Archives: Quiz

Almost all variation in living standards is attributable to differences in countries’ a. population growth rates. b. productivity. c. systems of public education. d. taxes. Tim mows the yard for his neighbors. He spends $1 on gas and charges them […]

Holding all other factors constant and using the midpoint method, if a calculator manufacturer increases production from 40 to 50 units when price increases by 20 percent, then supply is a. inelastic, since the price elasticity of supply is equal […]

Figure 2-3 Refer to Figure 2-3. Inefficient production is represented by which point(s)? a. J, L b. J, L, M c. K, N d. M A bagel shop sells fresh baked bagels from 5 a.m. until 7 p.m. every day. […]

The marginal propensity to consume (MPC) is defined as the fraction of a. extra income that a household consumes rather than saves. b. extra income that a household either consumes or saves. c. total income that a household consumes rather […]

Which of the following would tend to shift the supply of dollars in the market for foreign-currency exchange in the open-economy macroeconomic model to the right? a. The exchange rate rises. b. The exchange rate falls. c. The expected rate […]

Figure 8-2 The vertical distance between points A and B represents a tax in the market. Refer to Figure 8-2. Consumer surplus without the tax is a. $6, and consumer surplus with the tax is $1.50. b. $6, and consumer […]

Unemployment insurance a. reduces search effort which raises unemployment. b. reduces search effort which lowers unemployment. c. increases search effort which raises unemployment. d. increases search effort which decreases unemployment. Which of the following would cause prices to rise and […]

Welfare economics is the study of how a. the allocation of resources affects economic well-being. b. a price ceiling compares to a price floor. c. the government helps poor people. d. a consumer’s optimal choice affects her demand curve. The […]

Other things the same, an increase in the U.S. interest rate causes the quantity of loanable funds supplied to a. rise because net capital outflow and domestic investment rise. b. rise because national saving rises. c. fall because net capital […]

Nominal exchange rates a. vary little over time. b. vary substantially over time. c. appreciate over time for most countries. d. depreciate over time for most countries. In the United States, before OPEC increased the price of crude oil in […]

Other things the same, as the price level falls, a. the money supply falls. b. interest rates rise. c. a dollar buys more domestic goods. d. the aggregate-demand curve shifts right. Figure 3-4 Perry’s Production Possibilities Frontier Jordan’s Production Possibilities […]

Which of the following statements is correct? a. The demand for flat-screen computer monitors is more elastic than the demand for monitors in general. b. The demand for grandfather clocks is more elastic than the demand for clocks in general. […]

If the cost of producing sofas decreases, then consumer surplus in the sofa market will a. increase. b. decrease. c. remain constant. d. increase for some buyers and decrease for other buyers. Figure 20-2. Refer to Figure 20-2. Point B […]

When an economy is operating at a point on its production possibilities frontier, then a. consumers are content with the mix of goods and services that is being produced. b. there is no way to produce more of one good […]

The nominal interest rate for a consumer loan lasting from 2007 to 2008 is 8.5 percent and the real interest rate is 4.5 percent. If the consumer price index was 200 in 2007, what would the consumer price index value […]

Which of the following are effects of an increased budget deficit? a. the supply of loanable funds does not change; a higher interest rate reduces private saving b. the supply of loanable funds does not change; a higher interest rate […]

Figure 8-1 Refer to Figure 8-1. Suppose the government imposes a tax of P’ – P”’. The area measured by J+K+I represents a. consumer surplus after the tax. b. consumer surplus before the tax. c. producer surplus after the tax. […]

Fortunade Corporation stock has a price of $100 per share, a dividend of $1.60 per share, and retained earnings of $2.00 per share. The dividend yield on this stock is a. 2.8 percent. b. 2.0 percent. c. 1.6 percent. d. […]

A decrease in supply is represented by a a. movement downward and to the left along a supply curve. b. movement upward and to the right along a supply curve. c. rightward shift of a supply curve. d. leftward shift […]

All else equal, what happens to consumer surplus if the price of a good decreases? a. Consumer surplus increases. b. Consumer surplus decreases. c. Consumer surplus is unchanged. d. Consumer surplus may increase, decrease, or remain unchanged. In the early […]

The introduction of a union into an industry a. raises wages and employment in that industry. b. lowers wages and employment in that industry. c. lowers wages and raises employment in that industry. d. raises wages and lowers employment in […]

If, at some interest rate, the quantity of money supplied is greater than the quantity of money demanded, people will desire to a. sell interest-bearing assets, causing the interest rate to decrease. b. sell interest-bearing assets, causing the interest rate […]

Supply-side economists focus more than other economists on a. how fiscal policy affects consumption. b. the multiplier affect of fiscal policy. c. how fiscal policy affects aggregate supply. d. the money supply. A country reported nominal GDP of $200 billion […]

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we […]

In the loanable funds model, an increase in an investment tax credit would create a a. shortage at the former equilibrium interest rate. This shortage would lead to a rise in the interest rate. b. shortage at the former equilibrium […]

