Econ Final Review
Refer to Figure 5-1. With reference to Graph B, at a price of $5, total revenue equals: A. $150. B. $250. C. $300. D. $200.
$200
Refer to Figure 5-1. With reference to Graph A, at a price of $10, total revenue equals: A. $1,000. B. $500. C. $400. D. $200.
$400
Refer to Figure 5-1. With reference to Graph A, at a price of $5, total revenue equals: A. $200. B. $400. C. $500. D. $1,000.
$500
When we want to measure wage inflation in the labor market, we use the: A. Consumer Price Index B. Product Price Index C. Employment Cost Index D. Employment Price Index
Employment Cost Index
Increased investment alone will guarantee economic growth. A. This is a true statement, because growth occurs only with savings. B. This is a true statement, because money is the only resource needed for growth. C. This is a false statement, because an economy must rely on capital injections from abroad. D. This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.
This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology
Which of the following are most likely classified by economists as consumer durable goods? A. food, clothing B. drugs, toys, magazines, books C. automobiles, furniture D. stocks, bonds
automobiles, furniture
The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. A. Opportunity cost B. productive efficiency C. budget constraint D. production possibilities frontier
budget constraint
The nature of demand indicates that as the price of a good increases: A. suppliers wish to sell less of it. B. more of it is produced. C. more of it is desired. D. buyers desire to purchase less of it.
buyers desire to purchase less of it.
The demand measure of GDP accounting adds together: A. wages and salaries, rent, interest, and profit. B. consumption, investment, government purchases, and trade balance. C. consumption, government purchases, wages and salaries, and trade balance. D. consumption, interest, government purchases, and trade balance.
consumption, investment, government purchases, and trade balance.
Another term used to describe negative inflation is: A. counter inflation B. deflation C. hyperinflation D. GDP deflator
deflation
Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change. A. market B. economy C. production D. firm
economy
In the early 1990's extremely high inflation rates of 2500% were common in Russia. During that time, we can say that as a result of those inflation rates, Russia was experiencing ___________________. A. perpetual inflation B. ultra inflation C. hypo inflation D. hyperinflation
hyperinflation
Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then: A. exports exceed imports by $50 billion. B. imports exceed exports by $50 billion. C. imports exceed exports by $150 billion. D. exports exceed imports by $150 billion.
imports exceed exports by $50 billion.
Inflation implies that the level of all prices _____________________. A. decrease B. stay the same C. increase D. none of the above
increase
Refer to Figure 3-1. Using the graph above and beginning on D1, a shift to D2 would indicate a(n): A. increase in quantity demanded. B. decrease in quantity demanded. C. increase in demand. D. decrease in demand.
increase in quantity demanded.
Improvements in the productivity of labor will tend to: A. decrease wages. B. decrease the supply of labor. C. increase wages. D. increase the supply of labor.
increase wages.
The opportunity cost of an action: A. can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action. B. can be determined by adding up the bills incurred as a result of the action. C. can be objectively determined only by economists. D. is a subjective valuation that can be determined only by the individual who chooses the action.
is a subjective valuation that can be determined only by the individual who chooses the action.
Macroeconomics: A. is concerned with the expansion of a small business into a large corporation. B. is narrower in scope than microeconomics. C. analyzes mergers and acquisitions between firms. D. is concerned with the expansion and contraction of the overall economy.
is concerned with the expansion and contraction of the overall economy.
A nation can achieve higher economic growth if: A. it devotes more resources to research and development. B. the productivity of labor declines C. taxes are imposed on investment in capital. D. more resources are allocated to consumption goods.
it devotes more resources to research and development.
A university student who is enrolled in school fulltime and not seeking employment is considered: A. out of the labor force. B. unemployable, and not counted in official statistics. C. employed in leisure. D. underemployed.
out of the labor force.
The most commonly cited measure of inflation in the United States is: A. the Consumer Price Index (CPI). B. the Deflationary Price Index (DPI) C. the Cumulative Price Index (CPI) D. the Inflationary Price Index (IPI)
the Consumer Price Index (CPI).
Which of the following is included in GDP? A. revenue from the sale of a three-year old car B. the fees charged for a stock broker's services C. the receipts from a sale of land D. the value of lawn care service provided by a sixteen-year-old as part of his weekly chores
the fees charged for a stock broker's services
In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers? A. wage levels B. the macroeconomy C. the firm's income D. household income
the macroeconomy
Price elasticity of demand is defined as: A. the slope of the demand curve. B. the slope of the demand curve divided by the price. C. the percentage change in price divided by the percentage change in quantity demanded. D. the percentage change in quantity demanded divided by the percentage change in price.
the percentage change in quantity demanded divided by the percentage change in price.
Frictional unemployment is: A. unemployment that is due to the friction of competing ideological systems. B. unemployment caused by lack of training and education. C. unemployment caused by automation in the workplace. D. unemployment that is due to normal turnover in the labor market.
unemployment that is due to normal turnover in the labor market.
