Macro

The market interest rate in Alpha is 7%, and the market interest rate in Beta is 10%; the inflation rate in Alpha is 3%, and inflation rate in Beta is 8%. Which of the following statements is true? Select one: a. The real interest rate is higher in Alpha, but the nominal interest rate is higher in Beta. b. The real interest rate is higher in Beta, but the nominal interest rate is higher in Alpha. c. Both the real and nominal interest rates are higher in Alpha. d. Both the real and nominal interest rates are higher in Beta.

The real interest rate is higher in Alpha, but the nominal interest rate is higher in Beta.

Saving for protection against unexpected setbacks-such as the loss of a job or a medical emergency-is called ______ saving. Select one: a. public b. bequest c. precautionary d. life-cycle

precautionary

An increase in an economy's productive resources will lead the production possibilities curve to: Select one:

shift outward.

Suppose Mary is willing to pay up to $15,000 for an used Ford pick-up truck. If she buys one for $12,000, her ______ would be ______.

economic surplus; $3,000

Refer to the figure below. Growing 1,000 bushels of wheat and no bushels of corn each year is: Select one: a. inefficient and unattainable. b. inefficient but attainable. Incorrect c. efficient but unattainable. d. efficient and attainable.

efficient and attainable.

The figure below shows Becky's daily production possibilities curve for dresses and skirts. Point Y is ______, and point V is ______. Select one: a. efficient; inefficient Incorrect b. inefficient; efficient c. efficient; efficient d. inefficient; inefficient

efficient; efficient

An example of a government policy to provide a framework within which the private sector can operate productively is: Select one: a. the taxation of savings. b. the suppression of political dissent. c. establishing well-defined property rights. d. government ownership of capital.

establishing well-defined property rights.

If a person takes an action if, and only if, the extra benefits from taking that action exceed the extra costs, then that person is:

following the Cost-Benefit Principle.

As the price of flour (an input into the cookie production process) increases, firms that produce cookies will: Select one: a. increase the supply of cookies. b. increase the quantity of cookies supplied. c. decrease the supply of cookies. d. decrease the quantity of cookies supplied.

the correct answer is: decrease the supply of cookies.

With ATMs, it is possible to retrieve cash from the bank at any time. One hundred years ago, one could only get cash from the bank during business hours, say, 9 am to 3 pm. The present availability of 24-hour service has arisen because:

the cost of providing 24-hour service is much lower today

According to the Cost-Benefit Principle, you should go see the latest Star Wars movie with your friends this weekend if:

the extra benefits of seeing the movie are greater than the extra costs of seeing the movie.

Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. Assume the minimum that Matt would be willing to accept to drive to campus is equal to the $4 he saved on the concert ticket. What would his economic surplus be if he bought his textbooks at the university bookstore rather than online?

$1

A firm pays Pam $40 per hour to assemble personal computers. Each day, Pam can assemble 4 computers if she works 1 hour, 7 computers if she works 2 hours, 9 computers if she works 3 hours, and 10 computers if she works 4 hours. Pam cannot work more than 4 hours day. Each computer consists of a motherboard, a hard drive, a case, a monitor, a keyboard, and a mouse. The total cost of these parts is $600 per computer. What is the marginal cost of producing the computers that Pam can assemble during her 2nd hour of work?

$1,840

If in the economy, business saving equals $240 billion, household saving equals $15 billion and government saving equals -$150 billion, what is the value of national saving? Select one: a. $415 billion b. $265 billion c. $250 billion d. $105 billion

$105 billion

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. Number of Employees Total Donations Average Donations Total Labor Costs Average Labor Costs 1 $30,000 $8,000 2 $42,426 $17,000 3 $17,321 $27,000 4 $60,000 $9,500 5 $13,416 $50,000 The marginal cost of the 4th employee is:

$11,000

You save $10 on gas every week because you take the bus to school. You have class 5 days a week. What is your average benefit per day of taking the bus to school?

