Archives: Quiz

If marginal cost exceeds marginal revenue, a profit-maximizing monopolist will a. restrict output to increase the price even higher. b. raise price and expand output to increase profit. c. lower price and expand output to increase profit. d. attempt to […]

A Japanese automobile manufacturer building an auto plant in the United States creates a a. supply of dollars and demand for yen in the foreign exchange market. b. demand for dollars and a supply of yen in the foreign exchange […]

Retired persons travel by bus and automobile more frequently than do business executives, who more commonly use air travel. An economic explanation for this would be that a. business executives have more time to travel. b. it is more important […]

Which of the following is true of debt financing? a. Elected political officials will find debt financing attractive because it allows them to provide voters with visible current benefits while pushing the more visible costs into the future. b. Debt […]

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire? a. Most people do not know the names of their legislators in the U.S. Congress, but those same individuals are likely […]

A profit-maximizing price searcher will expand output to the point where a. total revenue equals total cost. b. marginal revenue equals marginal cost. c. price equals average total cost. d. price equals marginal cost. The share of the labor force […]

Which of the following will be most likely to contribute to the growth of a less-developed country? a. price controls that keep the cost of agricultural products low b. rapid population growth c. exchange rate controls and export restrictions d. […]

According to the Economic Freedom of the World measure, between 2000 and 2010 the economic freedom of the United States a. declined and its rank fell from third to tenth during this period. b. increased, and the U.S. became the […]

Figure 4-25 Refer to Figure 4-25. The tax causes a reduction in producer surplus that is represented by area a. A. b. B + C. c. D + E. d. F. Within the AD/AS model, if consumers increase their savings […]

A shift to a more expansionary monetary policy will have its greatest effect on a. the interest rate on a 30-year fixed-rate mortgage. b. the interest rate on 10-year government bonds. c. short-term interest rates. d. the 15-year corporate bond […]

When a government subsidy is granted to the buyers of a product, sellers can end up capturing some of the benefit because a. the market price of the product will fall in response to the subsidy. b. the market price […]

When economists say an activity is consistent with economic efficiency, they mean a. a majority of citizens favor the activity. b. the benefits that result from the activity exceed the costs. c. the number of people who gain from the […]

Because the height of the demand curve measures the marginal value of the good to consumers, the fact that a demand curve slopes downward to the right illustrates that a. as more of a product is consumed, consumers will value […]

The political popularity of a tariff on imported goods that compete with products of a well-established domestic industry is a. surprising since one would expect the political power of consumers to override the interests of even a well-established domestic industry. […]

If you were a government official that wanted to raise the equilibrium price of milk, which of the following actions would you take? a. Take milk from government storage and sell it. b. Encourage farmers to produce more milk. c. […]

The new classical view of fiscal policy holds that a. budget deficits will stimulate consumption. b. budget deficits will decrease the saving rate. c. individuals fail to recognize that debt-financing implies higher future taxes. d. individuals fully anticipate the added […]

Which of the following is true? a. In a competitive capital market, private investors have a strong incentive to evaluate projects carefully and allocate their funds toward those projects expected to yield the highest rates of return. b. In a […]

Other things constant, an increase in consumer income will a. shift the demand curve for automobiles to the left. b. shift the demand curve for automobiles to the right. c. cause a movement along the demand curve for automobiles, but […]

Figure 3-22 Refer to Figure 3-22. Suppose the events depicted in graphs A and C were illustrated together on a single graph. A definitive result of the two events would be a. an increase in the equilibrium quantity. b. an […]

Economic theory indicates that the growth of subsidies to healthcare consumers and accompanying expansion in third-party payments will a. place downward pressure on the prices of healthcare services. b. lead to higher healthcare prices. c. increase the incentive of consumers […]

When a country fixes the price of foreign exchange (in terms of the domestic currency) below equilibrium, which of the following will result? a. A black market will develop for foreign exchange. b. Residents of that country can buy as […]

Systematic overestimation or underestimation of inflation will a. occur under rational expectations but not under adaptive expectations. b. occur under adaptive expectations but not under rational expectations. c. occur under both rational and adaptive expectations. d. not occur under either […]

Which of the following will most likely result from an unanticipated decrease in aggregate supply due to unfavorable weather conditions in agricultural areas? a. a decrease in inflation b. a decrease in unemployment c. a decrease in the general level […]

Crony capitalism is present when a. businesses are either implicitly or explicitly prohibited from making donations to political candidates. b. businesses either implicitly or explicitly provide political decision-makers with contributions and other forms of political support in “exchange” for government […]

In response to the recession of 2008-2009, the fiscal policy of the federal government was a. highly expansionary, and this Keynesian stimulus promoted a rapid recovery. b. highly expansionary, but this was largely offset by the Fed’s restrictive monetary policy […]

