Archives: Quiz

The purchase by a household in China of a CD produced in the United States is included in U.S. A) consumption expenditures. B) investment expenditures. C) government purchases. D) net exports. Consumption is $5 million, planned investment spending is $8 […]

According to economists Robert Lucas and Thomas Sargent, the apparent short-run trade-off between unemployment and inflation in the 1950s and 1960s was the result of A) unexpected changes in monetary policy. B) expected changes in monetary policy. C) unexpected changes […]

The Federal Reserve responded to the 2008 financial crisis in several ways. Which of the following is not one of the ways the Fed responded? A) The Fed made investment banks eligible for discount loans. B) The Fed lent investment […]

The change in consumption divided by the change in disposable income is equal to A) the slope of the consumption function. B) aggregate expenditure. C) household saving. D) real GDP. How does the owner of a sole proprietorship relate to […]

If people assume that future rates of inflation will ________, they are said to have adaptive expectations. A) be higher than inflation rates of the past B) follow the pattern of inflation rates in the past C) be lower than […]

Which of the following is a factor of production that generally is fixed in the short run? A) raw materials B) labor C) a factory building D) water As a form of business, a partnership A) has limited liability. B) […]

In August 2011, Standard & Poor’s (S&P) changed its rating on U.S. Treasury bonds from ________ based on the state of the federal government’s budget deficit. A) “A” to “D” B) “A” to “AAA” C) “A+” to “B+” D) “AAA” […]

Which of the following statements is false? A) When marginal cost equals average total cost, average total cost is at its highest value. B) The marginal cost curve intersects the average variable cost curve and the average total cost curve […]

Tesla Motors manufacturers its cars at a plant in Fremont, California. At this plant, Tesla is able to take advantage of the high level of technical training possessed by its American workers, but it also sacrifices the ability to pay […]

Baxter International, a manufacturer of hospital supplies, acquired American Hospital Supply, a distributor of hospital supplies. This is an example of A) a conglomerate merger. B) a horizontal merger. C) a vertical merger. D) a two-dimensional merger. Proponents of the […]

There is public dissaving if A) G + TR > T. B) G + TR < T. C) TR > G + T. D) TR < G + T. Figure 2-13 Figure 2-13 shows the production possibilities frontiers for Tahiti […]

The ________ model focuses on the relationship between total spending and real GDP in the short run, assuming the price level is constant. A) supply and demand B) national income C) aggregate expenditure D) business cycle If a decrease in […]

Figure 15-10 The deadweight loss due to a monopoly is represented by the area A) FHE. B) FGE. C) GEH. D) FQ1Q2E. The following equations represent the demand and supply for kumquats. QD = 60 – 3P QS = -20 […]

Scenario 1-1 Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week. A manager at the plant observes, “Although the last 3,000 cell phones we produced and sold increased our […]

Discouraged workers are classified by the BLS as A) part of the labor force. B) out of the labor force. C) unemployed. D) employed. E) part-time employees. The town of Harmonia gives away all 500 tickets to its annual Founder’s […]

The price elasticity of an upward-sloping supply curve is always A) positive. B) negative. C) greater than one. D) impossible to determine. Hovnanain Enterprises, a residential home builder based in New Jersey, did well during the mid-2000s but did not […]

Which of the following is a reason why increases in the price level result in a decline in aggregate expenditure? A) Price level increases raise real wealth, which causes consumption spending and aggregate expenditure to decline. B) Price level increases […]

Bank reserves include A) vault cash and deposits with the Federal Reserve. B) loans to bank customers and deposits with the Federal Reserve. C) vault cash and loans to bank customers. D) customer checking accounts and vault cash. E) deposits […]

________ involves undertaking an activity until its marginal benefits equal marginal costs. A) Scarcity reduction B) Central planning C) Marginal analysis D) Market intervention Scarcity A) stems from the incompatibility between limited resources and unlimited wants. B) can be overcome […]

When Toyota introduced its 2010 Prius, it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model. Which of the following would explain the price Differential? […]

If the current unemployment rate is 5%, under which of the following circumstances would you expect the Fed to use contractionary monetary policy? A) if the natural rate of unemployment is below 5% B) if the natural rate of unemployment […]

If the United States has a net export surplus, which of the following must be true? A) The balance on the financial account must equal the balance on the current account. B) Net foreign investment must be positive as well. […]

Suppose the government wants to finance housing for low-income families by placing a tax on the purchase of luxury homes. Assume the government defines a luxury home as a home that is purchased for at least $1 million. This tax […]

Bubba’s Hula Shack bar and bistro has begun giving customers who can show proof that they arrived at the establishment by public transportation a 10 percent discount on their total bill. All else equal, customers who arrive by public transportation […]

