An in-kind transfer payment to the poor is
A. made out of kindness.
B. a cash payment.
C. a benefit in the form of a good or service.
D. less costly to provide compared to a cash payment.
If the money supply equals 1,000, velocity equals 5, and real GDP equals 2,500, then
the price level equals:
A. 2.
B. 2.5.
C. 5.
D. 5,000.
Suppose Erie Textiles can dispose of its waste “for free” by dumping it into a nearby
river. While the firm benefits from dumping waste into the river, the waste reduces the
fish and bird reproduction. This causes damage to local fishermen and bird watchers. At
a cost, Erie Textiles can filter out the toxins, in which case local fishermen and bird
watchers will not suffer any damage. The relevant gains (in thousands of dollars) and
losses for the three parties are listed below.
Refer to the information given above. When Erie Textiles operates with a filter, the total
daily gain (in thousands of dollars) by all three parties is _______.
A. $985
B. $600
C. $510
D. $475
Suppose a firm is collecting $1,700 in total revenues and the total costs of its variable
factors of production are $1,900 at its current level of output. One can predict that the
firm will
A. shut down.
B. raise its price.
C. earn a loss.
D. continue to operate.
The decision about the forms in which to hold one’s wealth is called the ______
decision.
A. Taylor
B. portfolio allocation
C. Fisher effect
D. life-cycle
When the inflation rate decreases, PAE ______, which in turn causes Y to ______
because of ______.
A. rises; rise; the income-expenditure multiplier
B. rises; fall; the income-expenditure multiplier
C. falls; rise; the wealth effect
D. falls; fall; the wealth effect
The inflation rate can be calculated as the percentage change in:
A. real GDP.
B. nominal GDP.
C. the Consumer Price Index.
D. theexchange rate.
If the nominal exchange rate is 4 Israeli shekels per U.S. dollar, and 0.178 Jordanian
dinars per Israeli shekel, then there are ______ Jordanian dinars per U.S. dollar.
A. 0.712
B. 0.045
C. 0.025
D. 5.618
A CPI that equals 1.34 in 2005 (when 2000 is the base year) means that:
A. prices in 2005 are 34 percent higher than in 2004.
B. the CPI equals $1.34 in 2005.
C. the inflation rate in 2005 is 134 percent.
D. the average level of prices is 34 percent higher in 2005 than in the base year.
If both supply and demand increase simultaneously, the new equilibrium price is
___________ and the new equilibrium quantity is _________________.
A. lower; lower
B. lower; indeterminate
C. indeterminate; higher
D. higher; indeterminate
Males major in engineering much more frequently than females. Starting salaries for
engineers (male or female) are very high. As a result, the observed wage gap for all
college grads is __________ than wage gaps in specific majors because of __________.
A. larger; employer discrimination
B. smaller; academic discrimination
C. larger; customer discrimination
D. larger; choices made by male and female students
Suppose that in most car collisions between cars of unequal size, the smaller car
sustains the most damage and its occupants suffer the most injury. In answering the
following question, assume that, on average, smaller cars generate less air pollution and
that every person in the economy drives at least one car.
Refer to the information above. Suppose the size of all cars increased by 25%.
Collisions between two cars would cause ______ and air pollution would ______.
A. less injury; increase
B. greater injury; increase
C. neither greater nor less injury; remain the same
D. neither greater nor less injury; increase
OPEC is an example of a:
A. monopsony.
B. cartel.
C. monopoly.
D. duopoly.
When dealing with pure public goods,
A. the government must always provide them.
B. private firms will always provide them.
C. the government frequently provides them although private firms provide some.
D. private firms provide nearly all of them and the government provides the few
remaining ones.
The following graph depicts demand.
Refer to the figure above. At point A, demand is:
A. price inelastic.
B. price elastic.
C. unitary elastic.
D. perfectly price elastic.
The economy of Omega operates according to Okun’s law. In Omega, the actual and the
natural rates of unemployment equal 5 percent, and real GDP equals $10 trillion. What
is potential GDP in Omega?
A. $9.0 trillion
B. $9.5 trillion
C. $10.0 trillion
D. $10.5 trillion
To the extent that households are target savers who save to reach a specific goal, an
increase in the interest rate ______ household saving and a decrease in the interest rate
______ household saving.
A. increases; decreases
B. decreases; increases
C. does not affect; increases
D. increases; does not affect
Refer to the figure above. When the demand is P1 = $30, how much profit is this
producer earning?
A. $500
B. $800
C. $1200
D. $1600
Refer to the table above. The marginal labor cost (extra labor cost) of the 4th employee
is:
A. $9,500.
B. $10,750.
C. $11,000.
D. $13,000.
An unemployment spell is a period during which:
A. the unemployment rate is less than 10 percent.
B. the unemployment rate exceeds 15 percent.
C. an unemployed individual leaves the labor force and then returns.
D. an individual is continuously unemployed.
Prior to January 2000, the demand for money increased as people anticipated Y2K
problems. If the Fed took no actions to offset this increase in money demand, then
nominal interest rates would _____.
A. increase
B. decrease
C. remain constant
D. equal the real interest rates
In reference to short-term economic fluctuations, the “peak” refers to:
A. a period in which the economy is growing at a rate significantly above normal.
B. the high point of economic activity prior to a downturn.
C. the low point of economic activity prior to a recovery.
D. a particularly strong and protracted expansion.
In competitive labor markets, ____ demand labor and ____ supply labor.
A. firms; labor unions
B. labor unions; firms
C. workers; firms
D. firms, workers
The following graph depicts demand.
Refer to the figure above. The price elasticity of demand at point A is:
A. 5/2.
B. 5/8.
C. 2/5.
D. 8/5.
The table below shows the payoffs to the running of negative and positive political ads
by two candidates. The payoffs are the percentage increase or decrease in the number of
voters willing to vote for the candidate as a result of the campaign styles.
Refer to the figure above. Given the payoff matrix, the Nash equilibrium will be that:
A. both political parties will run positive campaigns.
B. the Republicans will run a positive campaign and the Democrats a negative
campaign.
C. as long as one party runs a positive campaign, the other will, too. But as soon as one
party starts running a negative campaign the other will follow.
D. both political parties will run negative campaigns.
Which of the following would be classified as a final good?
A. New computer software sold to a computer manufacturer for installation in new
computers.
B. The services provided by lawyers to a computer manufacturer.
C. Computer chips sold to a computer manufacturer for installation in new computers.
D. A new computer sold to a business firm.
If Alex uses $800 from her checking account to pay her credit card balance, her wealth:
A. increases by $800.
B. decreases by $800.
C. increases by $1,600.
D. does not change.
Curly usually drives on the freeway to get to work, but this morning he heard on the
radio that there was a major accident causing a long traffic back-up at the first
downtown exit. So, Curly decided to drive on side streets to get to work. When Curly
started driving he noticed that:
A. more people than usual were taking the side streets downtown.
B. the side streets were about as crowded as they usually are.
C. fewer drivers were using the side streets than usual.
D. more people were getting on the freeway than usual.
Chris was the business manager for a real estate firm earning an annual salary of
$40,000. Then Chris decided to become a consultant. Chris hired an administrative
assistant at $15,000 per year and rents office space (utilities included) for $3,000 per
month. Chris earned $100,000 in total revenue the first year as a consultant.
In order for Chris to earn normal profit, accounting profit would have to be _______.
A. $51,000
B. $40,000
C. 0
D. $9,000
Refer to the figure above. Of the labeled points, ______________ are efficient.
A. only t and u
B. only x, y, and z
C. only w, x, y, z, and v
D. only w, x, y, z, v, and t