Archives: Quiz

Which of the following is a result of government price controls? A) Some people win and some people lose. B) Price controls benefit poor consumers but harm producers and wealthy consumers. C) Price controls increase economic efficiency. D) The deadweight […]

If property rights are not well enforced, all of the following are likely to occur except A) fewer goods and services will be produced. B) economic efficiency will be reduced. C) an economy will produce inside its production possibilities frontier. […]

Knowledge capital is A) rival. B) nonrival. C) nonexcludable. D) both B and C Answer: D Suppose a bank has $100,000 in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal […]

Table 2-5 Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. Refer to Table 2-5. What is Finland’s opportunity cost of producing one board foot […]

Which of the following would shift the supply curve for energy drinks to the left? A) a decrease in the expected future price of energy drinks B) an increase in consumer income (assuming that energy drinks are normal goods) C) […]

Figure 10-6 Refer to Figure 10-6. The loanable funds market is in equilibrium, as shown in the figure above. As a result of an increase in the government budget deficit, the ________ for loanable funds will ________, thereby ________ the […]

Table 8-1 Refer to Table 8-1. Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. […]

Table 15-2 Refer to Table 15-2. Consider the hypothetical information in the table above for potential real GDP, real GDP and the price level in 2014 and in 2015 if the Federal Reserve does not use monetary policy. If the […]

What factors are not important in determining exchange rate fluctuations in the long run? A) relative price levels across countries B) relative rates of productivity growth across countries C) preferences for domestic and foreign goods across countries D) speculating in […]

An economic growth model explains A) changes in real GDP per capita in the long run. B) how changes in the money supply affect real interest rates. C) changes in government tax policies over time. D) the growth rate of […]

Inflation that is ________ than what is expected benefits ________ and hurts ________. A) less; lenders; borrowers B) less; borrowers; lenders C) greater; lenders; borrowers D) greater; lenders; no one Figure 19-3 Refer to Figure 19-3. At what level should […]

Which of the following could increase unemployment and inflation simultaneously? A) an increase in oil prices B) expansionary monetary policy C) contractionary monetary policy D) a decrease in the real wage In the dynamic aggregated demand and aggregate supply model, […]

Figure 4-4 Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. At a price of $3 A) the marginal cost of iced tea is greater than the marginal benefit; […]

If labor productivity growth slows down in a country, this will A) accelerate the increase in real GDP per capita. B) accelerate the increase in nominal GDP. C) slow down the increase in real GDP per capita. D) slow down […]

The value of what a U.S.-owned McDonald’s produces in South Korea is included in the U.S. ________ and the South Korean ________. A) GDP; GDP B) GNP; GDP C) GDP; GNP D) GNP; GNP When a celebrity has the desire […]

Suppose your expenses for this term are as follows: tuition: $5,000, room and board: $3,000, books and other educational supplies: $500. Further, during the term, you can only work part-time and earn $4,000 instead of your full-time salary of $10,000. […]

Figure 3-3 Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for original Michelangelo sculptures and the market for Ray Ban sunglasses. Which graph most likely represents which market? A) Graph […]

According to the “Rule of 70,” how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%? A) less than 1 year B) 5 years C) 14 […]

The deflation of the 1930s impacted the U.S. economy because it led some consumers to ________ and because it ________. A) postpone purchases while they waited for prices to fall even lower; increased the burden on borrowers B) demand higher […]

According to Douglass North, the Industrial Revolution occurred in England because A) the British Parliament took control of the government and could credibly commit to upholding property rights. B) the British monarchy took control of the government and pledged not […]

Figure 4-5 Figure 4-5 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R0. Refer to Figure 4-5. Suppose that instead of a price ceiling, the government imposed a price floor of R1. […]

In September, buyers of silver expect that the price of silver will rise in October. What happens in the silver market in September, holding all else constant? A) The quantity demanded decreases. B) The demand curve shifts to the left. […]

The three most important international financial centers today are A) New York, Los Angeles, and London. B) London, Tokyo, and Beijing. C) San Francisco, Paris, and Mexico City. D) Tokyo, London, and New York. The consumer price index (CPI), the […]

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 […]

If the MPC is 0.5, then a $10 million increase in disposable income will increase consumption by A) $2 million. B) $5 million. C) $15 million D) $50 million. According to the World Bank, in 2006, China’s GDP was approximately […]

At market equilibrium, A) demand equals supply. B) quantity demanded equals quantity supplied. C) surpluses are greater than shortages. D) shortages are greater than surpluses. According to new growth theory, A) physical capital is nonexcludable. B) knowledge capital is excludable. […]

