ECON MIDTERM 2 (My professors lab)

Social, as distinct from industrial, regulation is the major focus of the:

Consumer Products Safety Commission.

In the United States, The lifetime distribution of income is more equal than the annual distribution. This statement is:

true, because there is considerable income mobility over time.

A firm is likely to be a natural monopoly:

if economies of scale are experienced over the full range of output.

Interlocking directorates are:

illegal under provisions of the Clayton Act of 1914.

The Lorenz curve:

plots graphically the distribution of income.

Refer to the above diagram where curves (a) through (e) are for five different countries. The Gini ratio is:

zero in country (a) and 1 in country (e).

Refer to the above diagram pertaining to two nations and a specific product. The equilibrium level of exports and imports occurs at:

H, where GB and FC intersect.

If the rate of exchange for a pound is $4, the rate of exchange for the dollar is:

1/4pound.

In the quintile distribution of income, the term "quintile" represents:

20 percent of the income receivers.

In the U.S. balance of payments, U.S. purchases of assets abroad are a(n):

U.S. dollar outflow.

A merger between a maker of household detergents and a fast food chain would be an example of:

a conglomerate merger.

Price fixing is considered to be a per se violation of the antitrust laws because:

a guilty verdict requires proof that the activity was attempted, not that it unreasonably restrained trade.

Henry George's single tax movement was based on the argument that:

a high tax on land rent is justified because land rent performs no incentive function.

All but which one of the following are cash transfer programs?

low-rent public housing

In the balance of payments of the United States, inflows of foreign currencies to the United States are recorded as:

a positive entry.

A major purpose of usury laws is to make more funds available to low-income borrowers. Economic analysis suggests that usury laws:

allocate available funds to high-income borrowers.

Refer to the above diagram where curves (a) through (e) are for five different countries. Income is equally distributed in:

country a.

In the balance of payments of the United States, U.S. goods imports are recorded as a:

current account entry.

A market in which the money of one nation is exchanged for the money of another nation is a:

foreign exchange market.

Medicaid:

helps finance medical expenses for those participating in the TANF and Supplemental Security Income programs.

The main purpose of industrial regulation is to:

lower price to average total cost such that the firm earns a fair return.

The Sherman Act was designed to:

make monopoly and acts that restrain trade illegal.

A market in which the entire demand for a good or service can be satisfied at the least cost by a single firm is a:

natural monopoly.

In the U.S. balance of payments account for a certain year, a positive number in the financial account means a:

net reduction in the ownership of assets by U.S. interests.

Refer to the above diagram. If demand is D2, a tax of A per acre will:

not affect the quantity of land available to society.

The "rule of reason" indicated that:

only contracts and combinations that unreasonably restrain trade violate the antitrust laws.

The Clayton Act of 1914:

outlawed price discrimination, tying contracts, intercorporate stockholding, and interlocking directorates that lessen competition.

In making an investment decision a business firm is most interested in the:

real interest rate.

Housing subsidies for low-income households:

represent a noncash transfer.

An excise tax on an imported good that is not produced domestically is called a:

revenue tariff.

Refer to the above data. Zabella has a balance of trade (goods):

surplus of $10 billion.

A normal profit is:

the "price" required to retain entrepreneurial talent in some particular line of production.

All of the following can file antitrust charges under the Sherman Act except:

the Federal Energy Regulatory Commission.

Pure or economic profit is:

the amount by which accounting profits exceed normal profits.

A firm charged with monopolizing a market is less likely to be convicted if:

the court accepts a broad definition of the market.

Refer to the above diagrams. Assume that only wheat can be grown on the three grades of land shown in Figures a, b, and c. Also assume that identical amounts of labor, capital, and other needed inputs are used in farming each grade of land. On the basis of these three figures we can say that:

the land shown in Figure (a) only is a "free good."

The antitrust laws are enforced by the:

Federal Justice Department and the Federal Trade Commission.

Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The trading possibilities curves imply that:

world resources will be allocated more efficiently if the two nations specialize and trade based on comparative advantage.

Refer to the above data. Zabella's balance on goods and services shows a:

$5 billion surplus.

Which of the above distributions is closest to describing the United States?

