Econ 201
Which one of these topics is most likely to appear in a Macroeconomic course? a. How monopolies restrict production in order to maximize their profit b. How the federal government uses tax credits to stimulate the economy c. How investors decide which assets to invest in d. Should Horry Country increase its sales tax? e. How individuals decide on their career
How the federal government uses tax credits to stimulate the economy
If the Federal government decides to provide free university education to everyone in the US. This would most likely increase what type of resource? a. Labor b. Physical Capital c. Human Capital d. Renewable Natural Resources e. Non-renewable Natural Resources
Human Capital
In 1998 the government reduced its debt by $30 billion and it spent $230 billion. How much revenue did the government receive in 1998? Select one: a. $200 billion b. $230 billion c. $260 billion d. $290 billion e. $300 billion
c. $260 billion
Lisa decides to work for Thompson Inc. since Thompson agreed to pay her twice as much as her previous employer. This scenario best illustrates that: a. Income results from the combination of productive resources b. People make decisions on the margin c. Ceteris paribus conditions hold d. The use of resources is costly e. Incentives matter
Incentives matter
Between 2006 and 2009, Congress significantly raised minimum wage, how is this policy likely to affect the U.S. economy? a. It helped reduce the unemployment rate and created more inflation b. It helped reduce the unemployment rate and reduced inflation c. It caused the unemployment rate to rise but helped control inflation d. It caused the unemployment rate to rise and created more inflation e. Government policy has no effect on the economy
It caused the unemployment rate to rise and created more inflation
Which one of these resources is a non-renewable natural resource? a. A Wooden House b. A Metal Hammer c. Limestone d. Paper e. Soil
Limestone
Which of the following is NOT a problem that a demand-pulled, unanticipated inflation tends to create? a. Distortions in the market for loanable funds because real interest rates falls b. Menu costs for business because they have to reflect new prices c. Distortions in the labor market because real wages fall d. A decrease in the value of bonds and saving accounts e. Lower profits for firms
Lower profits for firms
Merinda is a CEO of a large company. Every week she in her management team discuss what consumers want and what product they should manufacture. What kind of economy does this scenario describe? a. Tangential b. Command c. Market d. Traditional e. Contingent
Market
Petra gets fired from her job as a marketing director when the economy slows down and her company has to downsize. Assuming Petra is looking for a new job, then: a. Petra is structurally unemployed b. Petra is frictionally unemployed c. Petra is seasonally unemployed d. Petra is cyclically unemployed e. Petra is seasonally unemployed
Petra is cyclically unemployed
What would happen to the equilibrium quantity and price of digital cameras if technological improvement reduces the cost of producing them? a. Price and quantity will both increase b. Price and quantity will both decrease c. Price will increase but quantity will decrease d. Price will decrease but quantity will increase e. It is impossible to determine what would have to price and quantity
Price will decrease but quantity will increase
What would happen to the equilibrium price and equilibrium quantity of tea if the costs of fertilizers and water (used to grow tea) increased? a. Price and quantity would both increase b. Price and quantity will both decrease c. Price will increase, but quantity will decrease d. Price will decrease, but quantity will increase e. It is impossible to determine what would have to price and quantity
Price will increase, but quantity will decrease
Which of these actions can the U.S. government take in order to slow down a demand-pulled inflation? a. Raise government spending on education b. Raise minimum wage c. Print more money d. Raise corporate taxes e. Lower interest rates
Raise corporate taxes
Based on the Production Possibilities Frontier attached here, what is the marginal cost of producing more rice at Point B? a. 0 tons of wheat b. 1/2 tons of wheat c. 2 tons of wheat d. 4 tons of wheat e. 6 tons of wheat
a. 0 tons of wheat
Based on the Production Possibilities Frontier attached here, if 3 tons of rice and 3 tons of wheat are produced, how much more wheat can be produced without giving up rice? a. 7 tons b. 10 tons c. 3 tons d. 5 tons e. 6 tons
a. 7 tons
Suppose that in Workaholia the total population = 280 million, the number of unemployed = 7 million, and the labor force = 142 million. What is the employment to population ratio in Workaholia if 100 million people are ineligible to work? Select one: a. 75% b. 72% c. 68% d. 65% e. 62%
a. 75%
Which one of these resources is considered labor? Select one: a. A Waitress b. Solar Energy c. Silver d. A Ph.D. e. A Robot
a. A Waitress
Ken's disposable income is $60,000, his Marginal Propensity to Save is .20, and he consumes $60,000 worth of goods. What is Ken's autonomous consumption? Select one: a. $0 b. $4,000 c. $8,000 d. $12,000 e. $14,000
d. $12,000
Suppose that in the country of Economia: Net Investment = $20 billion, Depreciation = $80b, Exports = $70b, Government Expenditure = $60b, Imports = $50b, Consumption = $120b. What does GDP equal in Economia? Select one: a. $280 billion b. $240 billion c. $250 billion d. $300 billion e. $270 billion
d. $300 billion
Suppose that in the country of Economia: Depreciation = $80 billion, Net Investment = $40b, Exports = $90b, Government Expenditure = $120b, Imports = $50b, and Consumption = $160b. What does Net Exports equal as a percent of GDP? Select one: a. 20.5% b. 12.5% c. 18.2% d. 9.1% e. 27.3%
d. 9.1%
Which one of these products is likely to have the largest income effect? Select one: a. Coffee b. A Yacht (an expensive boat) c. Apples d. A chair e. Electricity
e. Electricity
