Archives: Quiz

The long-run average total cost (LRATC) curve a. indicates the per-unit cost of producing various rates of output with a specific size of plant but variable levels of labor and technology. b. indicates the minimum per-unit cost that can be […]

When a banker accepts a deposit of $1,000 in cash and puts $200 aside as required reserves and then makes a loan of $800 to a new borrower, this set of transactions a. decreases the money supply by $1,000. b. […]

A decrease in the dollar price of foreign currency would cause a. the nation’s imports to increase and exports to decline. b. the nation’s exports to increase and imports to decline. c. both imports and exports to decline. d. both […]

Use the figure to answer the following question(s). Figure 10-2 What is the maximum economic profit this firm depicted in Figure 10-2 will be able to earn? a. zero b. $20 c. $30 d. $100 Which of the following is […]

The resource market involves transactions dealing with a. natural resources and financial services. b. the borrowing and lending of financial capital. c. the buying and selling of final goods and services. d. labor services, natural resources, and physical capital. When […]

In the short run, the firm’s average fixed costs a. always increase as output increases. b. always decline as output increases. c. equal zero. d. remain constant as output expands. Which of the following is true of high and variable […]

When a conflict arises in a major oil-exporting area of the world, such as the Middle East, the price of gasoline already in the storage tanks at local gas stations usually increases. Which of the following best explains this occurrence? […]

After a natural disaster, such as a hurricane, the increased demand for certain items (like lumber, electric generators, and chainsaws) causes their prices to rise. These higher prices a. discourage the flow of these items into the area. b. encourage […]

The optimal plant size depends on a. whether the firm confronts diminishing returns on its fixed factors of production. b. the output the firm expects to produce. c. whether the plant uses capital-intensive or labor-intensive production techniques. d. the preferences […]

Under a flexible exchange system, which of the following will most likely cause a nation’s currency to appreciate on the foreign exchange market? a. an acceleration in the nation’s inflation rate b. a balance of trade deficit c. a current […]

Which of the following actions would the Fed undertake if it wants to follow a more restrictive monetary policy? a. sell some of its holdings of government bonds b. decrease government expenditures c. urge the Treasury to sell more U.S. […]

One difficulty of computing the value of GDP is that there are no market prices for a. exports and imports. b. business investments. c. government goods and services. d. resource values. Which of the following is characteristic of a firm […]

The student government associations at several universities have experimented with purchasing bicycles to leave around campus for everyone’s use. Anyone who needs the bike can use it, and they are not allowed to lock the bike up or take it […]

An appreciation in the value of the U.S. dollar would a. encourage foreigners to make more investments in the United States. b. encourage U.S. consumers to purchase more foreign-produced goods. c. increase the number of dollars that could be purchased […]

When competition is present and private ownership rights are clearly defined and securely enforced, a. production and trade are encouraged and plunder (taking from others) is discouraged. b. people get ahead by helping others in exchange for income. c. employers […]

The GDP deflator is designed to adjust nominal GDP a. for changes in the unemployment rate. b. for changes in prices. c. for problems that arise because of externalities. d. for changes in interest rates. Which of the following will […]

If the U.S. price level decreased relative to price levels in foreign countries, what would be the impact on domestic aggregate supply and aggregate demand curves? a. the aggregate supply curve would shift outward and the aggregate demand curve would […]

The highest valued alternative that must be given up in order to choose an option is called a. opportunity cost. b. utility. c. scarcity. d. disutility. For a typical product, a decrease in consumer income will cause the market demand […]

Which of the following is true? a. During any given year, the size of the economic pie available for allocation to individuals is fixed. b. When the link between worker productivity and reward is weakened, individuals have less incentive to […]

The real wages of workers will tend to be high when a. output per worker is high. b. capital is scarce. c. industries are automating at a slow rate. d. profits are low. The actual rate of unemployment will generally […]

A decrease in aggregate demand and the subsequent cutbacks in production lead to a. frictional unemployment. b. cyclical unemployment. c. cost-push unemployment. d. structural unemployment. e. transitory unemployment. If firms in a competitive price-searcher market are incurring economic losses, which […]

Which of the following shifts short-run, but not long-run aggregate supply to the right? a. a decrease in the actual rate of inflation b. a decrease in the expected rate of inflation c. a decrease in the capital stock d. […]

According to the Keynesian view, the rapid increase in government spending and large budget deficits in response to the recession of 2008-2009 would a. slow the recovery process and result in weak long-term growth of real GDP. b. speed the […]

Use the figure to answer the following question(s). Figure 8-6 At what output does the firm depicted in Figure 8-6 begin to experience diminishing marginal returns to its variable factors of production? a. q1 b. q2 c. q3 d. an […]

