Econ Final
If the CPI increases from 100 to 130 per year, the rate of inflation for that year is: -30 percent -13 percent -10 percent -5 percent
30 percent
The Great Compromise produced: -checks and balances -the abolition of slavery -a bicameral Congress -separation of powers -federalism
A bicameral Congress
Which of the following will increase the supply of gasoline? -A situation where the quantity of gasoline demanded exceeds the quantity supplied -An increase in the price of gasoline -A decrease in the price of a resource used to produce gasoline, such as crude oil -A decrease in the demand for gas-guzzling SUVs
A decrease in the price of a resource used to produce gasoline, such as crude oil.
After a fruitless two-year search for a job, a former executive gives up and decides to live off the land in the Rocky Mountains. This former executive could be: -A discouraged worker -Structurally unemployed -One of the phantom unemployed -Underemployed
A discouraged worker
An example of a good with external benefits is: -An imported good -A slice of pizza -A sewing machine -A dose of the flu vaccine
A dose of the flu vaccine
For which of the following individuals would the opportunity cost of attending college be the highest? -A promising young physicist who will command a high salary once she earns her college degree -A student with average grades who has never held a job -A student who is the best player on the college football team, but who lacks the skills necessary to at professional football -A famous, highly-paid actor who wants to take time away from his movie career to finish college and earn a degree
A famous, highly-paid actor who wants to take time away from his movie career to finish college and earn a degree.
A large GDP gap implies: -An excess of imports over exports -A low rate of unemployment -A high rate of unemployment -A sharply rising price level
A high rate of unemployment
The term market failure refers to: -A situation in which the market on its own falls to allocate resources -An unsuccessful advertising campaign which reduces demand for a product -A situation in which competition among firms becomes ruthless -A firm which is forced out of business because of losses
A situation in which the market on its own fails to allocate resources efficiently.
The belief that the wealthy should bear a larger tax burden than the poor reflects the ___ principle of taxation. - benefit - cost - equity - ability to pay
Ability to pay
Judgement by performance means that the competitiveness of a market is determined by the: -Actual behavior of firms in the market -Structure of the industry The number of firms in the market -Technological considerations
Actual behavior of firms in the market.
McCulloch v. Maryland was decisive because it: -ruled in favor of state-centered federalism -asserted that the necessary and proper clause was a restriction on the power of the national government -affirmed that national law is supreme to conflicting state laws -established the Supreme Court's power to judge constitutional issues -allowed for a narrow reading of the Constitution
Affirmed that national law is supreme to conflicting state laws
Which of the following is a nonexcludable good? -Police protection -National defense -Coast-guard services -All of the above
All of the above.
According to the law of demand, a decrease in the price of baseball trading cards causes: -An increase in the quantity of baseball trading cards demanded -A decrease in the quantity of baseball trading cards demanded -An increase in the scarcity of baseball trading cards -A greater abundance of baseball trading cards
An increase in the quantity of baseball trading cards demanded.
Suppose the input cost associated with manufacturing hair replacement medication decreases over time. This would lead to: -An increase in the supply of touch treatments, lower prices, and an increase in equilibrium quantity -A decrease in quantity supplied and lower prices -An increase in and higher prices -A decrease in the supply of such treatments, higher prices and a decrease in the equilibrium quantity
An increase in the supply of such treatments, lower prices, and an increase in the equilibrium quantity
The law of demand states that, other things equal: -As the price increase, the quantity demanded will increase -As the price decreases, the demand curve will shift to the right -As the price increases, the demand will decrease -As the price increases, the quantity demanded will decrease
As the price increases, the quantity demanded will decrease.
In market economies, decisions about what to produce are made by: -Government central planners, who allocate resources to business -Businesses based on what was produced in the past -Businesses based on what they think will sell -Businesses based on what they think will be most socially beneficial
Businesses based on what they think will sell.