If cyclical unemployment is negative, which of the following statements MUST be true? Select one: a. The natural rate of unemployment must be negative b. The economy must have reached a business peak c. The economy must have reached a business trough d. The economy is experiencing a recession e. Employment is above the full level of employment
e. Employment is above the full level of employment
Which one of these is NOT an example of an automatic stabilizer? Select one: a. People pay less income tax when the economy is in a recession b. Interest rates tend to rise during periods of strong economic growth c. Nominal wages tend to rise during economic expansions d. Welfare payments tend fall when unemployment is low e. Every administration tends to increase spending on education
e. Every administration tends to increase spending on education
Which of the following statements is TRUE about the rates of unemployment? Select one: a. Cyclical unemployment can never exceed structural unemployment b. Frictional unemployment can never exceed structural unemployment c. Cyclical unemployment can never exceed the natural rate of unemployment d. Structural unemployment can never exceed seasonal unemployment e. Frictional unemployment can never exceed the natural rate of unemployment
e. Frictional unemployment can never exceed the natural rate of unemployment
Which of the following events is most likely to shift the U.S.'s Production Possibilities Frontier outwards? Select one: a. Americans start buying more cars from Europe (importing them) instead of the U.S. b. The government increases corporate taxes in order to help pay for the national debt c. 10 million Americans move from rural towns to large cities d. Land that was used for agricultural production (farming) is now used for wildlife conservation e. Genetic manipulation doubles the rate in which corn, wheat and soy grow
e. Genetic manipulation doubles the rate in which corn, wheat and soy grow
If the government currently has a balanced budget, which one of these actions will lead to a deficit in the government's budget? Select one: a. The Fed raising the supply of money through an Open Market Operation b. Decreasing spending on education c. Lowering spending on Homeland Security d. The Fed buying government bonds e. Lowering income tax
e. Lowering income tax
Which of the following is the MAIN reason why the labor force participation in the U.S. has substantially increased during the second half of the twentieth century? Select one: a. Americans started retiring at a later age than they used to in the past b. The flow of hard-working immigration to the U.S. has significantly increased c. New laws allowed teenagers to start working at a younger age d. Technology substantially increased the number of available jobs e. More women began participating in the labor force
e. More women began participating in the labor force
Charline lives in a small apartment in Nice, France. She uses inexpensive cloths and does not have a car, but she feels content with her life and does not feel that she needs any more material goods. Under what condition does Charline live? Select one: a. Marginal Scarcity b. Geographical Scarcity c. Absolute Scarcity d. Relative Scracity e. She does not live under scarcity
e. She does not live under scarcity
After congress approves the construction of a highway in order to stimulate the economy, each state must conduct feasibility and environmental impact studies before beginning construction. These studies are a part of which lag? Select one: a. The recognition lag b. The analysis lag c. The legislative lag d. The technology lag e. The impact lag
e. The impact lag
Suppose that in the country of Economia: Net Investment = $20 billion, Depreciation = $50b, Net Exports = $30b, Taxes = $70b, Government Expenditure = $60b, Imports = $80b, Consumption = $120b. What does GDP equal in Economia? a. $280 billion b. $260 billion c. $230 billion d. $210 billion e. $200 billion
$280 billion
The cost of energy and production typically have a ----(1)---- relationship while consumer confidence and consumption typically have a ----(2)---- relationship a. (1) Direct; (2) Direct b. (1) Inverse; (2) Inverse c. (1) Inverse; (2) Direct d. (1) Direct; (2) Inverse e. There is no relationship among these variables
(1) Inverse; (2) Direct
Suppose that in the country of Economia: Depreciation = $80 billion, Net Investment = $40b, Exports = $90b, Government Expenditure = $120b, Imports = $50b, and Consumption = $160b. What does Net Exports equal as a percent of GDP? a. 20.5% b. 12.5% c. 18.2% d. 9.1% e. 27.3%
. 9.1%
Suppose that the total Population of Wazoola is 120 million, the number of unemployed is 10 million, and the unemployment rate is 20%. If 40 million people in Wazoola are eligible to work but choose not to participate, what is the size of the eligible population in Wazoola? a. 50 million b. 60 million c. 70 million d. 80 million e. 90 million
. 90 million
Which of the following statements is TRUE about the rates of unemployment? a. Cyclical unemployment can never exceed structural unemployment b. Frictional unemployment can never exceed structural unemployment c. Cyclical unemployment can never exceed the natural rate of unemployment d. Structural unemployment can never exceed seasonal unemployment e. Frictional unemployment can never exceed the natural rate of unemployment
. Frictional unemployment can never exceed the natural rate of unemployment
Based on the Production Possibilities Frontier shown here, what is the marginal cost of producing more wheat at Point D? a. 2/3 tons of rice b. 1 tons of rice c. 3/2 tons of rice d. 2 tons of rice e. 13 tons of rice
2/3 tons of rice
Suppose that in Workaholia the total population = 180 million, the number of unemployed = 5 million, and the labor force = 55 million. What is the employment to population ratio in Workaholia if 60 million people are ineligible to work? a. 55.5% b. 68.4% c. 61.2% d. 50.0% e. 41.7%
41.7%
The number of seats sold on a flight drastically falls after airlines slightly increase the price of the flight. The demand for flight must be: Select one: a. Fairly vertical b. Fairly horizontal c. Perfectly vertical d. Perfectly horizontal e. Upward sloping
?
