Archives: Quiz

Foreign direct investment occurs when a Chinese corporation A) purchases stock issued in China. B) opens a new Chinese factory. C) purchases 1,000 shares of stock issued by an American company. D) opens a new factory in France. If the […]

Figure 4-8 Figure 4-8 shows the market for taxi rides. The following question(s) are based on this figure. To legally drive a taxicab in New York City, you must have a medallion issued by the city government. Assume that only […]

How is a stock’s price-earnings ratio found? A) by dividing the dividend by the closing price of the stock B) by dividing the dividend by the firm’s earnings per share C) by dividing current market price of the stock by […]

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated? A) A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per […]

A monopoly is a seller of a product A) with many substitutes. B) without a close substitute. C) with a perfectly inelastic demand. D) without a well-defined demand curve. Consumption spending is $5 million, planned investment spending is $8 million, […]

What is the Congressional act, enacted in 1933 and repealed in 1999, which prevented financial firms from being both commercial banks and investment banks? A) the Sarbanes-Oxley Act B) the Glass-Steagall Act C) the Taft-Hartley Act D) the Cellar-Kefauver Act […]

Assume that a perfectly competitive market is in long-run equilibrium. Suppose as a result of a health hazard associated with the industry’s product, demand decreases drastically. What is the immediate result of this event? A) The market price falls and […]

Article Summary. A growing number of U.S. citizens are going to other countries for elective surgery procedures. Improved quality and significant cost savings abroad have attracted an increasing number of what are being referred to as American medical tourists, especially […]

You agree to lend $1,000 for one year at a nominal interest rate of 10%. You anticipate that inflation will be 4% over that year. If inflation is instead 3% over that year, which of the following is true? A) […]

Figure 3-8 The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S2 (point B). If there is an increase in number of companies producing motorcycles and a decrease […]

When the economy enters a recessionary phase of the business cycle, unemployment tends to A) decrease. B) increase. C) be unchanged. D) change in the same direction as the rate of inflation. Some economists argue that the federal government should […]

Economic costs of production differ from accounting costs in that A) economic costs include expenditures for hired resources while accounting costs do not. B) economic costs add the opportunity costs of a firm using its own resources while accounting costs […]

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)? A) W* = $9.00; Q* = […]

How does the decreasing use of DVD players affect the market for prerecorded DVDs? A) The demand curve for prerecorded DVDs shifts to the right. B) The quantity of prerecorded DVDs demanded decreases. C) The quantity of prerecorded DVDs demanded […]

Private costs A) are borne by producers of a good while social costs are borne by government. B) are borne by consumers of a good while social costs are borne by government. C) are borne by producers of a good […]

In which of the following situations might you expect expansionary monetary policy to reduce the unemployment rate? A) if expectations are rational B) if changes in monetary policy are unanticipated C) if actual inflation is higher than expected D) if […]

By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis, economists assume that the most important determinant of the demand for a good is A) consumer income. B) consumer tastes and preferences. C) […]

Table 11-1 Table 11-1 shows the technology of production at the Matsuko’s Mushroom Farm for the month of May. Diminishing marginal returns sets in when the ________ worker is hired. A) 2nd B) 3rd C) 4th D) None of the […]

Perfect competition is characterized by all of the following except A) heavy advertising by individual sellers. B) homogeneous products. C) sellers are price takers. D) a horizontal demand curve for individual sellers. In the United States, health care spending on […]

An increase in the supply of capital, which is a complement to labor, will lead to A) a decrease in the quantity of labor demanded. B) an increase in the demand for labor. C) a decrease in the demand for […]

What happens in the primary market? A) primary inputs like electricity are sold B) a corporate financial manager will resell previously issued shares of stock C) newly issued claims are sold by the borrowing firm to the initial buyer D) […]

Table 12-1 Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units. If the market price of each camera case is […]

Table 17-7 Dante owns a pencil factory and faces the situation shown in the table and the cost of renting a machine is $240 per week. a. Fill in the blanks in the table and determine the profit-maximizing number of […]

Figure 29-1 Currency speculators believe that the value of the euro will decrease relative to the dollar. Assuming all else remains constant, how would this be represented? A) Supply would decrease, demand would decrease and the economy moves from B […]

An isocost line shows A) all the possible combinations of two inputs that a firm can use to produce its output. B) all the possible combinations of two inputs a firm can use that have the same total cost. C) […]