The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern. A. utility B. marginal benefit C. opportunity cost D. sunk costs
utility
During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year. A. 2% B. 12% C. 22% D. 32%
2%
During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force. A. 25% B. 45% C. 65% D. 85%
25%
The U.S. unemployment rate moves up and down as the economy moves in and out of recessions. But over time, the unemployment rate seems to return to a range of ____________. A. 2%-4% B. 4%-6% C. 6%-8% D. 8%-10%
4%-6%
Of the world's population of 6.7 billion people, _________ are scraping by on incomes that average less than $2 per day. A. 260 million B. 2.6 billion C. 5 billion D. 6.2 billion
5 billion
The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the price is increased to $40, then one would expect sales to equal: A. 20 units. B. 10 units. C. 5 units. D. 0 units.
5 units
Consumption in the United States is about ____________ of GDP, and it moves relatively little over time. A. 10% B. 33% C. 68% D. 90%
68%
If the unemployment rate is 8 percent, then this means: A. 8 percent of the population is unemployed. B. 8 percent of the population age over sixteen is unemployed. C. 8 percent of the labor force is unemployed. D. the number of unemployed persons equals 8 percent of the employed persons
8 percent of the labor force is unemployed.
Which of the following is included in the calculated Gross Domestic Product? A. Farmer Freddie sells his second-hand tractor to his son. B. Suzanne buys a love seat and chair for $85 at the yard sale on the corner. C. A local ice cream store sells $17,000 worth of cones and sundaes on July 1. D. Mr. Farkle buys a used lawn mower from his neighbor, Mr. Sparkle.
A local ice cream store sells $17,000 worth of cones and sundaes on July 1.
______________________ argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. A. Efficiency wage theory B. Equilibrium wage theory C. Employee wage theory D. Employer wage theory
Efficiency wage theory
Which of the following best describes the relationship between economic growth and literacy? A. As the economy grows, literacy declines because it becomes less and less useful in a developed economy. B. Increased literacy initially stimulates economic growth by raising labor productivity, but as the economy grows and the opportunity cost of education rises, literacy declines. C. Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education. D. There is no correlation between economic growth and literacy.
Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education.
The ____________________ is based on the prices of merchandise that are exported or imported. A. International Product Index B. Producer Price Index C. Foreign Price Index D. International Price Index
International Product Index
Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate? A. It would increase. B. It would fall. C. It would not change. D. It would change, but the effect cannot be predicted.
It would fall.
When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis. A. economic growth B. GDP per capita C. living standards D. consumption and expenditures
GDP per capita
Which of the following is correct? A. An increase in the quantity of labor always leads to economic growth. B. Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital. C. A decrease in the productivity of labour leads to economic growth. D. Third World countries are rich in human capital.
Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.
_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s. A. GDP per capita B. The Industrial Revolution C. The living standard D. Investment and inventions
The Industrial Revolution
Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel? A. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the right, thereby increasing the price of steel. B. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. C. There is a decrease in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. D. The increase in wage costs will shift the demand curve for steel to the left, increasing the cost of steel.
There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.
How do apple growers react to the news of medical research findings that suggest that eating apples leads to greater health benefits than were previously known? A. They increase the supply of apples. B. They increase the quantity of apples supplied. C. They decrease the supply of apples. D. They decrease the quantity of apples supplied.
They increase the quantity of apples supplied.
Which of the following best denotes the reason for the existence of substantial black markets? A. a market-oriented economy B. a command economy C. government laws and rules D. the microeconomy
a command economy
Which of the following would most likely shift the production possibilities curve inward? A. an increase in the number of hours factories are in use B. a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time C. an increase in the production of capital goods D. technological progress
a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time
Which of the following is most likely a topic of discussion in macroeconomics? A. an increase in the price of a hamburger B. a decrease in the production of DVD players by a consumer electronics company C. an increase in the wage rate paid to automobile workers D. a decrease in the unemployment rate
a decrease in the unemployment rate
The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to: A. a decline in college tuition. B. a sharp increase in the demand for and construction of wood-frame homes. C. an increase in the supply of lumberjacks. D. an end to government regulations that limit timber harvesting in national forests
a sharp increase in the demand for and construction of wood-frame homes.
After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is: A.no change; only the supply curve for beef is likely to be affected. B.a shift of the demand curve for beef to the left. C.a movement down along the demand curve for beef to the right. D.a shift of the demand curve for beef to the right.
a shift of the demand curve for beef to the left.
Which of the following lies primarily within the realm of macroeconomics? A. a study of the demand for gasoline B. a study of how tax cuts stimulate aggregate production C. an analysis of supply and demand conditions in the electricity market D. a study of the impact of "mad cow" disease on the price of beef worldwide
a study of how tax cuts stimulate aggregate production
If imports exceed exports, as in recent years, then __________ exists. A. a trade surplus B. a trade deficit C. a trade imbalance D. trade disequilibrium
a trade deficit
Frictional unemployment occurs when: A. there is friction between an employer and employee. B. a worker decides to quit one job to seek a different job. C. a large corporation transfers a worker to another city. D. college students go back to school at the end of the summer.
a worker decides to quit one job to seek a different job.
