Archives: Quiz

Table 7-6 Production and Consumption Production Without Trade With Trade Estonia and Morocco can produce both swords and belts. Table 7-6 shows the production and consumption quantities without trade, and the production numbers with trade. Refer to Table 7-6. If […]

A full-time student who is not working is categorized as A) unemployed. B) employed. C) not in the labor force. D) a discouraged worker. E) frictionally unemployed. The increase in government spending on unemployment insurance payments to workers who lose […]

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 […]

Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________. A) decrease; decrease B) decrease; increase C) increase; […]

If the marginal cost of producing a television is constant at $200, then a firm should produce this item A) only if the marginal benefit it receives is greater than $200 plus an acceptable profit margin. B) as long as […]

The Taylor rule helps explain the relationship between the Fed’s ________ and ________. A) money supply target; economic conditions B) money supply target; the federal funds target C) federal funds target; the monetary growth rule D) federal funds target; economic […]

The existence of the principal-agent problem A) increases the risk of buying stock in a corporation. B) increases the risk of becoming the sole proprietor of a business. C) implies that managers that have the same incentives as the board […]

Scenario 1-1 Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, “Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 […]

Which of the following is not an example of a transfer payment? A) unemployment insurance payments B) health insurance payments to an army private C) social security payments to retirees D) social security payments to disabled persons When the government […]

According to the U.S. Treasury, A) the government will not accept cash in payment of taxes. B) creditors do not have to accept cash in payment of debts. C) firms do not have to accept cash as payment for goods […]

A decrease in a fixed exchange rate from $1.75 per pound to $1.60 per pound is called a(n) ________ of the pound. A) devaluation B) depreciation C) appreciation D) revaluation A decrease in individual income taxes ________ disposable income, which […]

Which of the following would cause the short-run aggregate supply curve to shift to the right? A) an increase in the price level B) a decrease in inflation expectations C) a technological advance D) an increase in interest rates Figure […]

If the balance of the current account in the United States is -$900 billion, which of the following is most likely to be true? A) The balance on the financial account is positive. B) The trade balance is positive. C) […]

Economist Steve Landsburg has pointed out that Ebenezer Scrooge’s change in behavior from miser to spender might actually be detrimental to the economy because A) Scrooge’s miserly saving helped contribute to the production of investment goods rather than consumption goods. […]

________ save a ________ of their income. This ________ capital in their economy and raises economic growth. A) Developing countries; large proportion; decreases B) Developing countries; small proportion; increases C) High-income countries; large proportion; increases D) High-income countries; small proportion; […]

At macroeconomic equilibrium, A) total investment equals total inventories. B) total spending equals total production. C) total consumption equals total production. D) total taxes equal total transfers. Table 9-5 Refer to Table 9-5. Consider the following values of the consumer […]

Tanesha sells homemade candles over the Internet. Her annual revenue is $64,000 per year, the explicit costs of her business are $17,000, and the opportunity costs of her business are $22,000. What is her economic profit? A) $17,000 B) $25,000 […]

Refer to Figure 17-2. Suppose the economy is at point C in the figure above. If workers adjust their expectations of inflation, which of the following will be true? A) The short-run Phillips curve will shift to the right. B) […]

Figure 10-1 Refer to Figure 10-1. Which of the following is consistent with the graph depicted above? A) An expected recession decreases the profitability of new investment. B) Technological change increases the profitability of new investment. C) The government runs […]

The balance of payments includes which three accounts? A) the current account, the financial account, and the capital account B) the capital flows account, the financial account, and the trade account C) the net investment account, the net exports account, […]

Figure 2-9 Figure 2-9 shows the production possibilities frontiers for Greenland and Iceland. Each country produces two goods, snow cones and popsicles. Refer to Figure 2-9. What is the opportunity cost of producing 1 popsicle in Iceland? A) 1 1/2 […]

If a corporate bond with a face value of $5,000 pays yearly coupon payments of $100, what is the coupon rate? A) 2% B) 5% C) 10% D) 20% An advantage of the establishment survey over the household survey of […]

Figure 4-3 Figure 4-3 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price […]

Figure 10-3 Refer to Figure 10-3. Which of the following is consistent with the graph depicted above? A) Taxes are changed so that real interest income is taxed rather than nominal interest income. B) An expected recession decreases the profitability […]

Figure 18-1 Refer to Figure 18-1. Europe experiences an economic boom. Assuming all else remains constant, this would be represented as a movement from A) D to A. B) D to C. C) C to B. D) B to A. […]