The Clayton Act is an antitrust law that was passed to A) outlaw monopolization. B) address loopholes in the Sherman Act. C) prohibit charging buyers different prices if the result would reduce competition. D) toughen restrictions on mergers by prohibiting […]

If aggregate expenditure is less than GDP, how will the economy reach macroeconomic equilibrium? A) Inventories will decline, and GDP and employment will decline. B) Inventories will rise, and GDP and employment will decline. C) Inventories will decline, and GDP […]

If wages and prices adjust slowly, we would expect expansionary monetary policy to be A) less likely to reduce the natural unemployment rate. B) more likely to reduce inflation. C) more likely to affect the unemployment rate. D) more likely […]

All of the following questions or statements regarding medical school are positive except: A) How do changes in expected future incomes affect the decisions of medical students about which specialty to choose? B) Medical students who enter specialized fields make […]

Suppose your expenses for this term are as follows: tuition: $28,000, room and board: $9,000, books and other educational supplies: $2,500. Further, during the term, you can only work part-time and earn $16,000 instead of your full-time salary of $42,000. […]

Which of the following characteristics iscommon to monopolistic competition and perfect competition? A) Firms produce identical products. B) Entry barriers into the industry are low. C) Each firm faces a downward -sloping demand curve. D) Firms take market prices as […]

Figure 15-7 Suppose the Fed lowers its target for the federal funds rate. Using the static AD–AS model in the figure above, this situation would be depicted as a movement from A) A to B. B) B to A. C) […]

Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R0. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What is the quantity […]

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. If a minimum wage of $9.50 is mandated there will be a A) shortage of 10,000 units of labor. B) […]

Figure 26-10 In the figure above, suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by the Federal […]

Consider the market for blackjack dealers in Las Vegas. In each of the following cases, explain what happens to the equilibrium wage rate and the quantity of blackjack dealers hired. a. Three new large resort casinos open in Las Vegas. […]

By tying the salaries of top corporate managers to the price of the corporation’s stock, corporations hope to avoid A) corporate governance. B) conflict between the CFO and the CEO. C) the principal-agent problem. D) paying high salaries to their […]

Figure 19-5 The Chinese government pegs the yuan to the dollar, at one of the specified exchange rates on the graph, such that it overvalues its currency. Using the figure above, this would generate A) a shortage of yuan equal […]

If a graph has a line that shows the amount of outsourcing in the last ten years, it is known as A) a pie chart. B) a time-series graph. C) a demand curve for outsourcing. D) a supply curve of […]

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents? A) According to an article by in the American Journal of Public Health by Edward Kaplan and Michael Merson of Yale University School of […]

Which of the following is not a consequence of the Fed changing the reserve requirement? A) Changes in the ratio are easily incorporated into banks’ routine management. B) Decreasing the ratio will increase excess reserves. C) Increasing the ratio will […]

Monetarists think that the Fed should use ________ as a target when conducting monetary policy. A) the money supply B) the federal funds rate C) the Treasury bill rate D) the inflation rate E) the unemployment rate Table 23-4 Given […]

Figure 16-5 Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price. What is the revenue collected from the fixed […]

An example of a transfer payment is A) a teacher’s paycheck. B) a paycheck for a member of the National Guard. C) a welfare payment. D) a purchase of a new bridge in Alaska. Suppose electronic cigarette manufacturer NJOY is […]

If the United States is a “net borrower” from abroad, A) the United States must be exporting more than it is importing. B) net capital flows must be negative. C) domestic saving is less than domestic investment. D) net foreign […]

Table 19-18 A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above. What is the GDP deflator in 2013 if 2013 […]

Which of the following is not part of the “taxes” provision of the Patient Protection and Affordable Care Act (ACA)? A) Pharmaceutical firms and health insurance firms will pay new taxes. B) Investors earning more than $200,000 will pay a […]

Long-run equilibrium in a monopolistically competitive market is similar to long-run equilibrium in a perfectly competitive market in that in both markets, firms A) produce at the minimum point of their average total cost curves. B) produce where price equals […]

Table 9-11 Production and Consumption Production Without Trade With Trade Denmark and Belize can produce both clocks and hats. Table 9-11 shows the production and consumption quantities without trade, and the production numbers with trade. Prior to trade, what was […]

GDP in a country grew from $10 billion to $14 billion over the span of 5 years. The average annual growth rate of GDP was A) 4%. B) 7%. C) 10%. D) 40%. If an economy experiences deflation, the real […]