Archives: Quiz

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has a. $7.2 billion of exports and $4.8 billion of imports. b. $7.2 billion of imports and $4.8 […]

One problem with the consumer price index stems from the fact that, over time, consumers tend to buy larger quantities of goods that have become relatively less expensive and smaller quantities of goods that have become relatively more expensive. This […]

Which of these statements does not apply to market economies? a. Prices prevent decentralized decision making from degenerating into chaos. b. Prices coordinate the actions of millions of people with varying abilities and desires. c. Prices ensure that anyone who […]

Table 3-9 Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies. Minutes Needed to Number of […]

Country A experienced a growth rate of real GDP per person of 4 percent per year throughout the 1900’s. In view of other countries’ experiences during this time country A’s growth was a. exceptionally high. b. moderately high. c. moderately […]

Suppose you know the value of the consumer price index (CPI) in year 1 as well as the inflation rate in year 2. Which of the following equations is valid for the CPI in year 2? a. CPI in year […]

A Texas household receives a Social Security check for $500, which it uses to purchase a $460 television made in Korea by a Korean firm and a $40 dinner at a local restaurant. As a result, U.S. GDP a. does […]

Scenario 13-1. Assume the following information for an imaginary, closed economy. GDP = $120,000; consumption = $70,000; private saving = $9,000; national saving = $12,000. Refer to Scenario 13-1. For this economy, investment amounts to a. $4,000. b. $9,000. c. […]

A 2009 Chevrolet model has more horsepower than the 2008 version and is included in the BLS basket of goods. BLS attempts to account for this change in the market basket by a. dropping the good from the basket. b. […]

When the actual change in the price level differs from its expected change, which of the following can explain why firms might change their production? a. both menu costs and mistaking a price level change for a change in relative […]

Katie is planning to sell her house, and she is considering making two upgrades to the house before listing it for sale. Replacing the carpeting will cost her $2,500 and replacing the roof will cost her $9,000. Katie expects the […]

Which of the following is included in M2 but not in M1? a. demand deposits b. corporate bonds c. large time deposits d. money market mutual funds Today’s demand curve for gasoline could shift in response to a change in […]

A central bank that accommodates an aggregate supply shock a. increases the money supply, making the inflation rate rise. b. increases the money supply, making the inflation rate fall. c. decreases the money supply, making the inflation rate rise. d. […]

Real GDP per person in rich countries, such as Germany, is sometimes more than 10 times that of poor countries like India. A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In […]

Figure 9-5 Refer to Figure 9-5. With trade, the price of wagons in this country is a. $8, with 70 wagons produced in this country, 20 of which are exported. b. $8, with 90 wagons produced in this country, 50 […]

U.S. international trade has a. decreased because of a decrease in the trade of goods with a high value per pound. b. decreased because of an increase in the trade of goods with a high value per pound. c. increased […]

If Robert is risk-averse, then he will always a. choose not to play a game where he has a 50 percent chance of winning $1 and a 50 percent chance of losing $1. b. choose not to play a game […]

Table 16-3. The First Bank of Fairfield Refer to Table 16-3. If $1,000 is deposited into the First Bank of Fairfield, and the bank takes no other actions, its a. reserves will increase by $200. b. liabilities will decrease by […]

Suppose you are deciding whether or not to buy a particular bond for $2,990.08. If you buy the bond and hold it for 5 years, then at that time you will receive a payment of $5,000. You will buy the […]

Consider the following traders who meet. Which, if any, pairs of traders has a double coincidence of wants? a. Bob with Alice b. Ted with Alice c. Bob with Mary, Ted with Bob, and Ted with Alice d. None of […]

Figure 8-11 Refer to Figure 8-11. The size of the tax is represented by the a. length of the line segment connecting points A and B. b. length of the line segment connecting points A and C. c. length of […]

In general, elasticity is a measure of a. the extent to which advances in technology are adopted by producers. b. the extent to which a market is competitive. c. how firms’ profits respond to changes in market prices. d. how […]

Table 3-6 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. Hours Needed To Make 1 Amount Produced in 40 Hours Refer to Table 3-6. Assume that Maya and Miguel each has […]

A trade policy is a government policy a. directed toward the goal of improving the tradeoff between equity and efficiency. b. that directly influences the quantity of goods and services that a country imports or exports. c. intended to exploit […]

Scenario 21-1. Take the following information as given for a small, imaginary economy: When income is $10,000, consumption spending is $6,500. When income is $11,000, consumption spending is $7,300. Refer to Scenario 21-1. For this economy, an initial increase of […]

