macro econ practice quizzes

If the interest rate is 4%, what is the approximate future value of $15,000 in 10 years? $22,204 $10,133 $17,949 $15,900

$22,204

In 2010, Canada's GDP was approximately $1,357 billion, and its population was about 34.12 million. What was Canada's approximate GDP per person in 2010? $39,770 $26,246 $3,980 $46,060

$39,770

A minimum wage that is above the equilibrium wage is: -a labor union negotiated wage. -an example of a price floor. -an efficiency wage. -an unemployment benefit.

an example of a price floor.

Which of the following is an example of transfer payments? -unemployment benefits -government loans -interest earned on savings in banks -military salaries

unemployment benefits

A tariff is a: -limit on the quantity of a good that can be imported. -tax on imported products. -tax on exported products. -limit on the quantity of a good that can be exported.

tax on imported products.

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2 each. What is Chin's consumer surplus on the fifth bar? -$1 -$0 -$2 -$.50

$0

Dependencies between your own choices reflect the fact that: -you have limited resources. -society has limited resources. -resources can be spread across time. -resources are spread across varying markets.

-you have limited resources.

What is Sri Lanka's GDP deflator if its nominal GDP is $88.9 billion (in current US$) and the real GDP is $59.34 billion? 136.5 149.8 66.7 100

149.8

Which of the following benefits could a company gain from using internal markets? -Greater market power and reduced costs of production. -Access to more input markets and greater levels of competition. -Increased profits and reduced competition. -Better allocation of its resources and more accurate predictions.

Better allocation of its resources and more accurate predictions.

Which of the following is NOT one of the three questions that should guide discussions and policies related to the redistribution of income that were presented in the chapter? -How long will it take to redistribute income? -How large are the costs of redistribution of income? -How large are the benefits of redistributing income to those who most benefit from it? -How fair is this redistribution?

How long will it take to redistribute income?

Which of the following is a negative result of redistributing income toward equality? -Government expenses fall, and tax revenues rise. -The poor have a higher standard of living. -Average income rises. -Work incentives are reduced.

Work incentives are reduced.

Specialization will increase output when it is based on: -comparative advantage. -who can produce the fastest. -who can produce at the least comparative cost. -absolute advantage.

comparative advantage

An import is a good or service: -sold to a foreign buyer. -purchased from a foreign seller. -sold to a domestic buyer. -purchased from a domestic seller.

purchased from a foreign seller

Graphically, the equilibrium quantity can be identified as the: -quantity corresponding to the intersection of the demand and supply curves. -quantity corresponding to the intersection of the demand curve and the price axis. -maximum quantity that sellers are willing to sell. -maximum quantity that buyers are willing to buy.

quantity corresponding to the intersection of the demand and supply curves.

A shortage occurs when: -quantity demanded exceeds quantity supplied. -there is excess production. -quantity supplied exceeds quantity demanded. -when there is insufficient demand.

quantity demanded exceeds quantity supplied

The main role of markets is: -reallocating resources to better uses. -providing jobs and products. -preventing waste in choices. -facilitating consumption.

reallocating resources to better uses

The main role of markets is: -reallocating resources to better uses. -providing jobs and products. -preventing waste in choices. -facilitating consumption.

reallocating resources to better uses.

Along the same aggregate production function, the level of _____ is the same. -technology -labor -capital -economic growth

technology

In the AD-AS framework, price and quantity are represented by _____, respectively. -nominal interest rates and the real GDP -the real interest rate and consumption -the real GDP and the real interest rate -the GDP deflator and the real GDP

the GDP deflator and the real GDP

If the interest rate is 6% and the average inflation rate is 3.1%, what is the approximate future value of $75,000 in 20 years? $42,340 $240,535 $132,852 $89,743

$132,852

A new assembly line robot with a price tag of $2.5 million is expected to depreciate by 3% at the end of next year. The real interest rate is 2.5%. What is the user cost of the robot for one year? $137,500 $12,500 $62,500 $75,000

$137,500

A new assembly line robot costs $1.2 million and is expected to depreciate by 10% at the end of next year. The real interest rate is 4.5%. What is the user cost of the robot for one year? $54,000 $120,000 $174,000 $66,000

