Most economists agree that ______ are the single most important source of productivity
improvements.
A. increases in human capital
B. increases in physical capital
C. technological advances
D. discoveries of natural resources
What might cause a demand function to shift to the right?
A. An increase in the price of a substitute.
B. An increase in the product’s own price.
C. An increase in the price of a complement.
D. A decrease in the price of a substitute.
The impact of monetary policy through exchange rates tends to ______ the impact of
monetary policy through real interest rates.
A. reinforce
B. contradict
C. totally negate
D. be exactly the same as
At his current level of consumption, Cameron get 3 times more marginal utility from an
additional game of pinball than from an additional game of ping pong. If the price of a
ping pong game is $0.50, then he is maximizing utility if the price of a pinball game is:
A. $1.00
B. $1.50
C. $2.00
D. $3.00
If a nation restricts imports, it will:
A. benefit each individual citizen in that nation.
B. increase the total value of goods and services produced in that nation.
C. decrease the total value of goods and services produced in that nation.
D. harm each individual citizen in that nation.
The difference between the price a seller actually receives for a good and the seller’s
reservation price is:
A. producer surplus.
B. profit.
C. variable cost.
D. consumer surplus.
Refer to the figure below. If the Federal Reserve wants to raise the interest rate to 7%, it
must ______ the money supply to _____.
A. increase; 300
B. decrease; 300
C. increase; 900
D. increase; 700
GDP can be measured as each of the following except:
A. the market value of production.
B. total expenditure on final goods and services.
C. incomes of capital and labor.
D. total business revenues.
Data on after-tax income and consumption spending for the Adam Smith family are
given below:
Based on these data, the Adam Smith family has a marginal propensity to consume
equal to:
A. 0.9.
B. 0.8.
C. 0.75.
D. 0.6.
In the United States the real wages of the least-skilled, least educated workers have
______ and the wages of best-educated, highest skilled workers have ______.
A. increased; increased
B. declined; increased
C. increased; declined
D. declined; remained constant
Refer to the figure below. Let εX denote the price elasticity of demand at point X.
Which of the following describes the relationship between εA, εB and εC?
A. εA> εC> εB
B. εA> εB> εC
C. εC> εB> εA
D. εB> εC> εA
Who of the following would be considered a discouraged worker?
A. Ray wants to work forty hours per week, but can only find work for twenty hours per
week.
B. Anna Marie has been looking for a job every day for the last month, but has not been
hired.
C. Frank would like to work, but has not looked for work because he believes no jobs
are available.
D. Melissa has a Ph.D. in physics, but is currently employed full time driving a taxi.
If the Federal Reserve wants to increase the money supply, it should:
A. increase reserve requirements.
B. increase the discount rate.
C. conduct open-market purchases.
D. increase the interest that it pays on reserves.
Suppose that this graph describes the current labor market for high school teachers:
Why might the supply curvein this market shift to the left?
A. Distance learning and computer technology replace human teachers.
B. Women enter the workforce in greater numbers.
C. Immigration by families with children increases the need for teachers.
D. More attractive employment opportunities become available in other professions.
The reason the marginal benefit of information curve is downward sloping is because:
A. some information is useless.
B. most information is useless.
C. information adds less and less benefit as more of it is acquired.
D. there is only so much to learn about a product.
If the bank agrees to make a loan at a 7% interest rate and the inflation rate is 3%, then
4% is the ______ rate.
A. nominal interest
B. real interest
C. hyperinflation
D. disinflation
Assume the demand for sugar decreases while the supply of sugar increases. Which of
the following outcomes is certain to occur?
A. The equilibrium price of sugar will rise.
B. The equilibrium quantity of sugar will rise.
C. The equilibrium price of sugar will fall.
D. The equilibrium quantity of sugar will fall.
According to the textbook, the percentage of gross domestic product devoted to
healthcare between the years 1940 and 2013:
A. declined from 4% to less than 2%.
B. increased from 4% to about 6%.
C. increased from 4% to more than 17%.
D. increased from 4% to more than 40%.
Suppose that the equilibrium price of rice falls and the equilibrium quantity falls. Which
of the following best fits the observed data?
A. An increase in demand with supply constant.
B. An increase in demand coupled with a decrease in supply.
C. An increase in demand coupled with an increase in supply.
D. A decrease in demand with supply constant.
The tendency for consumers to purchase more of a good or service as its price falls is
captured by:
A. the law of supply.
B. the law of increasing cost.
C. the Low-Hanging Fruit Principle.
D. the law of demand.
First-dollar insurance coverage means that:
A. most of the insured’s expenses are covered.
B. some of the insured’s expenses are covered.
C. all of the insured’s expenses are covered.
D. the first 10% of the insured’s expenses are covered.
If voters A, B, and C have the following demand curves for a public library Pa = 5 – Q,
Pb = 10 – 2Q, and Pc = 15 – 3Q, then social demand for a public library is:
A. P = 6 – 30Q.
B. P = 15 – Q.
C. P = 30 – 3Q.
D. P = 30 – 6Q.
Changes in taxes and transfers affect planned spending:
A. only when there is an expansionary gap.
B. autonomously.
C. directly, by changing induced expenditures.
D. indirectly, by changing disposable income and, consequently, consumption.
When new technologies are applied to the production and distribution of goods and
services:
A. scarcity is eliminated.
B. diminishing returns to capital no longer hold.
C. diminishing returns to capital still hold.
D. average labor productivity decreases.
To prevent people paying a higher percentage of their income in taxes even when their
real incomes have not changed, Congress:
A. implemented a flat tax.
B. reduced the capital gains tax.
C. indexed the income tax brackets to the CPI.
D. deflated the income tax brackets to the CPI.
Smith and Jones comprise a two-person economy. Their hourly rates of production are
shown below.
If Smith and Jones are dividing their time efficiently and producing fewer than 10
computers and more than 120 calculators per hour, then Smith will ______ and Jones
will ______.
A. split his time between computers and calculators; produce only calculators
B. produce only calculators; split his time between computers and calculators
C. produce only calculators; produce only computers
D. produce only computers; produce only calculators
Net capital inflows equal:
A. capital inflows minus capital outflows.
B. capital outflows minus capital inflows.
C. international production.
D. domestic production.
In the basic Keynesian model, a decline in autonomous spending:
A. reduces short-run equilibrium output.
B. increases short-run equilibrium output.
C. reduces potential output.
D. increases potential output.
If the demand for computers shifts to the right as consumers’ incomes rise, computers
are
A. inferior goods.
B. complement goods.
C. normal goods.
D. substitute goods.
Small differences in annual growth rates of real GDP generate large differences in real
GDP over time because of the:
A. importance of average labor productivity.
B. power of compound interest.
C. diminishing returns to capital.
D. limits of economic growth.