C

Refer to the above data. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

1 unit and 15 units.

Refer to the above data. If the economy was opened to free trade and the world price of $1 prevailed, the price and quantity sold of this product would be:

$1 and 16 units.

If a U.S. importer can purchase 10,000 British pounds for $20,000, the rate of exchange is:

$2 = 1 British pound in the United States.

Refer to the above data. The domestic equilibrium prices of steel in Alpha and Beta are:

$3 and $2, respectively.

Refer to the above data. Assuming that Alpha and Beta are the only two nations in the world, the equilibrium world price of steel must be between:

$3 and $2.

Suppose the balance on the financial account is -$300 billion and the balance on the capital account is +$5 billion. The size of the current account is:

+$295 billion.

Suppose the balance on the current account is +$50 billion and the balance on the capital account is +$1 billion. The balance on the financial account is:

-$51 billion.

Suppose the balance on the current account is +$100 billion and the balance on the capital account is $1 billion. The balance on the financial account is:

-$99 billion.

The Gini ratio of income inequality ranges between:

0 and 1.

Refer to the above data. With a $1 per unit tariff, the quantities sold by foreign and domestic producers respectively will be:

7 units and 4 units.

Refer to the above data. At a world price of $5:

Alpha will want to export 50 units of steel.

If the exchange rate changes so that more Mexican pesos are required to buy a dollar, then:

Americans will buy more Mexican goods and services.

Refer to the above data. Assuming that Alpha and Beta are the only two nations in the world, at the equilibrium world price:

Beta will export steel and Alpha will import steel.

All of the following are regulatory commissions dealing with industrial regulation (as distinct from social regulation) except the:

Food and Drug Administration.

Refer to the above information. If these two nations specialize based on comparative advantage:

Harmony will produce chicken and Singsong will catch fish.

International transactions fall into what two broad categories?

International trade and international asset transactions.

Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. If this economy was entirely closed to international trade, equilibrium price and quantity would be:

Pa and x.

Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. If the economy is opened to free trade, the price and quantity sold of this product would be:

Pc and z.

Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a PcPt per unit tariff, per unit revenue received by domestic and foreign producers respectively will be:

Pt and Pc.

Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a per unit tariff in the amount PcPt, price and total quantity sold will be:

Pt and y.

For which of the following income-maintenance programs is aggregate spending the greatest?

Social Security

Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The data suggest that:

West Lothian should specialize in, and export, beer.

Refer to the above diagram where curves (a) through (e) are for five different countries. The Gini ratio is lowest in country:

a

Effective usury laws cause:

a shortage of money in money markets.

Suppose Slow Ketchup requires that, as a condition of purchase, all restaurants using its product must buy and make available its new sales product. This arrangement is an example of:

a tying contract.

The Celler-Kefauver Act of 1950:

amended the Clayton Act.

A tariff can best be described as:

an excise tax on an imported good.

Standard Census data on the distribution of income:

are before taxes in that they do not account for personal income and payroll taxes.

Economic rent refers to the price paid for land and other natural resources that:

are fixed in total supply.

Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The opportunity cost of producing a:

beer in West Lothian is 1/2a pizza.

In the United States:

both taxes and transfers decrease income inequality.

A major criticism of industrial regulation is that:

by allowing a fair return price, it gives natural monopolists little incentive to contain costs.

Refer to the above information. Population B, consisting of Fred, George, Holly, Irma, and Joan, receive incomes of $4,000, $3,000, $1,250, $950, and $800, respectively. We:

can say that the income of population B is more equally distributed than that of population A.

Refer to the above diagrams. Assume that only wheat can be grown on the three grades of land shown in Figures a, b, and c. Also assume that identical amounts of labor, capital, and other needed inputs are used in farming each grade of land. On the basis of these three figures we:

can say that the land in Figure c is most productive.

Critics of a single tax on land oppose the idea because:

changes in land ownership would cause the tax burden to fall unfairly on people who did not receive economic rents.

The U.S. poverty rate for:

children under 18 years of age is higher than for the overall population.

A nation's official reserves:

compensates for differences in the current and capital and financial accounts.

Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The data contained in the production possibilities curves are based on the assumption of:

constant costs.

