Archives: Quiz

Figure 9-10. The figure applies to Mexico and the good is rifles. Refer to Figure 9-10. Mexico’s gains from trade are represented by the area that is bounded by the points a. (0, P0), (Q0, P0), (Q2, P1), and (0, […]

If banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign currencies of other countries, but foreigners do not desire to increase their holdings of U.S. dollars, then U.S. net exports would a. rise and aggregate […]

Figure 6-2 Refer to Figure 6-2. The price ceiling a. is binding. b. causes a shortage. c. causes the quantity demanded to exceed the quantity supplied. d. All of the above are correct. If aggregate demand shifts left, then in […]

A risk-averse person has a. a utility function whose slope gets flatter as wealth rises. This means they have increasing marginal utility of wealth. b. a utility function whose slope gets flatter as wealth rises. This means they have diminishing […]

Figure 13-1. The figure depicts a demand-for-loanable-funds curve and two supply-of-loanable-funds curves. Refer to Figure 13-1. Which of the following events would shift the supply curve from S1 to S2? a. In response to tax reform, firms are encouraged to […]

The production possibilities frontier is a graph that shows the various combinations of output that an economy a. should produce. b. wants to produce. c. can produce. d. demands. Figure 3-4 Perry’s Production Possibilities Frontier Jordan’s Production Possibilities Frontier Refer […]

Figure 9-2 Refer to Figure 9-2. As a result of trade, total surplus increases by a. $80. b. $97.50. c. $162.50. d. $495.50. Table 3-12 Labor Hours Needed to Make 1 Pound of: Amount Produced in 40 hours Answer: B […]

The Laffer curve relates a. the tax rate to tax revenue raised by the tax. b. the tax rate to the deadweight loss of the tax. c. the price elasticity of supply to the deadweight loss of the tax. d. […]

The price paid by buyers in a market will decrease if the government a. increases a binding price floor in that market. b. increases a binding price ceiling in that market. c. decreases a tax on the good sold in […]

The case of perfectly elastic demand is illustrated by a demand curve that is a. vertical. b. horizontal. c. downward-sloping but relatively steep. d. downward-sloping but relatively flat. Which of the following statements is correct for the long run? a. […]

One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI a. fails to measure all changes in the quality of goods. b. displays a housing bias. […]

If the Kenyan nominal exchange rate declines, and prices are unchanged in Kenya and abroad, then the Kenyan real exchange rate a. does not change. b. rises. c. declines d. None of the above is necessarily correct. Which of the […]

Which of the following shifts aggregate demand to the right? a. both an investment tax credit and a decrease in income tax rates b. an investment tax credit but not a decrease in income tax rates c. a decrease in […]

The efficiency-wage theory of worker health is a. more relevant for explaining unemployment in less developed countries than in rich countries. b. more relevant for explaining unemployment in rich countries than in less developed countries. c. equally relevant for explaining […]

The Fed lowered interest rates in 2001 and 2002. This implies, other things the same, that the Fed a. increased the money supply because it was concerned about unemployment. b. increased the money supply because it was concerned about inflation. […]

Figure 6-16 Refer to Figure 6-16. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed? a. $5 b. between $5 and $10 c. between $10 […]

Which, if any, of the present values below are computed correctly? a. A payment of $100 to be received one year from today, with a 2 percent interest rate, has a present value of $98.81. b. A payment of $200 […]

During the mid and last part of the 1990’s both inflation and unemployment were low. In general this could have been the result of a. adverse supply shocks that shifted the short-run Phillips curve left. b. adverse supply shocks that […]

Monetary Policy in Highland Highland has had inflation of 15% for many years. Highland establishes a new central bank, the Bank of Highland, with the hopes of reducing the inflation rate. Refer to Monetary Policy in Highland. The Bank of […]

Which of the following is true? a. Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Malthus argued that increasing population would outstrip agricultural production. b. Kremer argued […]

Recently, Lisa’s wealth increased by $500. If her wealth were to increase by another $500 in the near future, then her utility would increase, but not by as much as it increased with the recent increase to her wealth. Based […]

Treasury Bonds are a. liquid, but not a store of value. b. a store of value, but not liquid. c. both liquid and a store of value. d. neither liquid nor a store of value. Suppose a stock market crash […]

Table 10-4 The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. Prices and Quantities Refer to Table 10-4. In 2010, this […]

If a country’s saving rate increases, then in the long run a. productivity is higher but real GDP per person is not higher. b. real GDP per person is higher but productivity is not higher. c. productivity and real GDP […]

