Archives: Quiz

What is Taylor’s wealth? Taylor has the following assets and liabilities: A. $105,000 B. $107,000 C. $111,000 D. $419,000 Logrolling refers to: A. legislation that affects the timber industry. B. the practice whereby legislators support each other’s pork barrel spending. […]

Starting from potential output, if firms become less optimistic and decide to decrease their investment in new capital, then this will shift the ______ curve to the left and generate ______. A. aggregate demand; a recessionary output gap B. aggregate […]

Assume that the graph below describes the current labor market for nurses in a mid-sized city and that the labor market is perfectly competitive. Suppose that several years ago the supply of nurses in this city was S0. What might […]

The study of individual choice and its implications for the behavior of prices and quantities in individual markets is: A. microeconomics. B. a normative economic principle. C. the Scarcity Principle. D. macroeconomics. Suppose Matt and Gabe must both choose between […]

The Hatfields and the McCoys both earn $50,000 per year in real terms in the labor market, and both families are able to earn a 5% real interest rate on their savings. In the year 2010, both families began to […]

A village has five residents, each of whom has an accumulated savings of $50. Each villager can use the money to buy a government bond that pays 10% interest per year or to buy a year-old goat, send it onto […]

A decrease in the price of pizza will cause a(n): A. increase in demand. B. increase in quantity demanded. C. decrease in quantity demanded. D. decrease in the number of consumers. Beyond the provision of public goods, government exists to […]

Based on the figure, if a union contract requires that the wage workers are paid be raised from $25 to $30 per hour, the number of unemployed workers will increase by ______ workers. A. 8 B. 10 C. 17 D. […]

In the short run with predetermined prices, when output is less than planned aggregate expenditure, firms will: A. reduce production. B. increase production. C. increase planned aggregate expenditure. D. decrease planned aggregate expenditure. Refer to the figure below. At quantities […]

The price level is: A. the rate of inflation. B. a measure of overall prices at a particular point in time. C. the percentage change in a price index such as the CPI. D. the price of a specific good […]

Because an increase in the nominal interest rate raises the opportunity costs of holding money, the money demand curve: A. shifts to the right. B. shifts to the left. C. slopes upward. D. slopes downward. One of the serious drawbacks […]

By international standards, the household saving rate of the United States: A. has not ever really been high. B. was extremely high until the 1980s. C. has always been very high. D. was low through the 1970s and 1980s, but […]

The difference between the economy’s potential output and its actual output relative to its potential output at a point in time is called the: A. budget deficit. B. trade deficit. C. output gap. D. full-employment rate. Real GDP per person […]

Assets of the commercial banking system include: A. reserves and loans. B. deposits. C. reserves and deposits. D. loans and deposits. If the exchange rate moves from 10 Mexican pesos per U.S. dollar to 8 Mexican pesos per U.S. dollar, […]

Suppose Sarah owns a small company that makes wedding cakes. The table below shows how Sarah’s total cost varies depending on the number of wedding cakes she makes each day. If Sarah’s fixed costs double, then in the short run, […]

The unemployment rate for younger workers is usually ________ the unemployment rate for older workers. A. lower than B. approximately equal to C. higher than D. more predictable than A price setter is a firm that: A. attempts but fails […]

When players cannot achieve their goals because they are unable to make credible threats or promises, the situation is called a: A. prisoner’s dilemma. B. Nash equilibrium. C. failure of dominant strategies. D. commitment problem. The money demand curve relates […]

Suppose two companies, Macrosoft and Apricot, are considering whether to develop a new product, a touch-screen t-shirt. The payoffs to each of developing a touch-screen t-shirt depend upon the actions of the other, as shown in the payoff matrix below […]

Entrepreneurs are people who: A. engage exclusively in business travel. B. entertain the workers. C. run businesses on a day-to-day basis. D. create new economic enterprises. Early settlers in the town of Dry Gulch drilled wells to pump as much […]

The table below shows a pizzeria’s fixed cost and variable cost at different levels of output. Pizza’s sell for $20 each. When the pizzeria makes 50 pizzas a day, its average total cost is ______. A. $5 B. $10 C. […]

If a borrower and lender agree to an interest rate on a loan when inflation is expected to be 7% and inflation turns out to be 10% over the life of the loan, then the borrower ______ and the lender […]

Holding other factors constant, if oil prices rise relative to the prices of other products, then the real wages of oil workers will ______ and employment of oil workers will _____. A. increase; increase B. increase; decrease C. decrease; not […]

Fred and Wilma just had a baby girl and want to make sure they save enough in the future to send her to college. They begin to save in response to this ______ reason for saving. A. life-cycle B. bequest […]

Accounting profit minus implicit costs equals: A. total revenues. B. economic profit. C. explicit costs. D. fixed costs. The market value of a particular bond at any given point in time is called the bond’s: A. coupon rate. B. principal […]

