Archives: Quiz

When production reflects consumer preferences, ________ occurs. A) allocative efficiency B) productive efficiency C) equity D) efficient central planning Table 8-14 Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator […]

An industry’s long-run supply curve shows A) the relationship in the long run between market price and quantity supplied. B) how the government determines the price of the product. C) how average productivity is changing. D) greater than normal profit. […]

Crowding out refers to a decline in ________ as a result of an increase in ________. A) tax revenues; unemployment B) government purchases; tax rates C) government purchases; private expenditures D) private expenditures; government purchases You have a bond that […]

In 2012, GDP per capita was ________ in the United States than in China, and since 1980, the growth rate of real GDP per capita has been ________ in the United States than in China. A) higher; higher B) higher; […]

Under autarky, consumer surplus is represented by the area A) above the supply curve and below the equilibrium price. B) above the supply curve and below the demand curve. C) below the demand curve and above the equilibrium price. D) […]

Inflation is measured A) using the level of the consumer price index. B) as the percentage change in the consumer price index. C) using the level of real GDP. D) as the percentage change in real GDP. Figure 5-3 The […]

Which of the following is a factor of production? A) a necklace produced by a jewelry manufacturer B) 50 shares of Google stock C) the security guard at the local bank D) $1,000 in casino chips Figure 5-10 Chicken pox […]

Suppose that the economy is producing above potential GDP and the Fed implements the correct change in monetary policy, but not until after the economy has passed the peak of the boom. Then A) the Fed’s contractionary policy will result […]

When there is a positive externality A) the private benefit received by consumers is greater than the external benefit. B) the social benefit received by consumers is greater than the private benefit. C) the private benefit received by consumers is […]

In the principal-agent relationship, the agent is A) the owner of a resource that has hired another party to act on his behalf. B) the person who is placed in control over resources that are not his own, with a […]

The tax multiplier is smaller in absolute value than the government purchases multiplier because some portion of the A) decrease in taxes will be saved by households and not spent, and some portion will be spent on imported goods. B) […]

Table 2-13 Table 2-13 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats. Which of the following statements istrue? A) Horace has an absolute advantage […]

The portion of ________ that a bank does not loan out or spend on securities is known as ________. A) loans; reserves B) deposits; reserves C) deposits; securities D) loans; securities A monopoly differs from monopolistic competition in that A) […]

Payments by a corporation to its shareholders are known as A) stocks. B) bonds. C) coupons. D) dividends. Some economists and lawmakers believe the Fed lost some of its independence when it A) began printing money at the directive of […]

If you put $100 into a bank account that earns five percent interest per year, what is the formula you should use to determine the account’s future value in one year? A) Future value equals the present value divided by […]

When plasma television sets were first introduced prices were high and few firms were in the market. Later, economic profits attracted new firms and the price of plasma televisions fell. This example illustrates A) a decreasing-cost industry. B) that consumers […]

Foreign direct investment declined worldwide during the recession of 2007-2009. The decline in foreign direct investment in developing countries can make it more difficult for these countries to break out of the vicious cycle of low economic growth and A) […]

DeShawn’s Detailing is a service that details cars at the customers’ homes or places of work. DeShawn’s cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will […]

The unemployment rate is A) the percentage of the labor force that is employed. B) the percentage of the number employed that is unemployed. C) the percentage of the working-age population that is unemployed. D) the percentage of the labor […]

Money’s most narrow definition is based on its function as a A) store of value. B) unit of account. C) standard of deferred payment. D) medium of exchange. E) standard of barter. The real business cycle model focuses on how […]

A decrease in aggregate demand causes a decrease in ________ only in the short run, but causes a decrease in ________ in both the short run and the long run. A) the price level; real GDP B) real GDP; real […]

Long-run macroeconomic equilibrium occurs when aggregate demand ________ short-run aggregate supply and they ________ the long-run supply curve. A) equals; intersect at a point to the right of B) equals; intersect at a point on C) is greater than; intersect […]

The demand for most farm products is relatively inelastic. All else constant, what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases in productivity? A) Farm revenues increase. B) […]

Productive efficiency is achieved when firms produce goods and services A) most desired by society. B) at the highest profit margin. C) at the lowest cost. D) of the highest quality. Table 19-17 A very simple economy produces three goods: […]

A marginal tax rate is A) the fraction of income that must be paid in taxes. B) the fraction of each additional dollar of income that must be paid in taxes. C) the incremental income one must earn to offset […]

