econ final review
Suppose the interest rate is 9%, compounded annually. If you deposit $5,000 today, how much will you have in 10 years? $10,900.00 $5,450.00 $2112.054 $11,836.82
$11,836.82
Pierre runs a French restaurant. He goes to the grocery store and buys a $5 container of smoked Mediterranean sea salt to be used in the kitchen at the restaurant, and a pound of Velveeta "cheese product" for $3 for home use. He then goes to a consignment store and pays $20 for a gently used apron and toque (that tall white hat you think of when you think of a traditional chef's uniform). How much of this is counted in this year's GDP? $28 $20 $8 $3
$3
Suppose the interest rate is 5%, compounded annually. To have $10,000 in five years, how much would you have to save today? $10,000.00 $12,762.82 $9,500.00 $7835.26
$7835.26
Which of the following forms of money is the most liquid? $0.93 in your checking account. $200 in your savings account. $10,000 in a 3 year certificate of deposit. A $20 bill in your wallet.
A $20 bill in your wallet.
Which of the following is likely to slow a country's rate of economic growth? Secure and well-defined private property rights. A government policy of only allowing firms that have purchased a government license to compete. A stable, low inflation rate. Low tariffs on foreign imports.
A government policy of only allowing firms that have purchased a government license to compete.
Why do political instability and insecure property rights retard economic growth? Fear that private property will be confiscated substantially reduces the incentive to invest and create wealth. When property rights are insecure, foreign investors will be reluctant to invest in the country. Savings will tend to flow out of a country if individuals fear their property is insecure. All of the above are correct.
All of the above are correct
Which of the following most clearly suggests an improvement in a country's standard of living? An increase in the price level. An increase in nominal GDP. An increase in Real GDP. An increase in Real Per Capita GDP.
An increase in Real Per Capita GDP.
Suppose demand increases and (at the same time) supply increases. Which of the following will happen? Equilibrium price will rise, fall, or stay the same while equilibrium quantity will decrease. Equilibrium price will rise, fall, or stay the same while equilibrium quantity will increase. Equilibrium quantity will rise, fall, or stay the same and equilibrium price will increase. Equilibrium quantity will rise, fall, or stay the same while equilibrium price will decrease. The change in equilibrium price and quantity cannot be determined.
Equilibrium price will rise, fall, or stay the same while equilibrium quantity will increase.
The nation of Goldbug has a rapidly growing economy, and the velocity of money is not changing, but the inflation rate is negative. You can conclude from this that... Goldbug's central bank is buying Treasury Bills. Goldbug's central bank is injecting too much money into the economy. Goldbug's banking system lacks competition. Goldbug's money supply must be growing slower than its real GDP.
Goldbug's money supply must be growing slower than its real GDP.
Which of the following is not a cost of anticipated inflation? Goods and services get more expensive. Businesses must use resources to update price lists and menus (instead of doing other things). The higher the inflation rate, the more frequently people must make trips to the bank to deposit and withdraw money. Higher inflation means that people are more likely to pay capital gains taxes for nominal gains, rather than real ones, which may deter investment.
Goods and services get more expensive.
Mateo values his camper at $4,000, and Nicole values it at $9,000. If Nicole buys it from Mateo for $7,000, which of the following is true? Mateo gains $3,000 of value, and Nicole gains $2,000 of value. Mateo gains $7,000 of value, and Nicole loses $7,000 of value. Mateo gains $7,000 of value, and Nicole gains $6,000 of value. Mateo and Nicole both gain $7,000 of value.
Mateo gains $3,000 of value, and Nicole gains $2,000 of value.
The market for computers is in equilibrium, but then two things happen at the same time. First, smartphones become so popular that many people use them instead of a computer. Second, computer producers find new and cheaper ways to produce computers. What will happen in the market for computers? Price falls, quantity falls. Price rises, quantity rises. Price falls, quantity is indeterminate. Price is indeterminate, quantity rises.
Price falls, quantity is indeterminate.