What distinguishes the real value of a statistic from the nominal value of a statistic? A. timing of announcement B. adjusting for inflation C. adjusting for GDP deflator D. real interest rate
adjusting for inflation
The labor force consists of: A. discouraged workers, employed workers, plus those actively seeking work. B. all adults who are working or actively seeking work. C. all adults who are able to work. D. all adults who are working, plus those not working.
all adults who are working or actively seeking work.
The term "ceteris paribus" means that: A. everything is variable. B. all variables except those specified are constant. C. no one knows which variables will change and which will remain constant. D. what is true for the individual is not necessarily true for the whole.
all variables except those specified are constant.
The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________. A. allocative efficiency B. the production possibilities frontier C. trade-offs D. Scarcity
allocative efficiency
In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________. A. a production function B. an aggregate production function C. human capital D. physical capital
an aggregate production function
To compare the GDP of two different countries with different currencies, it is necessary to use _________________________. A. an exchange rate B. foreign currency C. currency rates D. per capita GDP
an exchange rate
Which of the following results in a rightward shift of the market demand curve for labor? A. a decrease in labor productivity B. a decrease in the firm's product price C. an increase in the wage rate D. an increase in demand for the firm's product
an increase in demand for the firm's product
Which of the following will not result in a rightward shift of the market supply curve for labor? A. a decrease in non-wage income B. an increase in the working-age population C. an increase in labor productivity D. an increase in immigration
an increase in labor productivity
If exports and imports: A. are imbalanced, then a trade surplus exists. B. are imbalanced, then a trade deficit exits. C. are equal, then trade is balanced. D. are equal, then the economy is unhealthy.
are equal, then trade is balanced.
Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine: A. the equilibrium price will fall and the equilibrium quantity will fall. B. both the equilibrium price and quantity will rise. C. the equilibrium price will rise and the equilibrium quantity will decrease. D. the equilibrium price will rise, while the change to equilibrium quantity is indeterminate.
both the equilibrium price and quantity will rise.
The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. A. personal preference B. utility level C. budget constraint D. opportunity set
budget constraint
Cyclical unemployment arises when: A. the agriculture sector completes the cycle of planting, cultivating, and harvesting the nation's food supply. B. labor unions strike for higher wages. C. the business cycle enters an expansionary phase. D. business activity in the macroeconomy declines
business activity in the macroeconomy declines
The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________. A. natural rate of unemployment B. business cycle C. supply curve D. labor supply
business cycle
In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of: A. all consumers. B. buyers and sellers. C. producers and input suppliers. D. producers and government planning committees.
buyers and sellers.
Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories. A. financial capital market B. circular flow diagram C. financial investment market D. Specialization Model
circular flow diagram
The type of unemployment that occurs because of a recession is called: A. cyclical unemployment. B. the natural rate of unemployment. C. seasonal unemployment. D. frictional unemployment.
cyclical unemployment.
When society has a higher level of capital per person, it is called ______________. A. physical capital B. human capital C. capital deepening D. technological gains
capital deepening
Which of the following is not included in GDP? A. the payments for a chiropractor's services B. cash income paid to a day laborer that is not reported to the tax authorities C. the replacement of brake pads on your six-year-old vehicle D. the fees for legal services rendered by your lawyer
cash income paid to a day laborer that is not reported to the tax authorities
Refer to Figure 3-2. A change from Point A to Point B represents a(n): A. increase in demand. B. decrease in demand. C. decrease in quantity demanded. D. increase in quantity demanded.
decrease in quantity demanded.
From a macroeconomic perspective, if GDP economic indicators show a decline of 10% or more in a single year, then which of the following outcomes is most likely to result? A. deep economic recession B. influx of foreign capital C. lessening of foreign aid D. merchandise trade surplus
deep economic recession
The situation where the buying power of money in terms of goods and services increases is called: A. deflation. B. inflation. C. stationary pricing. D. hyperinflation.
deflation
With regard to the economy, the term negative inflation is synonymous with which of the following? A. recession B. depression C. deflation D. hyperinflation
deflation
The labor__________curve(s) will shift__________if there is an increase in productivity or an increase in the demand for the final product. A. demand; left B. supply; left C. demand; right D. supply; right
demand; right
The law of ____________________________ explains why people and societies rarely make all-or-nothing choices. A. consumption B. marginal analysis C. diminishing marginal utility D. utility
diminishing marginal utility
In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers. A. division of labor B. interconnected economy C. task economy D. modern economy
division of labor
_______________, which can be approximated by the growth of gross domestic product, ultimately determines the prevailing standard of living in a country. A. Trade balance B. Inflation C. Education D. Economic growth
economic growth
The leader of a federal political party made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if: A. the economy moves along the production possibilities in the direction of a greater quantity of defense. B. the economy moves from a point inside the production possibilities curve toward a point on the production possibilities curve. C. the production possibilities frontier shifts outward due to an improvement in technology. D. either b) or c) occurs, but not as a result of a).
either b) or c) occurs, but not as a result of a).