$174,000

In 1995, when the consumer price index was 152.38, women earned a median income of $12,130 per year. If the consumer price index in 2015 was 236.99, how much was $12,130 in 2015 dollars? $18,865 $7,799 $12,130 $16,259

$18,865

If the interest rate is 5%, what is the approximate present value of $25,000 received in five years? $22,676 $31,907 $23,810 $19,588

$19,588

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2.50 each. What is Chin's total consumer surplus from the five bars that he purchased? $2.50 $0 $.50 $5

$5

You've graduated from college and are now working in an investment firm where you advise clients on investment decisions. Here is the information on a proposed project. Up-front cost: $300,000 Next year's revenue: $15,000 Real interest rate: 8% Depreciation rate: 10% What is the present value of the stream of payments from this project? $383,333 $18,000 $83,333 $315,000

$83,333

The higher the GDP deflator in an economy, the:(i) higher the purchasing power of the currency.(ii) lower the real wealth in the economy.(iii) higher the real wealth in an economy.(iv) more expensive the country's exports. (ii) and (iv) (i), (ii), (iii), and (iv) (i), (iii), and (iv) (i) only

(ii) and (iv)

What happens to the investment line if the government institutes a tax break for funds invested? -There is a movement up and to the left along the same investment line. -There is a movement down and to the right along the same investment line. -The investment line shifts to the right. -The investment line shifts to the left.

-The investment line shifts to the right.

Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP? -They are not counted. -They are counted by subtracting Dale's opportunity cost in terms of lost income. -They are counted at market value. -They are counted by assigning a value that is equivalent to what it would have taken to pay a housekeeper to perform the same tasks.

-They are not counted.

Ceteris paribus, a decrease in imports leads to a: -movement up and to the left along the same aggregate demand curve. -left shift of the aggregate demand curve. -movement down and to the right along the same aggregate demand curve. -right shift of the aggregate demand curve.

-right shift of the aggregate demand curve.

In macroeconomics, the difference between saving and investment is that: -saving is the money left over after paying for spending, and investment is the purchase of new capital. -saving is created by the government, and investment is specific to firms. -saving does not depend on income, but investment depends on profitability. -saving is the money left over after paying for spending, and investment is the purchase of stocks and bonds.

-saving is the money left over after paying for spending, and investment is the purchase of new capital.

A market's deadweight loss is calculated as: -the economic surplus at the efficient quantity minus the economic surplus at the actual quantity. -the economic loss that a firm has when it is not producing its profit-maximizing output. -the price at equilibrium minus the price at actual quantity. -the loss to consumers when a product malfunctions or fails to meet expectations.

-the economic surplus at the efficient quantity minus the economic surplus at the actual quantity.

A downward-sloping demand curve implies: -buyers are willing to buy less when prices are lower. -there is an inverse relationship between price and quantity demanded. -there is a positive relationship between price and quantity demanded. -there is no relationship between price and quantity demanded.

-there is an inverse relationship between price and quantity demanded.

Consider the following basket of goods: 50 bottles of milk, 100 avocadoes, 50 apples, and eight pineapples. Suppose that last year, each bottle of milk was $2.50, each avocado was $1.50, each apple was $0.75, and each pineapple was $4. This year, each bottle of milk is $2.50, each avocado is $1.80, each apple is $0.80, and each pineapple is $4.30. What is the inflation rate between last year and this year? 10.13% -9.09% 8.99% -10%

10.13%

n May 2019, there were approximately 68,980,000 people in Japan's labor force. About 1,650,000 people were unemployed. What was the unemployment rate? 1.8% 5.0% 6.1% 2.4%

2.4%

When government expenditure rises by $180 million and the initial increase in government expenditure was $60 million, then the multiplier is: 3. 2.5. 2. 1.

3

In May 2019, Texas reported a civilian labor force of 14,012,711. The number of employed people was 13,516,387. What was the unemployment rate? 4.9% 96.5% 3.5% 5.3%

3.5%

Which of the following taxes is regressive? Raj pays a 10% tax on the first $10,000 he earns plus a _____ tax on any additional income. 25% 10% 15% 5%

5%

Which tax is regressive? Arturo pays an 8% tax on the first $9,000 he earns plus _____ tax on any additional income. an 8% a 10% a 5% a 25%

5%

You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions? -GDP rises by $31,500. -GDP rises by $69,500. -GDP rises by $38,000. -GDP rises by $6,500.

