Econ

An incentive is anything that is designed to change behavior. True False

True

Both the production of goods and services and the unemployment rate are used to measure the business cycle. True False

True

Economics is the study of the choices people make in attempting to manage their scarce resources. True False

True

Economists use the term absolute advantage when describing the opportunity cost of two producers. True False

True

GDP measures both an economy's production and its expenditures. True False

True

Most countries on the planet use a market-based approach to organizing economic activity. True False

True

The government plays an important role in a market economy. True False

True

The government purchases component of GDP includes salaries paid to soldiers but not Social Security benefits paid to the elderly. True False

True

The principle of comparative advantage does not provide answers to certain questions. One of those questions is a.What determines the price at which trade takes place? b.Is it possible for specialization and trade to benefit more than one party to a trade? c.Is it absolute advantage or comparative advantage that really matters? d.Is it possible for specialization and trade to increase total output of traded goods?

What determines the price at which trade takes place?

Refer to the Figure. Which of the following pairs correctly identify households and firms respectively? a.Z and X b.W and Y c.X and Z d.Y and W

.Y and W (two rectangle boxes on the right and left sides)

Which of the following statements about comparative advantage is not true? a.Comparative advantage is determined by the opportunity cost of production. b.The principle of comparative advantage applies to countries as well as to individuals. c.A country cannot have a comparative advantage in producing a good unless it has an absolute advantage in producing that good. d.Economists use the principle of comparative advantage to emphasize the potential benefits of free trade.

A country cannot have a comparative advantage in producing a good unless it has an absolute advantage in producing that good.

Factors of production include only physical capital such as business structures and business equipment. True False

False

If real GDP rises and the GDP deflator falls, then it must be that nominal GDP rose. True False

False

In order to understand how the real world works, economists try to capture every aspect of the real world in their models that they construct True False

False

Incentives are not important in economics. True False

False

Normal cost of living expenses, such as room and board, are included in the opportunity cost of attending college. True False

False

Suppose that you have already spent 45 minutes grocery shopping, but upon arriving at the checkout line, you realize it's going to be another 15 minutes just to purchase your groceries. Marginal thinking tells you that the decision of whether or not to wait in line depends on the cost of an hour of your time. True False

False

When economists are trying to explain the world, they are policy advisers, but when economists are trying to help improve the world they are scientists. True False

False

Refer to the Figure. If Chris and Katarina both spend all of their time producing meatballs, then total production is a.350 meatballs, 300 pizzas b.400 meatballs, 300 pizzas c.700 meatballs, 600 pizzas d.200 meatballs, 150 pizzas

a.350 meatballs, 300 pizzas (If Chris divides his time equally between the production of meatballs and pizzas, then he can produce 300/2=150 meatballs and 400/2=200 pizzas. Similarly, Katarina can produce 300/2=150 meatballs and 300/2=150 pizzas. Therefore, together they can produce 150 + 200 = 350 meatballs and 150 + 150 = 300 pizzas.)

Refer to the Figure . At which of the following prices would both Germany and Spain gain from trade with each other? a.6 units of Good Y for 4 units of Good X b.35 units of Good Y for 15 units of Good X c.Germany and Spain could not both gain from trade with each other at any price. d.4 units of Good Y for 10 units of Good X

a.6 units of Good Y for 4 units of Good X

Public policy such as changes in the amount of taxes and subsidies can alter people's behavior by: a.All of these answers are correct. b.offering an incentive or a disincentive to engage in an activity. c.changing the opportunity cost of an activity. d.changing the benefits and the costs of an activity.

a.All of these answers are correct.

Refer to the Figure. Which arrow includes a household receiving services from an attorney? a.D b.K c.C d.L

a.D (right corner arrow down towards households)

Suppose an economy produces two goods, food and clothing. This economy always operates on its production possibilities frontier. Last year, it produced 2000 units of food and 500 articles of clothing. This year it experienced a technological advance in its clothing-making industry. As a result, this year the society wants to produce 2200 units of food and 500 articles of clothing. Which of the following statements is correct? a.The technological advance reduced the amount of resources needed to produce 500 articles of clothing, so these resources could be used to produce more food. b.Because the technological advance occurred in the clothing-making industry, it is not possible to increase food production without reducing clothing production below 500. c.Because the technological advance occurred in the clothing-making industry, increases in output can only occur in the food industry. d.In order to increase food production in these circumstances without reducing machine production, the economy must experience unemployment.

a.The technological advance reduced the amount of resources needed to produce 500 articles of clothing, so these resources could be used to produce more food.