When the price level in the United States falls relative to the price level of other countries, ________ will fall, ________ will rise, and ________ will rise. A) imports; exports; net exports B) exports; imports; net exports C) net exports; […]

The key factors in raising standards of living in low-income countries have been increases in A) capital accumulation and the money supply. B) technology and knowledge. C) foreign aid and population. D) income and government ownership of resources. Employers withhold […]

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100. A) CPI; real GDP; nominal GDP B) GDP deflator; real GDP; nominal GDP C) GDP deflator; nominal GDP; real […]

The argument advanced by Milton Friedman for adopting a monetary growth rule is that A) active monetary policy potentially destabilizes the economy. B) the Fed can control the money supply, but not the level of interest rates. C) a constant […]

The quota on imported sugar costs U.S. consumers more than $2 billion annually and protects very few jobs. Why does Congress maintain a sugar quota that protects only a few thousand workers while forcing millions of people to pay higher […]

Figure 4-4 Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. If 20,000 units of iced tea are sold A) the deadweight loss is equal to economic surplus. B) […]

The federal funds rate is A) the interest rate the Fed charges commercial banks. B) the interest rate a bank charges its best customers. C) the interest rate banks charge each other for overnight loans. D) the interest rate on […]

For each of the following pairs of products state which are complements, which are substitutes, and which are unrelated. a. House plants and potato chips b. Eyeglasses and contact lenses c. Motorcycles and gasoline d. Smartphone and smartphone apps e. […]

Article Summary Concerned about slow economic growth, the Fed announced in September 2013 that it would postpone winding down its $85 billion a month bond purchasing program which has been a key component of its monetary stimulus package. Fed Chairman […]

If the Fed lowers the reserve requirement, then this A) increases excess reserves, encourages banks to make more loans, and increases the money supply. B) decreases excess reserves, causes banks to reduce their loans, and decreases the money supply. C) […]

Figure 13-1 Refer to Figure 13-1. Ceteris paribus, a decrease in personal income taxes would be represented by a movement from A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point […]

In the long run, A) GDP = potential GDP. B) unemployment is below its natural rate. C) LRAS and SRAS lie on the same line. D) unemployment is above its natural rate. Which of the following is a true statement […]

Which of the following would be the best measure of the cost of living? A) real GDP B) real GDP per person C) GDP deflator D) consumer price index Which of the following is an example of foreign portfolio investment? […]

Figure 17-6 Refer to Figure 17-6. If firms and workers have rational expectations, an expansionary monetary policy will cause the short-run equilibrium to move from A) point B to point C. B) point C to point A. C) point A […]

What impact might a decrease in the U.S. federal budget deficit have on interest rates and exchange rates in the market for the U.S. dollar? (Assume the exchange rate is stated in terms of foreign currency per U.S. dollar.) A) […]

The expansionary monetary and fiscal policies of the 1960s resulted in A) high inflation rates and high rates of unemployment. B) low inflation rates and low rates of unemployment. C) low inflation rates and high rates of unemployment. D) high […]

The German Hyperinflation of the early 1920s was caused by A) the German government raising funds for expenditures by selling bonds to the central bank. B) an overly aggressive monetary policy implemented to combat a severe recession. C) rising oil […]

A persistent shortage of yen at a given fixed exchange rate (in dollars per yen) is evidence that the yen is ________ versus the dollar. This shortage can be reduced or eliminated through a ________ of the yen. A) undervalued; […]

Figure 12-1 Refer to Figure 12-1. If the economy is at point L, what will happen? A) Inventories have fallen below their desired level, and firms decrease production. B) Inventories have fallen below their desired level, and firms increase production. […]

Which of the following would be directly counted in GDP in 2014? A) kitchen cabinets purchased from Home Depot in 2014 to be installed in a house built in 1997 B) kitchen cabinets built in 1887, extracted from the 1887 […]

Robert Lucas argues that there are ________ returns to human capital, and these productivity increases are not completely captured by individuals as they decide how much education to purchase. As a result, the market produces ________ education and training. A) […]

Figure 5-3 Figure 5-3 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services. Refer to Figure 5-3. With insurance and a third-party payer system, what […]

If net exports are negative, A) net foreign investment is also negative. B) capital inflows must be less than capital outflows. C) net foreign investment is positive. D) Both A and B are correct. If actual inflation is greater than […]

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 […]