Which of the following scenarios BEST illustrates the tenet of economics that people respond to incentives? Select one: a. Miranda decides to move to Chicago because there are many job opportunities there b. Louis decides to open a restaurant because he is an excellent chef c. Gomez decides to do one more set of pushups before leaving the gym d. Tatiana decides to ride the bus when the city reduces the price of the ticket e. Sheila compares the features and prices of the iphone and Galaxy phone
?
Suppose that in 2007 Nominal GDP was $12 trillion and the Real GDP was $10 trillion. If Nominal GDP increased by 25% between 2007 and 2008 and Real GDP remained the same, what was the GDP Price Index in 2008? Select one: a. 1.20 b. 1.25 c. 1.40 d. 1.50 e. 1.60
? (Not A.)
Which of the following explanations is a reason why Real GDP per Capital is NOT a good measure of social welfare? Select one: a. Real GDP per Capita is too inaccurate to be used for any policy decision making b. Real GDP per Capita does not account for changes in the population c. Real GDP per Capita does not account for the production of services d. Real GDP per Capita does not account for inflation e. Real GDP per Capita does not examine human rights violations
? (Not B.)
Which of the following events is likely to raise employment and create more inflation in the economy? Select one: a. Weak economic growth in Canada, one of our biggest trade partners b. A deprecation of the dollar c. A fall in consumer confidence d. Technological innovation that reduces production cost e. A rise in the price of petroleum
? (Not D.)
When the government increases taxes in order to pay off more of its debt then 1. Inflation is likely to _______ and 2. Employment are likely to _______? Select one: a. 1. Rise; 2. Rise b. 1. Rise; 2. Fall c. 1. Fall; 2. Rise d. 1. Fall; 2. Fall e. Both variables are likely to remain the same
? (Not a.)
Which of the following government actions can cause a cost-pushed inflation? Select one: a. Raising minimum wage b. Increasing income tax c. Decreasing cooperate taxes d. Subsidizing petroleum e. Increasing government spending
? (Not d.)
If the federal government was required to balance its budget, when would government spending most likely decrease? Select one: a. When employment was rising rapidly for an extended period of time b. When unemployment was declining for an extended period of time c. When the economy was experiencing a strong expansion due to high business confidence d. When the economy was experiencing a demand pulled inflation e. A balance budget amendments ensures that government spending never decrease
? Not A
Which one of these events is MOST likely to raise interest rates in the economy? Select one: a. The Fed buying government bonds through an Open Market Operation b. Prices in the economy increasing due to a demand-pulled inflation c. The Fed lowering the Federal Funds Rate d. The Fed lowering the Discount Rate e. National income falling during a severe recession
? Not D
According to Keynesians, what should the government do if unemployment is 11% and inflation is 1%? Select one: a. Increase the supply of money b. Lower taxes c. Lower government spending d. Raise interest rates e. Do nothing
? Not D.
Ransomware work by blocking an individual's or company's files and demanding money, paid via the Internet using bitcoin, to release the files. What kind of money is this? Select one: a. Commodity Money b. Token Money c. Representative Money d. Electronic Money e. Digital Money
? Not D.
What is most likely to happen to the price level and real GDP if the Fed targets a lower Federal Funds Rate? Select one: a. Price level and real GDP will both increase b. Price level and real GDP will both decrease c. Price level will increase, but real GDP will decrease d. Price level will decrease, but real GDP will increase e. Real GDP will increase, but the price level would remain the same
? Not D.
In 2003, the Fed lowered interest rates all the way to 1%, which fueled a large and destructive housing bubble in 2005 and created more inflation when the economy was already expanding. The problem created by the Fed's actions BEST support which school of thought: Select one: a. Supply-side economists b. Keynesian economists c. Classical economists d. Marginalists e. Monetarists
? Not E.
Which of these actions can the U.S. government take in order to slow down a demand-pulled inflation? Select one: a. Raise government spending on national defense b. Increase the supply of money c. Decrease consumer confidence d. Depreciate the dollar e. Raise income tax
? (Not D.)