Which of the following are leakages from the circular flow of income? Savings, taxes, and imports Investment, government purchases, and exports Investment, taxes and bonds Imports, wages and taxes
Savings, taxes, and imports
Ethan washes and irons his own shirts. Sophia, his boss, sends her clothes to a laundry. Which is the most plausible economic explanation for this difference? Ethan must enjoy ironing more than Sophia does. Ethan must be better at ironing than Sophia is. The opportunity cost of ironing is greater for Ethan. Sophia has a higher opportunity cost of laundering her clothes than Ethan does.
Sophia has a higher opportunity cost of laundering her clothes than Ethan does.
The market for incandescent flashlights is in equilibrium, and incandescent flashlights are an inferior good. LED flashlights are a normal good. Everyone's income falls. What happens? The demand for incandescent flashlights falls, and the demand for LED flashlights rises. The demand for incandescent flashlights falls, and the demand for LED flashlights falls. The demand for incandescent flashlights rises, and the demand for LED flashlights rises. The demand for incandescent flashlights rises, and the demand for LED flashlights falls.
The demand for incandescent flashlights rises, and the demand for LED flashlights falls.
The Federal Reserve is... a central bank, with the responsibility for controlling the money supply. a division of the treasury, with the responsibility for managing taxes and borrowing. a creation of a group of private banks. none of the above.
a central bank, with the responsibility for controlling the money supply.
Suppose the market for wheat is in equilibrium. A price floor imposed above the equilibrium wheat price will result in... a shortage of wheat. a surplus of wheat. a new equilibrium. None of the above.
a surplus of wheat.
A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by many dairies, what will be the effect on the milk market? An increase in supply, higher equilibrium price, and lower equilibrium quantity. A decrease in supply, lower equilibrium price, and lower equilibrium quantity. An increase in supply, lower equilibrium price, and higher equilibrium quantity. An increase in supply, higher equilibrium price, and higher equilibrium quantity. A decrease in supply, lower equilibrium price, and higher equilibrium quantity.
an increase in supply, lower equilibrium price, and higher equilibrium quantity
Refer to Figure 4-17. Suppose a price floor of $7.00 is imposed. As a result, buyers' total expenditure on the good decreases by $20.00. the supply curve will shift to the left so as to now pass through the point (Q = 40, P = $7.00). the quantity of the good demanded decreases by 20 units. the price of the good continues to serve as the rationing mechanism.
buyers' total expenditure on the good decreases by $20.00.
Because of the free-rider problem, competitive markets will tend to undersupply public goods. the federal government spends too much on national defense. fireworks displays have become increasingly dangerous. poverty has increased.
competitive markets will tend to undersupply public goods.
Which of the following are outcomes that taxes and price controls have in common? shortages and surpluses deadweight loss tax revenue all of the above
deadweight loss
A decrease in demand will cause an increase in supply. a decrease in supply. an increase in quantity supplied. a decrease in quantity supplied. an increase in equilibrium price
decrease in quantity supplied
Structural unemployment is a result of difficulties in matching qualified workers with available jobs. inaccurate or costly information about job opportunities. slow or negative economic growth, as during a recession. not enough workers to fill available jobs.
difficulties in matching qualified workers with available jobs.
Open-market purchases by the Fed make the money supply increase, which tends to increase the value of money. increase, which tends to decrease the value of money. decrease, which tends to decrease the value of money. decrease, which tends to increase the value of money.
increase, which tends to decrease the value of money.
A point inside the production possibilities curve represents a combination of goods that is inefficient efficient unattainable attainable
inefficient
Frictional unemployment would be eliminated if the economy were more stable. would be eliminated if the minimum wage were raised. is the result of workers' skills not matching the jobs available. is present even when labor markets are working well.
is present even when labor markets are working well.
According to the circular flow model, if the loanable funds markets and foreign exchange markets are in equilibrium, then... the trade deficit will be zero. government spending will equal tax revenue. capital outflow will equal capital inflow. leakages will equal injections.
leakages will equal injections.