A price cut will increase the total revenue a firm receives if the demand for its product is: A. unit inelastic. B. unit elastic. C. inelastic. D. elastic.
elastic
Demand is said to be__________when the quantity demanded is very responsive to changes in price. A. elastic B. unit elastic C. inelastic D. independent
elastic
Which of the following is generally accepted as a valid criticism of the production of useful goods and services? A. government involvement B. the black market C. environmental pollution D. economic freedom
environmental pollution
The_____________is the only price where quantity demanded is equal to quantity supplied. A.equilibrium price B.horizontal axis intercept C.vertical axis intercept D.market price
equilibrium price
The definition of market equilibrium states that at the _______________, the quantity of labor demanded by employers will equal the quantity supplied. A. efficiency wage B. equilibrium wage C. sticky wage D. natural rate of unemployment
equilibrium wage
If imports ______________, then the economy is said to have a trade deficit. A. precede exports B. follow exports C. equal exports D. exceed exports
exceed exports
If exports ______________, then the economy is said to have a trade surplus. A. equal imports B. exceed imports C. precede imports D. follow imports
exceed imports
A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are: A. trough, expansion, recession, peak B. contraction, recession, expansion, boom C. expansion, trough, recession, peak D. expansion, peak, recession, trough
expansion, peak, recession, trough
Goods and services produced in one country that are then sold in other countries are called ____________. A. exports B. tradeable items C. surplus items D. economic stimulants
exports
In order to avoid double counting, statisticians just count the __________________. A. final inventories B. final goods and services C. intermediate goods and services D. durable goods and nondurable goods
final goods and services
The circular flow diagram of economic activity is a model of the: A. flow of goods, services, and payments between households and firms. B. influence of government on business behavior. C. role of unions and government in the economy. D. interaction among taxes, prices, and profits.
flow of goods, services, and payments between households and firms.
A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be: A. frictionally unemployed. B. underemployed. C. cyclically unemployed. D. structurally unemployed.
frictionally unemployed.
In the ______________, households receive goods and services and pay firms for them. A. labor market B. financial capital market C. goods and services market D. savings market
goods and services market
Final goods or services used to compute GDP refer to: A. the sum of all wages paid to laborers. B. the factors of production used to produce output. C. goods and services purchased by the ultimate users. D. the value of outstanding shares of stock of manufacturing firms.
goods and services purchased by the ultimate users.
A country's current account balance refers to a broad measure of the balance of trade that includes: A. merchandise, services, and foreign capital investments. B. goods, foreign capital investments, exported domestic services. C. goods and services, international flows of income, and foreign aid. D. merchandise, foreign aid and imported domestic services.
goods and services, international flows of income, and foreign aid.
The effects of inflation are seen in: A. goods and services only B. wages and income levels only C. services and wages only D. goods, services, wages and income levels
goods, services, wages and income levels
In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made. A. government B. market C. firm D. business sector
government
Which of the following best describes a fiscal policy tool? A. government spending B. bank lending C. financial capital markets D. household spending
government spending
For most high-income countries of the world, GDP _________________ over time. A. has proven to be stable B. has risen gradually C. has declined slightly D. has sharply risen
has risen gradually
In the long run, the most important source of increase in a nation's standard of living is a: A. zero rate of population growth B. high rate of economic growth. C. high rate of consumption. D. high rate of labor force growth.
high rate of economic growth.
Which of the government policies below is most unlikely to encourage per capita economic growth? A. high taxes on companies that spend a lot on capital formation B. the use of tax revenues for investment and capital formation C. special subsidies for capital-intensive forms of production D. promotion of education and training programs for workers
high taxes on companies that spend a lot on capital formation
Which of the following would reduce the supply of microcomputers? A.a technological improvement that lowers the cost of producing the computers B.higher wage rates for the workers that assemble the computers C.a reduction in the price of computer chips used to produce the computers D.a reduction in the price of computers
higher wage rates for the workers that assemble the computers
On the demand side of GDP, consumption by _____________ is the largest component of GDP, accounting for about two-thirds of the GDP in any year. A. services B. businesses C. households D. government
households
Consumption is the purchase of goods and services by: A. households. B. government. C. business firms. D. foreign buyers.
households.
The term __________ is used to describe what those in one country buy from those in other countries. A. exports B. imports C. trade D. surplus
imports
Refer to Figure 3-3. A change from Point A to Point D represents a(n): A.decrease in quantity supplied. B.increase in quantity supplied. C.decrease in supply. D.increase in supply.
increase in supply.
If the demand curve is perfectly elastic, then an increase in supply will: A. decrease the price but result in no change in the quantity exchanged. B. increase the quantity exchanged but result in no change in the price. C. increase the price but result in no change in the quantity exchanged. D. increase both the price and the quantity exchanged.
increase the quantity exchanged but result in no change in the price.