GDP rises by $38,000.

Which of the following is a positive economic statement? -A 10% inflation rate is too high and should be reduced. -That company with a 50% profit rate made too much profit at the expense of consumers. -If the government raises taxes, people will have less income available for purchases and saving. -The government ought to balance its budget and eliminate the deficit

If the government raises taxes, people will have less income available for purchases and saving

In 2018, the unemployment rate in the United States went as low as 3.7%, as measured by the Bureau of Labor Statistics. This historically low level of unemployment occurred simultaneously with a large trade deficit. This provides evidence against which of the following arguments against international trade? -International trade may lead to job loss. -International trade may promote unfair competition. -International trade may hurt national security. -International trade may hurt infant industries.

International trade may lead to job loss.

How is the economic surplus generated by a decision calculated? -It is the sum of benefits arising from the decision. -It is the sum of costs arising from the decision. -It is the total benefits minus total costs arising from the decision. -It is the total benefits plus total costs arising from the decision.

It is the total benefits minus total costs arising from the decision.

Which of the following scenarios illustrates the law of demand? -Francis does not care about the price of coffee at the coffee shop - he must buy two cappuccinos every day, regardless of the price. -John likes to drink spring water. At $2 he buys four bottles of water, and at $1.50 he still buys four bottles of water. -A research company finds that the more expensive a particular brand of a designer handbag, the more that consumers are willing to purchase the brand. -Kathleen eats more steak when the price is low, and less when the price is high.

Kathleen eats more steak when the price is low, and less when the price is high.

What is the difference between microeconomics and macroeconomics? -Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole. -Microeconomics focuses only on the forces of individual demand and individual supply, whereas macroeconomics focuses only on policy making for the economy. -Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of government policies. -Microeconomics is the study of the economy as a whole, whereas macroeconomics is the study of individual decisions in specific markets.

Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.

The government passes a new investment tax credit initiative. Which input in the production function changes, and what is the effect on economic growth in the country? -Human capital is enhanced, and economic growth is positively affected. -The capital stock decreases, and economic growth is negatively affected. -The capital stock increases, and economic growth is positively affected. -Technological advance occurs, but there is no effect on economic growth.

The capital stock increases, and economic growth is positively affected.

Which of the following is NOT a factor that can shift supply? -The market price of a product. -The price of a substitute-in-production. -The price of a complement-in-production. -The expected future price of a product.

The market price of a product.

You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which of the following could explain why M&Ms are more expensive? -A new robot has been installed at the Mars chocolate company that reduces the time needed to produce M&Ms by half. -Consumers are now purchasing fewer M&Ms compared to other types of chocolates. -A new study finds that the benefits of eating chocolate are not as great as previously thought. -The supply of cacao beans, used to produce chocolate, has fallen around the world.

The supply of cacao beans, used to produce chocolate, has fallen around the world

You're shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase? -New sellers are offering the same product. -There is a shortage of the item. -There is decreased demand for the item. -There is a surplus of the item.

There is a shortage of the item.

Which of the following statements is based on normative analysis? -When the burner beneath a pot of water on the stove is turned on, the water will heat up. -The temperature in the office room is 22 degrees centigrade. -We should protect the environment. -Mario is 24 years old.

We should protect the environment

Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario? -You will take fewer pumpkins to the market to sell. -You will be able to sell only the highest-quality pumpkins. -You can charge a higher price per pumpkin. -You will wind up with many unsold pumpkins

You can charge a higher price per pumpkin

Which of the scenarios represents consumption spending? -Your parents pay their income taxes. -You eat at a fancy restaurant for Valentine's Day. -You take out a bank loan. -A new hospital is constructed in your town.

You eat at a fancy restaurant for Valentine's Day.

Southeast Asian countries experience high temperatures and high humidity during the monsoon seasons. This makes working conditions difficult. Because air conditioners are expensive and consume a lot of electricity, an alternative air cooler called an Eco-cooler was invented. This device does not use electricity, is made from readily available soda bottles, and works by funneling air into a room. This scenario is an example of: -a technological innovation that can increase labor productivity and thus increase economic growth. -a rise in productivity causing an increase in technology. -the development of human capital. -a decrease in the labor force participation rate in Southeast Asian countries.

a technological innovation that can increase labor productivity and thus increase economic growth.

