1) In terms of aggregate supply, the difference between the long run and the short run is
that in the long run:
A.the price level is variable.
B.employment is variable.
C.real output is variable.
D.nominal wages and other input prices are fully responsive to price-level changes.
2) (Consider This) Which of the following methods is used by farmers to “hedge”
against short-run price and output fluctuations?
A.Securing prices for their output in the futures market.
B.Purchasing crop revenue insurance to prevent against natural disasters.
C.Leasing land to other farmers in return for stable rent payments.
D.All of these risk-management techniques are used.
3) nominal gdp was $130 and $150 in years 1 and 2 respectively. real gdp was $100 and
$110 in years 1 and 2 respectively. on the basis of this information we can conclude
that:
a.the price level increased between years 1 and 2.
b.more intermediate goods were produced in year 1 than in year 2.
c.the increase in nominal gdp between years 1 and 2 understated the increase in
production which occurred.
4)
refer to the above data. the value for y is:
a.25
b.30
c.40
d.45
5)
Refer to the above diagram for the Federal funds market. If the Fed wants to raise the
Federal funds rate by one-half of a percentage point, it should:
A.act to increase reserves by $50 billion.
B.act to reduce reserves by $50 billion.
C.pursue an expansionary monetary policy.
D.buy bonds from banks and the public.
6)
refer to the above diagram. this firm will earn only a normal profit if product price is:
a.p1
b.p2
c.p3
d.p4
7) education levels and crime rates are inversely related. this suggests that education:
a.is not subject to the exclusion principle.
b.entails external benefits.
c.creates a free-rider problem.
d.should be produced in the private sector.
8) the united states devotes about ______ percent of its domestic output to health care.
a.2
b.5
c.13
d.16
9) We know with certainty that a consumer will buy a newly introduced product rather
than an existing product when the:
A.MU/P of the new product exceeds the MU/P of the existing product.
B.price of the new product is less than the price of the existing product.
C.MU of the new product is more than the MU of the existing product.
D.law of diminishing marginal utility applies to the existing product.
10) If the MPC is .50 and the equilibrium GDP is $40 billion below the
full-employment GDP, then the size of the recessionary expenditure gap is:
A.$40 billion.
B.$20 billion.
C.$60 billion.
D.$80 billion.
11) approximately what percentage of u.s. income was received by businesses (both
corporate and non-corporate) in 2007?
a.9%
b.14%
c.23%
d.32%
12) Which of the following actions by the Fed will increase commercial bank lending
potential?
A.Raising the reserve ratio.
B.Increasing the Federal funds rate target.
C.Expanding the amount of reserves available through the term auction facility.
D.Selling bonds to commercial banks and the public.
13) Which of the following includes only examples of industrially advanced nations
(IACs)?
A.the United States, Canada, and Mexico.
B.Pakistan, India, and China.
C.Japan, South Korea, and China.
D.Germany, Italy, and France.
14) In defining money as M1, economists exclude time deposits because:
A.the intrinsic value of time deposits is nil.
B.the purchasing power of time deposits is much less stable than that of checkable
deposits and currency.
C.they are not directly or immediately a medium of exchange.
D.they are not recognized by the Federal government as legal tender.
15) (consider this) in recent years:
a.unemployment rates in europe have been higher than in the united states.
b.the natural rate of unemployment in europe has fallen sharply.
c.europe has had strong economic growth and low unemployment rates.
d.european nations have greatly reduced their unemployment rates by reducing
minimum wages, welfare benefits, and government restrictions against firing workers.
16)
refer to the above diagram, in which solid arrows reflect real flows; broken arrows are
monetary flows. if the economy were in a serious recession, it would be most
appropriate for government to:
a.increase flows (3) and (7) and reduce flows (2) and (6).
b.decrease flows (3) and (7) and increase flows (2) and (6).
c.increase flows (2) and (3) and reduce flows (6) and (7).
d.increase all of the monetary flows.
17) which of the following cases best illustrates economic immigration?
a.sophia migrated to germany to rejoin her family.
b.julio migrated to australia to take a job paying three times what he earned at home.
c.nguyen migrated to the united states to escape religious persecution.
d.vladimir migrated to great britain to avoid political imprisonment.
18) For a firm selling its product in an imperfectly competitive market, the marginal
revenue product of labor can be found by:
A.adding marginal product to total product as one more unit of labor is employed.
B.adding marginal revenue to total product as one more unit of labor is employed.
C.multiplying marginal product by product price.
D.multiplying marginal product by marginal revenue.