Despite being a college graduate, Ethan cannot name any of his representatives in Congress and he has no idea which issues are being debated and voted on this week in Congress. According to public choice analysis, Ethan is irrational. considering only the welfare of society and not his own personal interests. not intelligent enough to understand the issues. making a rational personal choice because knowing these things gives him little personal benefit.
making a rational personal choice because knowing these things gives him little personal benefit
According to the law of supply, more of a good is desired by consumers as the price falls. less of a good is desired by consumers as the price rises. more of a good will be offered by suppliers as the price rises. less of a good will be offered by suppliers as the price rises.
more of a good will be offered by suppliers as the price rises
Relative to a competitive situation, if a market lacks competition, economic theory suggests that output will be lower and price higher. output will be higher and price lower. both output and price will be higher. both output and price will be lower.
output will be lower and price higher
The market for printed economic textbooks is in equilibrium. As incomes rise, students buy fewer printed textbooks, and buy more e-books instead. You can conclude (ceteris paribus) that... printed textbooks are normal goods. printed textbooks are inferior goods. printed textbooks are complements for e-books. e-books are inferior goods.
printed textbooks are inferior good
Gold, silver, stone, copper, and bronze coins, and even cowrie shells (small seashells) have been used as money. Iron, however, was only rarely used as money, because of how it interacts with moisture. Which of the characteristics of money does it fail to satisfy? Medium of exchange Store of value Unit of account Hedge against risk
store of value
A minimum wage of $14 per hour is being considered. If imposed, the minimum wage will result in a __________ of _________ workers.
surplus, 4 million
If you are offered a choice of two investments, with one offering an interest rate of 6% per year, and the other an interest rate of 2% per year, it is probably the case that... the investment offering a lower interest rate is riskier. the investment offering a higher interest rate is riskier. neither investment is worthwhile due to seller commissions. capital gains taxes will render both investments unattractive.
the investment offering a higher interest rate is riskier.
A point outside the production possibilities curve represents a combination of goods that is inefficient efficient unattainable attainable
unattainable
If the underground economy is sizable, then GDP will understate the economy's performance. overstate the economy's performance. fluctuate unpredictably. accurately reflect this subterranean activity.
understate the economy's performance.
Abigail wishes to spend more time this week studying for her classes. Using the idea of a production possibilities curve, and assuming Abigail is currently spending all of her time efficiently, Abigail can spend more time studying this week only if she also spends more time doing other things. she spends less time doing other things. Daylight Savings Time begins this week, so everyone moves their clocks ahead one hour. none of the above.
she spends less time doing other things.
Refer to Figure 4-17. If the government imposes a price ceiling in this market at a price of $5.00, the result would be a shortage of 20 units. shortage of 10 units. surplus of 20 units. surplus of 10 units.
shortage of 20 units.
Which of the following goods is likely to have inelastic supply? solar power generated from an array in south Florida televisions produced in a plant that also makes computer monitors and phone screens t-shirts produced in a plant that also makes socks and undergarments notebook paper made in a mill that also produces envelopes and posters
solar power generated from an array in south Florida
U.S. Nominal GDP in 2014 was $17,419,000. U.S. Real GDP in 2014 was $16,150,000. GDP Deflator in 2014 was therefore 107.8 92.7 100 8%
107.8
Suppose the nominal interest rate on a 30-year mortgage is 5%. If the expected inflation rate is 1%, what is the real interest rate on this mortgage? 6% 5% 4% 1%
4%
Refer to Figure 3-17. When the price is P1, consumer surplus is A. A + B. A + B + C. A + B + D.
A + B + C.
In Figure 1 above, the demand curve has shifted to the left, reducing the price and changing consumer and producer surplus. Which of the following is correct? A is Producer Surplus, B and F are Consumer Surplus, and C and G are nothing. A is Consumer Surplus, B and F are Producer Surplus, and C and G are nothing. A, B, and G are Producer Surplus. F and C are Consumer Surplus. A and B are Producer Surplus, F and C are Consumer Surplus, and G is deadweight loss.
A is Producer Surplus, B and F are Consumer Surplus, and C and G are nothing.
Which of the following is commodity money? A 10 Euro note printed in 2011 A $100 bill printed in 2016 $10 trillion Zimbabwe bill printed in 2009. A silver denarius minted in Roman Syria in 335 C.E.
A silver denarius minted in Roman Syria in 335 C.E.