Economists who favor the judgement by structure standard argue that: -Competition is strong and forces trusts and monopolies to charge competitive prices -Government should just make sure that there are no significant barriers to entry -Competition is incompatible with the existence of large firms that control a significant share of the market -Economies of scale must be encouraged at all cost
Competition is incompatible with the existence of large firms that control a significant share of the market.
A merger between a textile mill and a law firm would be considered to be a: -Horizontal merger -Vertical merger -Conglomerate merger -Diagnol merger
Conglomerate merger.
All of the following were true under the Articles of Confederation EXCEPT: -amending the Articles required agreement of all thirteen states -sovereignty resided with the states -Congress had the right to levy taxes on individuals -there was no executive (President) with power in the national government
Congress had the right to levy taxes on individuals
If the Fed simultaneously raises the discount rate and the reserve requirement, the money supply will: - contract - remain unchanged - expand - take on a value that cannot be determined by the information given
Contract
Shay's Rebellion: -was a successful revolt -convinced many political leaders that the national government was too powerful -convinced many political leaders that the national government was too weak -reinforced public support for the Articles of Confederation -occurred after the Philadelphia Convention of 1787
Convinced many political leaders that the national government was too weak.
The 8th Amendment to the Constitution prohibits: -trial by jury in civil cases -unreasonable search and seizure - cruel and unusual punishment - powers from being reserved to the states
Cruel and unusual punishment
You have been asked by your economics professor to graph the market for lumber and then analyze the change that would occur in equilibrium price as a result of recent forest fires. Your first steps would be to: -Decide which direction to shift the curve -Decide whether the fires affected demand or supply -Graph the shift to see the effect on equilibrium -None of the above are correct
Decide whether the fires affected demand or supply.
If goods A and B are substitutes, a decrease in the price of good B will: -Increase demand for good A -Increase demand for good B -Decrease the demand for good A -Both B and C
Decrease demand for good A
The enumerated powers in Article I of the Constitution were intended to: -limit the powers of the state governments -ensure that neither small nor large states would be at a disadvantage -ensure that neither northern nor southern states would be at a disadvantage - define the lawful powers of the national government - limit the powers of the presidency
Define the lawful powers of the national government
If income was distributed equally, the Lorenz curve would be a: -Diagonal line -Horizontal line -Vertical line -Downward sloping curve
Diagonal line
The federal government's power to tax, regulate commerce among the states, and to declare war are all examples of ___ powers. -reserved -enumerated - implied - concurrent
Enumerated
The 10th Amendment reflects what basic principle of American government? - separation of powers - the protection of the rights of the minority - democracy - federalism
Federalism
The document explaining the ideas of the Constitution and urging its ratification is the: -Mayflower Compact -Declaration of Independence -Anti-Federalist Papers -Federalist Papers -Declaration of Conscience
Federalist Papers
A budget surplus means that: - government expenditures are greater than revenues in a given year - government revenues are greater than expenditures in a given year - government revenues are greater than expenditures throughout time - government expenditures are falling and government revenues are falling
Government revenues are greater than government expenditures in a given year.
Which of the following Supreme Court cases involved using the Commerce clause to prohibit discrimination in the economic marketplace? - NLRB v. Jones & Laughlin - Hamner v. Dagenhart - Heart of Atlanta Hotel v. United States - McCulloch v. Maryland
Heart of Atlanta Hotel v. United States
Which of the following is more likely to be a violation of antitrust laws? -Conglomerate merger -Horizontal merger -Vertical merger -Diagonal merger
Horizontal merger
A budget deficit occurs when: - in any given year, government revenues exceed government expenditures - in any given year, government expenditures exceed government revenues - in any given year, government expenditures equal government revenues - in any given year, when monetary policy is expansionary
In any given year, government expenditures exceed government revenues
A technological advance in the production of automobiles will: -Increase the supply of automobiles -Increase the demand for automobiles -Decrease the demand for automobiles -Decrease the supply of automobiles
Increase the supply of automobiles.