Which of the following tends to reduce bank failures as the result of bank runs by depositors? a. The Federal Deposit Insurance Corporation b. The Federal Open Market Operations Committee c. The comptroller of the currency d. The Senate Banking […]

If the supply of a good decreased, what would be the effect on the equilibrium price and quantity? a. Price would increase, and quantity would decrease. b. Price would decrease, and quantity would decrease. c. Price would increase, and quantity […]

Each point on the demand curve indicates a. the demand for the product. b. the quantity demanded at that price. c. the amount that people need. d. the amount people want to buy at different income levels. A decrease in […]

Figure 17-13 In Figure 17-13, the world price of a baseball is $3. With free trade, how many baseballs will the United States import? a. 4,000 b. 6,000 c. 8,000 d. 10,000 e. 12,000 In which of the following situations […]

If the money interest rate is 7 percent and the inflationary premium 4 percent, the real interest rate is a. 3 percent. b. 3 percent. c. 4 percent. d. 7 percent. Transfer payments are a. payments made to individuals who […]

Economic analysis indicates that the monetary policy of the 1930s, which shifted back and forth between restrictive monetary policy and expansionary monetary policy, would likely result in a. economic stability and growth in real levels of output. b. keeping the […]

Figure 18-3 Figure 18-3 displays the international currency market for yen in terms of dollars and dollars in terms of yen. The supply curve in graph (B) is comprised of a. U.S. citizens attempting to purchase Japanese-made goods. b. Japanese […]

Since the mid-1980s, the debt-to-income ratio of American households a. has remained about the same as the previous 25 years. b. has been slowly declining. c. has fluctuated between about 55 and 70 percent of after-tax income. d. has rapidly […]

In economics, man-made resources such as tools, equipment, and structures that are used to produce other goods and services are referred to as a. consumer goods. b. capital. c. marginal goods. d. infrastructures. A reserve requirement of 20 percent implies […]

Other things being equal, the effect of a decrease in the price of grapes would be illustrated by a. a rightward shift in the demand curve for grapes. b. an increase in the quantity demanded for grapes. c. a leftward […]

What impact did the soaring oil prices of 2007 and the first half of 2008 have on the economy? a. They increased SRAS, causing real output and employment to increase. b. They reduced SRAS, causing real output and employment to […]

When a nuclear-powered electrical plant is permitted to dump radioactive waste at no cost into a recreational waterway lowering the value boaters receive from the waterway, the a. firm’s cost of producing electricity will be higher than the community’s true […]

In recent years, the ratio of earnings of the typical U.S. college graduate to the earnings of the typical high school graduate without additional education has a. risen as the demand for skilled labor has increased relative to the demand […]

When commercial banks extend loans, they are able to expand the supply of money in the United States because the U.S. has a. a fiat supply of money. b. money that is backed by gold. c. a fractional reserve banking […]

The optimal level of resource use comes when a. MRP exceeds input price. b. MRP is less than input price. c. MRP equals input price. d. use of the resource exhausts the producer’s funds. Relative to a no-trade situation, if […]

Suppose the development of new drought-resistant hybrid seed corn leads to a 50-percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology. If the conditions in the corn production industry […]

Private ownership and competitive markets are important for economic growth because they provide individuals with a strong incentive to a. care for resources and use them beneficially. b. innovate and introduce new products that are highly valued relative to their […]

According to the theory of rational expectations, the government can influence output a. with appropriate fiscal and monetary policy. b. in the short run, but not in the long run. c. without affecting the price level. d. only by making […]

If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil a. will increase the demand for coal. b. will reduce the demand for coal. c. will increase the supply of coal. […]

The 2012 box office receipts for the movie The Avengerswere $1,515.8 million. By way of comparison, the 1977 receipts forStar Wars were $798.0 million. If the Consumer Price Index was 60.6 in 1977 and 229.6 in 2012, which of the […]

Figure 4-24 Refer to Figure 4-24. The price that sellers receive after the tax is imposed is a. P1. b. P2. c. P3. d. impossible to determine from the figure. If the exchange rate of the English pound goes from […]

The long-run equilibrium price level is the price level the economy is expected to reach when the a. economy produces its potential output b. Fed has stabilized interest rates c. federal budget is balanced d. discount rate equals the prime […]

Which of the following is a positive economic statement? a. Government control of rent is a fair way to help poor people afford housing. b. Government control of rent keeps landlords from charging too much rent. c. Government control of […]

Which of the following will likely have the strongest demand for large expenditures on environmental quality? a. wealthy countries b. poor countries c. countries with air pollution problems d. countries with water pollution problems Which economist made the following statement: […]

If a surplus exists in a market we know that the actual price is a. above equilibrium price and quantity supplied is greater than quantity demanded. b. above equilibrium price and quantity demanded is greater than quantity supplied. c. below […]