Archives: Quiz

An increase in each of the following factors would normally provide a subsequent increase in quantity demanded, except: a. price of substitute goods b. level of competitor advertising c. consumer income level d. consumer desires for goods and services e. […]

Suppose we estimate that the demand elasticity for fine leather jackets is ‘“.7 at their current prices. Then we know that: a. a 1% increase in price reduces quantity sold by .7%. b. no one wants to buy leather jackets. […]

When the demand for a product is less elastic than the supply, A) consumers pay the majority of the tax on the product. B) firms pay the majority of the tax on the product. C) firms pay the entire tax […]

If the government finances an increase in government purchases with an increase in taxes, which of the following would you not expect to see? A) an increase in the exchange rate B) a decrease in the interest rate C) an […]

Suppose the supply of bicycles is price elastic. This means that A) consumers will respond significantly to an increase in the quantity supplied of bicycles. B) suppliers will increase the quantity supplied of bicycles, but not immediately. C) suppliers face […]

If real GDP increases we know for sure that A) output has risen. B) prices have risen. C) prices have risen but output has remained constant. D) prices have remained constant. The short-term unemployment arising from the process of matching […]

Figure 13-2 The marginal revenue from selling the additional unit Qinstead of Qa equals A) the area (G + H). B) the area (H – E). C) the area (E + F) – (G + H). D) the area G. […]

Which of the following can a firm use to defend a successful product’s brand name? A) The firm can obtain a patent on the brand name. B) The firm can apply for a trademark to ban other firm’s from using […]

The ________ curve is vertical. A) short-run aggregate supply B) short-run aggregate demand C) long-run aggregate supply D) long-run aggregate demand What is the principal-agent problem? A) It is a problem caused by a person (principal) who hires an agent […]

Figure 24-4 Given the economy is at point A in year 1, what is the inflation rate between year 1 and year 2? A) 0.9% B) 1.8% C) 2.7% D) 3.0% Figure 2-7 Mercedes Benz recently decided to introduce its […]

If the production possibilities frontier is linear, then A) opportunity costs are decreasing as more of one good is produced. B) it is easy to efficiently produce output. C) opportunity costs are increasing as more of one good is produced. […]

If the government finances an increase in government purchases with an increase in taxes, which of the following would you expect to see? A) an increase in the exchange rate B) a decrease in the interest rate C) a decrease […]

Society faces a trade-off in all of the following situations except A) when deciding who will receive the goods and services produced. B) when deciding what goods and services will be produced. C) when deciding how goods and services will […]

Marginal revenue is A) total revenue divided by the total quantity of output. B) the change in profit divided by the change in the quantity of output. C) the change in total revenue divided by the change in total cost. […]

Fluctuating exchange rates can alter a multinational firm’s profits and losses. The U.S. corporation, Motorola, produces cell phones and sells cell phones in Mexico. If the dollar appreciates against the peso, then Motorola’s revenues from these operations should ________ and […]

In a competitive market equilibrium A) total consumer surplus equals total producer surplus. B) marginal benefit and marginal cost are maximized. C) consumers and producers benefit equally. D) the marginal benefit equals the marginal cost of the last unit sold. […]

A relationship that depends on the basic behavior of consumers and firms and remains unchanged over long periods is called a ________ relationship. A) frictional B) structural C) cyclical D) dynamic When a firm produces more output using the same […]

If the nominal exchange rate between the American dollar and the New Zealand dollar is 1.36 New Zealand dollars per American dollar, how many American dollars are required to buy a product that costs 3.50 New Zealand dollars? A) $2.14 […]

Increases in real GDP would understate the well-being of a country over time if, over that time period, the A) crime rate increased. B) percentage of people addicted to illegal drugs increased. C) amount of pollution decreased. D) average hours […]

If the Fed lowers the reserve requirement, then this A) increases excess reserves, encourages banks to make more loans, and increases the money supply. B) decreases excess reserves, causes banks to reduce their loans, and decreases the money supply. C) […]

Table 7-6 Production and Consumption Production Without Trade With Trade Estonia and Morocco can produce both swords and belts. Table 7-6 shows the production and consumption quantities without trade, and the production numbers with trade. Which country has a comparative […]

Macroeconomics is the study of A) how households make choices. B) how firms make choices. C) how households and firms make choices. D) the economy as a whole. Classifying a good as rival means A) that the good is produced […]

Article Summary. Seeking ways to improve education, Garrett Johnson has organized technology competitions called hackathons where participants such as students, teachers, and engineers build applications designed to improve secondary and higher education systems. These applications can include ways for teachers […]

You have a bond that pays $60 per year in coupon payments. Which of the following would result in a decrease in the price of your bond? A) Coupon payments on newly-issued bonds fall to $40 per year. B) The […]

India’s rapid growth can be explained by A) reduced regulations and market-based reforms. B) investment in human capital from 1947 through 2013. C) the movement of workers from the agricultural sector to the manufacturing sector. D) an increase in labor […]