This is a multiple answer question, which means that there may be more than one correct answer. Select all the answers that are correct. Which of the following is an example of a person responding to incentives? As a result of an increase in her pay, Maria chooses to take a lighter course load in college, and work more hours at her job. Joe's income rises, and instead of consuming more or saving more, he burns additional money. As a result of an increase in gas prices, Donna begins carpooling to work with her friends. As a result of an increase in gas prices, Matthew buys a large truck and begins driving a longer, slower route to work.
As a result of an increase in her pay, Maria chooses to take a lighter course load in college, and work more hours at her job. As a result of an increase in gas prices, Donna begins carpooling to work with her friends.
Refer to Figure 3-15. Which area represents producer surplus when the price is P1? BCE ACF ABED DEF
BCE
Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a result? Both price and quantity will increase. Both price and quantity will decrease. Price will increase and quantity decrease. Price will decrease and quantity increase. Nothing.
Both price and quantity will decrease
Use the graphs below to calculate the opportunity costs of production for countries A and B. Which of the following statements is true? Country A has a comparative advantage in producing bananas. Country B has a comparative advantage in producing bananas. Country A has a comparative advantage in producing both goods. Country B has an absolute advantage in producing both goods.
Country B has a comparative advantage in producing bananas.
Students have used printed textbooks for years, but then e-books are invented. Many students prefer e-books and stop buying printed textbooks. What happens in the market for printed textbooks? Supply rises, driving prices down and quantities up. Supply falls, driving prices down and quantities up. Demand rises, driving prices up and quantities up. Demand falls, driving prices down and quantities down.
Demand falls, driving prices down and quantities down.
Suppose Real GDP per capita is $50,000. If the population doubles, but Real GDP is unchanged, which of the following is correct? GDP per capita rises. GDP per capita falls. GDP per capita is unchanged. We cannot say what happens to GDP per capita with the available information.
GDP per capita falls.
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 gas stations near you usually increases immediately. Which of the following best explains this occurrence? Gas station owners anticipate consumers will buy more gasoline because of increased gasoline prices. Gas station owners are attempting to defy the laws of supply and demand. Gas station owners anticipate higher replacement costs for their supply of gasoline and, therefore, raise their prices in response to this increased expected cost. A decline in consumer demand generally causes gas station owners to raise their prices.
Gas station owners anticipate higher replacement costs for their supply of gasoline and, therefore, raise their prices in response to this increased expected cost.
Suppose that guitar-oriented music becomes very unpopular. Which of the following graphs depicts what occurs in the market for studio guitarists (that is, the people who play guitar in recording studios for other artists' albums)? You may assume here that the price is actually the wage of studio guitarists. Graph A Graph B Graph C Graph D
Graph C
During the boom phase of a business cycle, which of the following usually occurs? Inflation falls, unemployment falls, economic growth rises Inflation rises, unemployment falls, economic growth rises Inflation falls, unemployment rises, economic growth rises Inflation rises, unemployment rises, economic growth rises
Inflation rises, unemployment falls, economic growth rises
The market for home mortgages is in equilibrium. As a result of new regulations, it becomes more difficult and costly for banks to lend money to home buyers. Which of the following will occur? Interest rates will rise and the equilibrium quantity of loans will rise. Interest rates will fall and the equilibrium quantity of loans will fall. Interest rates will rise and the equilibrium quantity of loans will fall. Interest rates will fall and the equilibrium quantity of loans will rise.
Interest rates will rise and the equilibrium quantity of loans will fall.
If you wanted to compare the quantity of output of a country across time periods, which of the following would you use? the consumer price index nominal GDP the GDP deflator real GDP
real GDP
Noah values his car at $10,000, and Emily values it at $14,000. If Emily buys it from Noah for $11,000, which of the following is true? Noah gains $1,000 of value, and Emily gains $3,000 of value. Noah gains $11,000 of value, and Emily loses $11,000 of value. Noah gains $10,000 of value, and Emily loses $14,000 of value. Noah and Emily both gain $11,000 of value.
Noah gains $1,000 of value, and Emily gains $3,000 of value.
