Archives: Quiz

Figure 5-3 The efficient output level is A) Qm. B) Q. C) Qo. D) Qo– Qm. High-income countries have ________ and ________ as compared to developing countries. A) low rates of savings; high rates of growth B) low rates of […]

Proponents of the ________ model argue that the short-run supply curve is vertical. A) the monetarist model B) the new classical model C) the real business cycle model D) the new Keynesian model All of the following are examples of […]

During a business cycle expansion, total production ________ and total employment ________. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases The Brooks Appliance Store and the Lefingwell Appliance Store (both are located in the same city) […]

If real GDP grows by 3% in 2011, 3.2% in 2012, and 2.5% in 2013, what is the average annual growth rate of real GDP? A) 2.6% B) 2.9% C) 3.1% D) 4.2% Table 9-5 Consider the following values of […]

If a country has a fixed exchange rate, A) the equilibrium exchange rate in that market does not respond to changes in supply and demand for currency. B) central banks have more control over real GDP in the economy. C) […]

Figure 10-7 Manuri has $300 to spend on Pilates classes and Yoga classes. The price of a group Pilates class is $20 and the price of a group Yoga class is $10. Manuri’s optimal bundle is given by “A” in […]

Figure 5-5 Figure 5-5 shows a market with an externality. The current market equilibrium output of Q1 is not the economically efficient output. The economically efficient output is Q2. If, because of an externality, the economically efficient output is Q2 […]

Economists Kenneth Chay and Michael Greenstone find that in the two years following the passage of the Clean Air Act of 1970, the sharp reduction in air pollution also led to a decline in infant deaths. Although this and other […]

An increase in the price of off-road vehicles will result in A) a smaller quantity of off-road vehicles supplied. B) a larger quantity of off-road vehicles supplied. C) an increase in the demand for off-road vehicles. D) a decrease in […]

Tax cuts on business income ________ aggregate demand. A) would decrease B) would increase C) would not change D) may increase or decrease Suppose the demand curve for a product is represented by a typical downward-sloping curve. Now suppose the […]

Vineyards can grow either red wine grapes or white wine grapes on their land. Which of the following would cause the supply of red wine grapes to decrease? A) an increase in the price of white wine grapes B) a […]

You are given the following market data for Venus automobiles in Saturnia. Demand: P = 200 – 0.25Q Supply: P = 130 + 0.10Q where P = Price and Q = Quantity. a. Calculate the equilibrium price and quantity. b. […]

Figure 4-1 Figure 4-1 shows Kendra’s demand curve for ice-cream cones. If the market price is $2.50, what is the maximum number of ice cream cones that Kendra will buy? A) 1 B) 2 C) 3 D) 4 Scenario 1-2 […]

Table 17-1 Suppose the output price is $3. If the wage rate is $90, what is the profit-maximizing quantity of labor that the firm should hire? A) 7 units B) 5 units C) 4 units D) 3 units If the […]

The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by A) investment spending. B) export spending. C) government spending. D) the level of aggregate expenditure. A firm’s net […]

Figure 12-6 Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason’s House of Apples. To maximize his profit, Jason should produce the rate of output indicated by point A) a. B) b. C) […]

Disposable personal income is defined as A) personal income less personal taxes plus indirect sales taxes. B) personal income less transfer payments plus personal taxes. C) personal income less personal taxes. D) personal income less depreciation. On a two-dimensional graph, […]

Table 2-6 Table 2-6 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. What is Serena’s opportunity cost of making a bracelet? A) 2 necklaces B) […]

In San Francisco there are many restaurants that specialize in a wide variety of cuisines. Patronage at these restaurants is influenced by factors such as tastes, price and location. This market is A) perfectly competitive. B) monopolistically competitive. C) oligopolistic. […]

Which of the following leads to an increase in real GDP? A) a decrease in government spending B) a decrease in the inflation rate in other countries, relative to the inflation in the United States C) a decrease in interest […]

If your total satisfaction increases when you consume another unit, your marginal utility must be A) increasing. B) decreasing. C) negative. D) positive. In 1995, the General Agreement on Tariffs and Trade (GATT), which was established in 1948, was replaced […]

Deadweight loss refers to A) the opportunity cost to firms from producing the equilibrium quantity in a competitive market. B) the sum of consumer and producer surplus. C) the loss of economic surplus when the marginal benefit equals the marginal […]

When the price level rises from 110 to 115, the aggregate level of GDP supplied rises from $80 billion to $120 billion. This ________ relationship represents the ________ relationship between the quantity of real GDP firms are willing to supply […]

Figure 5-15 Figure 5-15 shows the market for Atlantic salmon, a common resource. The current market equilibrium output of Q1 is not the economically efficient output. The economically efficient output is Q2. The current market equilibrium output is partly the […]