Figure 3-2 Peru’s Production Possibilities Frontier Refer to Figure 3-2. Suppose Madagascar is willing to trade 40 rubies to Peru for each emerald that Peru produces and sends to Madagascar. Which of the following combinations of emeralds and rubies could […]

Which of the following concepts is most helpful in explaining why investment increases when the interest rate falls? a. deadweight loss b. present value c. economic growth d. financial intermediation Figure 7-21 Refer to Figure 7-21. If the government mandated […]

When quantity supplied increases at every possible price, we know that the supply curve has a. shifted to the left. b. shifted to the right. c. not shifted; rather, we have moved along the supply curve to a new point […]

Industrial machinery is an example of a. a factor of production that in the past was an output from the production process. b. technological knowledge. c. a production function. d. an item which always has the property called constant returns […]

Efficiency wages create a labor a. surplus and so increase unemployment. b. surplus and so decrease unemployment. c. shortage and so increase unemployment. d. shortage and so decrease unemployment. When we move along a given demand curve, a. only price […]

If velocity = 5, the price level = 1.5, and the real value of output is 2,500, then the quantity of money is a. 333.33. b. 750.00. c. 1,050.00. d. 8,333.33. If the discount rate is raised then banks borrow […]

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarter(s) does(do) these […]

If the demand for light bulbs increases, producer surplus in the market for light bulbs a. increases. b. decreases. c. remains the same. d. may increase, decrease, or remain the same. A nonbinding price floor (i) causes a surplus. (ii) […]

Economists build economic models by a. generating data. b. conducting controlled experiments in a lab. c. making assumptions. d. reviewing statistical forecasts. Which of the following events would shift money demand to the left? a. an increase in the price […]

An increase in the price of a good would a. increase the supply of the good. b. increase the amount purchased by buyers. c. give producers an incentive to produce more. d. decrease both the quantity demanded of the good […]

If a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about a. 0.63, and supply is elastic. b. 0.63, and supply is inelastic. c. 1.60, and supply is elastic. […]

In the circular-flow diagram, firms produce a. goods and services using factors of production. b. output using inputs. c. factors of production using goods and services. d. Both (a) and (b) are correct. Figure 17-2. On the graph, MS represents […]

Which of the following would do the most to reduce a trade deficit? a. increase domestic saving b. increase domestic political stability and respect of property rights c. other countries reduce their trade restrictions d. raise tariffs If the government […]

Figure 8-7 The vertical distance between points A and B represents a tax in the market. Refer to Figure 8-7. Which of the following statements summarizes the incidence of the tax? a. For each unit of the good that is […]

If the cross-price elasticity of demand for two goods is 1.25, then a. the two goods are luxuries. b. the two goods are substitutes. c. one of the goods is normal and the other good is inferior. d. the demand […]

Figure 14-3. The figure shows a utility function for Rob. Refer to Figure 14-3. If most people’s utility functions look like Rob’s utility function, then it is easy to explain why a. people buy various types of insurance. b. we […]

Figure 9-1 The figure illustrates the market for wool in Scotland. Refer to Figure 9-1. From the figure it is apparent that a. Scotland will experience a shortage of wool if trade is not allowed. b. Scotland will experience a […]

The term used to describe a situation in which markets do not allocate resources efficiently is a. economic meltdown. b. market failure. c. equilibrium. d. the effect of the invisible hand. Monetary policy affects employment a. only in the long […]

Morgan, a financial advisor, has told her clients the following things. Which of her statements is not correct? a. “U.S. government bonds generally pay a higher rate of interest than corporate bonds.” b. “The interest received on corporate bonds is […]

Figure 17-1 Refer to Figure 17-1. When the money supply curve shifts from MS1 to MS2, a. the demand for goods and services decreases. b. the economy’s ability to produce goods and services increases. c. the equilibrium price level decreases. […]

Which of the following is not correct? a. The U.S. economy has never experienced deflation. b. Since 1965, the U.S. nominal interest rate has exceeded the U.S. real interest rate. c. Since 1965, the U.S. economy has experienced rising consumer […]

Table 16-5. Bank of Pleasantville Refer to Table 16-5. Assume the Fed’s reserve requirement is 9 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 9 percent requirement. Further assume that people hold only […]

Table 3-1 Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate. Minutes Needed to Make 1 Refer to Table 3-1. Which of the following combinations of wheat and beef could Zardia not […]

Figure 3-4 Perry’s Production Possibilities Frontier Jordan’s Production Possibilities Frontier Refer to Figure 3-4. If Perry and Jordan each divides their time equally between writing novels and writing poems, then total production is a. 2 novels and 6 poems. b. […]

In the circular-flow diagram, in the markets for a. goods and services, households and firms are both sellers. b. goods and services, households are sellers and firms are buyers. c. the factors of production, households are sellers and firms are […]