Which of these individuals would NOT be counted as part of the eligible population? a. A 14 years old who is working part time at a local cinema b. A healthy 38 years old living in a small town. He looked for a job for two years, but gave up and is no longer looking c. A 20 years old college students who does not have any time to work d. A 50 years old who does not work because she inherited a lot of money e. A healthy 75 years old who retired at the age of 65
A 14 years old who is working part time at a local cinema
Which of these events is most likely to increase the demand for printers worldwide? a. A fall in the price of personal computers (PCs) b. A decrease in the number of consumers c. A rise in the cost of cartridge (ink used in printers) d. An increase in minimum wage e. A technological advancement that reduces the cost of producing printers
A fall in the price of personal computers (PCs)
Which of the following events can cause a demand-pulled inflation? a. An increase in the cost of raw materials b. An appreciation in the local currency c. A rise in interest rates d. A decrease in wages e. A reduction in income tax
A reduction in income tax
If thousand of acres of forest are cut down to build wood houses and create new neighborhoods, how will this affect the resources in the economy? Select one: a. It will increase the physical capital, but will reduce renewable natural resources b. It will increase non-renewable natural resources, but will reduce renewable natural resources c. It will raise the size of the labor, but will decrease physical capital d. It will increase physical capital, but will reduce human capital e. It will increase human capital, but will reduce natural resources
A. It will increase the physical capital, but will reduce renewable natural resources
What is true about the equilibrium price? Select one: a. Quantity demanded equals the quantity supplied b. Every can afford to buy the product c. Quantity supplied would exceed quantity demanded and there would be a surplus d. Quantity supplied would exceed quantity demanded and there would be a shortage e. There is no consumer surplus in the market
A. Quantity demanded equals the quantity supplied
If real GDP is below potential GDP in the short-run, what is likely to happen in the long run if the government does not intervene? a. Demand for money will lower interest rates and stimulate investment b. Welfare payments will increase, which could help stimulate consumption c. Wages will remain stagnate or even begin falling, which would reduce production cost d. People will pay less income tax, which will help stimulate consumption e. All of these adjustments will occur
All of these adjustments will occur
Which one of these goods is likely to have the largest substitution effect? a. Diamonds b. Apples c. Flour d. Electricity e. Gasoline
Apples
Out of the following resources, which one tends to DECREASE over time in the U.S.? a. Forests in the U.S. b. Human Capital c. Coal d. Power Tools e. Trucks
Coal
he Red Cross decides to give AIDS medication to children in Africa before it gives them to adults. Which of the fundamental questions of economics is the Red Cross answering? a. What to produce b. When to produce c. How to produce d. For whom to produce e. Why to Produce
D. For whom to produce
Which of the following statements is neither normative nor positive? Select one: a. The government should raise taxes to control inflation b. You should drink at least 5 glasses of water per day c. Alaska is the largest state in the U.S. d. Hawaii is the prettiest state in the US e. Delaware has no sales tax
D. Hawaii is the prettiest state in the U.S
If there is an expansionary gap in the economy, which of the following is MOST likely to be true? a. Employment is above the full level of employment b. Unemployment is above the natural rate of unemployment c. The economy is in long-term equilibrium d. Real GDP is below Potential GDP e. The economy is experiencing a recession
Employment is above the full level of employment
Which one of these is NOT an example of an automatic stabilizer? a. People pay less income tax when the economy is in a recession b. Interest rates tend to rise during periods of strong economic growth c. Nominal wages tend to rise during economic expansions d. Welfare payments tend fall when unemployment is low e. Every administration tends to increase spending on education
Every administration tends to increase spending on education
All of the following will eventually shift the Production Possibilities Frontier of the US outwards EXCEPT? a. Sun Microsystems develops a Widows Program that is twice as fast as Microsoft Windows, is not susceptible to any viruses, and works on all computers b. The United State conquers Mexico and turns it into its fifty first state c. Obama's tax credit for textbook increases enrollment in universities d. The US population rises by 5 million due to a wave of legal immigrants from Mexico e. Forests that were used for timber production are converted into cotton fields
Forests that were used for timber production are converted into cotton fields
Which of the following statements is neither normative nor positive? a. The government should raise taxes to control inflation b. You should drink at least 5 glasses of water per day c. Alaska is the largest state in the U.S. d. Hawaii is the prettiest state in the US e. Delaware has no sales tax
Hawaii is the prettiest state in the US
Petra, a high school student, lives with her parents in a middle class neighborhood, but does not have enough money to buy a car, which she really wants? Under what type of state does Petra live? a. Utility constraint b. Geo-spatial constraint c. Absolute scarcity d. Ceteris Paribus e. Relative scarcity
Relative scarcity
David starts taking short showers and washing his dishes by hand instead of using the dishwasher when the price of the water that he uses in his house significantly increases. This is a good illustration of: a. The Law of Supply b. The Substitution Effect c. The Environmental Effect d. A Positive Incentive e. The Income Effect
The Income Effect
When the supply of insulin (a medication that is used to treat diabetes) increases, the price of insulin falls but the quantity of insulin sold stays exactly the same. This indicates that: a. The demand for insulin is fairly vertical b. The demand for insulin is fairly horizontal c. The demand for insulin is perfectly vertical d. The demand for insulin is perfectly horizontal e. The demand for insulin is downward sloping
The demand for insulin is perfectly vertical
Based on the Production Possibilities Frontier attached here, which one of these statements is FALSE? a. Point F is not feasible given the country's resources and technology b. Point C and Point E are equally efficient c. The marginal cost of rice at point B is 6 tons of wheat d. The marginal cost of rice in Point D is 2 tons of wheat e. Point B is inefficient but feasible
The marginal cost of rice at point B is 6 tons of wheat
What is the BEST description of what Gross Domestic Product for the U.S. measures? a. The social, environmental and educational development in the U.S. economy b. The market value of production in the U.S. c. The total profit made by American companies d. The total tax revenue generated in the U.S. economy e. The total income generated by Americans in the U.S. and abroad
The market value of production in the U.S.