Figure 2-4 Figure 2-4 shows various points on three Different production possibilities frontiers for a nation. A movement from ________ could occur because of an influx of immigrant labor. A) W to V B) X to W C) W to […]

A Big Mac costs $4.00 in the United States and 9.00 reals in Brazil. If the exchange rate is 2 reals per dollar, purchasing power parity predicts that A) the dollar is undervalued. B) the dollar is overvalued. C) the […]

If a supply curve is a horizontal line, supply is said to be A) perfectly inelastic. B) unit-elastic. C) inelastic. D) perfectly elastic. If, for the last bushel of apples produced and sold by an apple farm marginal revenue exceeds […]

Consider the following statements: a. Consumers rent more DVDs from a video store that rents DVDs at a lower price than other rival video stores in the area. b. Department stores take steps to increase security since they believe it […]

A general formula for the multiplier is A) . B) . C) . D) . “Because chips and salsa are complements, an increase in the price of chips will cause the demand for salsa to decrease. This initial shift in […]

Arnold Kim began blogging about Apple products during his fourth year of medical school. Kim’s Website, MacRumors.com, became so successful that he decided to give up his medical career and work full time on his Website, despite the nearly $200,000 […]

Figure 28-4 Consider the shift in the short-run Phillips curves shown in the above graph. This shift may be explained by A) an increase in the natural rate of unemployment from 5.0 to 6.2 percent. B) an increase in the […]

Figure 15-15 Figure 15-15 shows the cost and demand curves for the Erickson Power Company. The profit-maximizing price is A) P1. B) P2. C) P3. D) P4. Table 14-7 Answer: C The payoff matrix shown above assumes that Perfect Plants […]

Table 9-6 Production and Consumption Production Without Trade With Trade Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade. Which country has an absolute […]

Suppose your expenses for this term are as follows: tuition: $9,000, room and board: $1,500, books and other educational supplies: $1,000. Further, during the term, you can only work part-time and earn $3,000 instead of your full-time salary of $8,000. […]

Figure 24-1 Ceteris paribus, a decrease in personal income taxes would be represented by a movement from A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A. A student comments […]

When a celebrity has the desire to have his image protected following his death, this is best described as an example of the protection of A) an invention. B) a patent. C) a trademark. D) intellectual property. One important difference […]

Consumers benefit from monopolistic competition by A) being able to choose from products more closely suited to their tastes. B) paying the lowest possible price for the product. C) paying the same price as everyone else. D) being able to […]

All else being equal, if the rate of growth in productivity in Spain is greater than the rate of growth in productivity in the United States, the euro A) will decrease in value relative the U.S. dollar. B) will increase […]

Figure 16-7 The Lizard Lounge is well known for its exotic cocktails. Figure 16-7 shows its estimated demand curve for cocktails. The owners of the Lizard Lounge are considering the following four pricing options: a. A single price scheme where […]

A product is considered to be nonexcludable if A) you can keep those who did not pay for the item from enjoying its benefits. B) you cannot keep those who did not pay for the item from enjoying its benefits. […]

Beginning in 1965, the head of the Antitrust Division of the U.S. Department of Justice began to change antitrust policy. How did antitrust policy change? A) For the first time horizontal mergers were allowed – with government approval – and […]

How does contractionary monetary policy affect net exports in the short run? A) Contractionary monetary policy increases exports and reduces imports. B) Contractionary monetary policy reduces exports and increases imports. C) Contractionary monetary policy increases exports and increases imports. D) […]

Assume that the hourly price for the services of personal trainers has risen and sales of these services have also risen. One can conclude that A) the law of demand has been violated. B) the number of personal trainers has […]

Horatio can produce either a combination of 15 bird houses and 25 wind chimes or a combination of 30 bird houses and 15 wind chimes. If he now produces 30 bird houses and 15 wind chimes, what is the opportunity […]

Table 9-6 Mateo and Celeste produce custom saddles and spurs. Table 9-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. Select the statement that accurately interprets the data in the […]

Psychologists Daniel Kahneman and Amos Tversky conducted the following experiments by asking a sample of people the following questions: Scenario A: “Imagine that you have decided to see a play and paid the admission price of $10 per ticket. As […]

Figure 4-5 Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for […]

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, and no fiscal or monetary policy is […]

A perfectly competitive apple farm produces 1,000 bushels of apples at a total cost of $36,000. The price of each bushel is $50. Calculate the firm’s short-run profit or loss. A) loss of $14,000 B) profit of $14,000 C) profit […]