Economists who believe the recent productivity acceleration may be permanent claim
that the above-normal economic growth in the United States between 1995 and 2009
was caused by:
A. increases in the rate of personal saving.
B. increased entrepreneurial activity, application of information technology, and global
competition.
C. rising federal budget surpluses that reduced real interest rates.
D. expansionary monetary policy.
If a Japanese importer could buy $1000 U.S. for 122,000 yen, the rate of exchange for
one dollar would be:
A. 112 yen.
B. 122 yen.
C. 1220 yen.
D. 12,200 yen.
Answer the next question based on the following balance sheet for the First National
Bank. Assume the reserve ratio is 15 percent.
Refer to the above data. This commercial bank has excess reserves of:
A. $15,000.
B. $18,000.
C. $27,000.
D. $32,000.
A characteristic of the market system is:
A. frequent use of price controls.
B. frequent use of barter.
C. extensive use of capital goods.
D. low interest rates.
The price of gold is often volatile because:
A. demand is relatively inelastic so changes in supply have a large effect on price.
B. supply is relatively elastic so changes in demand have a large effect on price.
C. demand is relatively elastic so changes in supply have a large effect on price.
D. supply is relatively inelastic so changes in demand have a large effect on price.
Marginal cost:
A. equals both average variable cost and average total cost at their respective
minimums.
B. is the difference between total cost and total variable cost.
C. rises for a time but then begins to decline when diminishing returns set in.
D. declines continuously as output increases.
The opportunity cost of a new national park is the:
A. alternative uses for the land and funding for the park.
B. cost of constructing park buildings and highways to get to it.
C. cost of hiring staff and park rangers to provide services for visitors.
D. increased pollution to the wildlife habitat at the park.
If the Fed sells government securities to the public in the open market:
A. the Fed gives the securities to the public; the public pays for the securities by writing
checks that when cleared will increase commercial bank reserves at the Fed.
B. the Fed gives the securities to the public; the public pays for the securities by writing
checks that when cleared will decrease commercial bank reserves at the Fed.
C. the public gives the securities to the Fed; the Fed pays for the securities by check,
which when deposited at commercial banks will increase their reserves at the Fed.
D. the public gives the securities to the Fed; the Fed pays for the securities by check,
which when deposited at commercial banks will decrease their reserves at the Fed.
Refer to the above graph. It shows a profit-maximizing, purely competitive firm
operating in the short run. Which area in the graph represents the amount the firm can
save by continuing to produce in the short run rather than closing down immediately?
A. 0beg
B. 0cdg
C. acdf
D. abef
Since 1970, the distribution of personal income in the United States has:
A. moved toward greater inequality.
B. moved toward greater equality.
C. remained about the same.
D. fluctuated considerably.
Which will NOT increase the average productivity of labor?
A. An increase in the stock of real capital.
B. Improvements in the education and health of the labor force.
C. Technological progress as reflected in more efficient capital goods.
D. An increase in the size of the labor force.
The level of employment in the labor market shown above will be:
A. A.
B. B.
C. C.
D. D.
The table shows the aggregate demand and aggregate supply schedule for a
hypothetical economy.
Refer to the above table. The equilibrium price level and quantity of real domestic
output will be:
A. 200 and $5000.
B. 200 and $6000.
C. 250 and $7000.
D. 300 and $8000.
Which event would most likely increase aggregate demand?
A. A depreciation of the dollar.
B. An appreciation of the dollar.
C. A decrease in the national incomes in foreign nations.
D. A decrease in the price level that results in a foreign purchases effect.
The table below shows cost data for a firm that is selling in a purely competitive
market.
Refer to the above table. If the market price for the firm’s product is $180, the
competitive firm will produce:
A. 6 units at an economic profit of $100.
B. 6 units at an economic profit of $120.
C. 7 units at an economic profit of $238.
D. 7 units at an economic profit of $278.
The industry represented by the graph above where S1 and S2 are short-run supply
curves, D1 and D2 are short-run demand curves, and LRS is the long-run supply curve
can be said to be:
A. a constant-cost industry.
B. an average-cost industry.
C. a decreasing-cost industry.
D. an increasing-cost industry.
An expected decline in the prices of consumer goods will:
A. decrease aggregate demand.
B. increase the quantity of real domestic output demanded.
C. increase aggregate demand.
D. decrease the quantity of real domestic output demanded.
In considering yen and dollars, when the dollar rate of exchange for the yen rises:
A. the yen rate of exchange for the dollar will fall.
B. the yen rate of exchange for the dollar will also rise.
C. the yen rate of exchange for the dollar may either fall or rise.
D. U.S. net exports to Japan will fall.
Cuba is a command economy that suffered decline in economic growth because of a cut
in support from the former Soviet Union when it collapsed. As a consequence, Cuba:
A. experienced a shift outward in its production possibilities curve.
B. experienced a shift inward in its production possibilities curve.
C. moved along its existing production possibilities curve.
D. went to a point inside its production possibilities curve.
A union composed of all workers in a given plant or industry is called a(n):
A. closed shop.
B. craft union.
C. monopsony union.
D. industrial union.
What function is money serving when you take it on a trip and keep it in your wallet or
purse in case you need it?
A. A flow of funds.
B. A unit of account.
C. A store of value.
D. A medium of exchange.
When an economy is at full employment and full production, more of any one product:
A. cannot be produced because there is full production.
B. can be produced only if there is a general decrease in prices.
C. can be produced only if there is less production of some other products.
D. cannot be produced unless private enterprise does so rather than government.
The percentage change in one’s real income can be approximated by:
A. dividing real income by the price level, expressed as an index number.
B. dividing the price level, expressed as an index number, by nominal income.
C. the percentage change in price level minus the percentage change in nominal
income.
D. the percentage change in nominal income minus the percentage change in the price
level.
Discretionary fiscal policy refers to:
A. any change in government spending or taxes that destabilizes the economy.
B. the authority that the president has to change personal income tax rates.
C. changes in taxes and government expenditures made by Congress to stabilize the
economy.
D. changes in taxes and transfers that occur as GDP changes.
The diagonal line in a Lorenz curve represents perfect:
A. inequality in the distribution of personal income.
B. equality in the distribution of personal income.
C. inequality in factor shares of personal income.
D. equality in factor shares of personal income.
The following are national income account data for a hypothetical economy in billions
of dollars: government purchases ($940), personal consumption expenditures ($4920),
imports ($170), exports ($133), and gross private domestic investment ($640). What is
GDP in this economy?
A. $6463 billion.
B. $6500 billion.
C. $6537 billion.
D. $6633 billion.
Refer to the above graph, in which Dt is the transactions demand for money, Dm is the
total demand for money, and Sm is the supply of money. If the money market is in
equilibrium at a 6 percent rate of interest and the money supply increases, then Sm2 will
shift to:
A. Sm3 and the interest rate will be 4 percent.
B. Sm3 and the interest rate will be 8 percent.
C. Sm1 and the interest rate will be 8 percent.
D. Sm1 and the interest rate will be 4 percent.
In long-run equilibrium in a monopolistically competitive industry:
A. P = minimum AC.
B. P > minimum AC.
C. P = MC.
D. P < MC.
Refer to the above graph of the representative firm in monopolistic competition. The
intersection of marginal cost and average total cost is represented by point:
A. a.
B. b.
C. c.
D. d.
Which is best considered a supply factor for long-run economic growth?
A. Government spending.
B. The stock of capital goods.
C. Full employment of resources.
D. Personal consumption expenditures.