1) If the cyclically-adjusted budget has a zero deficit but the actual budget has a $100
billion deficit, then that means that the government is pursuing an expansionary fiscal
policy.
2) College graduates who dislike business risk will mostly seek to be hired by firms as
labor, rather than starting their own firms.
3) Changes in business inventories are included as part of investment in the national
income accounts.
4) Economists widely fear that the world will run out of energy in the next century.
5) Usury laws will result in a shortage of loanable funds and nonmarket rationing in
credit markets.
6) The Great Recession of 2007-2009 caused a basic change in consumer behavior,
shifting the saving schedule up.
7) In the aggregate expenditures model of a private closed economy, we analyze a
consumption schedule and an investment schedule both of which indicate that as
income increases then consumption and investment will increase.
8) When somebody buys an insurance policy, that person is seeking to transfer risk
away from herself and pass it on to the insurance company.
9) The reason why the long-run supply curve for a purely competitive industry may be
upward-sloping is because of diminishing marginal returns.
10) The monetary multiplier can also be called the spending multiplier.
11) The demand curve of a monopolistically competitive producer is less elastic than
that of a purely competitive producer.
12)
The monopolistically competitive firm shown in the figure:
A.is in long-run equilibrium.
B.might realize an economic profit or a loss, depending on its choice of output level.
C.cannot operate profitably in the short run.
D.can realize an economic profit.
13) Because the demand for agricultural products is price-inelastic, price support
programs tend to:
A.Increase farm income
B.Decrease farm income
C.Have no effect upon farm income
D.Cause farm incomes to fluctuate more than they would without such programs
14) In pure competition, price is determined where the industry:
A.Demand and supply curves intersect
B.Total cost is greater than total revenue
C.Demand intersects the individual firm’s marginal cost curve
D.Average total cost equals total variable cost
15) Explain the utility maximizing rule for two products in words and using algebra.
16) If product prices were stated in terms of tobacco leaves, then tobacco leaves would
be functioning primarily as:
A.Fiat money
B.Legal tender
C.A store of value
D.A unit of account
17)
Refer to the above graph for a purely competitive firm in the short run. The firm would
suffer losses if it operates at which of the following range of output?
A.0A
B.AB
C.BC
D.Any level below C
18) Suppose that the quantity of a certain type of farmland available is 400,000 acres,
and the demand for this land is given in the table below.
Refer to the above information and table. How much of the farmland will be rented?
A.200,000 acres
B.300,000 acres
C.400,000 acres
D.500,000 acres
19) The demographers predict that the worldwide total fertility rate will decline to one
birth per woman per lifetime. If this happens, then:
A.Each generation will be one-fourth as large as the previous one
B.Each generation will be half as large as the previous one
C.Each generation will be as large as the previous one
D.Each generation will be one half larger than the previous
20) A bilateral monopoly is a situation where a firm is:
A.A monopoly in its product market and is a monopsony in its labor market
B.The only employer of a resource and is acquiring that resource from a single supplier
C.One of only two firms that produce a particular product
D.The only buyer of a resource and also the only seller of a product
21)
Refer to the figures. Which figure(s) represent(s) a situation where prices are flexible?
A.A only.
B.B only.
C.Both A and B.
D.Neither A nor B.
22)
Refer to the graph above. Assume the economy is at the initial position of B2. It is
possible for the government to reduce the unemployment rate and move the economy to
C2 if:
A.Expected inflation remains at 4%
B.Expected inflation becomes 8%
C.Actual inflation remains at 4%
D.Actual inflation is at 12%
23) A decrease in wage rates in the United States will:
A.Decrease total wage income if labor demand is elastic
B.Increase total wage income if labor demand is inelastic
C.Increase total wage income if labor demand is elastic
D.Decrease total wage income regardless of the elasticity of labor demand
24) A market where there is only a single buyer is called a(n):
A.Monopoly
B.Monopsony
C.Oligopoly
D.Dominant firm
25) Data on total water use in the United States since 1950 show that it has:
A.Continually increased
B.Continually decreased
C.Increased and then leveled off
D.Decreased and then leveled off
26) The market system is an economic system that:
A.Produces more consumer goods than capital goods
B.Produces more capital goods than consumer goods
C.Gives private individuals the right to own resources used in production
D.Emphasizes the government’s power to control markets and direct economic activity
27) Discuss the explanations economists give for the slow recovery after the Great
Recession.
28) Use the graph below to show the effect of a discretionary increase in government
spending. Assume the economy is currently in an expansionary period. Discuss how
this effects the federal budget.
29) Assess the arguments for and against patents in terms of creative destruction.
30) Complete the following short-run cost table using the information provided.
31) Suppose your friend is currently a nursing major. She decides she wants to switch
her major to economics, but she would lose many of the college credits she has already
earned. Explain to her why the past college credits should not be figured into her
marginal benefit and marginal cost calculation.
32) Why might a country seek to protect an industry, even when the benefits are greatly
outweighed by the cost?
33) How has the European Union differed from the United States in the treatment of a
monopoly? Consider the treatment of Microsoft.
34) In the table below you will find a schedule of a firm’s fixed cost and variable cost.
Complete the table by computing total cost, average fixed cost, average variable cost,
average total cost, and marginal cost.
35) Discuss the political pressures associated with fiscal policy.
36) Explain the economic fallacy in the statement: “If the Jones family would just cut
up their credit cards and live within their means, they’d be better off. And if consumers
in this nation cut up their credit cards and lived within their means, the nation would be
better off.”