Sarah decides to become a lawyer instead of a doctor (her second choice). What is Sarah's opportunity cost of becoming a lawyer? a. The money and experienced that she would have gained as a doctor b. The difference in her salary as a lawyer and her salary as a doctor c. The cost of tuition and fees in law school d. She does not have an opportunity cost because becoming a lawyer was her first choice e. All the other professions that she could have chosen like being an accountant
The money and experienced that she would have gained as a doctor
What will happen if the price of a good is below the equilibrium price? a. There will be a surplus and sellers will lower the price of the good b. There will be a surplus and sellers will raise the price of the good c. There will be a shortage and sellers will lower the price of the good d. There will be a shortage and sellers will raise the price of the good e. Nothing will happen unless the government intervenes
There will be a shortage and sellers will raise the price of the good
Eric pays for a doctor visit with a check. Eric is using money as: Select one: a. A medium of exchange b. A medium of arbitration c. A unit of account d. Eric is not using money since he is using a check e. A store of value
a. A medium of exchange
What kind of inflation tends to create more jobs and increase the values of assets like commodities and real-estate? Select one: a. Demand-pulled inflation b. Employment-based inflation c. Hyperinflation d. Secondary Inflation e. Cost-pushed inflation
a. Demand-pulled inflation
Between 2009 and 2014, Obama significantly raised spending on education and highway construction, how is this policy likely to affect the U.S. economy? Select one: a. It helped reduce the unemployment rate and created more inflation b. It helped reduce the unemployment rate and reduced inflation c. It caused the unemployment rate to rise but helped control inflation d. It caused the unemployment rate to rise and created more inflation e. Government policy has no effect on the economy
a. It helped reduce the unemployment rate and created more inflation
Assume that banks lend out all their excess reserves and individuals deposit all their money. If the Required Reserve Ratio is .14, what will happen to the supply of money if the Fed SELLS $10 billion worth of bonds through an Open Market Operation? Select one: a. It would decrease by $71.4 billion b. It would increase by $54.7 billion c. It would decrease by $44.2 billion d. It would increase by $22.8 billion e. It would decrease by $15 billion
a. It would decrease by $71.4 billion
hich of the following government actions can cause a cost-pushed inflation? Select one: a. Raising minimum wage b. Increasing income tax c. Decreasing cooperate taxes d. Subsidizing petroleum e. Increasing government spending
a. Raising minimum wage
Lisa's Marginal Propensity to Save is 0.10, her autonomous consumption is $16,000 and her disposable income is $180,000. How much is Lisa saving? Select one: a. She is saving $2,000 b. She is saving $4,000 c. She is saving $8,000 d. She is saving $10,000 e. She is saving $12,000
a. She is saving $2,000
Which of the following is an example of a pro-cyclical policy? Select one: a. The Fed lowering the Required Reserves Ratio during an expansion b. The Fed targeting a lower Federal Funds Rate during a recession c. Congress lowering government spending during an expansion d. The Treasury bailing out banks during an economic crisis e. Congress raising taxes on the rich during an expansion
a. The Fed lowering the Required Reserves Ratio during an expansion
Oliver learned how to hunt from his father. He is mostly self-sufficient; although occasionally he trades fur and meat in exchange for grain and vegetables. What kind of economy does this scenario describe? Select one: a. Traditional b. Sustain c. Command d. Market e. Provincial
a. Traditional
Suppose that the Price level = 140, the Supply of Money = $20 billion, and the Velocity of Money is 35. What does real GDP equal? Select one: a. $4 billion b. $5 billion c. $8 billion d. $10 billion e. $12 billion
b. $5 billion
Suppose that in 2012 the government collected $320 billion in revenue and spent $380 billion, while in 2013 the government revenue increased to $350 billion and its spending fell to $330 billion. If the government had a debt of $600 billion at the beginning of 2012, how much debt would it have by the end of 2013? Select one: a. $620 billion b. $640 billion c. $650 billion d. $660 billion e. $680 billion
b. $640 billion
When the economy is in a recession: 1. Unemployment compensation is likely to _______ and 2. Tax revenue is like to _______? Select one: a. 1. Rise; 2. Rise b. 1. Rise; 2. Fall c. 1. Fall; 2. Rise d. 1. Fall; 2. Fall e. Both variables will remain constant
b. 1. Rise; 2. Fall
Suppose that the total Population of Wazoola is 420 million, the number of unemployed is 20 million, and the unemployment rate is 10%. If 80 million people in Wazoola are eligible to work but choose not to participate in the labor force, what is the size of the ineligible population? Select one: a. 80 million b. 140 million c. 170 million d. 240 million e. 280 million
b. 140 million
What does each point Outside the Production Possibilities Frontier represent? Select one: a. The highest possible production of one good given a production level of another good b. A combination of goods that is not feasible to produce given current resources c. A combination of goods that can be produced but is not efficient d. The technological level of the economy e. The equilibrium point where quantity demanded equals quantity supplied
b. A combination of goods that is not feasible to produce given current resources
Which one of these assets is the LEAST liquid one? Select one: a. A money market mutual fund b. A corporate stock c. A government bond d. A time deposit e. A checking account
b. A corporate stock
Which of the following events is most likely to decrease the price of cereal? Select one: a. A drought that destroys half of the oat and wheat that cereals are made from b. An increase in the price of milk c. The number of children rises due a rise in the birthrate d. The number of cereal suppliers decreases e. A new study discovers that eating cereal for breakfast can improve one's memory