In a market graph, consumer surplus is the area: -above the price. -above the price and below the demand curve. -below the demand curve. -between the demand curve and the supply curve.

above the price and below the demand curve

Credit constraints limit the: -amount of money that people can borrow. -amount of money that banks can accept as deposits. -interest rates that banks can charge. -amount of saving that people can make.

amount of money that people can borrow.

Henry Ford's $5 per day wage is an example of: -a minimum wage law. -an efficiency wage. -an equilibrium wage. -a government regulated wage.

an efficiency wage.

During the Great Recession, the United States Congress increased the length of time that unemployment benefits could be received from 52 weeks to 99 weeks. This change caused: -an increase in the labor force participation rate. -an increase in the number of employed people in the economy. -an increase in the costs for the government. -a decrease in unemployment.

an increase in the costs for the government.

Managers can harness market forces by setting up internal markets, which: -buy and sell raw materials rather than finished products. -trade only with employees rather than companies and governments. -are organized within a company to buy and sell scarce resources. -have a geographic scope limited to one country with no international transactions.

are organized within a company to buy and sell scarce resources.

You have a comparative advantage if you can complete a task: -using fewer inputs than anyone else. -at a higher opportunity cost than anyone else. -using more inputs than anyone else. -at a lower opportunity cost than anyone else.

at a lower opportunity cost than anyone else

People gain consumer surplus when they purchase an item: -at an equitable price. -at a price above marginal revenue but lower than the cost of production. -at a price below the value of the benefit they receive from the item. -with a marginal benefit below the price of the item.

at a price below the value of the benefit they receive from the item

To get maximum output, you should allocate each task to the person who: -can do the task with the lowest opportunity cost. -has an absolute advantage in completing the task. -can do the task with the smallest amount of input. -has a cost advantage in completing the task.

can do the task with the lowest opportunity cost.

You have an absolute advantage in producing a product if you: -have training in producing it. -can produce the product using the fewest inputs. -have the most capital to work with. -can produce the product at the lowest opportunity cost.

can produce the product using the fewest inputs.

The moral of the story of the Solow growth model is that: -technological advance cannot sustain continuous economic growth. -capital accumulation alone cannot lead to sustainable economic growth. -capital accumulation is the key to sustained economic growth. -human capital growth does not lead to economic growth.

capital accumulation alone cannot lead to sustainable economic growth.

When the economic surplus in a market is less than it would be if the market were efficient, the market is experiencing: -deadweight loss. -an inverse externality. -a situation in which marginal benefit equals marginal cost. -asymmetry problems.

deadweight loss

When there is a shortage of highly skilled workers in a particular region, the: -demand for skills education decreases. -demand for highly skilled workers increases. -supply of jobs for highly skilled workers increases. -demand for skills education increases.

demand for skills education increases

Which of the following is a mean-tested social safety net program in the United States? -earned income tax credit -Social Security -worker's compensation -Medicare

earned income tax credit

Which of the following is consistent with the view that "fairness" means equality of outcomes? -equal access to education -equal productivity that yields equal pay -equal incomes -nondiscrimination in hiring processes

equal incomes

Which of the following is a scaled number? -government budget deficit as a percentage of GDP -the country's national debt -the sum of all incomes earned in the economy -total tax revenues in the economy

government budget deficit as a percentage of GDP

The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is: -greater than or equal to the marginal cost. -less than the marginal cost. -less than the marginal benefit. -greater than or equal to the marginal benefit.

greater than or equal to the marginal cost.

If you need to make a decision and all the information needed to make a good decision is not available, then you: -face an analysis hurdle. -have to make a prediction. -have a knowledge problem. -are dealing with a partitioning issue.

have a knowledge problem

The higher the minimum wage, as compared to the equilibrium wage, the: -lower the natural rate of unemployment. -higher the cyclical unemployment rate. -higher the structural unemployment rate. -lower the structural unemployment rate.

higher the structural unemployment rate.

