1) The many layers of the federal government in the United States:
A.lead to economic inefficiencies because of difficulty aggregating and conveying
information.
B.enhance government’s ability make effective decisions quickly.
C.better allow the invisible hand to direct government resources to their best uses.
D.improve accountability of government officials, thus leading to more efficient
policies.
2)
Refer to the production possibilities curve. At the onset of the Second World War, the
United States had large amounts of idle human and property resources. Its economic
adjustment from peacetime to wartime can best be described by the movement from
point:
A.c to point b.
B.b to point c.
C.a to point b.
D.c to point d.
3) Interest rates are the payments needed to entice individuals to:
A.Accept insurable risk
B.Accept uninsurable risk
C.Sacrifice their present consumption
D.Sacrifice their future consumption
4) Economists call the pursuit of a transfer of wealth through government at someone
else’s expense:
A.the paradox of voting.
B.adverse selection.
C.rent-seeking behavior.
D.the benefits-received principle.
5) If a nation’s goods exports are $55 billion, while its goods imports are $50 billion, we
can conclude with certainty that this nation has a:
A.balance of trade (goods) surplus.
B.balance of payments surplus.
C.positive balance on current account.
D.positive balance on goods and services.
6) For DVC per capita incomes to rise, birth rates must first be reduced. This statement
describes the:
A.human capital view of population growth.
B.traditional view of population growth.
C.capricious universe view.
D.demographic transition view of population growth.
7)
In the diagram, curves 1, 2, and 3 represent:
A.average variable cost, marginal cost, and average fixed cost respectively.
B.total variable cost, total fixed cost, and total cost respectively.
C.total fixed cost, total variable cost, and total cost respectively.
D.marginal product, average variable cost, and average total cost respectively.
8) Accounting profits are typically:
A.greater than economic profits because the former do not take explicit costs into
account.
B.equal to economic profits because accounting costs include all opportunity costs.
C.smaller than economic profits because the former do not take implicit costs into
account.
D.greater than economic profits because the former do not take implicit costs into
account.
9) Advertising can enhance economic efficiency when it:
A.increases brand loyalty.
B.raises entry barriers.
C.increases consumer awareness of substitute products.
D.boosts average total cost.
10)
Refer to the graph above, which shows a change in the demand for pounds from D to
D’. Under a system of flexible exchange rates, the:
A.Price of a pound will increase to $3
B.Price of a dollar will increase to 3 pounds
C.Shortage equal to ab would be met using international monetary reserves
D.Payment deficit will cause changes in domestic price and income levels, shifting
demand to the left, supply to the right, and reestablishing the original exchange rate
11) A producer’s minimum acceptable price for a particular unit of a good:
A.is the same for all units of the good.
B.will, for most units produced, equal the maximum that consumers are willing to pay
for the good.
C.equals the marginal cost of producing that particular unit.
D.must cover the wages, rent, and interest payments necessary to produce the good but
need not include profit.
12) The median-voter model indicates that political parties will:
A.Target only those voters who can be influenced by rent-seeking
B.Direct their work to voters who can be influenced by special interests
C.Campaign at one end of the distribution of voter sentiments
D.Try to appeal to the sentiments of the voter holding the middle position
13) The lowest quintile of households in the income distribution receives about:
A.2.4 percent of the total income.
B.3.2 percent of the total income.
C.8.4 percent of the total income.
D.10 percent of the total income.
14)
Refer to the diagram. At the profit-maximizing output, total revenue will be:
A.0AHE.
B.0BGE.
C.0CFE.
D.ABGE.
15) Answer the question on the basis of the following production possibilities tables for
two countries, Latalia and Trombonia:
Refer to the tables. If these two nations specialize on the basis of comparative
advantage:
A.Trombonia will produce beans and Latalia will produce pork.
B.Trombonia will produce both beans and pork.
C.Latalia will produce both beans and pork and Trombonia will produce neither.
D.Latalia will produce beans and Trombonia will produce pork.
16) Answer the next four questions on the basis of the following table, which shows the
rankings of the public goods by three voters: A, B, and C.
(a)What will be the choice between more police protection and more fire protection?
(b)What will be the choice between more schools and more police protection?
(c)What will be the choice between more fire protection and more schools?
(d)What do the rankings in the table indicate about choices made under majority rule?
17)
Which of the diagrams correctly portrays the demand (D) and marginal revenue (MR)
curves of a purely competitive seller?
A.A.
B.B.
C.C.
D.D.
18)
Refer to the diagram. A surplus of 160 units would be encountered if the price was:
A.$1.10, that is, $1.60 minus $.50.
B.$1.60.
C.$1.00.
D.$0.50.
19) The collective action problem refers to:
A.logrolling behavior that results in inefficient policies.
B.the tendency for legislatures to enact policies that are economically harmful.
C.the lack of political power of small groups of people.
D.difficulty in organizing and motivating large groups to achieve desired outcomes.