$2

An economy produces 1,000,000 computers valued at $2,000 each. Households purchase 200,000 computers, of which 100,000 are imported. Businesses purchase 300,000 domestically produced computers, the government purchases 300,000 domestically produced computers, and 100,000 domestically produced computers are sold abroad. At the end of the year, the computer manufacturers hold the unsold computers in inventory. What is the value of GDP? a. $0.9 billion b. $1.0 billion c. $1.8 billion d. $2.0 billion

$2.0 billion

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry's opportunity cost of attending NoName U is:

$20,000

Refer to the table below. The average cost of 4 units of this activity is: Units of Activity Total Cost Total Benefit 0 $0 $0 1 $30 $100 2 $40 $160 3 $60 $190 4 $100 $210 5 $150 $220 6 $210 $225

$25

An economy produces only 500,000 tables valued at $100 each. Of these, 100,000 are sold to consumers, 200,000 are sold to businesses, 100,000 are sold to the government, and 50,000 are sold abroad. No tables are imported. At the end of the year, the table manufacturers hold the unsold tables in inventory. What is the value of the investment component of GDP? Select one: a. $2 billion b. $10 million c. $20 million d. $25 million

$25 million

You won a free ticket to see the latest Star Trek movie this Friday night (which you can costlessly resell for its face value of $15). Your favorite band is also performing on Friday and is your only alternative activity. Friday is your last chance to see either the movie or the band. Tickets to see your favorite band cost $30, and on any given day, you would be willing to pay as much as $50 for a ticket. Based on this information, what is your opportunity cost of going to see the Star Trek movie on Friday?

$35

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. Assume that $35 is the most you would have been willing to pay for a ticket. Your boss called, and she is looking for someone to cover a shift on Saturday at the same time as the concert. You would have to work 4 hours and she would pay you $11/hr. The psychic cost to you of working is $2/hr. What is the opportunity cost of going to the concert?

$36

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. Number of Employees Total Donations Average Donations Total Labor Costs Average Labor Costs 1 $30,000 $8,000 2 $42,426 $17,000 3 $17,321 $27,000 4 $60,000 $9,500 5 $13,416 $50,000 The total labor cost with 4 employees is:

$38,000.

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. What is the opportunity cost of using the coupon for the Miami trip?

$450

Refer to the table below. The average cost of 5 units of activity is: Units of Activity Total Cost Total Benefit 0 $0 $0 1 $2 $12 2 $6 $22 3 $12 $30 4 $20 $36 5 $30 $40 6 $42 $42 7 $56 $43

$6

For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your average cost for a meal is:

$6.

refer to the table below. The average benefit of 4 units of activity is: Units of Activity Total Cost Total Benefit 0 $0 $0 1 $2 $12 2 $6 $22 3 $12 $30 4 $20 $36 5 $30 $40 6 $42 $42 7 $56 $43

$9

The table below gives the quantities and prices for 2000 and 2010 for an economy that produces just two goods: sailboats and coconuts. For this economy that produces just sailboats and coconuts, and with 2000 is the base year, real GDP was approximately ______ times larger in 2010 than it was in 2000. Select one: a. 1.34 b. 1.65 c. 1.77 d. 2.19

1.77

The towns of Jekyll and Hyde each have a labor force of 2,000 people. In Jekyll, 500 people were unemployed for the entire year, while the rest of the labor force was employed continuously. In Hyde, every member of the labor force was unemployed for three months and was employed for nine months. The average duration of unemployment spells over the year was ______ months in Jekyll and ______ months in Hyde. Select one: a. 3; 3 b. 3; 9 c. 12; 3 d. 12; 9

12; 3

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. If Smith and Jones devote all of their resources to producing computers, then the maximum number of computers they can produce in an hour is:

16

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Based on last month's data, Larry's opportunity cost of selling a truck is selling: Select one: a. 10 cars. b. 1/2 of a car. Incorrect c. 1 car. d. 2 cars.

2 cars

If the annual real rate on a 10-year inflation-protected bond equals 1.9 percent and the annual nominal rate of return on a 10-year bond without inflation protection is 4.4 percent, what average rate of inflation over the ten years would make holders of inflation-protected bonds and holders of bonds without inflation protection equally well off?