Which of the following is most likely to contribute to economic growth as measured by GDP per capita? A. the imposition of tariffs and quotas on imported goods B. increased capital formation C. rapid population growth D. an increase in marginal tax rates
increased capital formation
Demand is said to be____________when the quantity demanded is not very responsive to changes in price. A.independent B. inelastic C. unit elastic D. elastic
inelastic
__________ implies that pressure for price increases reaches across _______________markets, not just one. A. inflation; all B. deflation; most C. inflation; most D. deflation; all
inflation; most
Which of the following best describes a monetary policy tool? A. interest rates B. taxes C. household savings D. government spending
interest rates
Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization? A. division of labour B. international trade C. economies of scale D. command economy
international trade
___________ is a small category that refers to the goods produced by one business that have yet to be sold to consumers, and are either still sitting in warehouses and on store shelves. A. Inventories B. Services C. Structures D. Durable goods
inventories
Investment in human capital: A. is of minor importance to economic growth. B. can be acquired through on-the-job training. C. is an important source of economic growth. D. is characterized by both B) and C).
is characterized by both B) and C).
Karen chooses to go to university fulltime rather than to work. Karen: A. is not part of the labor force. B. is part of the labor force and what economists call a discouraged worker. C. is part of the labor force, but not actively seeking work. D. is considered employed.
is not part of the labor force.
Scarcity implies that: A. consumers would be willing to purchase the same quantity of a good at a higher price. B. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available. C. at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce. D. consumers are too poor to afford the goods and services available.
it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.
Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines. A. law of trade-offs B. law of diminishing marginal utility C. production possibilities frontier D. law of increasing marginal utility
law of diminishing marginal utility
The unemployment rate may underestimate the true extent of unemployment if: A. many part-time employees would like to work fulltime, but are unable to get the additional work. B. employees increase the number of hours they work overtime. C. there are a large number of people working in the underground economy. D. people are pretending to look for work so that they can continue receiving unemployment benefits.
many part-time employees would like to work fulltime, but are unable to get the additional work.
Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. A. utility B. opportunity cost C. benefit analysis D. marginal analysis
marginal analysis
The marginal benefit of a slice of pizza is the: A. total amount that a consumer is willing to pay for a whole pizza, divided by the number of slices B. difference between the value of the slice to the consumer and the price of the slice. C. maximum amount that a consumer is willing to pay for the slice. D. price of the slice of pizza
maximum amount that a consumer is willing to pay for the slice.
The basic difference between macroeconomics and microeconomics is: A. microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. B. microeconomics concentrates on the behaviour of individual consumers while macroeconomics focuses on the behaviour of firms. C. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. D. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.
microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
The basic difference between macroeconomics and microeconomics is that: A. microeconomics looks at the forest (aggregate markets) while macroeconomics looks at the trees (individual markets). B. macroeconomics is concerned with groups of individuals while microeconomics is concerned with single countries. C. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets). D. macroeconomics is concerned with generalization while microeconomics is concerned with specialization.
microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).
A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as: A. cyclically unemployed. B. underemployed. C. frictionally unemployed. D. naturally unemployed.
naturally unemployed.
The demand curve for a typical good has a(n): A. negative slope because some consumers switch to other goods as the price rises. B. negative slope because consumer incomes fall as the price of the good rises. C. negative slope because the good has less "snob appeal" as its price falls. D. inverse slope because as the price goes up, the good has more
negative slope because some consumers switch to other goods as the price rises.
Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by . A. the recession B. new technologies C. the rise of global markets D. inflation
new technologies
Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________, which describe how the world should be. A. normative statements B. budget constraints C. trade-offs D. opportunity costs
normative statements
The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible. A. opportunity set B. consumption choice C. time value of money D. risk premium
opportunity set
In contrast to goods and services markets,___________are rare in labor markets, because rules that prevent people from earning income are not politically popular. A. minimum wages B. price floors C. price ceilings D. living wage laws
price ceilings
The downward slope of the demand curve again illustrates the pattern that as________________ rises,_______________decreases. A. quantity demanded, price B. quantity supplied, quantity demanded C. price, quantity demanded D. price, quantity
price, quantity demanded
The Producer Price Index is based on prices paid for supplies and inputs by: A. consumers B. producers of goods and services C. government D. the small business sector
producers of goods and services
The value of what businesses provide to other businesses is captured in the final products at the end of the __________ chain. A. service B. value C. production D. supply
production
Over the long run, ____________ per hour is the most important determinant of the average wage level in any economy. A. demand B. dollars C. productivity D. supply
productivity
The value of what is produced per worker, or per hour worked, is called ____________. A. economic growth B. human capital C. productivity D. GDP per capita
productivity
_________ is output per hour in the business sector. A. Net exports B. Productivity C. Investment D. GDP per capita
productivity
To achieve a high standard of living, a nation should: A. increase the tax deduction for child dependents. B. promote economic growth. C. use less capital and more labor in the production process. D. increase welfare payments to the poor.
promote economic growth.