b. An increase in the price of milk
Assuming there is no trade, if the Marginal Propensity to Save is 0.25 and the government increases spending by $8 billion, by how much will output rise? Select one: a. By $25 billion b. By $32 billion c. By $48 billion d. By $54 billion e. By $60 billion
b. By $32 billion
Based on the figure below (that shows Real GDP over time), which of the following statements is most likely to be true? Select one: a. The economy reached a business trough in 1995 b. Cyclical unemployment was negative in 1996 c. The economy was in a recession in 1993 d. The unemployment rate was rising in 1994 e. Employment was above the full level of employment in 1992
b. Cyclical unemployment was negative in 1996
Which one of these actions will lower the amount of money in M2 WITHOUT changing the amount in M1? Select one: a. Maggie uses funds from her checking account to purchase a corporate stock b. Mandy uses money from a savings account for a down payment on a house c. Marissa uses money from her savings account to purchase travelers checks d. Marsha transfers money from her checking account to a time deposit e. Melinda sells holdings of corporate stocks and places the money in a checking account
b. Mandy uses money from a savings account for a down payment on a house
Which of the following scenarios best illustrates the law of supply? Select one: a. Ron decides to buy a new cell phone, when the 4th generation of cell phones comes out b. Michelle decides to bake more éclairs in her bakery when their price rises c. Production of houses increases after the number of construction companies rises d. John decides to buy a new sofa when his income increases e. Car manufactures increase their production of cars when the price of steel drops
b. Michelle decides to bake more éclairs in her bakery when their price rises
Matt, a truck driver, decides to drive for another hour on highway 95 instead of stopping at a hotel for the night because he is not tired and he can get closer to his destination. This scenario best illustrates that: Select one: a. The income effect is stronger than the substitution effect b. People make decisions on the margin c. Ceteris paribus conditions hold d. The use of resources is costly e. Incentives matter
b. People make decisions on the margin
Both potential buyers and potential sellers expect the price of real estate to keep falling. What would happen to the price and quantity of houses as a result? Select one: a. Price will increase, but quantity can increase, decrease or remain the same b. Price will decrease, but quantity can increase, decrease or remain the same c. Quantity will increase, but price can increase, decrease or remain the same d. Quantity will decrease, but price can increase, decrease or remain the same e. Price and quantity will both remain the same
b. Price will decrease, but quantity can increase, decrease or remain the same
Which of the following explanations is a reason why Real GDP per Capital is NOT a good measure of social welfare? Select one: a. Real GDP per Capita does not account for population growth b. Real GDP per Capita does not account for household activities like cooking at home c. Real GDP per Capita does not account for the production of services d. Real GDP per Capita is not as accurate as Real Gross National Product per Capita e. Real GDP per Capita is not measured frequently enough
b. Real GDP per Capita does not account for household activities like cooking at home
In 2004 the Fed began raising interest rates? What is likely to happen to the price level and real GDP as a result? Select one: a. The price level and real GDP will both increase b. The price level and real GDP will both decrease c. The price level will increase, but real GDP will decrease d. The price level will decrease, but real GDP will increase e. Interest rates have no effect on economic growth and inflation
b. The price level and real GDP will both decrease
The U.S. experienced a major recession in 2008 & 2009? What is likely to happen to the price level and real GDP in Canada (our biggest trade partner) as a result? Select one: a. The price level and real GDP will both increase b. The price level and real GDP will both decrease c. The price level will increase, but real GDP will decrease d. The price level will decrease, but real GDP will increase e. The U.S. economy does not affect Canada's economy
b. The price level and real GDP will both decrease
The government raises interest rates in response to the housing boom of 2005 and at the same time the cost of raw materials significantly decreases. What would happen to the price level and real GDP as a result? Select one: a. The price level will rise, but real GDP can increase, decrease or remain the same b. The price level will decrease, but real GDP can increase, decrease or remain the same c. Real GDP will rise, but the price level can increase, decrease or remain the same d. Real GDP will decrease, but the price level can increase, decrease or remain the same e. This is too hard to figure out (hint: you can do it, start by during the AD and SAD graph)
b. The price level will decrease, but real GDP can increase, decrease or remain the same
The cost of energy and production typically have a ----(1)---- relationship while consumer confidence and consumption typically have a ----(2)---- relationship Select one: a. (1) Direct; (2) Direct b. (1) Inverse; (2) Inverse c. (1) Inverse; (2) Direct d. (1) Direct; (2) Inverse e. There is no relationship among these variables
c. (1) Inverse; (2) Direct
Suppose that the total Population of Wazoola is 250 million, the number of unemployed is 8 million, and the unemployment rate is 8%. If 60 million people in Wazoola are eligible to work but choose not to participate, what is the size of the eligible population in Wazoola? Select one: a. 60 million b. 124 million c. 160 million d. 182 million e. 190 million
c. 160 million
Which of the following events is likely to lower unemployment and create more inflation in the economy? Select one: a. Weak economic growth in Europe b. An appreciation in the dollar c. A rise in consumer confidence d. A fall in the cost of raw materials e. A rise in the price of petroleum
c. A rise in consumer confidence