2.5%

Refer to the table below. Pat's opportunity cost of delivering a pizza is making: Pizzas Made Per Hour Pizzas Delivered Per Hour Corey 12 6 Pat 10 15 Select one: a. 12 pizzas b. 10 pizzas c. 3/2 of a pizza d. 2/3 of a pizza

2/3 of a pizza Correct

Frank owns an apple farm and plans to spend 4 hours today picking apples. The number of apples he can pick per hour depends on the total number of hours he spends working in either the east orchard or the west orchard in the manner shown in the table below. Picture What is the marginal benefit to Frank of the 2nd hour he spends picking in the east orchard?

32 apples

Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 30 chicken breasts per hour, while Tom's experience allows him to debone 60 chicken breasts per hour. Both Mike and Tom work 40 hours per week. Their average hourly productivity as a team is ______ chicken breasts. Select one: a. 30 b. 45 c. 60 d. 90

45

What might cause a demand function to shift to the right? Select one: a. An increase in the price of a substitute. b. An increase in the product's own price. c. An increase in the price of a complement. d. A decrease in the price of a substitute.

An increase in the price of a substitute.

In which of the following situations would GDP not change? Select one: a. As domestic consumers buy fewer tobacco products, tobacco manufacturers instead sell their products, at the same price, to foreign buyers. b. Domestic consumers begin to buy less imported wine, and instead spend just as much money on domestically produced wine. c. Without reducing the number of automobiles sold, domestic automobile producers decide to reduce the number of automobiles they produce, rather than producing cars that would end up as unsold inventory. d. More and more domestic consumers opt to build a new home, rather than spending the same money on an already existing home.

As domestic consumers buy fewer tobacco products, tobacco manufacturers instead sell their products, at the same price, to foreign buyers.

Suppose you bought three tickets to a concert in advance at the University ticket window. At the last minute one friend cancelled, so you could use only two of those tickets. You scalped, or sold, the third ticket just outside the entrance to the concert for slightly more than the price you had originally paid. Which transaction occurred in a market?

Both transactions, the one at the University ticket window as well as the sale at the concert entrance, occurred in markets.

Frank owns an apple farm and plans to spend 4 hours today picking apples. The number of apples he can pick per hour depends on the total number of hours he spends working in either the east orchard or the west orchard in the manner shown in the table below. Picture How should Frank divide his time between the east and the west orchard?

He should spend 3 hours in the east orchard and 1 hour in the west orchard.

Which of the following is an example of frictional unemployment? Select one: a. Dora lost her job when the textile factory closed. She does not have skills to work in another industry and has been unemployed for over a year. b. Marsha was laid off from her job with the airline because the recession has reduced the demand for airline travel. She expects to get her job back when the economy picks up. c. George is an unskilled worker who mows lawns in the summer, but is unemployed the rest of the year. d. Hector looked for a job for five weeks after finishing college. He turned down several jobs that didn't fit his skills, but now has a job that requires the expertise he gained in college.

Hector looked for a job for five weeks after finishing college. He turned down several jobs that didn't fit his skills, but now has a job that requires the expertise he gained in college.

The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell. Why?

Higher gas prices increased the cost of driving a SUV

The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell. Why?

Higher gas prices increased the cost of driving a SUV. Correct

Which of the following would not be studied in macroeconomics?

History of gasoline prices

Refer to the figure above. Moving from demand curve D1 to demand curve D2 illustrates a(n): Select one: a. increase in quantity demanded. b. increase in demand. c. decrease in demand. d. decrease in quantity demanded.

Increase in demand

You have noticed that your next-door neighbor, Mary, always works in the garden, and her husband, Joe, always walks the dog. You conclude that if Joe and Mary are efficient, then it must be the case that:

Joe has a comparative advantage in walking the dog.

Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The table below shows the number of rooms they can each clean and the number of meals they can each cook in an hour. Which of the following is true? Select one: a. Lou has both an absolute advantage and a comparative advantage over Alex in both tasks. b. Alex has a comparative advantage over Lou in cleaning. c. Lou has a comparative advantage over Alex in cleaning. d. Alex has both an absolute advantage and a comparative advantage over Lou in both tasks.

