Archives: Quiz

The principle that individuals and firms pick the activity level where the incremental benefit of that activity equals the incremental cost of that activity is known as the A) marginal principle. B) principle of opportunity cost. C) principle of diminishing […]

Decreases in the demand for products can be caused by which of the following? A) decreases in income B) decreases in population C) decreases in the prices of substitute goods D) all of the above Figure 19.2 Referring to Figure […]

Recall the Application about why the U.S. federal government took over the debt of the state governments in the late 1700s to answer the following question(s).According to this Application, in exchange for the federal government absolving their debts, the states […]

Suppose that in October the price of a cup of cafe latte was $2.50 and 400 lattes were consumed. In November the price of a latte was $2.00 and 600 lattes were consumed. What might have caused this change? A) […]

The market demand curve is: A) downward sloping and is flatter than an individual’s demand curve. B) upward sloping and is flatter than an individual’s demand curve. C) downward sloping and is steeper than an individual’s demand curve. D) upward […]

Suppose that the population of a country increases. Assuming that people in that country enjoy eating steak, we would predict that the equilibrium quantity of steak will ________ and the equilibrium price of steak will ________ in that country. A) […]

An increase in Swiss prices will cause A) an increase in the demand for U.S. dollars and an increase in the exchange rate of Swiss francs per dollar. B) a decrease in the demand for U.S. dollars and a decrease […]

All of the following are examples of outside lags associated with fiscal policy, except: A) the time it takes for individuals to increase consumption when personal taxes are lowered. B) the time it takes for businesses to increase investment when […]

The economic theory that emphasizes the role of difficulties in coordinating economic affairs as a cause of economic fluctuations is known as A) Keynesian economics. B) investment cycle theory. C) real business cycle theory. D) technology shock theory. The weekly […]

Bananas and apples are substitutes. When the price of bananas rises, and a technological advance in apple production occurs at the same time A) the equilibrium price of apples rises and the equilibrium quantity of apples falls. B) the equilibrium […]

If a technological advance makes it possible to produce bananas at a lower cost: A) the demand for bananas increases. B) the demand for bananas decreases. C) the supply of bananas increases. D) the supply of bananas decreases. Suppose that […]

Diminishing returns to labor implies that: A) as labor increases output increases. B) as output increases, labor increases. C) as labor increases, output decreases. D) as labor increases, labor productivity decreases. A single variable can be illustrated as: A) a […]

Figur e 15.3 Refer to Figure 15.3 If this economy is initially in a recession, the change in price level which would bring the economy back to full employment would lead to a change in money demand, which is reflected […]

If a competitive market operates perfectly, it relies on A) the number of people buying goods. B) the laws of supply and demand. C) how many products can be produced for sale. D) how much people are willing to pay […]

Figure 19.3 Refer to Figure 19.3. The market equilibrium for yen is currently at Point A. A decrease in the price level in Japan causes a movement to Point ________. A) B B) D C) E D) C The time […]

Recall Application 2, “Two Approaches to Determining the Causes of Recessions,” to answer the following questions: According to the application, a recession is likely to be caused by a decrease in aggregate supply if: A) prices change but output does […]

What would be a way for the Federal Reserve to stimulate a sluggish economy? A) print more money B) buy government bonds on the open market C) sell more government bonds D) encourage the stock market When referring to “marginal” […]

The length of time that Congress takes to formulate a tax bill to help the economy is part of the: A) inside lag. B) outside lag. C) identification lag. D) inside-outside lag. Federal discretionary spending consists of: A) interest payments […]

If the Fed wishes to increase long-term investment spending, it must: A) cut the current short-term interest rate. B) convince the public that the expected future short-term rates would be low. C) raise the short-term interest rates but lower the […]

The cost savings from outsourcing often lead to ________ for consumers and ________ for the outsourcing company. A) lower prices; less output B) lower prices; more output C) higher prices; less output D) higher prices; more output Recall the Application […]

If sellers have an expectation of higher future prices: A) the current supply of that good will decrease. B) the current demand for that good will increase. C) the current supply of that good will increase. D) the current demand […]

An individual worked for an airline that went out of business because the airline was unable to meet new federal safety standards. While the individual is unemployed, she will be classified as: A) frictionally unemployed. B) naturally unemployed. C) cyclically […]

Suppose the demand for hot dogs decreases. In the short run, firms that produce hot dogs will experience a fall in prices, which will induce them to A) increase production and increase the number of workers. B) decrease production and […]

Suppose that the quantity supplied of cars exceeds the quantity of cars demanded. We would expect that: A) the price of cars will increase. B) the price of cars will decrease. C) the supply will increase to meet the demand. […]

According to the Application, moving from a country with relatively weak civil liberties to one with relatively strong civil liberties, the economic rate of return on World Bank development projects A) increases by about 15 percentage points. B) more than […]

