
Frontier
Refer to Figure 3-8. Chile has an absolute advantage in the production of
a. coffee and Colombia has an absolute advantage in the production of soybeans.
b. soybeans and Colombia has an absolute advantage in the production of coffee.
c. both goods and Colombia has an absolute advantage in the production of neither
good.
d. neither good and Colombia has an absolute advantage in the production of both
goods.
Other things equal, when the price of a good falls, the
a. quantity supplied of the good increases.
b. supply decreases.
c. quantity supplied of the good decreases.
d. demand increases.
Table 4-1
Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price
falls by $1, the quantity demanded in the market increases by
a. 2 units.
b. 3 units.
c. 4 units.
d. 5 units.
Producer surplus is
a. measured using the demand curve for a good.
b. always a negative number for sellers in a competitive market.
c. the amount a seller is paid minus the cost of production.
d. the opportunity cost of production minus the cost of producing goods that go unsold.
Figure 4-20
The graph below pertains to the supply of paper to colleges and universities.
Refer to Figure 4-20. All else equal, an increase in the use of laptop computers for
note-taking would cause a move from
a. x to y.
b. y to x.
c. SA to SB.
d. SB to SA.
The ease with which an asset can be
a. traded for another asset determines whether or not that asset is a unit of account.
b. transported from one place to another determines whether or not that asset could
serve as fiat money.
c. converted into a store of value determines the liquidity of that asset.
d. converted into the economy’s medium of exchange determines the liquidity of that
asset.
If aggregate demand shifts because of a wave of optimism about stock prices, those
who favor a policy that “leans against the wind” would advocate the
a. Federal Reserve increase the money supply or the government increase taxes.
b. Federal Reserve increase the money supply or the government decrease taxes.
c. Federal Reserve decrease the money supply or the government increase taxes.
d. Federal Reserve decrease the money supply or the government decrease taxes.
Rent control policies tend to cause
a. relatively smaller shortages in the short run than in the long run because supply and
demand tend to be more elastic in the short run than in the long run.
b. relatively larger shortages in the short run than in the long run because supply and
demand tend to be more elastic in the short run than in the long run.
c. relatively larger shortages in the short run than in the long run because supply and
demand tend to be more inelastic in the short run than in the long run.
d. relatively smaller shortages in the short run than in the long run because supply and
demand tend to be more inelastic in the short run than in the long run.
Which of the following would not shift the demand curve for mp3 players?
a. a decrease in the price of mp3 players
b. a fad that makes mp3 players more popular among 12-25 year olds
c. an increase in the price of digital music downloads, a complement for mp3 players
d. a decrease in the price of satellite radio, a substitute for mp3 players
Consider three imaginary countries. In Mainland, saving amounts to $4,000 and
consumption amounts to $8,000; in Upland, saving amounts to $2,000 and consumption
amounts to $15,000; and in Lowland, saving amounts to $6,000 and consumption
amounts to $11,000. The saving rate is
a. higher in Mainland than in Lowland, and it is higher in Lowland than in Upland.
b. higher in Lowland than in Mainland, and it is higher in Mainland than in Upland.
c. higher in Lowland than in Upland, and it is the same in Upland and Mainland.
d. higher in Mainland than in Upland, and it is the same in Mainland and Lowland.
In the past there have been violent protests against the World Bank and the World Trade
Organization. The protesters argued that these institutions promote free trade and also
encourage corporations in rich countries to invest in poor countries. The protesters
contended that these practices make rich countries richer and poor countries poorer. An
economist would
a. disagree with the protesters because these practices will help make both rich and poor
countries richer.
b. disagree with the protesters about free trade, but would agree with the protesters
about corporate investment.
c. disagree with the protesters about corporate investment, but would agree with the
protesters about free trade.
d. agree with the protesters.
It does not matter whether a tax is levied on the buyers or the sellers of a good because
a. sellers always bear the full burden of the tax.
b. buyers always bear the full burden of the tax.
c. buyers and sellers will share the burden of the tax.
d. None of the above is correct; the incidence of the tax does depend on whether the
buyers or the sellers are required to pay the tax.
One result of a tax, regardless of whether the tax is placed on the buyers or the sellers,
is that the
a. size of the market is unchanged.
b. price the seller effectively receives is higher.
c. supply curve for the good shifts upward by the amount of the tax.
d. tax reduces the welfare of both buyers and sellers.
Nastech Pharmaceuticals announced it has developed a nasal spray that would reduce
hunger cravings. Other things the same we would expect
a. the demand for existing shares of stock in this company to decrease, so the price
would fall.
b. the demand for existing shares of stock in this company to increase, so the price
would rise.
c. the supply of existing shares of stock in this company to decrease, so the price would
fall.
d. the supply of existing shares of stock in this company to increase, so the price would
rise.
Consider the market for new DVDs. If DVD players became cheaper, buyers expected
DVD prices to fall next year, used DVDs became more expensive, and DVD production
technology improved, then the equilibrium price of a new DVD would
a. rise.
b. fall.
c. stay the same.
d. could rise, fall, or remain unchanged.
Suppose that Thom experiences a greater loss in utility if he loses $50 than he would
gain in utility if he wins $50. This implies that Thom’s
a. marginal utility diminishes as wealth rises, so he must be risk averse.
b. marginal utility diminishes as wealth rises, but we can”t tell from this if he is risk
averse.
c. marginal utility increases as wealth rises, so he must be risk averse.
d. marginal utility increases as wealth rises, but we can”t tell from this if he is risk
averse.
According to the definitions of national saving and private saving, if Y, C, and G
remained the same, an increase in taxes would
a. raise both national saving and private saving.
b. raise national saving and reduce private saving.
c. leave national saving and private saving unchanged.
d. leave national saving unchanged and reduce private saving.
In 2009, U.S. GDP was almost
a. $3 trillion.
b. $7 trillion.
c. $10 trillion.
d. $14 trillion.
The Fed decreases reserves if it conducts open market
a. purchases or auctions term credit.
b. purchases but not if it auctions term credit
c. sales or auctions term credit
d. sales but not if it auctions term credit
At the end of 2010, the government had a debt of about $9.4 trillion. If during 2011 real
GDP were to rise 3.2% and inflation were 1.6%, what is the largest deficit the
government could have run without raising the debt-to-GDP ratio?
a. about $150.4 billion
b. about $188.0 billion
c. about $451.2 billion
d. about $481.3 billion