1) In 2008-2009, the U.S. economy lost 8 million jobs and saw the unemployment rate
rise from 4.6 percent to as high as 10.1 percent.
2) China’s GDP per person in 2011 was about one-third of U.S. GDP per person in the
same year.
3) The currency held in the vaults of commercial banks is included in the money supply
M1.
4) Gross private domestic investment can be divided into replacement investment and
net investment.
5) A bank has reserves of $30,000 and deposits of $120,000. If the reserve ratio is 10%,
then this bank can lend out a maximum of $12,000 in new loans.
6) Unfunded liabilities are one consequence of the preference for “clear benefits, hidden
costs” by politicians.
7) The percentage change in real income can be approximated by subtracting the
percentage change in the price level from the percentage change in nominal income.
8) With a fixed level of farm production, a given shift in demand for a crop will cause a:
A.Small price-change if demand is quite inelastic
B.More dramatic price-change if demand is quite elastic
C.More dramatic price-change if demand is quite inelastic
D.Similar amount of price-change regardless of whether demand is elastic or not
9)
Refer to the graph above. They suggest that the GDP price index during the period
shown was generally:
A.Constant
B.Decreasing
C.Increasing
D.Positive
10) Fixed costs faced by farmers typically include the following, except:
A.Family labor
B.Fertilizer
C.Property taxes
D.Interest and rent payments
11) About what percentage of health care spending in the U.S. is financed by private
health insurance?
A.15%
B.33%
C.50%
D.75%
12) What is the main problem with government guarantees that socialize losses and
privatize gains?
A.They encourage overly risky investments by insulating private investors from any
losses.
B.The investments that do occur never generate production of goods underproduced by
the private sector.
C.They discourage private investment in worthwhile projects.
D.They tend to benefit foreign companies at the expense of domestic firms.
13) Temporary shutdowns of firms are most widespread when:
A.total fixed costs are rising across the economy.
B.the economy experiences recession.
C.firms have the ability to set prices for their output.
D.wage levels are falling.
14) Assume a single firm in a purely competitive industry has variable costs as
indicated in the following table in column 2. Complete the table and answer the
questions.
(a)At a product price of $52, will this firm produce in the short run? Explain. What will
its profit or loss be?
(b)At a product price of $28, will this firm produce in the short run? Explain. What will
its profit or loss be?
(c)At a product price of $22, will this firm produce in the short run? Explain. What will
its profit or loss be?
(d)Complete the following short-run supply schedule for this firm.
Assume there are 500 identical firms in this industry, that they have identical cost data
as the firm above, and that the industry demand schedule is as follows:
(e)What will the equilibrium price be?
(f)What will the equilibrium output for each firm be?
(g)What will profit or loss be per unit?
(h)What will profit or loss be per firm?
15) The term “recession” describes a situation where:
A.inflation rates exceed normal levels.
B.output and living standards decline.
C.an economy’s ability to produce is destroyed.
D.government takes a less active role in economic matters.
16) A public good:
A.Generally results in substantial negative externalities
B.Can never be provided by a nongovernmental organization
C.Costs essentially nothing to produce and is thus provided by the government at a zero
price
D.Can’t be provided to one person without making it available to others as well
17) In the U.S., government subsidies for “alternative” energy sources have been have
been:
A.Hugely successful with minimal failures
B.The major reason for the nation’s reduced dependence on imported sources of energy
C.Receiving universal political support
D.Marred by costly failures and rendered moot by a sharp increase in conventional
energy supply
18) Answer the question on the basis of the following Census data.
Which of the given distributions is closest to describing the United States?
A.A.
B.B.
C.C.
D.D.
19) If an increase in the supply of a product in the market results in a decrease in price,
but no change in the quantity traded, then:
A.The price elasticity of supply is zero
B.The price elasticity of supply is infinite
C.The price elasticity of demand is unitary
D.The price elasticity of demand is zero
20) Mainstream economists support:
A.Adoption of a monetary rule for increases in the money supply
B.Elimination of efficiency wages and insider-outsider relationships
C.The requirement that the government annually balance its budget
D.The use of discretionary monetary and fiscal policy for achieving major economic
goals
21) The change in real GDP resulting from an initial change in spending can be
calculated by:
A.Dividing the multiplier by the initial change in spending
B.Dividing the initial change in spending by the multiplier
C.Multiplying the multiplier by the initial change in spending
D.Adding the initial change in spending to the multiplier
22) At long-run equilibrium in monopolistic competition, there is:
A.Allocative efficiency
B.Productive efficiency
C.Both allocative and productive efficiency
D.Neither allocative nor productive efficiency
23) Discuss the problem of clear benefits and hidden costs related to government
programs. Why can it result in inefficiency?
24) How is an indifference map like a topographic map?
25) Assume a firm has fixed costs of $80 and variable costs as indicated in the table
below. Complete the cost table.
26) How does the market for insurance promote economy growth and investment?
27)
28) What is financial economics? What are the most important investor preferences?
29) How does consumer choice differ from consumer sovereignty in a market system?
30) What are the two types of legal immigration in the United States?
31)