What will happen in the artichoke market now if buyers expect higher artichoke prices
in the near future?
a. The demand for artichokes will increase.
b. The demand for artichokes will decrease.
c. The demand for artichokes will be unaffected.
d. The supply of artichokes will increase.
Index funds
a. typically have a higher rate of return and higher costs than managed mutual funds.
b. typically have a higher rate of return and lower costs than managed mutual funds.
c. typically have a lower rate of return and higher costs than managed mutual funds.
d. typically have a lower rate of return and lower costs than managed mutual funds.
A Mexican firm exchanges Pesos for U.S. dollars and then uses these dollars to
purchase corn from the U.S. This transaction
a. increases Mexican net capital outflow, and increases U.S. net exports.
b. increases Mexican net capital outflow, and decreases U.S. net exports.
c. decreases Mexican net capital outflow, and increases U.S. net exports.
d. decreases Mexican net capital outflow, and decreases U.S. net exports.
Imagine the U.S. economy is in long-run equilibrium. Then suppose the value of the
U.S. dollar increases. At the same time, people in the U.S. revise their expectations so
that the expected price level falls. We would expect that in the short-run
a. real GDP will rise and the price level might rise, fall, or stay the same.
b. real GDP will fall and the price level might rise, fall, or stay the same.
c. the price level will rise, and real GDP might rise, fall, or stay the same.
d. the price level will fall, and real GDP might rise, fall, or stay the same.
Disinflation is defined as a
a. zero rate of inflation.
b. constant rate of inflation.
c. reduction in the rate of inflation.
d. negative rate of inflation.
Both Bill and Mary produce t-shirts and hats. If Bill’s opportunity cost of 1 t-shirt is 4
hats and Mary’s opportunity cost of 1 t-shirt is 3 hats, then
a. Bill has a comparative advantage in the production of t-shirts.
b. Mary has a comparative advantage in the production of t-shirts.
c. Mary has a comparative advantage in the production of hats.
d. Bill has a comparative advantage in the production of both t-shirts and hats.
Which of the following events would increase producer surplus?
a. Sellers’ costs stay the same and the price of the good increases.
b. Sellers’ costs increase and the price of the good stays the same.
c. Sellers’ costs increase and the price of the good decreases.
d. All of the above are correct.
Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the
price of the good increases from $20 to $22?
a. Quilana
b. Wilbur
c. Ming-la
d. All three buyers experience the same loss of consumer surplus.
If outsiders had more say in union contracts then it is likely that union wages would be
a. higher so unemployment would be higher.
b. higher so unemployment would be lower.
c. lower so unemployment would be higher.
d. lower so unemployment would be lower.
The law of demand states that, other things equal, when the price of a good
a. falls, the demand for the good rises.
b. rises, the quantity demanded of the good rises.
c. rises, the demand for the good falls.
d. falls, the quantity demanded of the good rises.
The interest rate falls if
a. the price level falls or the money supply falls.
b. the price level falls or the money supply rises.
c. the price level rises or the money supply falls.
d. the price level rises or the money supply rises.
Table 4-9
The demand schedule below pertains to sandwiches demanded per week.
Refer to Table 4-9. Suppose Harry, Darby, and Jake are the only demanders of
sandwiches. Also suppose the following:
x = 2.
The current price of a sandwich is $3.00.
The market quantity supplied of sandwiches is 5.
The slope of the supply curve is 1.
Then there is currently a
a. shortage of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00
and $5.00.
b. shortage of 5 sandwiches, and the equilibrium price of a sandwich is $5.00.
c. surplus of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00
and $5.00.
d. surplus of 5 sandwiches, and the equilibrium price of a sandwich is $5.00.
Efficiency wages contribute to
a. frictional unemployment and the natural rate of unemployment.
b. frictional unemployment but not the natural rate of unemployment.
c. structural unemployment and the natural rate of unemployment.
d. structural unemployment but not the natural rate of unemployment.
Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay
for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three
buyers of oranges, and only three oranges can be supplied per day.
Refer to Table 7-5. Which of the following statements is correct?
a. Neither Bob’s consumer surplus nor Charisse’s consumer surplus can exceed Allison’s
consumer surplus, for any price of an orange.
b. All three individuals will buy at least one orange only if the price of an orange is less
than $0.25.
c. If the price of an orange is $0.60, then consumer surplus is $4.90.
d. All of the above are correct.
If expected inflation is constant, then when the nominal interest rate falls, the real
interest rate
a. falls by more than the change in the nominal interest rate.
b. falls by the change in the nominal interest rate.
c. rises by the change in the nominal interest rate.
d. rises by more than the change in the nominal interest rate.
A decrease in the budget deficit causes domestic interest rates
a. and investment to rise.
b. to rise and investment to fall.
c. to fall and investment to rise.
d. and investment to fall.
From 1970 to 1998 the U.S. dollar
a. gained value compared to the Italian lira because inflation was higher in Italy.
b. gained value compared to the Italian lira because inflation was lower in Italy.
c. lost value compared to the Italian lira because inflation was higher in Italy.
d. lost value compared to the Italian lira because inflation was lower in Italy.
Which of the following is not correct?
a. The regional Federal Reserve Banks play a role in regulating banks and ensuring the
health of the banking system.
b. The President of the New York Federal Reserve Regional Bank always gets to vote
on the decisions made by the Federal Open Market Committee.
c. U.S. monetary policy is made by the Federal Open Market Committee.
d. The Federal Open Market Committee meets every 12 weeks.
