Archives: Quiz

Is it possible for a perfectly competitive firm to be maximizing profits, but not achieving resource allocative efficiency? a. Definitely yes, because it is impossible to achieve both at the same time. b. Yes, it is possible, but it is […]

The coordinates of point A are 20 units of X and 36 units of Y. The coordinates of point B are 22 units of X and 30 units of Y. With X on the horizontal axis and Y on the […]

A rightward shift in the demand curve for tennis balls could be caused by a. a fall in the price of tennis balls. b. a fall in the price of tennis rackets. c. a rise in the price of tennis […]

Which of the following was not given as a reason for income differences in the textbook? a. luck b. low minimum wage c. wage discrimination d. risk taking A government agricultural policy in which a guaranteed price is set and […]

The absolute price of a good is the price of that good in terms of another good. a. True b. False Economist Charles Kindleberger (a proponent of fixed exchange rates mentioned in the text) would agree with which of the […]

Which of the following is a possible rationing device? a. dollar price b. first-come-first-served c. brute force d. a and b e. a, b, and c The quantity demanded of loanable funds is inversely related to the rate of interest. […]

A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers fatalities per accident from 0.11 to 0.08 while raising the number of accidents per period from 100,000 to any more than a. 108,000. b. 111,111. […]

The primary intent of antitrust legislation is to a. ensure that product safety standards are met. b. eliminate positive economic profits. c. eliminate price discrimination. d. control monopoly power and preserve and promote competition. e. all of the above Saying […]

The main difference between the short run and the long run is that a. firms earn losses in the long run, but not in the short run. b. the long run always refers to a time period of one year […]

The absence of value judgments is the essence of a. normative economics. b. positive economics. c. microeconomics. d. macroeconomics. Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health […]

In order for an individual to achieve consumer equilibrium through the consumption of two goods, A and B, that individual must fulfill the condition a. TUA = TUB. b. TUA/PA = TUB/PB. c. MUA = MUB. d. MUA/PA = MUB/PB. […]

The cross elasticity of demand coefficient between Coca-Cola and Pepsi Cola would be expected to be negative. a. True b. False The Alchian and Demsetz theory of why business firms exist suggests that a. there are only advantages to team […]

The standard definition of “recession” is a. a period of a positive frictional unemployment rate. b. two consecutive quarters of falling Real GDP. c. the lowest point in a business cycle. d. a period of negative inflation. As a result […]

According to the Keynesian transmission mechanism, an increase in the money supply causes a(n) __________ in the interest rate and a(n) __________ in investment, which in turn causes a(n) __________ in total expenditures and aggregate demand. a. increase; decrease; decrease […]

A tariff on avocadoes ______________ the price of avocadoes, _____________ consumers’ surplus for avocado buyers, _______________ producers’ surplus of avocado growersand __________________ tariff revenue. Because the loss to _____________ is more than the gain to ___________________, there is a net […]

The U.S. income tax is currently a __________ tax. a. progressive b. proportional c. regressive d. proactive One reason that helps to explain the law of supply is the law of a. diminishing marginal utility. b. diminishing marginal returns. c. […]

The coupon rate is equal to the annual coupon payment a. divided by the face value of the bond. b. divided by the price paid for the bond. c. multiplied by the price paid for the bond. d. divided by […]

Here is a consumption function: C = C0 + MPC(Yd). If MPC is 0.95, then we know that a. as Yd rises by $1, Co rises by $0.95. b. as Yd rises by $1, C rises by $0.95. c. Yd […]

The M2 money supply a. includes M1. b. is commonly referred to as the broad definition of the money supply. c. includes savings deposits. d. is larger than M1. e. all of the above Samuelson and Solow, in their 1960 […]

One major reason for the law of demand is that a. one price changing requires at least one other price to change in the opposite direction. b. people substitute relatively lower-priced goods for relatively higher-priced goods. c. a higher price […]

If income elasticity of demand for food is 1.55 it follows that a. a 10 percent rise in the price of food lowers the quantity demanded of food by 15.5 percent. b. if income rises by 10 percent, consumption of […]

Which of the following exchange rates between the dollar and the peso would a Mexican buyer of American goods most prefer? a. $0.10 = 1 peso b. $0.08 = 1 peso c. $0.06 = 1 peso d. $0.04 = 1 […]

Exhibit 2-6 Which graph depicts the result of an increase in the number of illegal immigrants entering the country? a. (1) b. (2) c. (3) d. (4) e. none of the above When a production function is graphed with Real […]

If the economy is operating at a point beyond its institutional production possibilities frontier (institutional PPF), then the economy is a. producing Natural Real GDP and operating at the natural unemployment rate. b. producing less than Natural Real GDP and […]

Small-denomination time deposits are part of M2, but not part of M1. a. True b. False The ability of banks to get insurance from______________ encourages banks to take on a little bit _________ risk than they would in the absence […]

The aggregate demand (AD) curve is the graphical representation of production in the short run. a. True b. False When the current state of the economy is such that Real GDP is less than Natural Real GDP, the economy is […]