Imports are goods produced _____ and sold ________. a.abroad; domestically b.domestically; domestically c.abroad; abroad d.domestically; abroad

a.abroad; domestically

A binding minimum wage a.alters both the quantity demanded of labor and the quantity supplied of labor. b.affects only the demand for labor; it does not affect the supply of labor. c.alters both the demand for and supply of labor. d.affects only the supply of labor; it does not affect the demand for labor.

a.alters both the quantity demanded of labor and the quantity supplied of labor.

Refer to the Figure. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for replacement windows? a.an expectation by firms that the price of replacement windows will increase in the very near future b.an improvement in technology that allows firms to use less labor in the production of replacement windows c.a decrease in the price of glass d.a decrease in the price of replacement windows

a.an expectation by firms that the price of replacement windows will increase in the very near future

Refer to the Figure. The movement from S1 to S2 could be caused by a.an increase in input prices. b.a decrease in the quantity supplied. c.an increase in the number of sellers. d.an improvement in production technology.

a.an increase in input prices.

Before OPEC raised the price of crude oil in the 1970s, the price a.ceiling on gasoline was not binding, but it became binding and caused a shortage when the supply of gasoline decreased. b.floor on gasoline was not binding, but it became binding and caused a surplus when the supply of gasoline decreased. c.ceiling on gasoline was binding, but it became nonbinding and caused a shortage when the supply of gasoline decreased. d.floor on gasoline was binding, but it became nonbinding and resulted in equilibrium when the supply of gasoline decreased.

a.ceilingon gasoline was not binding, but it became binding and caused a shortage when the supply of gasoline decreased.

Which of the following is an important cause of inflation? a.growth in the quantity of money b.the influence of negative externalities c.when individuals fail to respond appropriately to incentives d.increases in productivity

a.growth in the quantity of money

Juan, a Mexican citizen, works only in the United States. The value of the output he produces is a.included in U.S. GDP, but it is not included in U.S. GNP. b.included in U.S. GNP, but it is not included in U.S. GDP. c.not included in either U.S. GNP or U.S. GDP. d.included in both U.S. GDP and U.S. GNP.

a.included in U.S. GDP, but it is not included in U.S. GNP.

In the short run, if the money supply increases, which of the following is NOT likely to happen? a.lead to a lower rate of inflation. b.lead to increased inflation. c.encourage firms to hire more workers. d.increase the demand for goods and services.

a.lead to a lower rate of inflation.

The Earned Income Tax Credit is a a.method of raising living standards of the working poor without creating unemployment. b.tax credit given to high income families to incentivize hard work. c.policy to eliminate a price floor on basic goods needed by all households. d.policy to institute a price ceiling on basic goods needed by all households.

a.method of raising living standards of the working poor without creating unemployment.

In economics, the phrase "no such thing as a free lunch" means a.people face tradeoffs. b.there is an unlimited supply of resources. c.rational people think at the margin. d.everyone is always acting in his or her own self-interest.

a.people face tradeoffs.

Positive statements are NOT a.prescriptive. b.descriptive. c.claims about how the world is. d.made by economists speaking as scientists.

a.prescriptive.

If the market price of T-shirts is $10 and the government imposes a price ceiling at $12, the market will a.reach the equilibrium and the price ceiling is not binding. b.reach the equilibrium and the price ceiling is binding. c.have a shortage of T-shirts and the price ceiling is binding. d.have a surplus of T-shirts and the price ceiling is binding.

a.reach the equilibrium and the price ceiling is not binding. (A price ceiling is a legal maximum on the price and it is binding if it is set below the market price. Because the price ceiling is set at $12 and the market price is $10, this ceiling is not binding & equilibrium will be reached)

When OPEC raised the price of crude oil in the 1970s, it caused a a.shortage of gasoline as the nonbinding price ceiling became binding. b.shortage of gasoline as the nonbinding price floor became binding. c.surplus of gasoline as the nonbinding price floor became binding. d.surplus of gasoline as the nonbinding price ceiling became binding.

a.shortage of gasoline as the nonbinding price ceiling became binding.