If your firm’s production function has constant returns to scale, then if you double all your inputs, your firm’s output will a. double and productivity will rise. b. double but productivity will not change. c. more than double and productivity […]

Figure 7-18 Refer to Figure 7-18. If the price decreases from $22 to $16 due to a shift in the supply curve, consumer surplus increases by a. $120. b. $360. c. $480. d. $600. Bob is looking for work after […]

Which of the following statements about real and nominal interest rates is correct? a. When the nominal interest rate is rising, the real interest rate is necessarily rising; when the nominal interest rate is falling, the real interest rate is […]

If a U.S. resident purchases a foreign bond, her transactions are included a. in the U.S. supply of loanable funds and the supply of dollars in the market for foreign-currency exchange. b. in the U.S. supply of loanable funds and […]

Figure 6-7 Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good? a. a price ceiling set at $4 b. a price ceiling set at $5 c. a price floor […]

If interest rates rose more in the U.S. than in Canada, then other things the same a. U.S. citizens would buy more Canadian bonds and Canadian citizens would buy more U.S. bonds. b. U.S. citizens would buy more Canadian bonds […]

Since World War II, GATT has been responsible for reducing the average tariff among member countries from about a. 40 percent to about 5 percent. b. 40 percent to about 20 percent. c. 80 percent to about 20 percent. d. […]

If a country raises its budget deficit, the net capital outflow a. rises, so the supply of its currency shifts right in the market for foreign currency exchange. b. rises, so the demand for its currency shifts right in the […]

The labor-force participation rate measures the percentage of the a. total adult population that is in the labor force. b. total adult population that is employed. c. labor force that is employed. d. labor force that is either employed or […]

Figure 9-6 Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals a. $100. b. $200. c. $400. d. $500. Table 7-11 Answer: B Refer to Table 7-11. Both the demand curve and the supply curve […]

Suppose that the adult population is 4 million, the number of unemployed is 0.25 million, and the labor-force participation rate is 75%. What is the unemployment rate? a. 6.25% b. 8.3% c. 9.1% d. 18.75% If a bank posts a […]

Table 4-9 The demand schedule below pertains to sandwiches demanded per week. Refer to Table 4-9. Regarding Harry and Darby, whose demand for sandwiches conforms to the law of demand? a. only Harry’s b. only Darby’s c. both Harry’s and […]

Figure 3-3 Arturo’s Production Possibilities Frontier Dina’s Production Possibilities Frontier Refer to Figure 3-3. If Arturo and Dina each divides his/her time equally between the production of tacos and burritos, then total production is a. 200 tacos and 150 burritos. […]

Ivan, a Russian citizen, sells several hundred cases of caviar to a restaurant chain in the United States. By itself, this sale a. increases U.S. net exports and decreases Russian net exports. b. increases U.S. net exports and has no […]

Mario was laid off two months ago. He has not searched for other work because he is expecting to be recalled to work. In the U.S. labor force statistics Mario is counted as a. unemployed and in the labor force. […]

Figure 3-5 Hosne’s Production Possibilities Frontier Merve’s Production Possibilities Frontier Refer to Figure 3-5. If Hosne and Merve switch from each person dividing her time equally between the production of purses and wallets to each person spending all of her […]

Someone who has a job but is absent from work because she is on vacation is counted as “employed.” a. True b. False Unions are often thought to cause conflict between different groups of workers — between the insiders who […]

Suppose the government changed the tax laws, with the result that people were encouraged to consume more and save less. Using the loanable funds model, a consequence would be a. lower interest rates and lower investment. b. lower interest rates […]

If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, a. there is a surplus so interest rates will rise. b. there is a surplus so interest rates will fall. c. there is a shortage so […]

Money a. is more efficient than barter. b. makes trades easier. c. allows greater specialization. d. All of the above are correct. The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity […]

The slope of the demand for loanable funds curve represents the a. positive relation between the real interest rate and investment. b. negative relation between the real interest rate and investment. c. positive relation between the real interest rate and […]

Svetlana is risk averse. Which of the following is correct about Svetlana? a. Her marginal utility of wealth increases as her income increases. b. She will always accept a bet if the probability of winning a dollar is the same […]

Chloe talked to several stockbrokers and made the following conclusions. Which, if any, of Chloe’s conclusions are correct? a. It is relatively easy to reduce firm-specific risk by increasing the number of companies one holds stock in. b. Stock prices, […]

Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included a. in both German GDP and U.S. GDP. b. in German GDP, but is not included in U.S. GDP. c. in U.S. […]

Sirius has just finished high school and started looking for his first job, but has not yet found one. Other things the same, the unemployment rate a. and the labor-force participation rate both increase. b. increases, and the labor-force participation […]