When there is a shortage of highly skilled workers in a particular region: -highly skilled workers can negotiate higher salaries. -unemployment rises among highly skilled workers. -the incomes of highly skilled workers fall. -there is a corresponding surplus of low-skilled workers in the region.

highly skilled workers can negotiate higher salaries

When people focus on their comparative advantage and then trade for other things, they: -increase the time they spend working and reduce the variety in their consumption. -focus their consumption on just a few things. -have a lower standard of living than if they focused on their absolute advantage. -improve their standard of living or increase their leisure time

improve their standard of living or increase their leisure time

When the definition of poverty focuses on relative poverty, a person is in poverty if the household income is: -insufficient to provide basic food, shelter, medical care, and transportation. -below $3.10 per day. -is less than three times the cost of a basic food plan. -in the bottom 10% of household incomes in the nation.

in the bottom 10% of household incomes in the nation.

Expansionary monetary policy _____ consumption, investment, and net exports; _____ aggregate expenditures; and _____ aggregate demand. -decreases; lowers; lowers -decreases; boosts; raises -increases; boosts; raises -increases; lowers; lowers

increases; boosts; raises

In the United States, the poverty line income: -is based on estimated medical care costs. -is the same for all households. -excludes medical care costs. -is adjusted based on family size.

is adjusted based on family size.

Contractionary monetary policy causes a: -left shift of the aggregate demand curve. -right shift of the aggregate supply curve. -right shift of the aggregate demand curve. -movement along the same aggregate demand curve.

left shift of the aggregate demand curve.

Nerida Kyle could either commute to work via Uber or purchase a new car. The average cost of her one-way Uber trip is $15. Nerida works five days a week for 50 weeks a year. Based solely on avoiding the cost of an Uber, Nerida should purchase a car if the cost of the car is _____ than _____ per week. -less; $75 -less; $150 -greater; $150 -greater; $75

less; $150

The equilibrium unemployment rate is also known as the _____ unemployment rate. -long-run -frictional -structural -cyclical

long-run

The rational rule of consumption is to consume more today if the: -marginal benefit of a dollar of consumption today is greater than (or equal to) the marginal benefit of spending a dollar plus interest in the future. -marginal benefit of a dollar of consumption today is less than the marginal benefit of spending a dollar plus interest in the future. -real interest rate in the future is expected to be higher than the real interest rate today. -price of consumption today exceeds the dollar-plus-interest in the future.

marginal benefit of a dollar of consumption today is greater than (or equal to) the marginal benefit of spending a dollar plus interest in the future.

The benefit of an extra dollar of consumption is called the: -average price of goods and services consumed. -marginal benefit of consumption. -real interest rate. -average benefit of consumption.

marginal benefit of consumption.

A government leader determines that the 5% unemployment rate is too high. She asks her staff to research policy options to reduce the rate and a few weeks later is given four options. Each option would reduce the rate by a different amount and at a different cost. The leader studies the options and chooses the one she feels is best for the country. In order, what types of analysis were used in this three-stage chain of events? -positive; positive; normative -positive; normative; positive -normative; positive; normative -normative, positive; positive

normative; positive; normative

If you see that the consumer price index this year is lower than the consumer price index last year, this means that: -the consumer price index is lower than the producer price index. -the prices of each and every good and service went down. -economic growth also decreased. -on average, prices went down across the economy.

on average, prices went down across the economy.

Which of the following is NOT a cost of the redistribution of income? -reduced incentive to work and earn -reduced marginal benefits to extra income -tax avoidance and fraud -administrative costs

reduced marginal benefits to extra income

Internal markets, which are markets that managers set up within their organization, are: -set up to allocate resources of a company more efficiently, often not using real money. -required to use real money to allocate real resources across firms in an industry. -based on predetermined prices rather than equilibrium prices. -allowed to sell only to customers on an approved list of buyers.

set up to allocate resources of a company more efficiently, often not using real money.

When the government increases spending, a multiplier effect will: -shift the AD curve further to the left than the effect of the spending. -cause a movement to the right along the same AD curve. -shift the AD curve further to the right than the effect of the spending. -cause a movement to the left along the same AD curve.

shift the AD curve further to the right than the effect of the spending.

The cash-assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution are known as the: -social safety net. -social insurance. -progressive tax system. -offset tax system.

social safety net

Government social insurance programs are funded by: -taxes and fees that are assessed on workers and employers specifically for each program. -a premium paid by those who choose to participate in the insurance programs. -a pay-back system where beneficiaries repay benefits over a 10-year period. -progressive taxes on income.

taxes and fees that are assessed on workers and employers specifically for each program.