An example of a factor of production is A) a car produced by an auto manufacturer. B) a worker hired by an auto manufacturer. C) a loan granted to an auto manufacturer. D) the automobiles exported by an auto manufacturer. […]

What are earnings per share equal to? A) the last dividend payment made B) total dividend payments plus retained earnings divided by outstanding stock shares C) the amount by which the stock’s market price has increased in the last year […]

Securities dealers that trade stocks and bonds outside exchanges comprise the A) foreign exchange market. B) over-the-counter market. C) NASDAQ market. D) outlet market. Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to […]

Two consequences of asymmetric information are adverse selection and moral hazard. An important distinction between the two is A) adverse selection exists prior to the completion of a transaction while moral hazard occurs after the transaction is completed. B) moral […]

Net foreign investment minus net foreign portfolio investment is equal to A) capital outflows. B) net foreign financial investment. C) the balance of trade. D) net foreign direct investment. Figure 3-1 Refer to Figure 3-1. If the product represented is […]

If the price of propane-fueled gas grills was to decrease, then A) the demand for propane would decrease. B) the demand for propane would increase. C) the quantity of propane demanded would increase. D) the quantity of propane demanded would […]

The increase in quality bias in the consumer price index refers to the idea that price increases in the CPI reflect pure inflation, but ________ quality increases. This causes the CPI to ________ the cost of the market basket. A) […]

All else being equal, if the rate of growth in productivity in Spain is greater than the rate of growth in productivity in the United States, the euro A) will decrease in value relative the U.S. dollar. B) will increase […]

If inflation in Mexico is lower than it is in the United States, A) the purchasing power of the peso in buying Mexican goods will fall relative to the dollar. B) the value of the dollar will rise in the […]

Table 9-3 Refer to Table 9-3. Assume the market basket for the consumer price index has three products € Cokes, hamburgers, and CDs € with the following values in 2006 and 2013 for price and quantity: The Consumer Price Index […]

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. Refer to Figure 2-2. If Vidalia chooses to produce 40 dozen orchids, how many roses can it produce to […]

Figure 2-8 Figure 2-8 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. Refer to Figure 2-8. What is the opportunity cost of producing 1 ton of pineapples in Costa Rica? […]

Suppose the federal budget deficit for the year was $100 billion and the economy was in a recession. If the economy had been at potential GDP, it is estimated that tax revenues would have been $60 billion higher and government […]

Identify whether each of the following transactions will take place in the factor market or in the product market: a. Shondra buys a Harley-Davidson Softail motorcycle. b. Aimee works 20 hours a week at a grocery store. c. Gustavo sells […]

If a corporation goes bankrupt, bondholders have ________ on the firm’s assets. A) no claim B) third claim, after the IRS and stockholders, C) second claim, after stockholders, D) first claim In a market economy, those who are willing and […]

Which of the following would occur if the United States switched from income taxes to consumption taxes? A) Consumption would increase. B) The supply of loanable funds would decrease. C) Saving would increase. D) Tax revenues would rise. Dollar bills […]

Table 3-2 Refer to Table 3-2. The table above shows the demand schedules for cashews of two individuals (Jordy and Amy) and the rest of the market. At a price of $10, the quantity demanded in the market would be […]

National income is defined as A) gross national product plus transfer payments. B) gross national product less retained earnings plus transfer payments. C) gross domestic product less retained earnings plus transfer payments. D) gross domestic product less the consumption of […]

A policy that offers parents a tax reduction based on how much they are saving for their children’s college education should ________ the equilibrium level of loanable funds and ________ the rate of long-term growth. A) decrease; increase B) increase; […]

If the current account is in deficit and the capital account is zero, then A) the financial account must be in surplus. B) the balance of trade must be in surplus. C) the balance of payments must be in surplus. […]

The balance of trade is defined as A) the difference between the balance of the current account and the balance of the capital account. B) the difference between the value of the goods and services a country exports and the […]

A Big Mac costs $4.00 in the United States and 9.00 reals in Brazil. If the exchange rate is 2 reals per dollar, purchasing power parity predicts that A) the dollar is undervalued. B) the dollar is overvalued. C) the […]

In a closed economy, A) I = Y – C – G. B) I = Y + C – G. C) I = Y – C + G. D) I = Y + C + G. If the growth rate […]

By the 2000s, an important change in the mortgage market had occurred when ________ became significant participants in the secondary market for mortgages. A) investment banks B) Federal Reserve Banks C) commercial banks D) savings banks When Americans decrease their […]

A person’s wealth A) is a measure of how much money the person has. B) equals the value the person’s assets minus his or her liabilities. C) is measured independent of his or her current and expected future income. D) […]