Identify whether each of the following transactions will take place in the factor market
or in the product market:
a. Shondra buys a Harley-Davidson Softail motorcycle.
b. Aimee works 20 hours a week at a grocery store.
c. Gustavo sells a warehouse to a produce delivery company.
d. Ocean Spray increases employment at its Middleboro, Massachusetts plant.
Suppose the United States decides to go back on the gold standard. This should
A) decrease the Federal Reserve’s ability to pursue active monetary policy.
B) increase the effectiveness of contractionary monetary policy.
C) increase the effectiveness of expansionary monetary policy.
D) improve the Federal Reserve’s ability to target inflation.
What is the “reverse causality” problem in determining cause and effect?
A) It is a problem that occurs when one concludes that a change in variable X caused a
change in variable Y when in actual fact, it is a change in variable Z that caused a
change in variable Y.
B) It is a problem that occurs when one observes that a change in variable X caused a
change in variable Y which caused a change in variable Z and concludes that a change
in variable X caused a change in variable Z.
C) It is a problem that occurs when one concludes that a change in variable X caused a
change in variable Y when in actual fact, it is a change in variable Y that caused a
change in variable X.
D) It is a problem that arises when two variables are inter-connected so that a change in
variable X causes a change in variable Y, and a change in variable Y causes a change in
variable X.
Which of the following statements describes the experiences of the Whirlpool
Corporation since it was established in 1911?
A) strong uninterrupted growth in demand
B) long-run growth interrupted by periods of business cycle recession
C) little or no growth in the long run, and unaffected by the business cycle
D) little or no growth in the long run, but very vulnerable to the business cycle
If real GDP per capita in the United States is $8,000 in 2013, and if real GDP per capita
is $12,000 in 2023, what is the total percent change in the growth rate of GDP per
capita between 2013 and 2023?
A) 3.33%
B) 5%
C) 33%
D) 50%
In the United States in 2012, the percentage of firms that employed more than 200
workers and did not offer health insurance as a fringe benefit to the workers was about
A) 2%.
B) 29%.
C) 44%.
D) 98%.
The price of ________ in terms of ________ is referred to as the real exchange rate.
A) foreign goods; foreign services
B) domestic goods; the domestic currency
C) domestic goods; domestic services
D) domestic goods; foreign goods
The interest rate that banks charge other banks for overnight loans is the
A) prime rate.
B) discount rate.
C) federal funds rate.
D) Treasury bill rate.
In 1986, an Apple IIe computer with 65 kilobytes of memory cost around $1,500.
Today, a $1,500 iMac computer (also made by Apple) comes with 8 gigabytes of
memory. This illustrates the potential for what kind of bias in CPI calculations?
A) new product bias
B) increase in quality bias
C) substitution bias
D) outlet bias
If the U.S. dollar decreases in value relative to other currencies, how does this affect the
aggregate demand curve?
A) This will move the economy up along a stationary aggregate demand curve.
B) This will move the economy down along a stationary aggregate demand curve.
C) This will shift the aggregate demand curve to the left.
D) This will shift the aggregate demand curve to the right.
In the real world we don’t observe countries completely specializing in the production
of goods for which they have a comparative advantage. All of the following are reasons
for this except
A) not all goods and services are traded internationally.
B) some countries have more resources than other countries.
C) tastes for many traded goods are different in many countries because of
globalization.
D) production of most goods involves increasing opportunity costs.
In October 2008, Congress passed the Troubled Asset Relief Program (TARP), under
which the Treasury provided ________ to banks in exchange for ________.
A) bonds; cash
B) lines of credit; loan guarantees
C) funds; stock
D) financial advice; promises to expand mortgage lending
Suppose the U.S. government encouraged new teachers to take jobs in underperforming
schools by paying the new teachers a $20,000 bonus. These teachers would be
exemplifying the economic idea that
A) people are rational.
B) people respond to economic incentives.
C) optimal decisions are made at the margin.
D) equity is more important than efficiency.
Refer to Table 2-9. What is Japan’s opportunity cost of producing one wristwatch?
A) 0.04 pounds of rice
B) 4 pounds of rice
C) 25 pounds of rice
D) 40 pounds of rice
The demand for loanable funds is downward sloping because the ________ the interest
rate, the ________ the number of profitable investment projects a firm can undertake,
and the ________ the quantity demanded of loanable funds.
A) lower; greater; greater
B) lower; smaller; greater
C) greater; greater; greater
D) greater; smaller; greater
Consider the following economic agents:
a. the government
b. consumers
c. producers
Who, in a modern mixed economy, decides what goods and services will be produced
with the scarce resources available in that economy?
A) the government
B) producers
C) consumers
D) consumers and producers
E) the government, consumers and producers
The recession of 2007-2009 began in ________, with the end of the economic
expansion that had begun in ________.
A) January 2007; April 1984
B) December 2007; November 2001
C) July 2007; August 2006
D) March 2007; March 1995
Which of the following is an advantage of starting a new business as a proprietorship?
A) The owner has limited personal liability.
B) A proprietorship has few government rules and regulations to comply with.
C) Business profits are not taxed.
D) A proprietorship can easily attain additional funding.
A consumer price index of 160 in 1996 with a base year of 1982-1984 would mean that
the cost of the market basket
A) equaled $160 in 1996.
B) equaled $160 in 1983.
C) rose 160% from the cost of the market basket in the base year.
D) rose 60% from the cost of the market basket in the base year.
Figure 4-3
Figure 4-3 shows the market for granola. The market is initially in equilibrium at a price
of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order
to raise the price to P2.
Refer to Figure 4-3. At the equilibrium price of P1, consumers are willing to buy the
Q1pounds of granola. Is this an economically efficient quantity?
A) No, the marginal benefit of the last unit (Q1) exceeds the marginal cost of that last
unit.
B) Yes, because marginal cost is zero at the price of P1.
C) Yes, because P1 is the price where marginal benefit equals marginal cost.
D) No, the marginal cost of the last unit (Q1) exceeds the marginal benefit of the last
unit.