If a store runs a sale on a product to clear out its stock, we can conclude that: -there was a surplus of the product in the store. -the product must be very close to its expiration date. -there was a shortage of the product in the store. -the demand for the product is larger than the supply of the product.

there was a surplus of the product in the store.

An equilibrium in a market occurs: -when the quantity supplied equals the quantity demanded. -at the halfway point on the price axis. -when suppliers have sold all the goods and services that they have produced. -at the halfway point on a demand curve.

when the quantity supplied equals the quantity demanded.

An underemployed person is one who is: -cyclically unemployed. -working but whose skills are not fully utilized. -employed in the underground economy. -retired or outside of the labor force

working but whose skills are not fully utilized.

Which of the following is an example of a durable good? -your new car -your haircut -a soft drink -fresh flowers from the florist

your new car

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte? -$6 -$4 -$2 -$1

$4

Portia produces and sells headbands. Her marginal cost for one headband is $6, and her average cost is $4. She gains producer surplus only when she sells headbands at a price above: $10. $5. $4. $6.

$6

In 1971, the cost of a four-year college degree from a public university was about $1,410. The consumer price index was 40.48 in January 1971. If the current consumer price index is 251.1, what is the approximate cost of the four-year degree in current dollars? $9,422 $227 $1,410 $8,746

$8,746

The news of an impending recession in the economy will lead to a:(i) fall in consumption.(ii) rise in precautionary saving.(iii) rise in national saving.(iv) rise in consumption. (ii) only (i) and (iii) (i), (ii), (iii), and (iv) (i), (ii), and (iii)

(i), (ii), and (iii)

You purchase a certificate of deposit that earns an advertised rate of 1.75% interest per year. What is your real rate of return if the actual inflation rate is 1.9%? 0.15% 1.75% -0.15% 3.65%

-0.15%

Why are supply curves typically upward-sloping? -They slope upward due to the law of demand. -They slope upward because sellers demand more when prices are lower. -They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services. -They slope upward because sellers prefer to sell more when prices are lower.

They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services.

Why would a company set up internal markets? -To gain access to resources that were previously unavailable. -To solve the knowledge problem. -To solve a problem with product design. -To prevent the product price from falling.

To solve the knowledge problem

Graphically, shortages will always occur: -when the quantity supplied exceeds the quantity demanded. -at prices above the equilibrium price. -at the equilibrium price. -at prices below the equilibrium price.

at prices below the equilibrium price

An equilibrium price is: -the price that prevails when there is a shortage. -the price that occurs when there is a surplus. -determined by the intersection of the demand and supply curves. -the price that prevails when quantity supplied is less than quantity demanded.

determined by the intersection of the demand and supply curves.

According to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is _____ the marginal cost of an additional item. -less than -greater than -greater than or less than -equal to

equal to

You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ____ to dinner with your friend because the benefit of doing so is _____ than the cost. -go; greater -not go; less -go; less -not go; greater

go; greater

Holding everything else equal, the _____ the interest rate on saving, the _____ the future value of that saving. -higher; greater -higher; lower -lower; the more negative -lower; greater

higher; greater

In the field of economics, the observation that the living standard of a household is more stable than its income, because people think in terms of their long-term earnings as they spend, is known as: -wealth and inequality of purchasing power. -intergenerational mobility and inequality of opportunity. -consumption and inequality of living standards. -permanent income versus current income.

permanent income versus current income.

Analysis that describes what would happen if various actions were taken is _____ analysis. -positive -normative -valuation -partitioning

positive

Money illusion is the: -inability to understand that prices always rise. -tendency to focus on nominal values instead of inflation-adjusted values. -increase in the amount of money that it takes to purchase goods and services when prices rise. -illusion that one's earnings this year are higher than they were last year.

tendency to focus on nominal values instead of inflation-adjusted values.

An individual demand curve is a graph: -that plots the quantity of an item that someone plans to buy, at each price. -that plots the market price of a product at different points in time. -that plots the quantity of an item that a seller plans to sell, at each price. -that plots the quantity of an item that someone plans to buy, at one single price point.

that plots the quantity of an item that someone plans to buy, at each price.

