1) As a result of the Great Recession of 2007-2009, illegal immigration to the United
States:
A.has increased dramatically.
B.fell significantly during the recession but has increased since the recession and the
illegal immigrant population is growing significantly again.
C.illegal immigration to the United States fell significantly and the net flow of illegal
immigrants following the recession has been close to zero.
D.illegal immigration to the United States fell significantly, and now there is a dramatic
backflow that has the total number of illegal immigrants in the United States falling.
2) According to the purchasing power parity theory, the exchange rate would eventually
adjust such that they equalize the various:
A.Currencies’ values in terms of goods and services
B.Inflation rates in the trading nations
C.Interest rates in the trading nations
D.Supply and demand in the foreign exchange markets
3)
Refer to the figure in which S is the before-tax supply curve and St is the supply curve
after an excise tax is imposed. The efficiency loss of this tax will be area:
A.ABCE.
B.ABCE + ECF.
C.0AEG.
D.ECF.
4) Suppose the world economy is composed of just two countries: Italy and Greece.
Each can produce steel or chemicals, but at different levels of economic efficiency. The
production possibilities curves for the two countries are shown in the graphs below.
Refer to the graphs and information above. The assumption made about the domestic
production opportunity costs in both countries is that they are:
A.Constant
B.Variable
C.Increasing
D.Decreasing
5) The graph below shows the supply and demand curves for dollars in the pound/dollar
market.
Refer to the graph above. Assume that D1 and S1 are the initial demand for and supply
of dollars. Suppose that Britain’s demand for dollars increases from D1 to D2. If the
British government wishes to fix the exchange rate at the initial level, then it would be
faced with a problem of:
A.Deteriorating terms of trade
B.Rationing LM dollars among British importers who would like to acquire LN dollars
C.A rise in the pound price of dollars
D.Rationing LN dollars among British importers who would like to acquire LM dollars
6) Answer the question on the basis of the following table showing market shares of
firms in hypothetical industries. Assume these are distinct industries with no
buyer-seller relationships or competition among them.
Refer to the table. A merger between Firm 2 and Firm 3 in Alpha would be a:
A.vertical merger.
B.horizontal merger.
C.diagonal merger.
D.conglomerate merger.
7) America Online’s cost of delivering Internet access to each additional user has fallen
over time because:
A.Of constant returns to scale
B.Of minimum efficient scale
C.Of economies of scale
D.It is a natural monopoly
8) The plus items below are “export-type” entries and the minus items are “import-type”
entries in the balance of payments for the hypothetical country of Zippo.
Refer to the given information. The current account items for Zippo are:
A.1, 2, 3, and 4
B.1, 3, 4, 5, 7, and 9
C.6 and 8
D.1, 2, 4, 7, and 9
9)
Refer to the diagram in which S is the market supply curve and S1 is a supply curve
comprising all costs of production, including external costs. Assume that the number of
people affected by these external costs is large. Without government interference, this
market will reach:
A.an optimal allocation of society’s resources.
B.an underallocation of resources to this product.
C.an overallocation of resources to this product.
D.a higher price than is consistent with an optimal allocation of resources.
10)
Refer to the above graph for a profit-maximizing monopolist. The firm will produce the
quantity:
A.0V
B.0Y
C.0T
D.0X
11) If the demand curve for product B shifts to the right as the price of product A
declines, then:
A.both A and B are inferior goods.
B.A is a superior good and B is an inferior good.
C.A is an inferior good and B is a superior good.
D.A and B are complementary goods.
12) Assume that health insurance pays three-fourths of the cost of health care. Under
this type of system, there will be allocative:
A.Efficiency because consumers pay a price below market equilibrium and receive a
quantity at which the marginal cost to society equals the marginal benefit
B.Efficiency because consumers pay a price below market equilibrium and receive a
quantity at which the marginal benefit to society exceeds the marginal cost
C.Inefficiency because consumers pay a price below market equilibrium and receive a
quantity at which the marginal cost to society exceeds the marginal benefit
D.Inefficiency because consumers pay a price above market equilibrium and receive a
quantity at which the marginal benefit to society exceeds the marginal cost
13)
Refer to the graph above. At its equilibrium level of output, this monopolist earns:
A.Positive economic profits
B.Negative economic profits
C.Zero economic profits
D.Zero revenues
14) Which best expresses the law of diminishing marginal utility?
A.The more of a product is consumed, the smaller is the total utility from the product
B.The less of a product is consumed, the greater is the marginal utility of the product
C.The more of a product is consumed, the greater is the total utility from the product
D.The less of a product consumed, the smaller is marginal utility of the product
15) The United States’ current account deficit reached a new high in:
A.2006.
B.2007.
C.2008.
D.2009.