As the price level rises, ceteris paribus, people holding some of their wealth in monetary form become a. less wealthy and they buy less. b. more wealthy and they buy more. c. less wealthy and they buy more. d. more […]

The real business cycle theory holds that the business cycle a. originates as a result of factors affecting aggregate supply. b. originates as a result of factors affecting aggregate demand. c. is the result of correctly anticipated policies. d. is […]

In recent years, the Chinese government€s actions have had an impact on interest rates in the United States. a. True b. False The average tariff rate in the US today is about 40 percent, but it was only 1.6 percent […]

China has intervened in the foreign exchange market to maintain the value of its currency vis–vis other countries. a. True b. False An American good with a price tag of $89 costs 809 pesos. The exchange rate must be approximately […]

In the history of banking, warehouse receipts refer to receipts a. that goldsmiths once issued acknowledging that they held a customer’s gold. b. for storing furniture in a warehouse. c. goldsmiths issued to each other when they borrowed gold. d. […]

At a price for which quantity demanded exceeds quantity supplied, a __________ is experienced, which pushes the price __________ toward its equilibrium value. a. surplus; downward b. surplus; upward c. shortage; downward d. shortage; upward Attempts to determine “what is” […]

Look at the following data: The frictional unemployment rate is 2 percent, the structural unemployment rate is 3.5 percent, and the actual unemployment rate is 9.5 percent.The natural unemployment rate is ____________ percent and the cyclical unemployment rate is __________ […]

The short-run aggregate supply (SRAS) curve shows the quantity a. demanded of all goods and services at different price levels, ceteris paribus. b. supplied of all goods and services at a particular price level, ceteris paribus. c. supplied of all […]

Exhibit 34-3 The world price is PW. At this price, Americans purchase Q1 from U.S. producers and import the quantity __________ from foreign producers. a. Q4 – Q1 b. Q2 – Q1 c. Q2 – Q4 d. Q2 – Q3 […]

Exhibit 4-7 How many fewer persons work in the unskilled labor market at the minimum wage (WM) than at the equilibrium wage (W1)? a. (N2 – N1) persons b. (N1 – N3) persons c. (N2 – N3) persons d. N3 […]

Exhibit 14-1 What sequence of points shows the short- and long-run consequences of a rise in the money supply under monetarist assumptions? a. A-E-B b. B-D-A c. A-D-B d. B-A Suppose the economy is self-regulating, the price level is 120, […]

A voter will tend to be more informed if the issue in question a. affects everyone very little. b. is complicated and difficult to understand. c. has an intense and a direct effect on the voter. d. is of special […]

Exhibit 3-4 At a price of $2 _______________ units will be exchanged. a. 5 b. 10 c. 15 d. 20 A simultaneous rightward shift in SRAS and leftward shift in AD may come from the dollar _______________ in the aftermath […]

In the monetarist version of the AD-AS framework, an increase in the money supply produces a __________ shift of the __________ curve. a. rightward; AD b. rightward; SRAS c. leftward; AD d. leftward; SRAS According to real business cycle theorists, […]

According to the new classical theory, if the public correctly anticipates a government policy to increase aggregate demand, then a. there will be a short-run tradeoff between inflation and unemployment, but there will not be a long-run tradeoff. b. there […]

Exhibit 15-1 A Keynesian monetary policy to eliminate a recessionary gap can be portrayed as a move between points a. A and B. b. B and C. c. C and D. d. D and A. You turn to the Treasury […]

Exhibit 34-2 The U.S. demand and supply for a good are shown. Under a policy of free trade, the world price is PW. At this price, consumers’ surplus equals the area of a. PW DE. b. PW AB. c. PW […]

If the U.S. dollar appreciates in the foreign exchange market, U.S. exports will be __________ and U.S. imports will be __________. a. relatively less expensive; relatively less expensive b. relatively less expensive; relatively more expensive c. relatively more expensive; relatively […]

The sum of durable goods, nondurable goods, and services equals a. investment. b. fixed investment. c. government purchases. d. consumption. e. net exports. Exhibit 2-8 For Maria, the opportunity cost of producing one unit of good Y is ___________ unit(s) […]

Economists who are in favor of smaller government tend to prefer ________________ when expansionary _______________ policy is needed to raise aggregate demand. a. tax cuts; fiscal b. tax cuts; monetary c. more government spending; fiscal d. more government spending; monetary […]

The short-run aggregate supply curve shows the various amounts of real output that producers are willing to a. sell at different profit levels. b. sell at different price levels. c. buy at different income levels. d. buy at different price […]

If Jorge is temporarily absent from his regular job because of an industrial dispute, the Bureau of Labor Statistics will classify him as unemployed. a. True b. False Those economists who view the AS curve as being vertical see more […]

Based on information provided in the textbook, which of the following statements is true regarding taxing millionaires and the budget deficit in 2012? a. If the government had taxed all income earners who earned more than $1 million a 100 […]

Harvard University admits a larger percentage of applicants than does India€s Indian Institute of Technology. a. True b. False Exhibit 8-3 A shift in aggregate demand from AD1 to AD2could have been the result of a. a decrease in the […]