Suppose milk is currently selling for $2.50 per gallon, but the equilibrium price of milk is $3.00 per gallon. We would expect a a.shortage to exist and the market price of milk to increase. b.surplus to exist and the market price of milk to decrease. c.surplus to exist and the market price of milk to increase. d.shortage to exist and the market price of milk to decrease.

a.shortage to exist and the market price of milk to increase.

Which of the following would likely be studied by a microeconomist rather than a macroeconomist? a.the effect of gas prices on the profitability of snowplow companies in New England b.the effect of national debt on the interest rate c.the effect of changes in health care standards on gross domestic product d.barriers to effective international trade

a.the effect of gas prices on the profitability of snowplow companies in New England

Gross domestic production is equal to. a.the total income of everyone in the economy, and the total expenditure on the economy's output of goods and services. b.neither the total income of everyone in the economy, nor the total expenditure on the economy's output of goods and services. c.the total expenditure on the economy's output of goods and services, but not the total income of everyone in the economy. d.the total income of everyone in the economy, but not the total expenditure on the economy's output of goods and services.

a.the total income of everyone in the economy, and the total expenditure on the economy's output of goods and services.

Differences in scientific judgment between economists are similar to all of the following except a.two biologists arguing about the fairness of health insurance premiums b.doctors debating which antibiotic is appropriate for a particular infection c.meteorologists debating how much snow fall we will get in the upcoming blizzard d.physicists debating how much friction is caused by salt on the roads

a.two biologists arguing about the fairness of health insurance premiums

Which of the following is the most likely to be a perfectly competitive market? a.wheat b.electricity c.jeans d.soft drinks

a.wheat

Refer to the Table. Italy should export a.wine and import cheese. b.neither good and import both goods. c.both goods and import neither good. d.cheese and import wine.

a.wine and import cheese.

Refer to the Figure. Argentina should specialize in the production of a.soybeans and import coffee. b.coffee and import soybeans. c.both goods and import neither good. d.neither good and import both goods.

b. coffee and import soybeans.

Refer to the Table. Suppose the government imposes a price floor of $5 on this market. What will be the size of the surplus in this market? a.0 units b.12 units c.3 units d.6 units

b.12 units

Refer to the Table. If the market consists of John, Albert, and Phillip and the price decreases by $2, the quantity demanded in the market increases by a.2 units. b.6 units. c.1 unit. d.3 units.

b.6 units.

If the equilibrium wage exceeds the minimum wage, then a.the actual quantity demanded of labor will be less than the equilibrium quantity. b.there will be no unemployment. c.the actual quantity supplied of labor will exceed the equilibrium quantity. d.the minimum wage will be binding.

b.there will be no unemployment.

Refer to the Figure . Which of the following is not correct? a.Alan and Diana could each consume 150 muffins and 100 scones without trade. b.Alan and Diana could each consume 150 muffins and 150 scones with trade. c.Total consumption of muffins could not be 550 either with or without trade. d.Neither Alan nor Diana could each consume 250 muffins and 200 scones without trade.

b.Alan and Diana could each consume 150 muffins and 150 scones with trade.

Refer to the Figure . Germany has a comparative advantage in the production of a.neither good and Spain has a comparative advantage in the production of both goods. b.Good Y and Spain has a comparative advantage in the production of Good X. c.Good X and Spain has a comparative advantage in the production of Good Y. d.both goods and Spain has a comparative advantage in the production of neither good.

b.Good Y and Spain has a comparative advantage in the production of Good X.

Tom, an American resident, crosses the border to work in Canada. Mike, a Canadian resident, crosses the border to work in the U.S. Whose production is included in U.S GDP? a.Tom's but not Mike's. b.Mike's but not Tom's. c.Neither Tom's nor Mike's. d.Both Tom's and Mike's.

b.Mike's but not Tom's.

Suppose Jessica can wash six windows per hour or she can iron twelve shirts per hour. Peter can wash four windows per hour or he can iron ten shirts per hour. Which of the following is not true? a.Jessica has an absolute advantage over Peter in washing windows. b.Peter has an absolute advantage over Jessica in ironing shirts. c.Jessica has a comparative advantage over Peter in washing windows. d.Peter has a comparative advantage over Jessica in ironing shirts.

b.Peter has an absolute advantage over Jessica in ironing shirts.