Which of the following statements regarding inflation is incorrect? -Inflation is a continual rise in the general price level -Inflation can occur even if some prices are falling -Inflation is a one-time increase in the general price level -Inflation can occur only if prices are rising on average
Inflation is a one-time increase in the general price level
The duty of the judicial branch is to: - enforce the laws - interpret the laws - make the laws - all of the above
Interpret the laws
Suppose the production of roses generates a positive externality in that travelers enjoy the scenic rural vistas. Then the market quantity of roses produced and consumed: -Is less than the socially optimal quantity -Is more than the socially optimal quantity -Equals the socially optimal quantity -May be more than, less than, or equal to the socially optimal quantity
Is less than the socially optimal quantity.
A public good: -Only provides benefits to those that choose to buy it -Is rival -Is nonrival and nonexclusive -Can be provided efficiently by the private market
Is nonrival and nonexclusive.
The marginal benefit from consuming another unit of a good: -Must equal the marginal cost or the unit will not be consumed -Must exceed the sink cost or the unit will not be consumed -Is the additional benefit above what you have already derived -Equals the total benefit obtained from the consumption of all units
Is the additional benefit above what you have already derived.
Autoworkers negotiate a wage increase. How does this change affect the supply curve of cars? -It shifts the supply curve to the left -It shifts the supply curve to the right -It does not have any impact on the supply curve -It causes a movement along the supply curve
It shifts the supply curve to the left.
If the federal government uses fiscal policy to intervene in the economy, one problem that it may experience is that: - governments are usually very efficient in administering fiscal policy, which makes private enterprise look bad - lag times are long and cause fiscal policy to be implemented too late - too many poor people will benefit from intervention, which is completely unfair
Lag times are long and cause fiscal policy to be implemented too late
The principle of increasing marginal opportunity cost states that initial opportunity costs are ____ and they ____ the more you concentrate on the activity. -High; decrease -Low; increase -High; increase -Low; decrease
Low; increase
The marginal benefit of owning another t-shirt this month to Mary is $12. If the $13 price of t-shirts reflects their marginal cost to Mary and she is rational, then: -Mary will sell the t-shirts she has to others who are willing to pay less -Mary can gain by buying more t-shirts -Mary will buy more t-shirts this month -Mary will not buy anymore t-shirts this month
Mary will not buy anymore t-shirts this month.
If a tax is imposed by the government that is based upon the ability-to-pay principle, we expect that: - taxpayers who benefit most from the government services will bear most of the tax burden - the tax will be more efficient than one based on the benefits principle - most of the tax burden will be borne by more wealthy taxpayers - total tax revenues for the government will be very small
Most of the tax burden will be borne by more wealthy taxpayers
An economic system: -Can eliminate scarcity -Must solve the questions of what to produce, how to produce and for whom to produce -Requires government planning of production and distribution -Must meet the needs of all individuals
Must solve the questions of what to produce, how to produce and for whom to produce.
All points outside the PPC represent: -Efficient production points -Inefficient production points -Non-feasible production points -Economic growth
Non-feasible production points
Andy Kaperson works in his own home as full-time caregiver and homemaker. Officially, he is: -Unemployed -Employed -Not in the labor force -Frictionally unemployed
Not in the labor force.
If drivers decide to make phone calls without considering the costs imposed on others, the: -Number of phone calls made while driving will be above the socially optimal quantity -Number of phone calls made while driving will be below the socially optimal quantity -Marginal social cost curve will lie below the marginal cost of the production curve -Marginal social benefit curve will lie below the marginal social cost curve
Number of phone calls made while driving will be above the socially optimal quantity.
All of the following are characteristics of a confederation EXCEPT: -states retain virtually all powers -states work together on issues that affect all of them, such as security -only the national government has the ability to impose taxes -states can issue their own currency
Only the national government has the ability to impose taxes
The most commonly used told of monetary policy is: - changes in the level of government spending and taxes - changes in the price level - changes in the reserve requirement - open market operations
Open market operations
Where can an economy not produce? -Inside its PPC -On its PPC -At the endpoints of its PPC -Outside its PPC
Outside its PPC.