Which of the following would contribute toward this year's GDP? You volunteer at a soup kitchen serving food to low income families and the homeless. You spend an hour pulling weeds out of your lawn, which makes it look much better and promotes healthier grass growth. You buy some crank for $20 from Big Tony, who hangs out on the corner north of the bus station. Yeah, crank. You know—speed, crystal, ice, tweak. Methamphetamine. You dig? None of the above contribute toward this year's GDP.
None of the above contribute toward this year's GDP.
The price of a gallon of gasoline in 1975 was $0.53. In 2014 the price of gasoline was $3.55. In 1975 CPI was 53.8. CPI in 2014 was 234. Which of the following is correct? On average, you would need $2.31 in 2014 to buy what $0.53 would buy in 1975. Therefore, the price of gasoline has fallen in real terms. On average, you would need $2.31 in 2014 to buy what $0.53 would buy in 1975. Therefore, the price of gasoline has risen in real terms. On average, you would need $0.81 in 2014 to buy what $0.53 would buy in 1975. Therefore, the price of gasoline has risen in real terms. On average, you would need $0.81 in 1975 to buy what $3.55 would buy in 2014. Therefore, the price of gasoline has fallen in real terms.
On average, you would need $2.31 in 2014 to buy what $0.53 would buy in 1975. Therefore, the price of gasoline has risen in real terms.
Suppose the market for bread is in equilibrium. Two things then happen at the same time: Warmer-than-usual weather results in a larger harvest of wheat (which is used to make bread), and a new diet, known as the Anti-Atkins-Anti-Paleo diet sweeps the country, encouraging everyone to eat more bread. What happens to the equilibrium price and quantity of bread? Price falls, quantity is indeterminate. Price rises, quantity falls Price rises, quantity is indeterminate. Price is indeterminate, quantity rises. Price falls, quantity falls. None of the above. Price is indeterminate, quantity falls. Price rises, quantity rises. Price falls, quantity rises
Price is indeterminate, quantity rises.
The market for computer printers is in equilibrium. Two things happen at the same time: The price of ink cartridges (sold separately) for the printers goes down, and there is an increase in the cost of the materials used to make printers. What happens to the price and quantity of printers? Price rises, quantity is indeterminate. Price rises, quantity falls. Price is indeterminate, quantity rises. Price falls, quantity is indeterminate.
Price rises, quantity is indeterminate.
After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water? Price will increase, and quantity will decrease. Price will decrease, and quantity will decrease. Price will decrease, and quantity will increase. Price will increase, and quantity will increase.
Price will increase, and quantity will increase.
The market for fresh blueberries is in equilibrium, and then two things happen at the same time. An early frost destroys many of the blueberries, and there is an increase in the price of strawberries (a substitute for blueberries). Which of the following is likely to happen? Quantity of blueberries is indeterminate, price of blueberries falls. Quantity of blueberries is indeterminate, price of blueberries rises. Quantity of blueberries rises, price of blueberries is indeterminate. Quantity of blueberries falls, price of blueberries rises.
Quantity of blueberries is indeterminate, price of blueberries rises.
Which of the following is not correct? CPI overstates inflation because it does not account for improvements in the quality of goods. Real GDP overestimates our material well-being because it does not account for inflation. The unemployment rate understates the true labor market conditions for workers because it does not account for underemployed workers. GDP alone is not a good measure of our material well-being because it does not account for population (which is why we use GDP per capita instead).
Real GDP overestimates our material well-being because it does not account for inflation.
Suppose that next year, the price level doubles, taking everyone by surprise. Which of the following is a cost of this inflation? Prices of goods and services double. Wages and salaries double. Some people hire financial advisors to help them shield their assets and investments from future unexpected inflation. All of the above.
Some people hire financial advisors to help them shield their assets and investments from future unexpected inflation
Which of the following is a deficiency of the regular (or traditional) consumer price index (CPI) as a measure of the cost of living? The CPI fails to make any adjustment for changes in the price of housing. The CPI only measures changes in the prices of food, clothing, and energy. The CPI fails to maintain the quantities of the typical bundle of goods purchased by consumers constant over a lengthy time frame. The CPI does not adjust regularly for the fact that consumers will shift their spending away from goods that become more expensive.