Refer to the Figure. Which of the following movements would illustrate the effect in the market for cars of a decrease in the price of gas?(Note: The X and Y labels on each curve are not meant to indicate which curve is the initial curve versus the new curve.) a.Point C to Point B b.Point A to Point D c.Point C to Point D d.Point A to Point B

b.Point A to Point D

What will happen to the equilibrium price and quantity of iPhones if the price of other smart phones falls, Apple develops new technology to produce iPhones, wireless phone contracts become more expensive, and Apple expects the price of iPhones to decrease in the near future? a.Price will rise, and the effect on quantity is ambiguous. b.Price will fall, and the effect on quantity is ambiguous. c.Quantity will rise, and the effect on price is ambiguous. d.Quantity will fall, and the effect on price is ambiguous.

b.Price will fall, and the effect on quantity is ambiguous.

Economists who are primarily responsible for advising Congress on economic matters work in which agency? a.the Federal Reserve b.The Congressional Budget Office c.the Department of Justice d.the Department of Labor

b.The Congressional Budget Office

Suppose the government has imposed a price ceiling on textbooks. Which of the following events could transform the price ceiling from one that is not binding into one that is binding? a.Textbook authors agree to lower salaries. b.The number of students buying textbooks increases. c.The price of electronic books, a substitute for textbooks, decreases. d.The price of paper, an input into textbook production, decreases.

b.The number of students buying textbooks increases.

Which of the following statements is not correct? a.Comparative advantage is the driving force of specialization. b.Trade does not allow for specialization. c.Trade has the potential to benefit all nations. d.Trade allows nations to consume outside of their production possibilities curves.

b.Trade does not allow for specialization.

Shelly buys a new car for $10,000 and spends $200 on a used sofa. The end result of these two transactions is a.U.S. consumption purchases increase by $0 and U.S. GDP increases by $10,000. b.U.S. consumption purchases increase by $10,000 and U.S. GDP increases by $10,000. c.U.S. consumption purchases increase by $10,000 and U.S. GDP increases by $10,200. d.U.S. consumption purchases increase by $10,200 and U.S. GDP increases by $10,200.

b.U.S. consumption purchases increase by $10,000 and U.S. GDP increases by $10,000.

Refer to the Figure. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for pickup trucks? a.a decrease in the price of gas b.a change in consumer tastes toward public transit and environmentally conscious travel modes c.an increase in the price of pickup trucks d.an increase in the price of sport utility vehicles

b.a change in consumer tastes toward public transit and environmentally conscious travel modes

Suppose the government wants to encourage Americans to eat healthier, so it imposes binding price ceilings on the markets for fresh vegetables. As a result, a.the demand for fresh vegetables will increase. b.a shortage of fresh vegetables will develop. c.a surplus of fresh vegetables will develop. d.the supply of fresh vegetables will decrease.

b.a shortage of fresh vegetables will develop.

Refer to the Table. A price floor set at $4 will a.be binding and will result in a surplus of 9 units. b.be binding and will result in a surplus of 6 units. c.be binding and will result in a surplus of 12 units. d.not be binding.

b.be binding and will result in a surplus of 6 units.

When the government intervenes in the economy to promote equality, it means that the government is trying to: a.create a more unequal distribution of income. b.create a more fair distribution of income. c.increase the size of the economic pie. d.change the way we produce goods and services.

b.create a more fair distribution of income.

In the circular-flow diagram, which of the following items does NOT flow from households to firms? a.factors of production b.goods and services c.revenue d.Labor

b.goods and services

"Total revenue rises when the quantity sold increases and prices remain constant" is an example of a a.negative economic statement. b.positive economic statement. c.statement that contradicts one of the basic principles of economics. d.normative economic statement.

b.positive economic statement.

In the market for bread, supply is determined by a.the government. b.the sellers of bread. c.the buyers of bread. d.both the buyers and sellers of bread.

b.the sellers of bread.

Real GDP is computed using a.current prices and base-year quantities. b.current prices and current quantities. c.base-year prices and current quantities. d.base-year prices and base-year quantities.

base-year prices and current quantities.