One of the reasons community colleges receive government subsidies is that it is believed that education creates _____, and therefore without subsidies the quantity produced would be ____ the socially optimal quantity. -Positive externalities; greater than -Positive externalities; less than -Negative externalities; greater than -No externalities; less than
Positive externalities; less than
A(n)_______ is excludable and rival in competition. -Private good -Artificially scarce good -Public good -Common resource
Private good
More police and security workers become aware that wearing bulletproof vests can protect them from injury and decide to start wearing bulletproof vests. At the same time, the price of ceramics used to produce the vests falls. Then, the equilibrium relative price of the vests _____ and the equilibrium quantity produced ______. -Increases; decreases -Decreases; decreases -Probably changes, but in an ambiguous direction; probably changes, but in an ambiguous direction -Probably changes, but in an ambiguous direction; increases
Probably changes, but in an ambiguous direction; increases
Unemployment would cause an economy to: -Produce outside its PPC -Produce on its PPC -Experience an inward shift of its PPC -Produce inside its PPC
Produce inside its PPC.
Income tax rates are such that Mr. R. Hood earns $35,000 per year and pays $7,000 in taxes while Mr. G. Gisbourne earns 1 million per year and pays $200,000 in taxes. This tax is: -Progressive -Regressive -Proportional -A lump-sum tax
Proportional
States may by the Constitution: - make treaties - provide for law and order - wage war - print money - do anything that is "necessary and proper"
Provide for law and order
Which of the following is not an enumerated power> - public education - regulation of commerce - declaration of war - taxation - print money
Public education
Nominal GDP differs from real GDP because: -Nominal GDP is based on constant prices -Real GDP is based on current prices -Real GDP is adjusted for changes in the price level -Nominal GDP is adjusting for changes in the price level
Real GDP is adjusted for changes in the price level.
In pure market economy, the government: -Relies on the market to allocate goods and services -Allocates goods and services according to need -Allocates goods and services according to ability -Allocates goods and services according to effort
Relies on the market to allocate goods and services.
If a tax Is progressive, then as a person's income rises, the fraction or percentage of their income paid towards the tax: -Is the same or remains constant -Falls -Is based on the benefits principle -Rises
Rises
The Supreme Court case that was the "final straw" and led to FDR's threat to "pack the (Supreme) court" was: - NLRB v. Jones & Laughlin - Heart of Atlanta Hotel v. United States - Marbury v. Madison - Schechter Poultry Corporation v. United Staes
Schechter Poultry Corporation v. United States
An improvement in technology will: -Imply that the law of increasing costs no longer applies -Shift the PPC curve inward -Shift the PPC curve outward -Have no effect on the PPC
Shift the PPC curve outward.
The Framers of the Constitution entrusted the selection of the U.S. Senate to; -specially chosen electors - state legislatures - the direct vote of the people - state governors
State legislatures
Which of the following events will definitely cause the equilibrium quantity to rise? -Demand increases and supply decreases -Demand and supply both decrease -Demand decreases and supply increases -Supply and demand both increase
Supply and demand both increase.
In any economic system, scarce resources have to be allocated among competing uses. Market economics harnesses the forces of: -Government to allocate scarce resources -Supply and demand to allocate scarce resources -Credit cards to allocate scarce resources -Nature to allocate scarce resources
Supply and demand to allocate scarce resources
A member of Congress who calls for a decrease in tax rates in order to increase saving, investment, work effort and economic growth would most likely be advocating: - contractionary fiscal policy - supply side fiscal policy - automatic stabilizers - monetary policy
Supply side fiscal policy
A rational decision maker: -Ignores the likely effects of government policies when he or she makes choices -Takes an action only if the marginal benefit of that action exceeds the marginal cost of that action -Takes an action only if the marginal benefits of that action are equal to the marginal cost of that action -Ignores costs and benefits
Takes an action only if the marginal benefit of that action exceeds the marginal cost of that action.