A successful market economy requires well defined property rights and A) balanced supplies of all factors of production. B) an independent court system to adjudicate disputes based on the law. C) detailed government regulations. D) a safety net to ensure […]

Scenario 14-2 Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%. As a result of Kristy’s deposit, Bank A can make a maximum loan of A) […]

From 1983-2013, net exports for the United States A) grew and then declined. B) were negative. C) were positive. D) increased as exports rose above imports. Table 2-17 Table 2-17 shows the output per week of two people, James and […]

Which of the following countries had the lowest GDP per capita in 2012? A) France B) Mexico C) Democratic Republic of the Congo D) Argentina Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He is considering […]

The value of the four-firm concentration ratio that many economists consider indicative of the existence of an oligopoly in a particular industry is A) anything greater than 10 percent. B) anything greater than 20 percent. C) anything greater than 30 […]

________ tended to increase spending on health care in the United States. A) The aging of the U.S. population, rather than advances in medical technology, has B) Advances in medical technology, rather than the aging of the U.S. population, has […]

The recession of 2007-2009 made many consumers pessimistic about their future incomes. How does this increased pessimism affect the aggregate demand curve? A) This will move the economy up along a stationary aggregate demand curve. B) This will move the […]

Figure 5-3 In the absence of any government intervention, the private market A) underproduces by Qo– Qm units. B) overproduces by Qo– Qm units. C) overproduces by Q– Qm units. D) underproduces by Q– Qm units. If the Federal Reserve […]

Which of the following information about fiat money is false? Fiat money A) is backed by gold. B) serves as a medium of exchange. C) has little to no value except as money. D) is authorized by a central bank […]

Suppliers will be willing to supply a product in all of the following situations except A) the price received is greater than the additional cost of producing the product. B) the price received is at least equal to the additional […]

If the best lawyer in town is also the best at operating a word processor, then according to economic reasoning, this person should A) split her time evenly between being a lawyer and a word processor. B) specialize in being […]

What is human capital? A) a slang term for the underground labor market B) manufactured goods that are used to produce other goods C) accumulated knowledge and skills acquired by a worker D) the manager or owner of a business […]

In a perfectly competitive market the term “price taker” applies to A) sellers and buyers. B) firms but not buyers. C) buyers but not sellers. D) only the smallest sellers and buyers. A firm’s net worth is calculated as A) […]

Figure 24-1 Ceteris paribus, an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from A) AD1 to AD2. B) AD2 to AD1. C) point A to […]

Assume that the four-firm concentration ratio in an industry is 85 percent. Which of the following statements uses one of the five competitive forces to argue that this industry may be more competitive than its concentration ratio suggests? A) The […]

A demand curve that is horizontal indicates that the commodity A) has few substitutes. B) must be very cheap. C) is a necessity. D) has a large number of substitutes. Figure 12-7 Figure 12-7 illustrates the cost curves of a […]

A commercial bank like Comerica creates money by A) printing paper money. B) earning profits. C) selling corporate bonds. D) making loans. Assuming the United States is the “domestic” country, if the real exchange rate between the United States and […]

Which of the following activities create a negative externality? A) cleaning up the sidewalk on your block B) graduating from college C) repainting the house you live in to improve its appearance D) keeping a junked car parked on your […]

The quantity theory of money implies that the price level will be stable (no inflation or deflation) when the growth rate of the money supply equals A) 0. B) the growth rate of the price level. C) the growth rate […]

What is the poverty rate? A) the rate at which the number of people relative to the size of the population fall below the poverty line B) the percentage of the population earning an annual income below the poverty line, […]

Prices of commercial airline tickets (assume that this is a normal good) have fallen in recent months. Over this same period, the price of jet fuel has risen and consumer incomes have fallen. Which of the following best explains the […]

In the short run, marginal product of labor increases at first and then falls because A) as more labor is hired, they are not as skilled as the first ones hired. B) there are fewer opportunities for division of labor […]

The market for smart phones has grown rapidly over the past few years, due in part to the overwhelming success of the Apple iPhone. Following the successful launch of the iPhone in 2007, companies such as Samsung, HTC, and LG […]

Holding everything else constant, a decrease in the price of GPS systems will result in A) a decrease in the quantity of GPS systems demanded. B) an increase in the demand for GPS systems. C) a decrease in the supply […]

According to a recent study, “Stricter college alcohol policies, such as raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana.” On the basis of this information, how would you describe alcohol […]

Figure 27-9 Given that the economy has moved from A to B in the graph above, which of the following would the appropriate fiscal policy to achieve potential GDP? A) increase taxes B) increase government spending C) decrease the money […]