1) The Laffer Curve indicates that lower tax rates will increase output.
2) Supply-side economists contend that aggregate supply is the relevant policy factor in
influencing the price level and real output in an economy.
3) Prices tend to be sticky partially because sellers know that consumers prefer stable
prices.
4) Pure competition results in a lower price but identical output level compared to those
in monopolistic competition.
5) When people change their decision just because the context of the given information
is changed, we call that the framing effect.
6) A demand shock occurs when large numbers of consumers unexpectedly reduce their
purchases of goods and services.
7) Increasing investment in the present means forgoing future consumption.
8) In the expenditures approach, transfer payments such as unemployment
compensation are included in the G component of GDP.
9) Agricultural price support programs result in consumers paying lower prices for the
product.
10) In a command economy, the head of each household makes the fundamental
economic choices such as what to produce and how to produce output.
11) Index funds consistently beat actively managed funds because actively managed
funds incur greater management costs.
12) Both collusive and noncollusive oligopoly models suggest that price changes will
be relatively infrequent in these types of industries.
13) Which of the following is a primary concern of social regulation?
A.Price fixing
B.Per se violation
C.Product design
D.Industry concentration
14) The conduct of monetary policy in the United States is the main responsibility of
the:
A.U.S. Treasury
B.Federal Reserve System
C.Office of Management and Budget
D.Bureau of Economic Analysis
15) For any given financial asset, risk levels and average expected rates of return are:
A.independent of each other.
B.negatively related because assets with higher average expected rates of return sell for
higher prices, which are inversely related to risk.
C.positively related because both are inversely related to the rate of inflation.
D.positively related because investors must be compensated for taking greater risks.
16) A price-discriminating monopolist will follow a system where:
A.Buyers with inelastic demand are charged higher prices than buyers with elastic
demand
B.Buyers with inelastic demand are charged lower prices than buyers with elastic
demand
C.All buyers are charged the same price regardless of their elasticity of demand
D.The price of the product is held the same even if the demand changes
17) The recurrent ups and downs in the level of economic activity extending over
several years are referred to as:
A.Economic phases
B.Business startups
C.Business cycles
D.Noncyclical fluctuations
18) George buys an antique car for $20,000 and sells it five years later for just over
$24,000. George’s per-year rate of return is:
A.20 percent.
B.12 percent.
C.10 percent.
D.4 percent.
19) Technological advance is a three-step process of:
A.Product development, production, and marketing
B.Creative destruction, start-ups, and patenting
C.Breakthrough, consolidation, and distribution
D.Invention, innovation, and diffusion
20) Which of the following statements is true about health care costs in the United
States?
A.Costs have risen because increases in the price of health care have more than offset
reductions in the quantity of health care provided.
B.Costs have risen because increases in the quantity of care provided have more than
offset price reductions realized through economies of scale.
C.Costs have risen because both the price of health care and the quantity provided have
risen.
D.Costs have remained relatively stable as price increases have been largely offset by
reductions in the quantity provided.
21) The benefits-received principle of taxation is:
A.The basis for the gasoline tax
B.Easy to apply because benefits received are conveniently measurable
C.Applied in income-redistribution programs
D.The principle behind the income tax system
22) Which of the following statements is correct?
A.Saving is high in less developed nations because the opportunities for consumption
are limited
B.For developing nations, the annual rate of population increase is about 5 percent
C.Most of the labor forces of developing nations are engaged in light industrial
production
D.Investment is low in developing nations, making it difficult to increase productivity
and incomes
23) If a 10 percent increase in the price of one good results in no change in the quantity
demanded of another good, then it can be concluded that the two goods are:
A.Complementary goods
B.Substitute goods
C.Independent goods
D.Normal goods
24) Answer the question on the basis of the following cost data:
Refer to the data. The profit-maximizing output for this firm:
A.is 3
B.is 4
C.is 5
D.cannot be determined from the information given.
25) To stabilize the economy, monetarists and rational-expectations economists:
A.Would like a monetary rule to be adopted
B.Would like to see coordination failures eliminated
C.Recommend the use of discretionary fiscal policy
D.Recommend the use of discretionary monetary policy
26) The imposition of a tariff on a product is least likely to result in a(n):
A.Increase in the efficiency in the domestic industry producing the product
B.Increase in the price of the product
C.Decrease in the quantity of imports
D.Decrease in the real incomes of workers in other industries
27) The functions of money are to serve as a:
A.Resource allocator, method for accounting, and means of income distribution
B.Unit of account, store of value, and medium of exchange
C.Determinant of consumption, investment, and government spending
D.Factor of production, exchange, and aggregate supply
28) The following factors have boosted farm income per farm household in the U.S.,
except:
A.Consolidation of farms
B.Outmigration from farming
C.Stronger or appreciating dollar
D.Significant government subsidies
29) Explain the two popular opinions held by economists on how to improve the
economy.
30) Use marginal-utility analysis to explain why the growing popularity of iPads over
laptop and desktop computers.
31) Explain how the relative magnitudes of changes in supply and demand can affect
equilibrium price and quantity, if supply and demand change simultaneously.
32)
33) Can ticket ‘scalping” be justified? Explain using economic analysis.