In the United States, monetary policy is controlled by: - Congress - the President - The Supreme Court - the Federal Reserve System
The Federal Reserve System
Debt is measured relative to the GDP because: - the ability to pay off a debt depends on a country's tax revenues, which in turn depend on the GDP - the ability to produce output depends on the size of the nation's debt - this measure reflects the division of the debt that is external and debt that is internal - as long as this ratio remains high, the government will have no trouble repaying the debt
The ability to pay off a debt depends on a country's tax revenue, which in turn depend on the GDP
In markets, prices move toward equilibrium because of: -The actions of buyers and sellers -Government regulations placed on market participants -Increased competition among sellers -Buyers' ability to affect market outcomes
The actions of buyers and sellers.
What will happen in the rice market now if buyers expect higher rice prices in the near future? -The demand for rice will increase -The demand for rice will decrease -The demand for rice will be unaffected -The supply of rise will increase
The demand for rice will increase.
Roger spends an hour studying instead of playing tennis. The opportunity cost to him of studying is: -The improvement in his grades from studying for the hour -The improvement in his grades from studying minus the enjoyment of playing tennis -Zero, since Roger chose to study rather than to play tennis, the value of studying must have been greater than the value of playing tennis -The enjoyment and exercise he would have received from playing tennis
The enjoyment and exercise he would have received from playing tennis.
What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell? -The equilibrium price would rise and the equilibrium quantity would fall -The equilibrium price would fall and the equilibrium quantity would fall -The equilibrium price would fall and the equilibrium quantity would rise -The equilibrium price would rise and the equilibrium quantity would rise
The equilibrium price would rise and the equilibrium quantity would fall.
Nominal GDP has risen more rapidly than real GDP since World War II in the U.S, because: -The general price level has declined -The general price level has increased -Labor productivity has increased substantially -World trade has increased
The general price level has increased.
All of the following describe Classical economic theory EXCEPT: - the economy is self regulating - the government should actively intervene if the economy is not operating at full employment - wages and prices are flexible - the supply side of the economy is more important than the demand side
The government should actively intervene if the economy is not operating at full employment.
The 10th amendment addressed the concerns of Antifederalists about: - individual freedoms - the powers of the state governments - the meaning of commerce clause - popular representation in Congress
The powers of the state governments
The consumer price index (CPI) attempts to measure changes in: -The price of all goods and services produced by the U.S. economy -The spending patterns of all consumers -The spending patterns of only urban consumers -The price of a market basket of goods purchased by consumers
The price of a market basket of goods purchased by consumers.
When computing the opportunity cost of attending a concert you should include: -The price you pay for the concert ticket and the value of your time -The price you pay for the concert ticket, but not the value of your time -The value of your time, but not the price of the concert ticket -Neither the price of the concert ticket nor the value of your time
The price you pay for the concert ticket and the value of your time.
Microeconomics is a study of all of the following except: -Inflation -The pricing policies of firms -Economic growth -Business cycles
The pricing policies of firms.
Clean water in a river is nonexcludable in that: -The supplier cannot prevent consumption by people who do not pay for it -More than one person can consume the same unit of good at the same time -Individuals ignore the effect their use has on the amount of the resource remaining for others -The market suffers from inefficiently low consumption
The supplier cannot prevent consumption by people who do not pay for it.
The recognition lag is: - the time it take for the Federal Reserve to recognize Congress - the time between the beginning of the recession or inflation and the certain awareness that it is actually happening - the time between when the need for fiscal action is recognized and the time action is taken - the time between Congress sessions
The time between the beginning of the recession or inflation and the certain awareness that it is actually happening
Utilitarian views of equity are based on the premise that the most fair distribution of resources occurs when: -No one takes from the rich and gives to the poor -Everyone agrees to equitable rules to allocate income -Decisions are made behind a "veil of ignorance" -The well-being of the largest number of people is maximized
The well-being of the maximum number of people is maximized.