During a business cycle expansion, total production ________ and total employment ________. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases Classifying a good as excludable means A) that someone can be barred from consuming the good […]

If people assume that future rates of inflation will follow the pattern of inflation rates in the past, they are said to have A) rational expectations. B) adaptive expectations. C) unstable expectations. D) accommodative expectations. In the long run, A) […]

Some individuals seek to use government action to make themselves better off at the expense of others. The actions of these individuals A) are examples of fraud; but these individuals usually avoid prosecution because of logrolling and rational ignorance. B) […]

If a producer is not able to expand its plant capacity immediately, it is A) bankrupt. B) operating in the long run. C) operating in the short run. D) losing money. For a perfectly competitive firm, which of the following […]

Figure 16-5 In the dynamic model of AD–AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely […]

Which of the following goods would have the most inelastic demand? A) ski vacations B) bread C) luxury cars D) big screen TVs Suppose a chain of convenience stores reorganized its system of supplying its stores with food. This led […]

Why are laws aimed at regulating monopolies called “antitrust” laws? A) The rise of large firms (e.g., Standard Oil) in the late 1800s in the United States caused consumers to lose trust in private business. B) “Trust” was a word […]

Investment spending ________ during a recession, and ________ during an expansion. A) declines; increases B) increases; declines C) increases; increases D) declines; declines If Molly Bee increases her work hours when her wage increases, then A) the income effect of […]

Figure 30-6 Which of the following would cause the change depicted in the figure above? A) An increase in investment in infrastructure causes U.S. productivity to rise relative to Mexican productivity. B) A growing preference for Margaritas causes U.S. consumers […]

Thailand’s experience with pegging the baht to the dollar failed because the baht was ________ relative to the dollar, and China’s experience with pegging the yuan to the dollar has run into difficulties because the yuan has been ________ relative […]

Which of the following countries does not come close to the free market benchmark? A) the United States B) Japan C) Cuba D) France Consumers usually pay less than the total cost of medical treatment because A) a third party, […]

Sole proprietorships are ________ type of business. A) the most profitable B) the least common C) the most common D) the least risky Golda Rush quit her job as a manager for Home Depot to start her own hair dressing […]

Table 7-6 Production and Consumption Production Without Trade With Trade Estonia and Morocco can produce both swords and belts. Table 7-6 shows the production and consumption quantities without trade, and the production numbers with trade. If the actual terms of […]

Figure 9-5 Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff. If the tariff was replaced by a quota which limited coffee imports to 20 million pounds, the […]

The proponents of ________ and ________ think that the Federal Reserve should adopt a constant monetary growth rule. A) new Keynesianism; the new classical model B) the real business cycle model; Marxism C) rational expectations; monetarism D) the monetarist model; […]

The tax multiplier equals the change in ________ divided by the change in ________. A) taxes; equilibrium real GDP B) equilibrium real GDP; taxes C) taxes; consumption spending D) consumption spending; taxes Figure 2-5 If the economy is currently producing […]

Jaycee Jeans sold 40 pairs of jeans at a price of $40. When it lowered its price to $20, the quantity sold increased to 60 pairs. Calculate the absolute value of the price elasticity of demand. Use the midpoint formula. […]

Given the equations for C, I, G, and NX below, what is the marginal propensity to consume? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400 A) -0.1 B) 0.1 C) 0.9 D) 2000 Which […]

As a percentage of GDP, federal expenditures ________ from 1950 to the early 1990s, ________ from 1992 to 2001, and have ________ since 2001. A) rose; fell; risen B) fell; fell; risen C) rose; rose; fallen D) fell; rose; fallen […]

Figure 17-1 Figure 17-1 shows the marginal revenue product for Dale’s Hand-Sewn Doilies, a producer of linen doilies. If Dale can sell her doilies at $2 each, what is the marginal product of the 5th worker? A) $28 B) 28 […]

In 2013, ________ of Goodyear’s sales were outside North America. A) only 11 percent B) more than 60 percent C) less than half D) 95 percent Table 2-4 Production Choices for Dina’s Diner Assume Dina’s Diner only produces sliders and […]

A monopolistically competitive market is described as one in which there are A) a few firms producing an identical product. B) a large number of firms selling similar, but not identical, products. C) a few firms producing differentiated products. D) […]

Where do economic agents such as individuals, firms and nations, interact with each other? A) in public locations monitored by the government B) in any arena that brings together buyers and sellers C) in any physical location people where people […]

Figure 5-10 Chicken pox vaccinations for toddlers benefit society by protecting young children and by preventing an epidemic of the disease. Thus, the social benefits of chicken pox vaccinations exceed the private benefit for any quantity of vaccinations as illustrated […]

Figure 7-4 Figure 7-4 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services. With insurance and a third-party payer system, what is the amount of […]