A mutual fund
a. is a financial institution that stands between savers and borrowers.
b. is a financial intermediary.
c. allows people with small amounts of money to diversify their holdings.
d. All of the above are correct.
Other things the same, if the U.S. price level rises, then
a. the supply of dollars in the market for foreign-currency exchange increases, so the
exchange rate rises.
b. the supply of dollars in the market for foreign-currency exchange increases, so the
exchange rate falls.
c. the supply of dollars in the market for foreign-currency exchange decreases, so the
exchange rate rises.
d. the supply of dollars in the market for foreign-currency exchange decreases, so the
exchange rate falls.
Figure 8-11
Refer to Figure 8-11. Suppose Q1 = 4; Q2 = 7; P1 = $6; P2 = $8; and P3 = $10. Then
the deadweight loss of the tax is
a. $6.
b. $8.
c. $9.
d. $12.
If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in
quantity supplied, then the price increase is about
a. 0.67%.
b. 0.83%.
c. 1.20%.
d. 2.70%.
Rocket Energy Drink Company buys sugar to produce energy drinks. At the end of a
quarter both its inventory of sugar and its inventory of energy drinks has increased.
Investment for the quarter will include
a. both the increased inventory of sugar and the increased inventory of energy drinks.
b. the increased inventory of sugar, but not the increased inventory of energy drinks.
c. the increased inventory of energy drinks, but not the increased inventory of sugar.
d. neither the increased inventory of sugar nor the increased inventory of energy drinks.
People had been expecting the price level to be 170 but it turns out to be 165. Diamond
Power Tools increases the number of workers it employs. What could explain this?
a. both sticky price theory and sticky wage theory
b. sticky price theory but not sticky wage theory
c. sticky wage theory but not sticky price theory
d. neither sticky wage theory nor sticky price theory
Figure 3-4
Perry’s Production Possibilities Frontier Jordan’s Production Possibilities Frontier
Refer to Figure 3-4. If the production possibilities frontiers shown are each for one
year of writing, then which of the following combinations of novels and poems could
Perry and Jordan together write in a given year?
a. 1 novel and 22 poems
b. 2 novels and 18 poems
c. 3 novels and 16 poems
d. 5 novels and 8 poems
The Fed is concerned about stock market booms because the booms
a. increase consumption spending.
b. increase investment spending.
c. increase both consumption and investment spending.
d. None of the above is correct.
If the dollar buys less cotton in Egypt than in the United States, then traders could make
a profit by
a. buying cotton in the United States and selling it in Egypt, which would tend to raise
the price of cotton in the United States.
b. buying cotton in the United States and selling it in Egypt, which would tend to raise
the price of cotton in Egypt.
c. buying cotton in Egypt and selling it in the United States, which would tend to raise
the price of cotton in Egypt.
d. buying cotton in Egypt and selling it in the United States, which would tend to raise
the price of cotton in the United States.
Which of the following countries had the highest growth rate over the last 100 or so
years?
a. Brazil
b. Germany
c. Canada
d. United States
Your boss gives you an increase in the number of dollars you earn per hour. This
increase in pay makes
a. your nominal wage increase. If your nominal wage rose by a greater percentage than
the price level, then your real wage also increased.
b. your nominal wage increase. If your nominal wage rose by a greater percentage than
the price level, then your real wage decreased.
c. your real wage increase. If your real wage rose by a greater percentage than the price
level, then your nominal wage also increased.
d. your real wage decrease. If your real wage rose by a greater percentage than the price
level, then your nominal wage decreased.
Which of the following both reduce net exports?
a. exports rise, imports rise
b. exports rise, imports fall
c. imports rise, exports rise
d. imports rise, exports fall
A market supply curve is determined by
a. vertically summing individual supply curves.
b. horizontally summing individual supply curves.
c. finding the average quantity supplied by sellers at each possible price.
d. finding the average price at which sellers are willing and able to sell a particular
quantity of the good.
Figure 9-7. The figure applies to the nation of Wales and the good is cheese.
Refer to Figure 9-7. Which of the following is a valid equation for Welsh producer
surplus with trade?
a. Producer surplus with trade = (1/2)P0Q0.
b. Producer surplus with trade = (1/2)P1Q1.
c. Producer surplus with trade = (1/2)P1Q2.
d. None of the above is correct.
Figure 17-1
Refer to Figure 17-1. If the current money supply is MS1, then
a. there is no excess supply or excess demand if the value of money is 2.
b. the equilibrium is at point C.
c. there is an excess supply of money if the value of money is 1.
d. None of the above is correct.
Which of the following is correct?
a. Economic forecasts are precise and aggregate spending responds almost immediately
to interest rate changes.
b. Economic forecast are precise and aggregate spending responds to interest rate
changes with a lag.
c. Economic forecasts are imprecise and aggregate spending responds almost
immediately to interest rate changes.
d. Economic forecast are imprecise and aggregate spending responds to interest rate
changes with a lag.
Table 3-7
Assume that Japan and Korea can switch between producing cars and producing
airplanes at a constant rate.
Hours Needed
to Make 1 Quantity Produced
in 2400 Hours
Refer to Table 3-7. Japan’s opportunity cost of one car is
a. 1/5 airplane and Korea’s opportunity cost of one car is 1/3 airplane.
b. 1/5 airplane and Korea’s opportunity cost of one car is 3 airplanes.
c. 5 airplanes and Korea’s opportunity cost of one car is 1/3 airplane.
d. 5 airplanes and Korea’s opportunity cost of one car is 3 airplanes.