Archives: Quiz

An increase in the price level and a reduction in output would result from a. an increase in the money supply. b. an increase in government expenditures. c. a fall in stock prices. d. bad weather in farm states. Which […]

Sonya, a citizen of Denmark, produces boots and shoes that she sells to department stores in the United States. Other things the same, these sales a. increase U.S. net exports and have no effect on Danish net exports. b. decrease […]

Figure 7-20 Refer to Figure 7-20. At equilibrium, producer surplus is measured by the area a. ACG. b. AFG. c. KBG. d. CFG. Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred? a. […]

The historical rise in living standards of American workers is primarily a result of a. the influence of labor unions in America. b. tariff protection imposed by the American government. c. the enactment of minimum-wage laws in America. d. the […]

When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures a. capital investment. b. investment in human capital. c. business consumption expenditures. d. personal saving. The sale of stocks a. and […]

Real GDP a. moves in the same direction as unemployment. b. is not adjusted for inflation. c. measures economic activity and real income. d. All of the above are correct. Which of the following lists includes only changes that shift […]

If there is an adverse supply shock, then a. unemployment rises and the short-run Phillips curve shifts right. b. unemployment rises and the short-run Phillips curve shifts left. c. unemployment falls and the short-run Phillips curve shifts right. d. unemployment […]

A decrease in the price of a good would a. increase the supply of the good. b. increase the quantity demanded of the good. c. give producers an incentive to produce more to keep profits from falling. d. shift the […]

Identify the immediate effect of each of the following events on U.S. GDP and its components. a. James receives a Social Security check. b. John buys an Italian sports car. c. Henry buys domestically produced tools for his construction company. […]

Moving from the late 1960s to 1970-1973, a. inflation remained high while the unemployment rate was lower than in the late 1960s. b. inflation remained high while the unemployment rate was higher than in the late 1960s. c. inflation remained […]

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected, a. production is more profitable and employment rises. b. production is more profitable and employment falls. c. production is less profitable […]

Suppose that M is fixed. According to the quantity equation, which of the following would make the price level lower? a. Y or V rise b. Y or V fall c. Y rises or V falls d. Y falls or […]

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift a. demand, raising both the equilibrium price and quantity in the market for artificially-sweetened beverages. b. demand, lowering the equilibrium price and raising […]

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. Refer to Stock Market Boom 2015. In the long run, the […]

Table 16-4. The First Bank of Roswell Refer to Table 16-4. Suppose the bank faces a reserve requirement of 10 percent. Starting from the situation as depicted by the T-account, a customer deposits an additional $50,000 into his account at […]

Total surplus in a market is equal to a. consumer surplus + producer surplus. b. value to buyers – amount paid by buyers. c. amount received by sellers – costs of sellers. d. producer surplus – consumer surplus. When a […]

In a particular country in 1999, the average worker had to work 20 hours to produce 55 units of output. In that same country in 2009, the average worker needed to work 28 hours to produce 77 units of output. […]

If the reserve ratio is 20 percent, the money multiplier is a. 2. b. 4. c. 5. d. 8. Figure 9-12 Refer to Figure 9-12. Equilibrium price and equilibrium quantity without trade are a. $27 and 400. b. $27 and […]

A pharmaceutical company unexpectedly announces that it just developed an important new drug. This news should a. raise the price of the corporation’s stock; if it does not the stock is overvalued. b. raise the price of the corporation’s stock; […]

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good? a. an increase in consumer income b. a decrease in […]

When a person engages in detailed analysis of a company to determine its value, he or she is engaging in a. standard deviation analysis. b. informational analysis. c. fundamental analysis. d. efficiency analysis. “When workers have a relatively small quantity […]

Figure 9-11 Refer to Figure 9-11. Producer surplus in this market after trade is a. C. b. C + B. c. A + B + D. d. B + C + D. Which of the following can the Fed do […]

If the price of a good has risen over time, a. it must have become more scarce. b. it must have become less scarce. c. it has become more scarce only if the price adjusted for inflation has risen. d. […]

Table 3-10 Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies. Minutes Needed to Number of […]

Suppose the price index was 100 in 2004, 118 in 2005, and the inflation rate was lower between 2005 and 2006 than it was between 2004 and 2005. This means that a. the price index in 2006 was lower than […]

Pessimism Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. Refer to Pessimism. In […]