Recall Application 2, “World Savings and the U.S. Current Account Deficits,” to answer the following questions: Since reaching a high in July 2008, the price of oil has been fluctuating at lower prices worldwide. Based on the argument provided in […]

Commercial banks: A) conducts monetary policy. B) are nonprofit organizations that lend and borrow funds. C) are financial intermediaries that lend funds and accept deposits. D) print all the money used in the US. Refer to Figure 18.4. With an […]

Recall the Application about how society will cope with increased demands for entitlement programs to answer the following question(s). This Application addresses the impact of increasing life expectancy and aging populations on the costs of government entitlement programs such as […]

In an effort to improve the central bank’s credibility in fighting inflation, the central bank in New Zealand: A) has been operating under a law that specifies that its only goal is to maintain stable prices. B) has been running […]

Figure 4.7 If demand and supply rise in Figure 4.7, then the equilibrium: A) price rises. B) price falls. C) quantity rises. D) quantity falls. Firms consider the ________ wage when considering whether to hire additional units of labor. A) […]

The government sometimes creates an excess demand for a product by setting a maximum price at which the product may be sold to consumers. This is sometimes called a A) price ceiling. B) price floor. C) tax. D) subsidy. If […]

If the marginal propensity to import is 0.2, then a $1,000 increase in income will: A) increase imports by $20. B) increase imports by $200. C) increase exports by $20. D) increase exports by $200. Best Buy, a retailer of […]

A price index is: A) a measurement showing how the average price of a bundle of goods changes over time. B) a measurement showing the cost of a bundle of goods at a point in time. C) a sustained increase […]

Figure 7.2 Refer to Figure 7.2. According to classical economists if the wage rate is: A) $12, the wage rate will decline to eliminate the surplus. B) $12, the wage rate will increase to eliminate the shortage. C) $7, the […]

An increase in the supply of dollars: A) increases the dollar price of yen. B) decreases the dollar price of yen. C) increases the yen price of dollars. D) does not change the exchange rate between dollars and yen. Figure […]

Recall Application 1, “Don’t Forget the Costs of Time and Invested Funds,” to answer the following questions. From the Application, the opportunity cost of your invested capital is: A) the interest you could get if you invested in in a […]

The absence of clear property rights A) is caused by capital deepening. B) is common in many developing nations. C) encourages creative destruction. D) all of the above Currency held by the public + demand deposits + travelers checks + […]

Figure 14.3 If the quantity of money demanded is less than the quantity of money supplied, then the interest rate will: A) change in an uncertain direction. B) rise. C) remain constant. D) fall. Bananas and apples are substitutes. When […]

When using the formula PV = K/(1+i)t to calculate the present value of a future payment, a higher t implies: A) a lower present value. B) a higher future value. C) a higher present value. D) a lower future value. […]

The purpose of having the members of the Board of Governors of the Federal Reserve serve fourteen-year terms is to A) ensure that the governors become well-experienced at policymaking. B) insulate the governors’ policy decisions from the influence of presidential […]

The most recent recession that the U.S. experienced started in: A) December 2007. B) November 2001. C) March 2001. D) December 2008. Figure 15.5 Refer to Figure 15.5. An increase in the price level, ceteris paribus, is represented by movement […]

Table 11.6 Refer to Table 11.6. If government spending increases by $100, equilibrium output increases by: A) $100. B) $200. C) $400. D) $800. Figure 10.2 Refer to Figure 10.2 to answer the question below. Points A, B, and C […]

Recall the Application about the level of real wages for laborers in England from 1350 to 1550 to answer the following question(s). In 1348, the bubonic plague, also known as the Black Death, arrived in England from Asia and caused […]

Which of the following is considered a cost of unemployment? A) higher crime, suicide and divorce rates B) severe psychological costs to the job loser C) wasted resources because a worker is not being utilized D) All of the above […]

An increase in the demand for labor means that A) the demand for labor increases as a result of an increase in the real wage rate. B) the demand for labor increases as a result of a decrease in the […]

Because the dK line is drawn as a straight line, then the Solow Model assumes that: A) the depreciation rate in the economy is constant. B) the total depreciation in the economy is constant. C) the total depreciation in the […]

The amount of income that households keep after paying taxes is A) national income. B) personal income. C) personal disposable income. D) value added income. Which of the following situations will arise in the domestic market following the imposition of […]

A specialized worker does not spend time switching from one task to another. This is called: A) continuity. B) innovation. C) functionality. D) repetition. If the government collects taxes using a constant income tax rate t, then the adjusted marginal […]

If the monthly unemployment rate increase mentioned in the Application wound up being a permanent and not temporary change, the best economic decision by the committee would most likely be to A) increase the money supply to stimulate the economy. […]

The net international investment position of the United States measures A) U.S. holdings of foreign assets. B) foreign holdings of U.S. assets. C) U.S. holdings of foreign assets plus foreign holdings of U.S. assets. D) U.S. holdings of foreign assets […]