Lou has a comparative advantage over Alex in cleaning.

Suppose there are two parallel highways between two cities with approximately equal traffic. What would you expect to happen if the state began charging tolls to drive on one of those highways?

More drivers would drive on the non-toll road, making the toll road less congested

Every time you go to the grocery store, you try to wait in the shortest line. But the lines always seem to be roughly the same length. Why?

Other people are trying to choose the shortest line too.

The tendency of markets to automatically gravitate toward equilibrium is an application of which core principle? Select one: a. The Scarcity Principle b. The Cost-Benefit Principle c. The Principle of Comparative Advantage d. The Incentive Principle

The Incentive Principle

Suppose that Nepal invests less in new factories and equipment than does the United States. This will likely cause: Select one: a. Nepal's production possibilities curve to shift outward faster than the U.S.'s. b. The U.S.'s production possibilities curve to shift inward faster than Nepal's. c. The U.S.'s production possibilities curve to shift outward faster than Nepal's. d. Nepal's production possibilities curve to shift inward faster than the U.S.'s.

The U.S.'s production possibilities curve to shift outward faster than Nepal's.

If you knew that two countries had the same level of real GDP per person, what additional piece of information would help you determine in which country people had a better standard of living? Select one: a. The total physical volume of output for each country b. The population of each country c. The average number of hours worked per week in each country d. The average level of prices in each country

The average number of hours worked per week in each country

The United States was unable to maintain its dominance in the production of televisions because: Select one: a. the highly technical skills necessary to produce televisions are greater in other countries. b. the raw materials necessary to build televisions became scarce in the United States. c. the product designs evolved too rapidly for engineers in the United States to keep up. d. automated techniques allowed production to be outsourced to countries with less-skilled workers.

The correct answer is: automated techniques allowed production to be outsourced to countries with less-skilled workers.

Efficiency occurs when: Select one: a. a market is in equilibrium. b. the socially optimal quantity of goods and services is being produced. Correct c. the individually rational quantity of goods and services is being produced. d. the government does not interfere with market prices.

The correct answer is: the socially optimal quantity of goods and services is being produced.

Where Y is GDP, C is consumption, I is investment, G is government spending, T is net taxes, and there is no international trade, private saving equals: Select one: a. C + I + G - T. b. Y - T - C. c. Y -T - G. d. Y - C - I.

Y - T - C.

In symbolic terms where Y equals real GDP, POP equals total population, and N equals the number of employed workers, Y/POP must equal: Select one: a. Y/N×N/POP. b. N/Y×POP/N. c. Y/POP×N/POP d. N/Y×N/POP

Y/N×N/POP.

One trend in labor markets is: Select one: a. a decrease in average real wages in the United States and other industrial countries. b. decreasing wage inequality in the United States. c. weak rates of job creation in the United States since 1980. d. a slowdown in real wage growth in the United States since 1973.

a slowdown in real wage growth in the United States since 1973.

Whether or not a good can be classified as a complement depends on whether; Select one: a. you personally tend to consume the goods together. b. no substitutes exist. c. an increase in demand for one good follows a decrease in the price of the other. d. an increase in demand for one good follows an increase in the price of the other.

an increase in demand for one good follows a decrease in the price of the other.

Refer to the figure above. Assume the market is originally at point W. Movement to point Y is a combination of: Select one: a. an increase in quantity supplied and an increase in demand. b. an increase in supply and an increase in demand. c. an increase in supply and an increase in quantity demanded. Correct d. a decrease in supply and an increase in quantity demanded. Feedback

an increase in supply and an increase in quantity demanded.

An economic naturalist is someone who:

applies economic insights to understand everyday life.

The figure below shows Becky's daily production possibilities curve for dresses and skirts. Point T is: Select one: a. attainable b. efficient c. both attainable and efficient d. neither attainable nor efficient

attainable

The introduction of an overnight delivery service that guarantees the delivery of packages anywhere in the world overnight would increase: Select one: a. average labor productivity. b. the share of population employed. c. the labor force participation rate. d. the unemployment rate.

average labor productivity.