Which of the following events could cause an increase in the supply of ceiling fans? -There is an increase in the price of air conditioners, and consumers regard air conditioners and ceiling fans as substitutes -There is an increase in the price of the motor that powers ceiling fans -There is a decrease in the price of inputs used to produce ceiling fans -All of the above are correct
There is a decrease in the price of inputs used to produce ceiling fans.
A production possibilities curve can shift inward if: -Government increases the amount of money in the economy -There is a technological improvement -Resources are shifted from the production of one good to the production of another good -The economy is producing inside its production possibilities curve
There is a technological improvement, The economy is producing inside its production possibilities curve
The official poverty income threshold for a family in the United States is calculated as ____ times the cost of a minimally acceptable annual food budget for a family. -Two -Three -Four -Five
Three
Under the North/South Compromise, slaves were counted as: -three-fifths of a person for the purposes of apportionment of seats in the House of Representatives -three-fifths of a person for the purposes of apportionment of seats in the Senate -one-half of a person for the purposes of the apportionment of taxes -three-fifths of a person for the purposes of apportionment of seats in the state legislatures
Three-fifths of a person for the purpose of apportionment of seats in the House of Representatives
T/F The unemployment rate is calculated by dividing the number of unemployed people by the number of people in the labor force.
True
T/F a ticket to a concert is excludable if the concert hall can prevent people who do not have a ticket from entering.
True
For a nonexcludable good like national defense, a market economy will: -Overproduce the good -Over consume the good -Underproduce the good -None of the above
Underproduce the good.
An externality is said to be internalized: -When individuals take external costs and benefits into account in their decision making -In situations in which the Coase theorem is irrelevant or cannot be applied -When individuals successfully petition the government to ban or restrict activities that generate negative externalities -When individuals learn to adapt to negative externalities through introspection or internal acceptance of what are viewed as unchangeable facts of life
When individuals take external costs and benefits into account in their decision making.
Economists tend to believe that to change people's behavior: -You must appeal to their concern for society -You must change their incentives -You must legislate change -None of the above can be done to change people's behavior
You must change their incentives.
Which of the following is an example of an activity generating a positive externality? -You buy a new car and then find $5,000 in the door panel -Your next door neighbor mows the lawn at 6am -Your next door neighbor installs a bat house and bats eat Mosquitos -After Joe buys health insurance, he decides to quit smoking
Your next door neighbor installs a bat house and bats eat Mosquitos.
Which of the following is an example of an activity generating a negative externality? -You buy a new car, then discover it needs a new transmission -Your next door neighbor mows the lawn at 6am -The only two coffee shops in town conspire to raise prices -After Jane bought health insurance, she began racing motorcycles on the weekends
Your next door neighbor mows the lawn at 6am.
The Constitution was ratified by: -the people -the state legislatures -state conventions -the Supreme Court -the Continental Congress
state conventions
The federal budget deficit is calculated each year by: - subtracting government spending from government revenues - subtracting private debt from public debt - subtracting the GDP gap from government spending - adding up the difference between government revenue and spending over the years of the nation's existence
subtracting government spending from government revenues
Where is the Bill of Rights found in the Constitution? -Article 1, section 8 -Article 2 - the first ten amendments -Amendments 17 through 26 - Article 3
the first ten amendments
Which of the following is correct under the Constitution? -the legislative branch enforces the law -the executive branch makes the law - the judicial branch interprets the law - the bureaucrats make the law - interest groups directly determine public policy outcomes
the judicial branch interprets the law
Shay's Rebellion called attention to: -the lack of ability of Congress under the Articles of Confederation to put down popular rebellion -American's anger with Britain over "taxation without representation" -the inability of the states under the Articles to bring the American Revolution to a successful conclusion -the conditions that were leading to mutiny on U.S. naval vessels
the lack of ability of Congress under the Articles of Confederation to put down popular rebellion
Of the issues taken up during the Constitutional Convention, which one consume the most time and attention? -the structure of the Presidency -the structure of Congress -the structure and powers of the federal judiciary -the ratification of the new Constitution
the structure of Congress