Refer to the above diagram where curves (a) through (e) are for five different countries. Of the countries listed below, income is most unequally distributed in country:

d.

Refer to the above data. Zabella's balance on financial account shows a:

deficit of $10 billion.

Refer to the above data. Zabella's balance on capital and financial account shows a:

deficit of $5 billion.

One cause of income inequality in the United States is:

differences in preferences for market work relative to nonmarket activities as well as differences in preferences for types of work.

A unique characteristic of taxes on economic rents is that such taxes:

do not lead to a reallocation of the resource.

Refer to the above diagram pertaining to two nations and a specific product. Point G is the:

domestic price for the nation represented by lines GB and GD.

In his book Progress and Poverty, Henry George argued that:

economic rent could be heavily taxed without impairing the supply of land or therefore the productive capacity of the economy.

In a nation's balance of payments, which one of the following items is always recorded as a positive entry?

exports of services

If the equilibrium exchange rate changes so that fewer dollars are needed to buy a South Korean won, then:

fewer U.S. goods and services will be demanded by the South Koreans.

The legal cartel theory of regulation argues that:

firms in certain industries want to be regulated rather than face the rigors of competition.

In the U.S. balance of payments, foreign purchases of assets in the United States are a:

foreign currency inflow.

Each of the following has contributed to growing income inequality in the United States since 1970 except:

government transfers.

Overall, economists believe that deregulation of industries formerly subjected to industrial regulation:

has produced large net benefits for consumers and society.

Assuming labor forces of equal size, the production possibilities curves above suggest that workers in West Mudville will have:

higher wages than workers in East Mudville both before and after trade.

Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger. The U.S. Justice Department concludes the merger will boost the index to 1,050. The antitrust authorities will most likely:

ignore this merger because of the relatively small size of, and increase in, the Herfindahl index.

Refer to the above diagram pertaining to two nations and a specific product. In equilibrium, the nation represented by lines FA and FC will:

import H from the country represented by lines GB and GD.

A nation's capital and financial account:

includes both inpayments and outpayments.

A function of the Federal Trade Commission is to:

investigate instances of faulty and misleading advertising.

Income:

is a flow concept.

The Gini ratio:

is a numerical measure of the overall dispersion of income in a nation.

Economic profit is most closely associated with:

monopoly, innovation, and uninsurable risks.

Some economists have criticized standard government figures on income inequality, arguing that these data:

overstate the degree of income inequality by failing to include noncash transfers as income.

Interest is the:

price paid for the use of money.

Refer to the above graphs. Stanville has a comparative advantage in producing:

product B.

The Earned Income Tax Credit:

provides a cash payment to low-income working families if their tax credit exceeds their tax liability.

"International trade" refers to:

purchasing or selling currently produced goods or services across an international border.

A government may be able to reduce the international value of its currency by:

selling its currency in the foreign exchange market.

Critics of the regulation of natural monopolies contend that:

the industry may "capture" or control the regulatory commission.

The Lorenz curve portrays:

the personal distribution of income.

Economic or pure rent is

the price paid for the use of land and other nonreproducible resources.

Landowners will not receive any rent so long as:

the supply curve lies entirely to the right of the demand curve.

Suppose the G8 nations decide that the dollar is too strong (high in value) relative to the yen. These nations might:

use official reserves of dollars to buy yen.

Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

v and vz.

A merger between an automobile manufacturer and a maker of automobile tires is an example of a:

vertical merger.

Economists who adhere to the laissez-faire antitrust perspective:

view competition as a long-run dynamic process in which firms battle for dominance of markets but rarely can sustain such dominance once it is achieved.

People's incomes are relatively low when they are young, reach a peak in middle age, and then decline. This fact helps explain:

why the lifetime distribution of income is more equal than the distribution in any given year.

If the dollar depreciates relative to the Russian ruble, the ruble:

will appreciate relative to the dollar.

Responsibility for enforcing the antitrust laws rests:

with both the Department of Justice and the Federal Trade Commission.

Refer to the above diagram. Land:

would be a free resource if demand is D4 or less.

Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a PcPt per unit tariff, the quantities sold by foreign and domestic producers respectively will be:

wy and w.