Refer to the Figure. If the production possibilities frontier shown is for two months of production, then which of the following combinations of beans and avocados could Mexico produce in two months? a.1 avocado, 220 beans b.3 avocados, 140 beans c.2 avocados, 160 beans d.5 avocadoes, 80 beans

c.2 avocados, 160 beans

Refer to the Figure. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of meatballs and pizzas could Chris and Katarina together not produce in a given day? a.400 meatballs, 300 pizzas b.650 meatballs, 50 pizzas c.550 meatballs, 250 pizzas d.500 meatballs, 200 pizzas

c.550 meatballs, 250 pizzas

Which of the following is not a likely statement regarding the imposition of a binding price floor on the market for cigarettes? a.Policymakers are not satisfied with the market price of cigarettes due to health hazards from smoking them. b.Policymakers wish to reduce the quantity demanded of cigarettes due to the health hazards from smoking them. c.Buyers of cigarettes have pressured policymakers into imposing the price floor. d.Sellers of cigarettes have pressured policymakers into imposing the price floor.

c.Buyers of cigarettes have pressured policymakers into imposing the price floor.

A survey of professional economists revealed that more than three-fourths of them agreed with a number of statements. Which of the following statement is NOT one of those propositions? a.A ceiling on rents reduces the quantity and quality of housing available. b.Fiscal policy has a significant stimulative impact on a less than fully employed economy. c.Flexible and floating exchange rates are not an effective international monetary arrangement. d.Tariffs and import quotas usually reduce general economic welfare.

c.Flexible and floating exchange rates are not an effective international monetary arrangement.

The U.S. computes that $3 trillion of GDP was produced in the second quarter of 2014. What, if any, adjustments will it make to this number when it reports GDP for the second quarter? a.It will only multiple by four. b.It will make no adjustments. c.It will adjust for seasonality and multiple by four. d.It will only adjust for seasonality.

c.It will adjust for seasonality and multiple by four.

If a U.S. company buys a computer server made in China by a Chinese firm, and the Chinese firm uses the payment to buy stocks issued by a U.S. company then other things the same a.U.S. exports decrease, U.S. imports are unchanged. b.U.S. exports increase, but U.S. imports are unchanged. c.U.S. imports increase but U.S. exports are unchanged. d.U.S. exports and U.S imports increase.

c.U.S. imports increase but U.S. exports are unchanged.

The supply curve for yoga mats shifts when a.the price of yoga mats changes. b.the demand for yoga mats shifts. c.a determinant of the supply of yoga mats other than the price of yoga mats changes. d.yoga becomes popular.

c.a determinant of the supply of yoga mats other than the price of yoga mats changes.

Which of the following is not required for a market to exist? a.a group of sellers b.a good or service to be exchanged c.a meeting location and time d.a group of buyers

c.a meeting location and time

Productivity is defined as the a.total number of hours worked in an economy. b.number of workers required to produce a given amount of goods and services. c.amount of output produced from each unit of labor input. d.hours of labor that can be saved by replacing workers with new technology.

c.amount of output produced from each unit of labor input.

John plows snow from driveways. He spends $2 on gas and charges $25 each time he plows. What's the total contribution to GDP each time John plows a driveway? a.$2 b.$27 c.$23 d.$25

d.$25

A government-mandated maximum price that is set below the market equilibrium price is a a.nonbinding price floor that results in an equilibrium quantity. b.nonbinding price ceiling that results in an equilibrium quantity. c.binding price ceiling that results in a shortage. d.binding price floor that results in a surplus.

c.binding price ceiling that results in a shortage.

Nick is a guitar teacher and Raul is an accountant. If Nick teaches Raul to play the guitar in exchange for Raul helping with Nick's bookkeeping: a.neither Nick nor Raul are made better off by the trade. b.only Nick is made better off by the trade. c.both Nick and Raul are made better off by the trade. d.only Raul is made better off by the trade.

c.both Nick and Raul are made better off by the trade.

A main cause of large or persistent inflation is a.increasing worker productivity. b.too much government spending. c.excessive growth in the money supply. d.foreign competition.

c.excessive growth in the money supply.

When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good _________ as more of the good is produced. a.decreases b.cannot be determined c.increases d.remains constant

c.increases

In the circular-flow diagram, which of the following items does NOT flow from firms to households? a.output b.goods c.labor d.wages

c.labor

Refer to the Figure . Alan should specialize in the production of a.both goods and Diana should specialization in the production of neither good. b.neither good and Diana should specialize in the production of both goods. c.muffins and Diana should specialize in the production of scones. d.scones and Diana should specialize in the production of muffins.

c.muffins and Diana should specialize in the production of scones.