You are trying to decide whether to purchase the latest Harry Potter book online or borrow it from the library. There is no charge for borrowing a book from the library, but going to the library takes more time than ordering a book online. Regardless of how you get the book, its benefit to you is the same. If the cost of buying the book online is $13, then you should:

borrow the book from the library if the cost of doing so (in terms of the extra time it takes) is less than $13.

Economics is the study of:

choice in the face of limited resources. Correct

The fact that most people make some decisions based on intuition rather than calculation is:

consistent with the cost-benefit model because most people intuitively weigh costs and benefits.

Holding other factors constant, an increase in the tax rate on revenue generated by capital will: Select one: a. increase national saving. b. decrease national saving. c. increase investment. d. decrease investment.

decrease investment.

Consumption spending includes spending on: Select one: a. durables, nondurables, and services. b. stocks, bonds, and other financial instruments. c. capital goods, residential housing, and changes in inventories. d. goods and services by federal, state, and local governments.

durables, nondurables, and services.

The typical family on the Planet Econ consumes 10 pizzas, 7 pairs of jeans, and 20 gallons of milk. In 2008, pizzas cost $10 each, jeans cost $40 per pair, and milk cost $3 per gallon. In 2009, the price of pizzas went down to $8 each, while the prices of jeans and milk remained the same. Between 2008 and 2009, a typical family's cost of living: Select one: a. increased by 4.5 percent. b. decreased by 4.5 percent. c. remained the same. d. decreased by 20 percent.

decreased by 4.5 percent.

A regular payment received by stockholders for each share they own is called a: Select one: a. coupon payment. b. dividend. c. bond. d. capital gain.

dividend.

As the real interest rate decreases, the quantity of saving supplied ______ and the quantity of saving demanded ____. Select one: a. increases; increases b. increases; decreases c. does not change; does not change d. decreases; increases

does not change; does not change

At the household level, higher saving rates lead to ______ and greater economic security. Select one: a. greater current consumption b. greater wealth c. less wealth d. less current income

greater wealth

Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown below. According to Moe's PPC, moving from a 70 to an 80 in economics:

has a lower opportunity cost than moving from an 80 to a 90.

Increasing wage inequality results when international trade leads to ______ wages for workers in exporting industries and ______ wages for workers in importing industries. Select one: a. higher; higher b. higher; lower c. lower; no change in d. lower; higher

higher; lower

As the differences in opportunity costs between the U.S. and its trading partners increase, the potential gains from specialization and trade ______. Select one: a. increase b. decrease c. stay the same d. become unpredictable

increase

Holding other factors constant, if oil prices rise relative to the prices of other products, then the real wages of oil workers will ______ and employment of oil workers will _____. Select one: a. increase; increase b. increase; decrease c. decrease; not change d. decrease; increase

increase; increase

The price of a gallon of gasoline was $0.35 in 1972 when the CPI equaled 0.418. The price of a gallon of gasoline was $2.25 in 2005 when the CPI equaled 1.68. The real price of a gallon of gasoline between 1972 and 2005: Select one: a. increased. b. decreased. c. remained constant. d. may have either increased or decreased.

increased

The price of a gallon of gasoline at the pump increased by 10 percent at the same time that the inflation rate was 5 percent. The nominal price of gasoline _____, and the real price of gasoline _____. Select one: a. increased; also increased b. increased; decreased c. increased; did not change d. decreased; increased

increased; did not change

According to the Incentive Principle, people will be less likely to smoke if the government:

increases taxes on cigarettes, effectively raising the price. Correct

Indexing is the process of: Select one: a. dividing a real quantity by a price index. b. dividing a nominal quantity by a price index. c. increasing a nominal quantity by an amount equal to the percentage change in a price index. d. increasing a real quantity by an amount equal to the percentage change in a price index.

increasing a nominal quantity by an amount equal to the percentage change in a price index.

The Incentive Principle states that a person:

is more likely to take an action if its benefit increases.