Which of the following scenarios best illustrates the substitution effect? Select one: a. Marshall buys more CDs after the price of gasoline drops b. Colleen trades in her five years old car for a new and better car c. Bill buys more apple juice when the price of orange juice increases d. Salma switches jobs when she receives an offer with a higher wage e. Chad stops drinking coffee after he discovers that it can cause cancer
c. Bill buys more apple juice when the price of orange juice increases
On the Production Possibilities Frontier shown here, which one of these statements is true? Select one: a. Point A is more efficient than Point B b. The Marginal Cost of rice at Point D is 4 tons of wheat c. It is possible to produce 2 tons of rice and 11 tons of wheat d. The marginal cost of wheat at Point B is 3 tons of rice e. Point A is feasible and efficient
c. It is possible to produce 2 tons of rice and 11 tons of wheat
Which one of these resources is a non-renewable natural resource? Select one: a. A Wooden House b. A Metal Hammer c. Limestone d. Paper e. Soil
c. Limestone
What would happen to the equilibrium quantity and price of digital cameras if the costs of plastic and other raw materials substantially increase? Select one: a. Price and quantity will both increase b. Price and quantity will both decrease c. Price will increase but quantity will decrease d. Price will decrease but quantity will increase e. It is impossible to determine what would have to price and quantity
c. Price will increase but quantity will decrease
What would happen to the equilibrium price and equilibrium quantity of bread if the price of wheat increases due to a major drought? Select one: a. Price and quantity would both increase b. Price and quantity will both decrease c. Price will increase, but quantity will decrease d. Price will decrease, but quantity will increase e. It is impossible to determine what would have to price and quantity
c. Price will increase, but quantity will decrease
The government lowered interest rates in response to the recession of 2008-09 and at the same time the cost of petroleum and other raw materials significantly decreased. What would happen to the price level and real GDP as a result? Select one: a. The price level will rise, but real GDP can increase, decrease or remain the same b. The price level will decrease, but real GDP can increase, decrease or remain the same c. Real GDP will rise, but the price level can increase, decrease or remain the same d. Real GDP will decrease, but the price level can increase, decrease or remain the same e. This is too hard to figure out (hint: draw the graph and show the shifts)
c. Real GDP will rise, but the price level can increase, decrease or remain the same
Which one of these policies should the Fed engage in if employment is well above the full level of employment and inflation is high? Select one: a. Lower the Required Reserve Ratio b. Target a lower Federal Funds Rate c. Sell government bonds to commercial banks d. Raise income and corporate taxes e. Reduce consumer confidence
c. Sell government bonds to commercial banks
Which one of these is NOT an example of an automatic stabilizer? Select one: a. Interest rates tend to fall during recessions b. People pay more income tax when the economy is growing and their income rise c. The government typically increases spending on highways during expansions d. Wages tend to fall when unemployment is high e. Unemployment compensation tend to rise during recessions
c. The government typically increases spending on highways during expansions
Grapes make a poor form of money because: Select one: a. They have a high opportunity cost b. They are not portable c. They are not durable d. They are not uniform e. They have an odd shape
c. They are not durable
Cid places his money in a financial institution that guarantees him an interest rate, but when his friend Kip tries to borrow money from the institution his application is rejected because he is not a member. What type of institution did Cid deposit his money in? Select one: a. A Hedge Fund b. Federal Reserve System c. A Commercial Bank d. A Credit Union e. An Investment Bank
d. A Credit Union
Which of the following events would most likely decrease the supply of cars? Select one: a. The construction of major highways around the U.S. b. An increase in the number of car manufacturers c. A decrease in the cost of public transportation d. An increase in the cost of steel e. A rise in the cost of gasoline
d. An increase in the cost of steel
Which of the following will be counted as having a positive impact on the U.S.'s Gross Domestic Product in 2018? Select one: a. Drills produced by Staney Black & Dekcer in South Carolina in 2017 but sold in 2018 b. A house that was built in the 1990s, but resold in 2018 c. Lamborghini Aventador that was produced in Italy and sold in Los Angeles in 2018 d. Corn that was grown in Nebraska and sold to Japan in 2018 e. Flour that Kroger supermarket purchased in 2018 to make cakes
d. Corn that was grown in Nebraska and sold to Japan in 2018
Coastal Carolina University decides that students must graduate high school with a Grade Point Average of 3.00 or above in order to be admitted to the university. Which of the basic questions of an economy is it answering? Select one: a. What to produce b. When to produce c. If the produce d. For whom to produce e. Where to Produce
d. For whom to produce
Which of the following resources tends to DECREASE over time in the U.S.? Select one: a. Wind available to produce electricity b. Entrepreneurial skills c. Residential houses d. Gold e. Accountants
d. Gold
Which of the following is a reason why Labor Force participation has decreased in recent years (since 2008)? Select one: a. There is a significant increase in the number of babies that Americans are having b. More women are deciding to become housewives instead of working c. More people are being jailed because of a rising crime rate d. People are getting more formal education instead of joining the labor force right away e. New government regulations are forcing people to retire at an earlier age
d. People are getting more formal education instead of joining the labor force right away