Refer to the Figure. If the government imposes a price ceiling of $10 on this market, then there will be a.a shortage of 20 units. b.a shortage of 40 units. c.no shortage. d.a shortage of 10 units.

c.no shortage.

Adam has $200 to spend and wants to buy either a new amplifier for his guitar or a new cell phone. Both the amplifier and the cell phone cost $200, so he can only buy one. This illustrates the basic concept that: a.everyone has an unlimited supply of resources. b.everyone is always acting in his or her own self-interest. c.people face trade-offs. d.people respond to incentives.

c.people face trade-offs.

Refer to the figure. Which of the following movements would illustrate the effect in the market for restaurant meals of a decrease in consumer incomes if restaurant meals are a normal good?(Note: The X and Y labels on each curve are not meant to indicate which curve is the initial curve versus the new curve.) a.point A to point C b.point B to point A c.point D to point A d.point A to point D

c.point D to point A

"Total revenue rises when the quantity sold increases and prices remain constant" is an example of a a.negative economic statement. b.statement that contradicts one of the basic principles of economics. c.positive economic statement. d.normative economic statement.

c.positive economic statement.

Almost all economists agree that government subsidies on ethanol in the United States should be a.increased. b.doubled. c.reduced. d.unchanged.

c.reduced.

Consider the market for coffee makers. If coffee becomes cheaper, consumption of coffee is found to reduce heart disease, the wages of workers in coffee maker manufacturing plants increases, and the price of plastic (an input for coffee makers) increases, the equilibrium price will a.fall. b.stay the same. c.rise. d.could rise, fall, or remain unchanged.

c.rise.

A fundamental concept in economics is the idea of a.banking. b.poverty. c.scarcity. d.money.

c.scarcity.

Suppose an economy only produces two goods, pizza and tables. Last month, the economy produced 100 pizzas and 10 tables. This month, the same economy produced 125 pizzas and 15 tables. Which of the following statements could NOT explain this change? a.This month, the economy reduced the unemployment on its resources. b.This month, the economy experienced an improvement in technology. c.This month, the economy experienced an increase in resources. d.This month, the economy experienced a change in the opportunity cost of producing pizza.

d. This month, the economy experienced a change in the opportunity cost of producing pizza.

Refer to the Figure. If this economy devotes all of its resources to the production of washers, then it will produce a.60 dryers and 50 washers b.80 dryers and 0 washers c.80 dryers and 50 washers d.0 dryers and 100 washers

d.0 dryers and 100 washers

Refer the Table. In which year was nominal GDP the lowest? a.2013 b.2011 c.2014 d.2012

d.2012 (Nominal GDP for 2011 = $1.50 x 50 + $2 x 75 = $225. Nominal GDP for 2012 = $1 x 60 + $2 x 80 = $220. Nominal GDP for 2013 = $1.50 x 50 + $3 x 120 = $435. Nominal GDP for 2014 = $2 x 60 + $2.50 x 120 = $420.)

Refer to the Figure. If these are the only two sellers in the market, then the market quantity supplied at a price of $9 is a.4.5 units. b.18 units. c.15 units. d.33 units.

d.33 units. (add them together)

Refer to the Table. Suppose the government imposes a price ceiling of $2 on this market. What will be the size of the shortage in this market? a.12 units b.3 units c.0 units d.6 units

d.6 units

Suppose the government has imposed a price floor on cheese. Which of the following events could transform the price floor from one that is binding to one that is not binding? a.Consumption of cheese is found to cause cancer. b.New technology makes the production of cheese cheaper. c.The price of crackers, a complement to cheese, increases. d.A bovine disease affects half of the cow population resulting in a higher price for milk.

d.A bovine disease affects half of the cow population resulting in a higher price for milk.

Suppose an economist advises a state's governor to raise the tax on cigarettes. The governor does not implement the policy because it would not be popular with voters. Which of the following statements best describes the Scenario? a.This is an uncommon occurrence. More often than not, policymakers follow the advice of economists. b.This would never happen because policymakers always follow economists' advice. c.This is a common occurrence. Policymakers typically disregard economists' advice since they don't believe it's useful. d.This is a common occurrence. The policymaker knows the best policy but chooses not to institute it for other reasons.

d.This is a common occurrence. The policymaker knows the best policy but chooses not to institute it for other reasons.