From a macroeconomic perspective, the problem of low household saving has probably been overstated because: Select one: a. household saving is not related at all to an economy's ability to accumulate new capital. b. household saving has been increasing steadily over the last three decades. c. it is national saving, not household saving, that allows an economy to accumulate new capital. d. household saving represents a smaller share of national saving than does public saving. Feedback

it is national saving, not household saving, that allows an economy to accumulate new capital.

Frictional unemployment may be economically beneficial if: Select one: a. its psychological costs are borne only by the unemployed worker. b. losses in economic output are small. c. it leads to a better match between worker and job. d. the social costs are limited to smaller tax revenues collected.

it leads to a better match between worker and job. Correct

Growth of real GDP per person is totally determined by the growth of average: Select one: a. labor productivity and the proportion of the population employed. b. labor productivity and the proportion of the population in the labor force. c. labor force participation and the share of income going to capital. d. labor force participation and the share of the population employed.

labor productivity and the proportion of the population employed.

Government policies that increase the long-term economic growth rate by a small amount result in ______ in average living standards. Select one: a. large increases b. small increases c. small decreases d. no change

large increases

Refer to the figure below. The opportunity cost of increasing medical care from 200 to 400 units is ______ the opportunity cost of increasing medical care from 400 to 600 units. Select one: a. greater than b. less than c. exactly the same as d. twice as much as

less than

Countries with small amounts of capital per worker tend to have ______ levels of real GDP per person and ______ levels of average labor productivity. Select one: a. high; high b. high; low c. low; low d. low; average

low; low

Countries with high real GDP tend to have ______ infant mortality rates and ______ literacy rates than countries with low real GDP. Select one: a. higher; higher b. higher; lower c. lower; higher d. lower; lower

lower; higher

The field of economics that would be most concerned with a recent fall in interest rates is:

macroeconomics

Which branch of economics is most likely to study differences in countries' growth rates?

macroeconomics

The field of economics that would be most concerned with a recent fall in interest rates is: Select one:

macroeconomics.

Refer to the table below. According to the table, Corey has the absolute advantage in: Pizzas Made Per Hour Pizzas Delivered Per Hour Corey 12 6 Pat 10 15 Select one: a. making pizza. b. neither making nor delivering pizza. c. delivering pizza. d. making and delivering pizza. Feedback

making pizza.

One reason there is political opposition to international trade is that: Select one: a. the potential gains from specialization and trade are small. b. trade does not increase the total value of goods and services produced by a nation. c. the differences in opportunity costs between countries are small. d. not everyone benefits from trade.

not everyone benefits from trade.

Jody has purchased a non-refundable $75 ticket to attend a Miley Cyrus concert on Friday night. Subsequently, she is asked to go out to dinner at no expense to her. If she uses cost-benefit analysis to choose between going to the concert and going out to dinner, the opportunity cost of going out to dinner should include:

only the entertainment value of the concert.

The marginal product of labor is the additional: Select one: a. wage paid for an additional hour of work. b. wage paid for an additional worker employed. c. labor employed to produce one more unit of output. d. output produced by one more worker.

output produced by one more worker.

If the Boskin Commission's conclusion is correct, then the CPI ______ the "true" inflation rate and indexing Social Security benefits to the CPI is ______ the federal government billions of dollars. Select one: a. understates; costing b. overstates; costing c. understates; saving d. measures; saving

overstates; costing

If the Boskin Commission's conclusion is correct, then the CPI ______ the "true" inflation and improvements in living standards over time has been _____. Select one: a. understates; overestimated b. understates; underestimated c. overstates; underestimated d. measures; overestimated

overstates; underestimated

Research confirms that government provision of infrastructure: Select one: a. hinders economic growth. b. promotes economic growth. c. increases human capital. d. leads to reduced spending on research and development.

promotes economic growth.

The saving of the government sector is called ______ saving. Select one: a. private b. public c. national d. aggregate Feedback

public

If government spending increases by $1 million while net taxes are unchanged, then: Select one: a. public saving increases. b. public saving decreases. c. public saving does not change. d. private saving increases.

public saving decreases

The minimum payment you are willing to accept to do a job is your: Select one: a. nominal wage. b. real wage. c. reservation price. d. value of marginal product.

reservation price.