The CPI does not adjust regularly for the fact that consumers will shift their spending away from goods that become more expensive.
Suppose the market for economics teachers is in equilibrium. The Econobot 5000 is invented, sells for $40,000 (less than the cost of a human economics instructor), and teaches economics as well as the best (human) economics instructors. What happens in the market for economics teachers? The demand for economics instructors rises, wages rise, and the equilibrium quantity rises. The supply of economics instructors falls, wages rise, and the equilibrium quantity falls. The supply of college students rises, the cost of college education falls, and the quantity of college graduates rises. The demand for economics instructors falls, wages fall, and the equilibrium quantity falls.
The demand for economics instructors falls, wages fall, and the equilibrium quantity falls.
Producer surplus is... The difference between what consumers are willing to pay, and the marginal cost of production. The difference between what producers are paid, and the marginal cost of production. The difference between what consumers are willing to pay, and what they actual pay. The difference between the marginal cost of production and what consumers are willing to pay.
The difference between what producers are paid, and the marginal cost of production.
A country has 250 noninstitutionalized civilian adults, 25 of which are unemployed, and 175 of which are employed. Which of the following is correct? The labor force participation rate is 70%, and the unemployment rate is 12.5%. The labor force participation rate is 80%, and the unemployment rate is 12.5%. The labor force participation rate is 80%, and the unemployment rate is 14.3%. The labor force participation rate is 100%, and the unemployment rate is 14.3%.
The labor force participation rate is 80%, and the unemployment rate is 12.5%.
Suppose the market for low-skilled labor is in equilibrium, and then two things happen at the same time. First, a large number of low-skill immigrants enters the country, competing with domestic low-skill workers. Second, these immigrants all want to buy more goods and services, and they typically buy goods produced by low-skill workers. Which of the following will occur in the market for low-skill workers? The number of workers employed will rise, but we cannot tell what will happen to the wage rate. The wage rate will fall, but we cannot tell what will happen to the number of workers. The number of workers employed will fall, but we cannot tell what will happen to the wage rate. The number of workers employed will rise, and the wage rate will fall.
The number of workers employed will rise, but we cannot tell what will happen to the wage rate.
Suppose the price of FSU branded t-shirts rises. Ceteris paribus, which of the following will occur? The quantity of FSU branded t-shirts supplied will fall. The quantity of FSU branded t-shirts supplied will rise. The supply of FSU branded t-shirts will fall. The supply of FSU branded t-shirts will rise.
The quantity of FSU branded t-shirts supplied will rise.
Consider the demand curve for blue jeans. The price of blue jeans goes down. Ceteris paribus, which of the following will occur? The quantity of blue jeans demanded falls. The quantity of blue jeans demanded rises. The demand for blue jeans falls. The demand for blue jeans rises.
The quantity of blue jeans demanded rises.
Marcus clears 100 acres of land by cutting down all the trees and burning the remaining vegetation. He then sells the cleared land to Juanita, who builds a dirt bike racing course on the site. As a result of the clearing of the land, a large bear finds itself homeless, leaves the area, and wanders to a town a few miles away, eating anyone it finds to satiate its hunger and rage. Which of the following is correct? The sale of land was a voluntary exchange, so society is better off. The rampaging bear is a negative externality, so society may not be better off. The dirt bike racing course is a poor use of resources because no one likes to race dirt bikes. It is never economically efficient to cut down trees.
The rampaging bear is a negative externality, so society may not be better off.
The U.S. sugar industry is protected from foreign competition by quotas, which limit the quantity of sugar that may be imported. As a result, Americans pay more for all goods containing sugar. This has also encouraged the growth of the high fructose corn syrup industry. Which of the following most likely explains why this quota exists? the special interest effect market failure tax revenue lobbying by economists
The special interest effect
Suppose the price of helium rises significantly due to an increase in the demand for party balloons, but the quantity produced increases only a small amount. You could say that... The supply of helium is inelastic. The supply of helium is elastic. The demand for helium is inelastic. The demand for helium is elastic.
The supply of helium is inelastic.
How will an increase in lumber prices influence the home construction market? The demand for newly constructed homes will increase. The demand for newly constructed homes will decrease. The supply of newly constructed homes will increase. The supply of newly constructed homes will decrease.