If unemployment is below the natural level in the short-run, what is likely to happen in the long run if the government does not intervene? Select one: a. Wages are likely to fall causing many workers to leave their job b. Welfare payments will continue to rise c. Interest rates are likely to fall, causing more investment d. People will end up paying more income tax, which will slow down consumption e. The economy cannot adjust on its own; the government must intervene
d. People will end up paying more income tax, which will slow down consumption
What would happen to the equilibrium quantity and price of digital cameras if technological improvement reduces the cost of producing them? Select one: a. Price and quantity will both increase b. Price and quantity will both decrease c. Price will increase but quantity will decrease d. Price will decrease but quantity will increase e. It is impossible to determine what would have to price and quantity
d. Price will decrease but quantity will increase
In September, many people who work in hotels and restaurants in the Myrtle Beach Area lose their job and are forced to look for a new job. They become: Select one: a. Frictionally unemployed b. Cyclically unemployed c. Geographically unemployed d. Seasonally unemployed e. Structurally unemployed
d. Seasonally unemployed
Which of the following subjects is a Microeconomics topic? Select one: a. The exchange rate between the U.S. Dollar and the British Pound b. The causes of the Economic Recession of 2008-2009 c. The differences in economic policies between President Obama and President Trump d. The budget of Coastal Carolina University e. Inflation in Europe
d. The budget of Coastal Carolina University
Which approach for calculating GDP measures the money spent on products by the different sectors of the economy? Select one: a. The income approach b. The production approach c. The public approach d. The expenditure approach e. The sectarian approach
d. The expenditure approach
Eric goes to see a movie with his girlfriend instead of working (his second choice) and he enjoys the date. What is Eric's opportunity cost of going out to the movies? Select one: a. He does not have an opportunity cost because he enjoys the date b. The cost of the movie ticket and popcorn at the movie theater c. The highest amount that he is willing to pay to see the movie d. The money that he would have earned if he worked instead e. All the other things that he could have done like sleeping or watching T.V.
d. The money that he would have earned if he worked instead
Which of the following is an example of an automatic stabilizer? Select one: a. An amendment that requires the government to balance its budget every year b. Congress bailing out Fannie Mae (a mortgage lender) to prevent a recession c. Subsidies for farmers to produce more corn for ethanol, which is used as a fuel for cars d. Unemployment compensation e. All of these are examples of automatic stabilizers
d. Unemployment compensation
Suppose that in 2014 the real GDP was $11 trillion and the GDP price index was 1.4. If Nominal GDP increased by 20% between 2014 and 2015, what was the Nominal GDP for 2015? Select one: a. $11.2 trillion b. $12.8 trillion c. $14.5 trillion d. $16.4 trillion e. 18.5 trillion
e. 18.5 trillion
Suppose that in Workaholia the total population = 200 million, the number of employed = 110 million, and the number of Unemployed = 10 million. What is the labor force participation rate in Workaholia if 50 million people in Workaholia are not eligible to work? Select one: a. 60.0% b. 68.7% c. 72.0% d. 73.3% e. 80.0%
e. 80.0%
Which of these individuals would be counted as part of the Labor Force? Select one: a. A 15 years old who is working part time on the weekend at a restaurant b. A 52 years old who is not working and stopped looking for a job after searching for 2 years c. A 28 years old Ph.D.students who does not have any time to work d. A 44 years old who does not work because she inherited a lot of money e. A 72 years old who started working part time in a flower shop after retiring at the age of 65
e. A 72 years old who started working part time in a flower shop after retiring at the age of 65
Which of the following is likely to DECREASE the demand for coffee (shift the demand to the left)? Select one: a. An increase in the number of adults in the U.S. due to legal immigration b. A new fertiziler that allows coffee to grow twice as fast c. A decrease in income tax d. A decrease in the number of coffee sellers e. A decrease in the size of the population
e. A decrease in the size of the population
If employment is well above the full level of employment, the difference between real GDP and potential GDP is called: Select one: a. A cyclical gap b. A contractionary gap c. An employment gap d. A multiplier gap e. An expansionary gap
e. An expansionary gap
if employment is well above the full level of employment, the difference between real GDP and potential GDP is called: Select one: a. A cyclical gap b. A contractionary gap c. An employment gap d. A multiplier gap e. An expansionary gap
e. An expansionary gap
Tanisha's Marginal Propensity to Consume is 0.75. When her income increases, she raises her savings by $400. By how much did her income increase? Select one: a. By $600 b. By $750 c. By $1,000 d. By $1,200 e. By $1,600
e. By $1,600
Which one of these tasks is a role that the Fed has? Select one: a. Telling banks what interest rates they must charge on car loans b. Acting as the central bank for state and local governments c. Determining the fiscal policy for the federal government d. Regulating how corporations report their earnings e. Determining the discount rate
e. Determining the discount rate
Which of the following scenarios best illustrates the law of supply? Select one: a. Sony Inc. increases the production of televisions by using robots to produce them b. John decides to sell his car because he can afford a new car after his income increases c. New, stricter environmental regulations make fish more expensive d. Microsoft Inc. decides to create a new version of Windows after sales of the older version begin to drop e. Developers build new hotels when the price of hotel rooms in Myrtle Beach increases
e. Developers build new hotels when the price of hotel rooms in Myrtle Beach increases