Which of the following is not correct? a. When a union is present in a labor market, wages are not determined by the equilibrium of supply and demand. b. Like any cartel, a union is a group of sellers acting […]

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies a. enhance equality. b. reduce efficiency. c. reduce the reward for working hard. d. All of the above are […]

A decrease in the price of large tractors imported into the United States from Russia a. leaves the GDP deflator unchanged but decreases the consumer price index. b. decreases the GDP deflator but leaves the consumer price index unchanged. c. […]

State what, if anything, each of the following does to the supply or demand of loanable funds. a. net capital outflow increases at each interest rate b. domestic investment increases at each interest rate c. the government deficit increases d. […]

A positive economic statement such as “Pollution taxes decrease the quantity of pollution generated by firms” a. would likely be made by an economist acting as a policy advisor. b. would require values and data in order to be evaluated. […]

For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that a. an import quota has no effect on consumer surplus, while a tariff decreases consumer […]

In which case(s) does(do) a country’s demand for loanable funds shift left? a. both an increase in the budget deficit and capital flight b. an increase in the budget deficit, but not capital flight c. capital flight, but not an […]

Suppose a Starbucks tall latte cost $4.00 in the United States and 3.20 euros in the Euro area. Also, suppose a McDonald’s Big Mac costs $3.50 in the United States and 2.45 euros in Euro area. If the nominal exchange […]

Figure 14-4. The figure shows a utility function for Dexter. Refer to Figure 14-4. Suppose Dexter begins with $1,300 in wealth. Starting from there, a. the pain of losing $500 of his wealth would equal the pleasure of adding $500 […]

Figure 7-20 Refer to Figure 7-20. If 10 units of the good are produced and sold, then a. the marginal cost to sellers exceeds the marginal value to buyers. b. producer surplus is maximized. c. total surplus is minimized. d. […]

In a competitive market, the quantity of a product produced and the price of the product are determined by a. buyers. b. sellers. c. both buyers and sellers. d. None of the above is correct. Table 4-2 Refer to Table […]

Which of the following is not correct? a. The economy contains many labor markets for different types of workers. b. The impact of the minimum wage depends on the skill and experience of the worker. c. The minimum wage is […]

A market supply curve shows a. the total quantity supplied at all possible prices. b. the average quantity supplied by producers at all possible prices. c. how quantity supplied changes when consumer income changes. d. suppliers’ responses, in terms of […]

Miller’s Dairy produces 960 gallons of milk per day. Each milker at the dairy works 8 hours per day and produces the same number of gallons of milk per hour. If the Dairy’s productivity is 12 gallons of milk per […]

At which interest rate is the present value of $360 three years from today equal to about $310 today? a. 4.7 percent b. 5.1 percent c. 5.5 percent d. 5.9 percent Last year country A had a nominal GDP of […]

Part of the lag in monetary policy effects is due to a. the long political process of monetary policy decisions. b. precise economic forecasts. c. the time required for firms and households to alter their spending plans. d. changes in […]

In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labor. What was Alpha Cabinet Company’s productivity? a. 1/8 cabinet per hour b. 8 hours per cabinet c. 40 cabinets d. None of the above is correct. […]

Equilibrium quantity must decrease when demand a. increases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease. b. increases and supply does not change, when demand does not change […]

Suppose the price index was 110 in 2004, 120 in 2005, and 125 in Which of the following statements is correct? a. The economy experienced inflation between 2004 and 2005 and between 2005 and 2006. b. The inflation rate was […]

Oil is considered to be a non-renewable energy source. Oil a. is an unlimited resource. b. is a scarce resource. c. is not a productive resource. d. has no opportunity cost. The market for diamond rings is closely linked to […]

Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of an increase in the production of coffee from 350 pounds to 650 pounds? a. 400 dozen cookies b. 300 dozen cookies c. […]

According to purchasing power parity what should the nominal exchange rate between the U.S. and another country be equal to? a. 1 b. the real exchange rate between the U.S. and that country c. the price level in the U.S. […]

When a binding price ceiling is imposed on a market, a. price no longer serves as a rationing device. b. the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. c. […]

To increase the money supply, the Fed could a. sell government bonds. b. increase the discount rate. c. decrease the reserve requirement. d. None of the above is correct. In the open-economy macroeconomic model, which of the following increases net […]

Which of the following firms is likely to have the greatest market power? a. an electric company b. a farmer c. a grocery store d. a local electronics retailer In one year, you meet 52 people who are each unemployed […]

The possibility of speculative bubbles in the stock market arises in part because a. stock prices may not depend at all on psychological factors. b. fundamental analysis may be the correct way to evaluate the value of stocks. c. future […]