The supply of newly constructed homes will decrease.
Suppose CPI in 2015 was 230, and CPI in 1990 was 115. The price of an economics textbook in 1990 was $50. The price of the newest version of that textbook in 2015 was $200. Which of the following is correct? The textbook price has risen as fast as the overall price level. The textbook price has risen slower than inflation. The textbook price has actually risen faster than inflation. There is not enough information to determine what happened to the real textbook price.
The textbook price has actually risen faster than inflation.
"The resources now going into the War on Terrorism and into improved airport security would save more lives if they were invested in medical research." This statement (whether you agree with it or not) most clearly reflects which of the following? The best test of an economic theory is its ability to predict. There is no such thing as a free lunch--the use of scarce resources always has an opportunity cost. selfishness; if people were not selfish, we could have more of everything. The value of goods can be determined objectively.
There is no such thing as a free lunch--the use of scarce resources always has an opportunity cost.
Given the demand and supply conditions shown in Figure 4-4, what will happen as the result of imposing a price ceiling of a? Demand for the product will decline. Supply will increase. There will be a shortage of the product. Over time, the quality of the product offered by suppliers will increase.
There will be a shortage of the product.
Consider the supply curve for basketballs. Other things held constant, if the price of basketballs goes up from $7.99 to $14.99, what can we expect from suppliers of basketballs as a result? There will be an increase in quantity supplied. The quantity supplied will not change. There will be a decrease in quantity supplied. There will be an increase in supply.
There will be an increase in quantity supplied
Which of the following does not contribute to GDP? You lose $50 playing cards with friends. You pay a doctor $200 to treat an arm that you broke in an accident. You pay $300 for this month's rent on your apartment. Your economics textbook is revised, and you buy the new edition.
You lose $50 playing cards with friends.
The market for yachts is in equilibrium. Due to increased income inequality, the government is pressured to put a high tax on yachts and similar luxury goods. If such a tax is imposed, the result will be... a shortage of yachts. a surplus of yachts. a decrease in the equilibrium quantity of yachts. an increase in the equilibrium quantity of yachts.
a decrease in the equilibrium quantity of yachts.
A substantial revision of the income tax code that made business and personal tax returns much easier to complete would tend to cause which of the following changes in the labor market for accountants? an increase in the demand for accountants an increase in the employment of accountants a decrease in the wage rate of accountants an increase in the number of students choosing to major in accounting
a decrease in the wage rate of accountants
The Law of Demand is... a law of nature, like the law of gravity. a general tendency in human behavior. mostly false, except in a few circumstances. always true, but only for computer programs.
a general tendency in human behavior
Which of the following would most likely cause the production possibilities curve for breadfruit and fish to shift outward from AA to BB in Figure 2-2? a decrease in the labor force of the country a sudden change in consumer preferences for more fish and less breadfruit a major technological advance a decrease in the capital stock
a major technological advance
"An 10% increase in the minimum wage will increase unemployment by 1%. This statement is... consistent with the economics of price ceilings. a positive economic statement. a normative economic statement. a negative externality.
a positive economic statement
When economists speak of changes in GDP measured in constant dollars, they mean that money GDP is constant. the price level is constant. a price index has been used to adjust money GDP for the effects of inflation. the growth rate of money GDP has been adjusted for changes in population.
a price index has been used to adjust money GDP for the effects of inflation.
An asteroid is hurtling toward the earth and deflecting it will require a very large expenditure of resource--probably more than any one country can afford to spend. The asteroid will probably destroy most life on earth. The United Nations tries to persuade the 20 wealthiest nations to pool their resources to build an asteroid defense system, but the citizens of each nation refuse to let their governments participate. They argue that if even a nation that doesn't contribute still benefits from asteroid defense. This is an example of... elastic demand. a public good. efficiency. efficient regulation.
a public good
Elasticity is... a measure of how price responds to a quantity change. a unit-free measure of how one variable responds to another. a way of calculating the slope of a demand curve. a measure of the relationship between price and economic growth.
a unit-free measure of how one variable responds to another
If a tax is imposed on consumers... consumers will be worse off but producers will be unaffected. consumers will be better off and producers will be worse off. both consumers and producers will be worse off. consumers will pay a lower price and producers will receive a higher price.
both consumers and producers will be worse off.