Refer to the Figure. In which of the following cases would the market price serve as a rationing mechanism? a.a price ceiling set at $4 b.a price floor set at $10 c.a price ceiling set at $6 d.a price floor set at $6

d.a price floor set at $6

A U.S. hospital provides surgical services and a U.S. pharmacy sells prescription drugs. a.both the surgical services and the prescription drugs are excluded from GDP. b.only the surgical services are included in GDP. c.only the prescription drugs are included in GDP. d.both the surgical services and prescription drugs are included in GDP.

d.both the surgical services and prescription drugs are included in GDP.

If the Federal Reserve announces it will be decreasing the money supply through its monetary policy tools, it tells us the Federal Reserve is a.attempting to decrease the unemployment rate. b.hoping to stimulate the demand for goods and services. c.concerned that the economy is not growing quickly enough. d.concerned about inflation.

d.concerned about inflation.

A(n) ___________ in the price of a good will ____________. a.increase; increase supply b.decrease; increase quantity supplied c.increase; decrease supply d.decrease; decrease quantity supplied

d.decrease; decrease quantity supplied

Unemployment benefits are a.included in GDP because they represent current income. b.included in GDP because they represent potential consumption. c.excluded from GDP because taxes are raised to finance them. d.excluded from GDP because they do not reflect the economy's current production.

d.excluded from GDP because they do not reflect the economy's current production.

Refer to the Table . Korea should export a.both goods and import neither good. b.neither good and import both goods. c.tablets and import freezers. d.freezers and import tablets.

d.freezers and import tablets.

In the simple circular-flow diagrams, the participants in the economy are a.households and markets b.firms and government c.households, firms, and government d.households and firms

d.households and firms

Refer to the Figure. If this society moves from point R to point U, a.it gives up 160 sweaters to get 140 bushels of apples. b.it gives up 20 bushels of apples to get 60 sweaters. c.it gives up 60 bushels of apples to get 80 sweaters. d.it gives up 80 sweaters to get 60 bushels of apples.

d.it gives up 80 sweaters to get 60 bushels of apples.

The millennials are the largest generation in US history and, according to a recent study, 80% of them use mobile phone as their primary form of communication. As a result of millennials entering the market for mobile phones, the market demand for a.mobile phones remains constant, but we observe a movement downward and to the right along the demand curve. b.landline phones remains constant, but we observe a movement upward and to the left along the demand curve. c.landline phones shifts to the right. d.mobile phones shifts to the right.

d.mobile phones shifts to the right.

Refer to the Table . Brian should specialize in the production of a.both goods and Tabitha should specialize in the production of neither good. b.neither good and Tabitha should specialize in the production of both goods. c.apples and Tabitha should specialize in the production of pork. d.pork and Tabitha should specialize in the production of apples.

d.pork and Tabitha should specialize in the production of apples.

Which of the following is included in the investment component of GDP? a.purchases of stocks and bonds, and purchases of new capital goods b.purchases of stocks and bonds, but not purchase of new capital goods c.neither purchases of stocks and bonds, nor purchases of new capital goods d.purchases of new capital goods, but not purchases of stocks and bonds

d.purchases of new capital goods, but not purchases of stocks and bonds

Suppose a publishing company is deciding whether or not to print 50,000 additional copies of an economic textbook. The company should print the textbooks if: a.the cost of printing the additional textbooks is zero. b.the marginal cost of printing the extra books is greater than the marginal benefit (additional revenue) of selling the books. c.they can get a good deal on the paper used to print the additional textbooks. d.the marginal benefit (additional revenue) from selling the extra books is greater than the marginal cost of printing the books.

d.the marginal benefit (additional revenue) from selling the extra books is greater than the marginal cost of printing the books.

Marginal thinking involves: a.always acting in your own self-interest. b.comparing the total benefit and total cost of a decision. c.accurately calculating the opportunity cost of a decision. d.weighing the small incremental benefits against the small incremental cost of a decision.

d.weighing the small incremental benefits against the small incremental cost of a decision.