When economists talk about supply, they are referring to a relationship between price received for each unit sold and the ____________. A. demand schedule B. market price C. quantity supplied D. demand curve
quantity supplied
A straightforward example of a ____________, often used for simplicity, is the interest rate. A. price ceiling B. financial investment C. rate of return D. price floor
rate of return
The difference between nominal GDP and real GDP is: A. nominal GDP measures actual productivity B. nominal GDP adjusts for inflation C. real GDP adjusts for inflation D. real GDP excludes imports and exports
real GDP adjusts for inflation
The price elasticity of demand measures the: A. responsiveness of quantity demanded to a change in quantity supplied. B. responsiveness of price to a change in quantity demanded. C. responsiveness of quantity demanded to a change in price. D. responsiveness of quantity demanded to a change in income.
responsiveness of quantity demanded to a change in price.
_________ are now the largest single component of the supply side of GDP, representing over half of GDP. A. Durable goods B. Services C. Nondurable goods D. Structures
services
A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will: A. shift to the right, increasing the price of the drug. B. shift to the left, increasing the price of the drug. C. shift to the right, decreasing the price of the drug D. shift to the left, decreasing the price of the drug.
shift to the right, decreasing the price of the drug
While one occasionally sees references to inflation over short time periods, the term typically implies a(n)_____________ in prices. A. ongoing decrease B. ongoing rise C. short term rise D. short term decrease
short term rise
The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. A. marginal utility B. sunk costs C. marginal analysis D. budget constraints
sunk costs
The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. A. sunk costs B. opportunity costs C. marginal analysis D. budget constraints
sunk costs
As the ____________complement for high-skill labor becomes cheaper, the demand curve for high- skill labor will shift to the right. A. technology B. low-skill labor C. market D. lower wage
technology
As the_________substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. A. high-skill labor B. lower wage C. technology D. market
technology
The term "merchandise trade balance" is used to describe: A. the balance of trade in services. B. the balance of trade in goods. C. the level of trade in goods. D. the level of trade in services.
the balance of trade in goods.
The opportunity cost of attending university is likely to include all except which of the following? A. the cost of haircuts received during the school term B. the income you forgo in order to attend classes C. tuition fees D. the cost of required textbooks
the cost of haircuts received during the school term
The most significant real economic cost of high unemployment is: A. the potential goods and services that might have been produced but weren't. B. the money cost of retraining persons to obtain new jobs. C. the lost tax revenue that might have been paid by persons if they had worked. D. the money cost of unemployment insurance payments to the unemployed.
the money cost of retraining persons to obtain new jobs.
If a nation's labor force receives a significant influx of young workers: A. the natural rate of unemployment is likely to increase. B. the natural rate of unemployment is likely to decrease. C. the natural rate of unemployment is unlikely to change D. frictional unemployment will likely decrease to zero.
the natural rate of unemployment is likely to increase.
As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good. A. the production possibilities frontier B. allocative efficiency C. scarcity D. utility
the production possibilities frontier
Macroeconomic topics do not usually include: A. the profit maximizing decisions of an individual manufacturer. B. the rate of inflation. C. the rate of unemployment. D. economic growth.
the profit maximizing decisions of an individual manufacturer.
Which of the following is not counted as a part of GDP? A. the purchase of 100 shares of AT&T stock by your grandfather. B. the purchase of a snow plough by the city of Minneapolis. C. the unsold additions to inventory at an appliances store D. the purchase of a loaf of bread by a consumer
the purchase of 100 shares of AT&T stock by your grandfather.
Whenever there is a surplus at a particular price, the quantity sold at that price will equal: A. (quantity demanded plus quantity supplied)/2. B. the quantity supplied at that price. C. the quantity supplied minus the quantity demanded. D. the quantity demanded at that price.
the quantity demanded at that price.
When consumers and businesses have greater confidence that they will be able to repay in the future, A. the quantity demanded of financial capital at any given interest rate will remain unchanged. B. the quantity demanded of financial capital at any given interest rate will shift to the left. C. the quantity demanded of financial capital at any given interest rate will shift to the right. D. the quantity demanded of financial capital at any given interest rate will achieve
the quantity demanded of financial capital at any given interest rate will shift to the right
Whenever there is a shortage at a particular price, the quantity sold at that price will equal: A. the quantity demanded at that price. B. the quantity supplied minus the quantity demanded. C. the quantity supplied at that price. D. (quantity demanded plus quantity supplied)/2.
the quantity supplied at that price.
If new manufacturers enter the computer industry, then (ceteris paribus): A.the supply curve shifts to the left. B.the supply curve shifts to the right. C.the demand curve shifts to the left. D.some established manufacturers must exit the industry.
the supply curve shifts to the right.
A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of: A.the supply curve. B.the demand curve, as consumers try to economize because of the shortage. C.both the supply and demand curves. D.the supply curve and a rightward shift of the demand curve, resulting in a higher equilibrium price.
the supply curve.