It is spring, and several graduates of State U are seeking employment. State U graduates have evenly distributed GPAs, from 2.0 to 4.0, with an average GPA of 3.0. The largest employer in town, Acme Dynamite, is interviewing candidates, hoping […]

Suppose that the salary range for recent college graduates with a bachelor’s degree in economics is $30,000 to $50,000, with 25 percent of jobs offering $30,000 per year, 50 percent offering $40,000 per year and 25 percent offering $50,000 per […]

Joe is the owner of the 7-11 Mini Mart, Sam is the owner of the SuperAmerica Mini Mart, and together they are the only two gas stations in town. Currently, they both charge $3 per gallon, and each earns a […]

Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product. Suppose Quick Buck and Pushy Sales decide to collude and work together as a […]

The marginal product of new capital depends on ______ and _____. A. productivity of capital; relative price of the firm’s output B. price of new capital goods; real interest rate C. relative price of the firm’s output; real interest rate […]

Holding other factors constant, a higher relative price of a firm’s output will: A. increase national saving. B. decrease national saving. C. increase investment. D. decrease investment. Indicators of economic activity that move at the same time as the overall […]

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. In the long run, the equilibrium price will be _____ per gallon, and each firm’s profit-maximizing quantity will be ______ gallons per […]

Workers whose spells of unemployment are broken up by brief periods of employment or withdrawal from the labor force are referred to as ______ workers A. short-term unemployed B. discouraged C. long-term unemployed D. chronically unemployed In the base year, […]

If the CPI equaled 1.43 in 2008and 1.56 in 2009, then between 2008 and 2009 there was: A. inflation. B. deflation C. a recession D. an expansion Last year Christine worked as a consultant. She hired an administrative assistant for […]

Refer to the figure below. The marginal utility of apples is: A. constant. B. first increasing, but decreasing after the fourth apple. C. decreasing after the first apple. D. constantly increasing. Player 1 and Player 2 are playing a game […]

The following graph depicts demand. At point A, demand is: A. inelastic. B. elastic. C. unit elastic. D. perfectly elastic. Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did […]

A period in which the economy is growing at a rate significantly below normal is called a(n): A. expansion. B. boom. C. peak. D. recession. Refer to the figure below. If Laura and Chris are the only two consumers in […]

Real GDP is not a perfect measure of economic well-being because it excludes the value of all of the following except: A. leisure time. B. goods and services available in the market economy. C. nonmarket economic activity. D. goods and […]

You are the Minister of Trade for a small island country with the following annual PPC: You are negotiating a trade agreement with a neighboring island with the following annual PPC: What’s the minimum number of fish you would be […]

Recessions in the United States typically are: A. limited to a few industries. B. limited to specific regions of the country. C. widely felt outside the United States. D. confined to the domestic economy. A group of physicians that provides […]

Both a perfectly competitive firm and a monopolist find that: A. price and marginal revenue are the same. B. they can sell as many units of output as they want at the market price. C. it is best to expand […]

Suppose two companies, Macrosoft and Apricot, and considering whether to develop a new product, a touch-screen t-shirt. The payoffs to each of developing a touch-screen t-shirt depend upon the actions of the other, as shown in the payoff matrix below […]

Consider the labor market below. The imposition of a $12 per hour minimum wage causes total economic surplus in this labor market to ______ by ______. A. rise; $800 B. fall; $800 C. rise; $400 D. fall; $1,600 All else […]

The consumption function is relationship between consumption and: A. planned aggregate expenditure. B. total spending. C. investment. D. disposable income. Refer to the figure above. Assume demand remains unchanged at D1. If supply shifts from S1 to S2, then the […]

When consumers substitute a cheaper good for a more expensive one, the CPI will ______ the change in the cost of living. A. equal B. understate C. precisely measure D. overstate Suppose that all workers value a 1 percent reduction […]

An imperfectly competitive firm is one that: A. has at least some influence over the market price. B. charges any price it wants. C. seeks to maximize revenue. D. faces a perfectly inelastic demand curve. Among the most important indicators […]

In response to the 2007-2009 recession, the Economic Stimulus Act of 2008, under President Bush, was composed of approximately _____; the American Recovery and Reinvestment Act, under President Obama, was composed of approximately ______. A. one-fourth tax cuts and three-fourths […]

The situation described in the book as “Smart for One, Dumb for All” occurs when: A. individuals, when acting rationally, benefit society as a whole. B. individuals make better decisions when acting alone than when in groups. C. individuals, when […]

Refer to the figure below. What is the price elasticity of demand when the price of rice is $6 per pound? A. 0.5 B. 0.67 C. 2 D. 3 Refer to the figure below. If this firm is a price […]

Data for an economy show that the unemployment rate is 6 percent, the participation rate is 60 percent, and 200 million people 16 years or older are not in the labor force. How many people are in the working-age population […]

Frictional unemployment may be economically beneficial if: A. its psychological costs are borne only by the unemployed worker. B. losses in economic output are small. C. it leads to a better match between worker and job. D. the social costs […]