Which of the following is an important ingredient of efficient economic organization? High marginal tax rates. Competitive markets. Rapid increases in the money supply. Imposition of high tariffs that will protect domestic producers from the ravages of foreign competition.
competitive markets
When an economist says, "nothing is free", the economist means that... no one ever gives away anything at a price of $0. every time someone gives you something, you have to give up something of equal value. every time you decide to do one thing, you give up the opportunity to do something else. scarcity does not really exist.
every time you decide to do one thing, you give up the opportunity to do something else.
The market for exchanging dollars for Swiss francs for U.S. dollars is in equilibrium. The supply of francs rises, and the demand for francs falls. As a result, the exchange rate of dollars for francs will... fall. rise. rise, then fall. none of the above.
fall
If Trevon voluntarily quits one job, possesses marketable skills, and expects to find a new job in a few weeks, then Trevon is considered frictionally unemployed. cyclically unemployed. seasonally unemployed. structurally unemployed. unwise to quit his job without already having another one.
frictionally unemployed.
Monetary and price instability will make it easier for both individuals and businesses to plan wisely for the future. generate uncertainty, and encourage investors and businesses to move their activities to countries with a more stable monetary environment. encourage businesses to invest and expand their future output. encourage domestic citizens to increase their rate of saving.
generate uncertainty, and encourage investors and businesses to move their activities to countries with a more stable monetary environment.
Discouraged workers are workers who... are still looking for a job. have given up looking for work because they believe there are no good jobs for them. want to work more hours, but currently can only find part time work. work in a job that does not make full use of their skills.
have given up looking for work because they believe there are no good jobs for them.
Printerstan decides to pay for a budget shortfall by printing money. The most likely outcome of this is... a larger budget deficit. higher inflation. lower inflation. a decrease in the price of ink.
higher inflation
Which of the following goods or services is most likely to have elastic demand? gasoline life-saving medication car insurance ice cream
ice cream
Gross domestic product is the sum of all exchanges of goods and services during a period. includes financial transactions such as the purchase of stocks or bonds traded during a period. is the sum of expenditures for both intermediate and final user goods. is the sum of the total spending on all final-user goods and services produced domestically during a period.
is the sum of the total spending on all final-user goods and services produced domestically during a period.
Economics is primarily the study of how to make money in the stock market. how to find lower cost methods of production. the choices we must make among alternatives because of scarcity. the proper form of industrial structure for the United States.
the choices we must make among alternatives because of scarcity
When the loanable funds and foreign exchange markets are in equilibrium, here are no leakages from the circular flow of income. macro equilibrium cannot occur. the leakages from the circular flow will equal the injections into it. injections into the circular flow will exceed leakages from it.
the leakages from the circular flow will equal the injections into it.
Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause cancer, the price of aspartame will increase. the price of sugar will decrease. the price of saccharin will increase. the demand curves for aspartame and sugar will shift leftward. aspartame and sugar will be complements.
the price of aspartame will increase
Back in the days before it was easy to lock down computers so that users couldn't screw them up, computers in computer labs tended to quickly be infected with viruses, spyware, and unnecessary programs. The failure of users to take care of these computers is an example of... a positive externality. a public good. lack of competition. the tragedy of the commons.
the tragedy of the commons
The opportunity cost of going to college is the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. the value of the best opportunity a student gives up to attend college. zero for students who are fortunate enough to have all of their college expenses paid by someone else. zero, since a college education will allow a student to earn a larger income after graduation.
the value of the best opportunity a student gives up to attend college.
Your car is in the shop (or maybe you don't own one), and you need to go to the store. You consider paying $30 for an Uber driver to take you, but a friend offers to take you for free instead, and you take her up on her offer. The effect of this on GDP is... zero, because the free ride is nonmarket production. zero, because the free ride is an improvement in product quality. $30. zero, because GDP does not capture the additional leisure and the improvement of job quality.
zero, because the free ride is nonmarket production.