Which of the following is included in GDP calculations? A. sales revenue received from a yard sale B. cash income received by a self-employed landscaper that is not reported to the IRS C. a crisp $50 bill received on your birthday D. the university tuition paid to enroll in a course
the university tuition paid to enroll in a course
GDP is: A. the sum of all currency and coins in circulation. B. the value of all final goods and services produced by a government. C. the value of all final good and services produced anywhere in the world by a nation's firms. D. the value of all final goods and services produced domestically.
the value of all final goods and services produced domestically.
GDP does not directly include: A. the value of goods produced domestically and sold abroad. B. the value of intermediate goods sold during a period. C. the value of services rendered during a period. D. the value of final goods and services produced, but not sold, during a period.
the value of intermediate goods sold during a period.
When quantity demanded decreases in response to a change in price: A.the demand curve shifts to the right. B.the demand curve shifts to the left. C.there is a movement down along the demand curve. D.there is a movement up along the demand curve.
there is a movement up along the demand curve.
Insofar as government public policy is concerned, the best way to battle unemployment would be __________________. A. to minimize recessions B. to maximize unemployment payments C. to maximize unemployment insurance duration D. to minimize labor unions
to minimize recessions
The gap between exports and imports in a nation's economy is called the ___________. A. trade surplus B. trade balance C. trade deficit D. trade inventory
trade balance
The term _____________ describes circumstances where a country's imports exceed its exports. A. trade imbalance B. trade balance C. trade surplus D. trade deficit
trade deficit
The term _____________ describes circumstances where a country's exports exceed its imports. A. trade deficit B. trade imbalance C. trade surplus D. trade balance
trade surplus
A series of macroeconomic events has led an economy into a deep recession. Which of the following factors is most likely to have initiated this series of events? A. level of trade B. unbalanced trade C. deficit level of trade D. merchandize trade imbalance
unbalanced trade
Reginald looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered: A. out of the labor force. B. unemployed. C. employed in the underground economy. D. underemployed.
unemployed
If macroeconomics looks at the economy as a whole, it focuses on which of the following? A. households B. business firms C. unemployed people D. the division of labor
unemployed people
The unemployment rate measures: A. the number of people unemployed divided by the number of people employed. B. unemployed workers as a percentage of the labor force. C. unemployed workers as a percentage of the population age over-sixteen. D. unemployed workers as a percentage of the population.
unemployed workers as a percentage of the labor force.
Demand is said to be _____________when the quantity demanded changes at the same proportion as the price. A. elastic B. unit elastic C. inelastic D. independent
unit elastic
Scarcity exists because of: A. the market mechanism. B. specialization and division of labor. C. the allocation of goods by prices D. unlimited wants and limited resources.
unlimited wants and limited resources.
But nearly all supply curves share a basic similarity: they slope____________. A. down from left to right B. up from left to right C. up from right to left D. down from right to left
up from left to right
Many states do have___________, which impose an upper limit on the interest rate that lenders can charge. A. price ceiling laws B. usury laws C. price floor laws D. minimum interest rate
usury laws
In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income. A. budget constraint B. opportunity set C. utility D. production possibilities frontier
utility
In economics, the demand for a good refers to the amount of the good that people: A. would like to have if the good were free. B. will buy at various prices. C. need to achieve a minimum standard of living. D. will buy at alternative income levels.
will buy at various prices.
Referring to Table 2-1: A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is: A. 8 points on the history exam. B. 15 points on the history exam. C. 14 points on the history exam. D. 17 points on the history exam.
15 points on the history exam.
Refer to Table 2-1. A student has only a few hours to prepare for two different exams tomorrow morning. The above table shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than 76 is: A. 10 points on the economics exam B. 8 points on the history exam C. 7 points on the economics exam D. 12 points on the economics exam
7 points on the economics exam
Which of the following statements most likely lies within the realm of microeconomics? A. Unemployment rises during a recession and falls during an expansion. B. An increase in government spending will increase the aggregate demand for goods and services in the economy. C. A rapid acceleration of the supply of money may create inflation. D. An increase in labor costs will increase the additional cost of producing another bus.
An increase in labor costs will increase the additional cost of producing another bus.
Why is there scarcity? A. Because the opportunity set determines this. B. Because theory dictates it. C. Because our unlimited wants exceed our limited resources D. Because human wants are limited.
Because our unlimited wants exceed our limited resources
In the circular flow diagram model: A. households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. B. businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households. C. households receive revenue for selling goods and services to businesses, and use that revenue to buy inputs from businesses. D. Both (a) and (b) are correct.
Both (a) and (b) are correct.
Which of the following best characterizes the circular flow of income? A. Businesses buy resources from the government, and households buy goods and services from businesses. B. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses. C. The government purchases resources from businesses and households and then sells goods and services to businesses and households. D. Households buy factors of production from businesses, and businesses buy goods and services from households.
Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.
In which of the following countries will the national government have the greatest influence with respect to the nation's economy? A. China B. Cuba C. Canada D. Chile
Cuba
In countries like _____________ the command economy predominates. A. China and Vietnam B. Cuba and North Korea C. South Africa and Kenya D. Germany and France
Cuba and North Korea
Which of the following statements most likely lies within the realm of macroeconomics? A. An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. B. Due to process innovations in computer chip manufacturing, the market supply of computers increased. C. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. D. Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook.
Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.
_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines. A. Skill B. Specialization C. Economies of scale D. Division of labor
Economies of scale
Any given demand or supply curve is based on the ceteris paribus assumption that A. everything is variable. B. all else is held equal C. no one knows which variables will change and which will remain constant D. what is true for the individual is not necessarily true for the whole.
all else is held equal
Macroeconomics primarily examines: A. the behaviour of individual households and firms. B. how prices are determined within individual markets. C. broad issues such as national output, employment and inflation. D. the output levels that maximize the profits of business firms
broad issues such as national output, employment and inflation.
The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible. A. consumption set B. budget constraint C. original budget D. income cap
budget constraint
Specialization: A. leads to greater self-sufficiency. B. can lead to an increase in overall production. C. allows workers to develop skills by working on a large number of tasks D. is always the result of an inefficient use of resources
can lead to an increase in overall production.
Marginal thinking is best demonstrated by: A. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. B. deciding to never purchase a coat made with animal skins or furs C. acquiring the information relevant to a choice before making that choice D. measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake
choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.
When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being: A. balanced budget B. prudent monetary policy C. low inflation D. assurring competition between firms
low inflation
If a firm faces____________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase. A.higher demand B.lower costs of production C.equilibrium D.a shift in demand
lower costs of production
Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. A. utility B. marginal analysis C. the budget constraint D. consumption
marginal analysis
In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers. A. market-oriented economy B. macroeconomy C. microeconomy D. command economy
market-oriented economy
Attending college is a case where the ________________ exceeds the monetary cost. A. budget constraint B. marginal analysis C. opportunity cost D. marginal utility
opportunity cost
In many cases, it is reasonable to refer to the ________________ as the price. A. budget constraint B. sunk cost C. opportunity cost D. budget constraint
opportunity cost
Philosophers draw a distinction between ___________________, which describe the world as it is, and normative statements, which describe how the world should be. A. negative statements B. positive statements C. tradeoffs D. utilitarianism
positive statements
Refer to Figure 3-3. A change from Point A to Point E represents a(n): A.increase in supply. B.decrease in supply. C.increase in quantity supplied. D.decrease in quantity supplied.
decrease in supply.
The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending. A. business B. government C. household D. capital market
government
Refer to Figure 3-3. A change from Point A to Point B represents a(n): A.increase in supply. B.decrease in supply. C.increase in quantity supplied. D.decrease in quantity supplied.
increase in quantity supplied.
The demand schedule for a good: A.indicates the quantity that people will buy at the prevailing price. B.indicates the quantities that suppliers will sell at various market prices. C.is determined primarily by the cost of producing the good. D.indicates the quantities that will be purchased at alternative market prices.
indicates the quantities that will be purchased at alternative market prices.
In the ____________, households work and receive payment from firms. A. financial investment market B. financial capital market C. labor market D. savings market
labor market
Other things being equal, a_______supply of workers tends to __________real wages. A. smaller; not change B. larger; increase C. smaller; decrease D. larger; decrease
larger; decrease
Economists refer to the relationship that a higher price leads to a lower quantity demanded as the A. income gap B. market equilibrium C. law of demand D. price model
law of demand
As a person receives more of a good, the _______________ from each additional unit of the good declines. A. utility B. sunk costs C. marginal utility D. budget constraint
marginal utility
The "law of supply" functions in labor markets; that is, a higher__________for labor leads to a higher quantity of labor supplied. A. price B. demand C. supply D. quantity
price
Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: A. nothing, because he enjoys playing basketball more than studying. B. the increase in skill he obtains from playing basketball for that hour. C. the benefit to his grades from studying for an hour D. nothing, because he had a free pass into the sports complex to play basketball.
the benefit to his grades from studying for an hour
If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages____________. A. will stay the same B. will decrease C. will increase D. may increase, decrease or stay the same depending on the relative slopes.
will increase
"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is: A. $0 B. $4 C. $40 D. $44
$44
The elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in___________ . A. quantity supplied B. the slope of the demand curve C. price D. the slope in the supply curve
price
___________ is about two-thirds of the demand side of GDP, but it moves relatively little over time. A. Government B. Consumption C. Investment D. Services
consumption
An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical. A. GNP B. output C. GDP per capita D. technology
GDP per capita
Once every __________, the Census Bureau does a comprehensive survey of housing and residential finance. A. month B. 5 years C. 10 years D. 20 years
10 years
A nation's prosperity is sometimes measured in terms of ___________. A. GNP B. GDP C. GDP per capita D. economic output
GDP per capita
What is the most common method of measuring flows of trade? A. amount of physical items transported between countries B. amount of manufactured items transported by truck C. comparing annual amounts of goods and services exchanged between countries D. comparing exports of goods, services, and financial capital between countries
comparing exports of goods, services, and financial capital between countries
When__________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right. A.prices rise B.equilibrium is achieved C.costs of production fall D.there is a population increase
costs of production fall