Refer to the figure below. This economy would be operating at point B if:

resources that are better-suited to making movies were being used to make milk, while resources that are better-suited to making milk were being used to make movies.

Health and safety regulations in the labor market: Select one: a. are always efficient because they improve working conditions. b. should be evaluated by comparing their costs to their benefits. c. are necessarily inefficient if they impose additional costs on employers. d. can lead to an increase in frictional unemployment.

should be evaluated by comparing their costs to their benefits.

Earth Movers & Shakers operates 3 iron ore mines. The table below shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. Suppose Earth Movers & Shakers needs to fill an order for 60 tons of ore in a single day. If it has no other orders for that day, it should: Select one: a. take it all from Mother Lode. b. take it all from Middle Drift. c. take 30 tons from Scraping Bottom and 30 tons from Middle Drift. d. take 20 tons from each of the three mines.

take it all from Middle Drift.

Long-term increases in productivity that have increased the demand for labor, and raised real wages, have resulted primarily from ______ and _____. a. technological progress; a modernized capital stock b. technological progress; an increased labor supply c. a modernized capital stock; skill-biased technological change d. a modernized capital stock; an increased labor supply

technological progress; a modernized capital stock

The Scarcity Principle tells us ______, and the Cost-Benefit Principle tells us ______.

that choices must be made; how to make good choices Correct

Physical capital is: Select one: a. the factories and machinery used to produce other goods and services. b. the talents, training, and education of workers. c. the financial resources available for investment. d. the physical labor of workers.

the factories and machinery used to produce other goods and services.

The opportunity cost of an activity includes the value of:

the next-best alternative that must be foregone. Correct

Ginger bought a phone that came with a $10 rebate. Ginger should fill out and mail in the rebate form if:

the opportunity cost of the time and trouble of sending in the rebate form is less than $10.

A measure of overall prices at a particular point in time is called: Select one: a. a relative price. b. the price level. c. a real price. d. inflation.

the price level

GDP would be a better measure of economic well-being if it included: Select one: a. the costs of education. b. the total value of intermediate goods. c. the market value of final goods. d. the value of leisure.

the value of leisure.

In a two-person, two-good economy, the gains to specialization will be larger when: Select one: a. one person has an absolute advantage in both goods. b. neither person has an absolute advantage. c. there are small differences between the individuals in their opportunity costs of producing the two goods. d. there are large differences between the individuals in their opportunity costs of producing the two goods. Correct Feedback

there are large differences between the individuals in their opportunity costs of producing the two goods.

The core rate of inflation excludes food and energy prices because: Select one: a. these prices don't change very frequently. b. these prices are most frequently responsible for short-run fluctuations in the inflation rate. c. consumers do not directly face these prices. d. these prices do not matter to policymakers.

these prices are most frequently responsible for short-run fluctuations in the inflation rate.

GDP is a measure of an economy's: a. domestic price level. b. level of unemployment. c. total output. d. domestic productivity.

total output

Payments by the government to the public for which the government receives no current goods or services in return are called: Select one: a. public saving. b. net taxes. c. transfer payments. d. capital losses.

transfer payments

The cost-benefit model used by economists is

useful because most people follow it most of the time.

For two goods X and Y to be classified as substitutes, it must be the case that: Select one: a. X and Y are identical. b. consumers tend to purchase both items. c. when the price of X rises, the demand for Y decreases. d. when the price of X rises, the demand for Y increases. Correct

when the price of X rises, the demand for Y increases.

The Scarcity Principle states that:

with limited resources, having more of one thing means having less of another

Refer to the figure below. The opportunity cost of producing one bushel of wheat is: Graph of wheat (bushels/year) versus corn (bushels/year). There is a negative slope from 1,000 bushels of wheat per year to 500 bushels of corn per year. Select one: a. 2 bushels of corn. b. ½ of a bushel of corn. c. 1,000 bushels of corn. d. 500 bushels of corn.

½ of a bushel of corn.