Archives: Quiz

Suppose that real GDP for 2012 was $10,000 billion and real GDP for 2013 was $11,000 billion. What is the rate of growth of real GDP between 2012 and 2013? A) 1% B) 2% C) 5% D) 10% Consider the […]

All of the following would be considered explicit costs of operating a business except A) rent paid to a landlord. B) bonuses paid to employees. C) a normal rate of return for investors. D) corporate income taxes. Workers laid off […]

Which of the following is not a flow in the circular flow model? A) the flow of goods and services and the flow of resources to produce goods and services B) the flow of profit and the flow of revenue […]

According to the production possibility model, if more resources are allocated to the production of physical and human capital, then which of the following is likely to happen? A) Fewer goods will be produced for consumption today. B) The production […]

Goods can be classified on the basis of whether their consumption is A) internal and excludable. B) rival and competitive. C) includable and cooperative. D) rival and excludable. If 11 workers can produce 53 units of output while 12 workers […]

To compete in the automobile market, Tesla must make many strategic decisions such as whether to introduce a new car model, how to sell and service its cars, and where to advertise. At Tesla’s Fremont, California plant, managers must decide […]

Table 20-15 Looking at the table above, real average hourly earnings were equal to ________ in 2012. A) $9 B) $9.52 C) $10 D) $12 ) Figure 24-2 Ceteris paribus, a decrease in the capital stock would be represented by […]

The U.S. Bureau of Labor Statistics predicts that 9 of the 20 fastest growing occupations over the next ten years will be in A) the medical field. B) the travel and leisure industry. C) education. D) construction. Why do some […]

Table 3-3 The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi) and the rest of the market. At a price of $4, the quantity demanded in the market would be A) 40 lb. […]

Which of the following describes a situation in which a good or service is produced at the lowest possible cost? A) productive efficiency B) allocative efficiency C) marginal efficiency D) profit maximization Increasing the growth rate of GDP per capita […]

The machines workers have to work with are considered A) human capital. B) physical capital. C) entrepreneurship. D) financial capital. To evaluate the size of the federal budget deficit or surplus over time, it would be best to look at […]

Which of the following describes a difference between allocative efficiency and productive efficiency in a perfectly competitive market? A) Allocative efficiency is achieved only in the long run. Productive efficiency is achieved only in the short run. B) Allocative efficiency […]

Article Summary. Over the past two years, the Indian rupee has fallen 26 percent in value against the U.S. dollar, reaching a record low of 61.80 rupees per dollar in August 2013. The decline reflects increasing capital outflows and pessimism […]

The federal budget deficit acts as an automatic stabilizer because A) government tax revenues decrease during a recession. B) unemployment insurance payments decrease during a recession. C) food stamp payments increase during expansionary periods. D) Medicaid payments increase during expansionary […]

Figure 7-1 Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations. The efficient equilibrium price is A) $30. B) […]

Scenario 1-3 Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, “Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 […]

An inward shift of the production possibilities frontier represents A) positive economic growth. B) negative economic growth. C) a rise in the unemployment rate. D) technological improvement. The poverty rate is defined as the percentage of the A) labor force […]

Consider a downward-sloping demand curve. When the price of a normal good decreases, the income and substitution effects A) work in the same direction to increase quantity demanded. B) work in the same direction to decrease quantity demanded. C) work […]

There is a federal budget deficit when A) the government spends less that it collects in taxes. B) the government spends more that it collects in taxes. C) the government spends the same amount it collects in taxes. D) taxes […]

Once a country has lost its comparative advantage in producing a good, its income will be ________ and its economy will be ________ if it switches from producing the good to importing it. A) higher; less efficient B) higher; more […]

If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is A) unit-elastic. B) perfectly elastic. C) relatively inelastic. D) relatively elastic. If a perfectly competitive firm’s total revenue is less than […]

When President Obama took office in January 2009, he pledged to pursue an expansionary fiscal policy to try to pull the economy out of the recession. The next month, Congress passed the American Recovery and Reinvestment Act of 2009, an […]

Actions taken by investors who sell a country’s currency in anticipation of buying it back later at a lower price is known as A) purchasing power parity. B) currency arbitrage. C) destabilizing speculation. D) exchange rate manipulation. If aggregate expenditure […]

Figure 4-4 Figure 4-4 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40in order to raise the price […]