Low rates of inflation are generally associated with a. low rates of government spending. b. small or nonexistent government budget deficits. c. low rates of productivity growth. d. low rates of growth of the quantity of money. The marginal benefit […]

If velocity = 3.5, the quantity of money = 15,000, and the price level = 1.2, then the real value of output is a. 3,571.43. b. 4,285.71. c. 5,142.86. d. 43,750.00. The “natural” rate of unemployment is the unemployment rate […]

A transfer payment is a. a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location. b. a payment that is automatically transferred from your bank account to pay a […]

If muffins and bagels are substitutes, a higher price for bagels would result in a(n) a. increase in the demand for bagels. b. decrease in the demand for bagels. c. increase in the demand for muffins. d. decrease in the […]

A COLA automatically raises the wage when a. GDP increases. b. taxes increase. c. the consumer price index increases. d. the producer price index increases. Figure 3-3 Arturo’s Production Possibilities Frontier Dina’s Production Possibilities Frontier Refer to Figure 3-3. Arturo […]

Which of the following changes would not shift the demand curve for a good or service? a. a change in income b. a change in the price of the good or service c. a change in expectations about the future […]

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct? a. GDP would definitely increase, […]

A tariff on a product makes a. domestic sellers better off and domestic buyers worse off. b. domestic sellers worse off and domestic buyers worse off. c. domestic sellers better off and domestic buyers better off. d. domestic sellers worse […]

A. W. Phillips’ findings were based on data a. from 1861-1957 for the United Kingdom. b. from 1861-1957 for the United States. c. mostly from the post-World War II period in the United Kingdom. d. mostly from the post-World War […]

When demand is inelastic, an increase in price will cause a. an increase in total revenue. b. a decrease in total revenue. c. no change in total revenue but an increase in quantity demanded. d. no change in total revenue […]

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. […]

Table 11-2 The table below pertains to Iowan, an economy in which the typical consumer’s basket consists of 3 pounds of pork and 4 bushels of corn. Refer to Table 11-2. If 2009 is the base year, then the CPI […]

Table 3-4 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. Labor Hours Needed to Make 1 Pound of Pounds Produced in 24 Hours Refer to Table 3-4. The farmer […]

Accumulated over a long span of time, the tax rate on interest income a. removes all benefits from saving. b. reduces the benefits from saving by a small amount. c. reduces the benefits from saving by a large amount. d. […]

If U.S. exports are $300 billion and U.S. imports total $350 billion, which of the following is correct? a. The U.S. has a trade surplus of $350 billion. b. The U.S. has a trade surplus of $50 billion. c. The […]

Suppose the world had only two countries and domestic residents of country A purchased $50 billion of assets from country B and country B purchased $30 billion of assets from country A. What would the net capital outflows of both […]

Sheamous loses his job and decides to sit on the beach rather than look for work during the next few months. Other things the same, the unemployment rate a. increases and the labor-force participation rate decreases. b. increases and the […]

Figure 6-1 Panel (a) Panel (b) Refer to Figure 6-1. The price ceiling shown in panel (b) a. is not binding. b. creates a surplus. c. creates a shortage. d. Both a) and b) are correct. Figure 8-13 Answer: C […]

In equilibrium which of the following happens if the U.S. imposes tariffs on leather boots? a. U.S. production of leather boots rise b. U.S. net exports rise c. the exchange rate falls d. All of the above are correct. Which […]

The benefit to buyers of participating in a market is measured by a. the price elasticity of demand. b. consumer surplus. c. the maximum amount that buyers are willing to pay for the good. d. the equilibrium price. Suppose that […]

A U.S. firm buys bonds issued by a technology center in India. This purchase is an example of U.S. a. foreign portfolio investment. By itself it is an increase in U.S. holdings of foreign bonds and increases U.S. net capital […]

Table 7-2 This table refers to five possible buyers’ willingness to pay for a case of Vanilla Coke. Refer to Table 7-2. Which of the following is not true? a. At a price of $9.00, no buyer is willing to […]

When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market a. and the price paid by buyers both decrease. b. decreases, but the price paid by buyers increases. c. increases, but the […]

Suppose that policymakers are considering placing a tax on either of two markets. In Market A, the tax will have a significant effect on the price consumers pay, but it will not affect equilibrium quantity very much. In Market B, […]