A corporation is A) the easiest type of business to set up. B) the least expensive type of business to set up. C) the most difficult type of business to set up. D) the least profitable type of business to […]

Figure 4-1 Figure 4-1 shows Arnold’s demand curve for burritos. If the market price is $2.00, what is the consumer surplus on the second burrito? A) $0 B) $1.00 C) $2.00 D) $4.50 Table 2-11 Table 2-11 shows the number […]

Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry. Table 12-5 shows the firm’s cost schedule. Table 12-5 Use the table to answer the following questions. a. Complete Table 12-5 by filling in the […]

Declines in spending on residential construction are often due to increases in interest rates. The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates. A) the financial […]

In general, the supply curve for a natural resource A) is vertical. B) is horizontal. C) slopes downward to reflect decreasing available quantities over time. D) slopes upward. Table 4-7 Table 4-7 shows the demand and supply schedules for labor […]

Growth in potential GDP in the United States is estimated to be about A) 8.25% per year. B) 5.0% per year. C) 3.2% per year. D) 1.5% per year. Figure 7-2 Figure 7-2 represents the market for vaccinations. Vaccinations are […]

What is the United States government’s formal definition of the poverty line? A) It is a level of annual income equal to total income in society divided by the population, adjusted for a family of four. B) It is a […]

The production possibilities frontier model assumes all of the following except A) labor, capital, land and natural resources are fixed in quantity. B) the economy produces only two products. C) any level of the two products that the economy produces […]

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 […]

The typical shape of an isoquant is A) convex towards the origin. B) concave towards the origin. C) linear and downward sloping. D) linear and upward sloping. Table 2-11 Table 2-11 shows the number of labor hours required to produce […]

Using the quantity equation, if the velocity of money grows at 5 percent, the money supply grows at 10 percent, and real GDP grows at 4 percent, then the inflation rate will be A) 19 percent. B) 15 percent. C) […]

The price elasticity of an upward-sloping supply curve is always A) positive. B) negative. C) greater than one. D) impossible to determine. To affect the market outcome, a price floor A) must be set above the black market price. B) […]

Which of the following is not a reason why the wages of workers and the prices of inputs rise more slowly than the prices of final goods and services? A) Contracts make prices and wages ‘sticky.” B) Firms are often […]

Table 6-3 Over what range of prices is the demand elastic? A) over the entire range of prices B) between $14 and $16 C) between $8 and $16 D) between $2 and $8 Table 2-11 Table 2-11 shows the number […]

Table 11-3 The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny’s House of Boxes. The capital used to produce the boxes is fixed. Diminishing returns […]

Shrimp is an increasingly popular part of the American diet. Louisiana shrimpers, who represent the bulk of the U.S. industry, were almost all put out of business by Hurricane Katrina. How did this affect the equilibrium price and quantity of […]

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen. One can conclude that A) the law of supply has been violated. B) the demand for swimming pool maintenance services has increased. […]

In the past two decades the United States lost its comparative advantage in automobiles to Japan. What factor was most responsible for the development of Japan’s comparative advantage in automobiles? A) Japanese firms excelled in process technology. B) Japan has […]

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. If Mendonca chooses to produce 120 pounds of meat, how much vegetables can it produce to maximize production? […]

The present value of $300 received 5 years in the future would be calculated as which of the following when the interest rate is 5%? A) 300/(1.5)5 B) 300/(1.05)5 C) 300 1.5 5 D) 5.05/300 If the consumption function is […]

The Organization of Petroleum Exporting Countries (OPEC) controls about 75 percent of the world’s proven oil reserves. Economists refer to OPEC as a cartel because A) OPEC is a monopoly, but it is located outside of the boundaries of any […]

Automatic stabilizers refer to A) the money supply and interest rates that automatically increase or decrease along with the business cycle. B) government spending and taxes that automatically increase or decrease along with the business cycle. C) changes in the […]

If the exchange rate changes from $2.00 = 1 euro to $1.98 = 1 euro then A) the dollar has depreciated. B) the dollar has appreciated. C) the euro has appreciated. D) the euro has stayed constant in value. Which […]

Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report. Iris is willing to pay $500 for the service while Daphne is willing […]

What is the dominant strategy in the prisoner’s dilemma? A) Each prisoner confesses because this is the rational action to pursue. B) Do nothing in the hope that the other prisoner will also do nothing. C) Do not confess because […]

The goals of monetary policy tend to be interrelated. For example, when the Fed pursues the goal of ________, it also can achieve the goal of ________ simultaneously. A) high employment; economic growth B) high employment; lowering government spending C) […]