In ________, health care spending per person based on income per person is significantly higher than the average for most other countries. A) Austria B) Canada C) Norway D) the United States Table 13-4 Table 13-4 lists estimated revenues and […]

The discount rate is A) the interest rate banks charge each other for overnight loans. B) the interest rate banks charge their best customers. C) the interest rate the Fed charges to banks for loans from the Fed. D) the […]

If the nominal exchange rate between the American dollar and the Canadian dollar is 0.89 Canadian dollars per American dollar, how many American dollars are required to buy a product that costs 2.5 Canadian dollars? A) $1.32 B) $2.23 C) […]

Deflation occurs when A) there is a sustained increase in the price level. B) there is a one-time increase in the price level. C) there is a decline in the price level. D) there is a decrease in the expected […]

Suppose there is a bank panic. Which of the following would not be a consequence of this bank panic? A) Bank total reserves would decrease. B) Required reserves would increase. C) Bank checking account balances would decrease. D) Individual banks […]

Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________. A) increases; they both benefit B) increases; only one party benefits C) decreases; neither benefit D) decreases; they both benefit Which […]

Which of the following describes how output changes in the short run? Because of specialization and the division of labor, as more workers are hired A) output will first increase at an increasing rate, then output will increase at a […]

The government purchases multiplier is defined as A) . B) . C) . D) . If the U.S. government removes tariffs it had placed on imports from countries that have been accused of deliberately undervaluing their currencies, the price of […]

The ________ shows the relationship between the price level and quantity of real GDP demanded. A) consumer price index B) aggregate expenditure line C) 45-degree line D) aggregate demand curve Suppose the demand for milk is relatively inelastic. What happens […]

Why does the short-run aggregate supply curve shift to the right in the long run, following a decrease in aggregate demand? A) Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. […]

One reason Zimbabwe suffered from hyperinflation is that the government had decided to pay for all of its expenses by A) selling Treasury bonds to foreign governments. B) selling its government-run oil company to a private company, which then defaulted […]

High-income countries have ________ and ________ as compared to developing countries. A) low rates of savings; high rates of growth B) low rates of savings; low rates of growth C) high rates of savings; high rates of growth D) high […]

Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R0. What is the area that represents consumer surplus after the imposition of the ceiling? A) A + B+ D […]

What impact might a decrease in the U.S. federal budget deficit have on interest rates and exchange rates in the market for the U.S. dollar? (Assume the exchange rate is stated in terms of foreign currency per U.S. dollar.) A) […]

Mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgage payments are known as ________ mortgages. A) subprime B) Alt-A C) gray market D) reciprocal Table 9-8 Suppose that the data in […]

If the government implements a price ceiling on insulin, this will have all of the following effects on the market for insulin except A) an increase in consumer surplus. B) an increase in producer surplus. C) an increase in deadweight […]

Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy? A) growth in capital per hour accompanied by technological change B) increases in labor force participation rates as workers […]

The level of real GDP in the long run is A) potential GDP. B) affected by changes in the price level. C) determined solely by aggregate demand. D) the same as the level of nominal GDP in the long run. […]

If the price level in the United States is 110, the price level is 135 in Mexico, and the nominal exchange rate is 12.5 pesos per dollar, what is the real exchange rate from the U.S. perspective? A) 8.8 B) […]

Short-run macroeconomic equilibrium occurs when A) aggregate demand and short-run aggregate supply intersect. B) the equilibrium lies on the long-run aggregate supply curve. C) structural and frictional unemployment equal zero. D) A and B Suppose we want to use game […]

An individual’s labor supply curve shows A) the maximum wage rates offered to that individual by various potential employers. B) the relationship between wages and the quantity of labor that she is willing to supply. C) the relationship between wages […]

You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants. Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic […]

Table 9-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. Select the statement that accurately interprets the data in […]

In 2004, hurricanes destroyed a large portion of Florida’s orange and grapefruit crops. In the market for citrus fruit, A) the supply curve shifted to the right resulting in an increase in the equilibrium price. B) the supply curve shifted […]

If the marginal benefit of reducing emissions of some air pollutant is less than the marginal cost, A) further reductions will make society better off. B) further reduction will make society worse off. C) pollution taxes should be imposed on […]

Except for recessions, the duration of unemployment for the typical person lasts A) less than six months. B) six to nine months. C) over nine months. D) over one year. E) over five years. Tabitha shares a flea market booth […]