Property right enforcement and markets can be imperfect, so environmental regulations are often used to correct market failures that result in environmentaldamages. But governmental regulation itself can be imperfect because a. both environmental harms and the benefits of reducing them […]

Use the figure below to answer the following question(s). Figure 9-2 The economy depicted in Figure 9-2 is a. operating at less than full employment. b. operating at more than full employment. c. in short-run equilibrium but not long-run equilibrium. […]

A competitive price-searcher market is characterized by firms a. being able to choose their price and by low barriers preventing firms from entering or leaving the market. b. being able to choose their price and by high barriers preventing firms […]

An institution that issues a currency at a fixed rate in exchange for an equivalent amount of another designated currency and invests the funds in bonds and liquid assets that provide 100 percent backing for the currency units issued is […]

Which of the following will lead to a decrease in supply of a good? a. an increase in the price of the good b. an increase in consumer incomes c. an increase in the price of an important resource used […]

The primary tool of fiscal policy is a. the money supply. b. the stock market. c. the federal budget. d. regulation of the bond market. Use the figure to answer the following question(s). Figure 9-4 Figure 9-4 indicates the cost […]

Federal budget deficits generally grow during recessions because a. both tax revenues and transfer payments decrease. b. both tax revenues and transfer payments increase. c. tax revenues decrease while transfer payments increase. d. tax revenues increase while transfer payments decrease. […]

If a nation wants to maintain a fixed exchange rate at a time when supply and demand are causing an excess of imports over exports, the nation might a. shift to a more expansionary monetary policy. b. shift to a […]

In order to increase the money supply, the banking system must have a. required reserves. b. the authority to buy corporate stocks. c. the authority to print U.S. currency. d. excess reserves. e. the authority to engage in interstate banking. […]

A subsidy on a product will generate more actual benefit for consumers (and less for producers) when a. the supply of the product is relatively inelastic. b. the supply of the product is relatively elastic. c. the demand for the […]

Even countries that depend primarily on market forces to resolve the basic economic questions will usually rely on the collective decision-making process to a. determine the prices of goods and resources. b. allocate goods that are essential to life. c. […]

If scientific research produces a technological breakthrough in the production of computer memory, then a. business costs will increase, profits will fall, and production will decrease. b. business costs will fall, but profits will also fall, and production will decrease. […]

How will a reduction in the price of cotton influence the market for blue jeans? a. The cost of producing blue jeans will fall, and the supply curve for blue jeans will shift to the left. b. The cost of […]

In a market economy, which of the following is most important if a worker is going to achieve high earnings? a. hard work b. provision of goods and/or services that others value highly c. having a graduate degree in a […]

According to the Keynesian view, if policy makers thought the economy was about to fall into a recession, which of the following would be most appropriate? a. a change in government spending and taxation that will lead to a budget […]

In the Central Utah Project, the water delivered from dams to users a. is very well utilized, because planners allocated water to its highest valued uses and users. b. cannot generally be traded, so is often wastefully used in low-valued […]

A strike, or the threat of one, is most likely to be effective when a. demand for the firm’s product is strong. b. foreign competition for the product is high. c. the firm has a high product inventory. d. demand […]

Which of the following is the most efficient way to reduce pollution emissions? a. Emission standards that cap allowable pollution. b. Government pollution charges or taxes. c. Legislated regulations limiting the quantity of emissions allowed by each firm. d. Enforcement […]

Which of the following transactions would increase GDP? a. a new tricycle purchased at a department store sale by the parents of a three-year-old child b. the retirement check your uncle received for spending 25 years in the Marine Corps […]

Use the figure below to answer the following question(s). Figure 11-2 Refer to Figure 11-2. When the economy is operating at point a, reliance on the self-correcting mechanism will a. result in higher resource prices and a shift to the […]

As the large baby-boom generation moves into the retirement phase of life, this will a. make it easier for the federal government to finance its budget deficit because the baby-boomers will be the wealthiest generation of retirees in American history. […]

Legislation that offers immediate and easily recognized benefits, at the expense of costs that are observable only in the distant future, is often enacted even when economic inefficiency results. This can be expected because of a. a lack of incentive […]

Figure 11-21 In Figure 11-21, the increase in consumer surplus that occurs when price is set equal to marginal cost rather than at the profit-maximizing level, as it would be in an unregulated monopoly, is shown by area a. abc […]

Which of the following is a normative economic statement? a. If we doubled the size of welfare payments, we would reduce the number of homeless persons. b. Companies should be concerned with more than just their profits. c. An increase […]

The burden of a tax will fall primarily on buyers when the a. demand for the product is highly inelastic and the supply is relatively elastic. b. demand for the product is highly elastic and the supply is relatively inelastic. […]

Compared to low-income families, a larger proportion of high-income families a. is headed by a person with a college degree. b. has both a husband and a wife who work full time. c. is headed by a person between the […]