Which of the following is NOT a trade cost? -the hassle of working across language barriers -the cost of producing a good -adapting to different ways of doing business -dealing with foreign laws

the cost of producing a good

Refer to the following statistics. Based on these statistics, the level of business investment is:Inventories: $12 millionHousing: $400 millionEquipment: $500 millionBusiness structures: $350 millionIntellectual property: $700 million $500 million. $1,050 million. $1,550 million. $1,562 million.

$1,550 million.

In order to be considered unemployed, a person must:(i) be part of the working-age population.(ii) be actively looking for work.(iii) not have been self-employed.(iv) must be noninstitutionalized. (i) and (ii) (iii) and (iv) (i), (ii), and (iv) (ii) and (iv)

(i), (ii), and (iv)

Which of the following five scenarios illustrate markets in action?(i) You rent a book at the university bookstore.(ii) You bargain at a street stall.(iii) You mow your own lawn.(iv) You get a manicure at a nail salon.(v) You grow your own vegetables and consume them yourself. -(i), (ii), and (iv) -(i), (iii), and (v) -(iii) and (v) -(i), (ii), and (iii)

(i), (ii), and (iv)

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if:(i) human capital increases.(ii) labor productivity falls.(iii) the capital stock in the country depreciates.(iv) the depreciation rate increases. (i) only (iii) only (i) and (iv) (i), (ii), (iii), and (iv)

(i) only

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if:(i) more labor is employed.(ii) human capital is reduced.(iii) the dependency ratio rises.(iv) the capital stock stays constant. (iii) only (i) and (iv) (i), (ii), (iii), and (iv) (i) only

(i) only

Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway?(i) The air pollution that the cyclist has to breathe.(ii) The cost of subway tickets.(iii) The time it takes to cycle to work versus the time it takes to ride the subway to work.(iv) The cost per gallon of gasoline. -(i), (iii) and (iv) -(i), (ii), (iii) and (iv) -(i), (ii), and (iv) -(i), (ii) and (iii)

(i), (ii) and (iii)

The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct?(i) If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future.(ii) The demand for gasoline will fall in the future.(iii) The demand for electricity will rise in the future.(iv) The demand for diesel will rise in the future. -(i), (ii), and (iii) -(ii) and (iv) -(i) and (ii) -only (i)

(i), (ii), and (iii)

Which of the following are correct about fixed costs?(i) They do not change with the level of production in the short run.(ii) They include variable costs.(iii) They are present even when the firm is producing zero units.(iv) They are irrelevant to marginal cost. -(i), (iii), and (iv) -(i), (ii), and (iii) -(ii) and (iv) -(i), (ii), (iii), and (iv)

(i), (iii), and (iv)

Which of the following is (are) included in investment?(i) military spending(ii) the purchase of an aircraft by a domestic airline(iii) the purchase of $45,000 worth of bonds(iv) the purchase of $32,000 worth of stock(v) social security payments(vi) the construction of a highway by the federal government -(ii), (iii), and (iv) -(i), (ii), (v), and (vi) -(i) and (vi) -(ii) only

(ii) only

Which of the following changes will lead to a decrease in the price level but an increase in the quantity of output in an economy? -a rise in aggregate supply -a rise in aggregate demand -a fall in aggregate supply -a fall in aggregate demand

-a rise in aggregate supply

Given your knowledge of how aggregate supply changes from the very short run to the long run, what is the LONG-RUN impact of a decrease in aggregate demand? -There is a recession as output falls sharply, and prices will not have had time to adjust. -All prices adjust, and the economy returns to long-run potential. -There is a sharp fall in prices in the economy as business hurriedly lower prices to try to boost sales. -There is a slow fall in prices as the short-run aggregate supply begins to have a positive slope, and the initial decline in output will increase.

-All prices adjust, and the economy returns to long-run potential.

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when corporate taxes rise in the economy? -Prices increase, and GDP decreases. -Both prices and GDP increase. -Both prices and GDP decrease. -Prices decrease, and GDP increases.

-Both prices and GDP decrease.

Which of the following correctly shows the steps needed to calculate the inflation rate? -Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate. -Collect prices from the stores where people shop, assess the substitution that people make from low inflation to high inflation products, and calculate the difference in the prices that people pay. -Find the total value of the basket of goods and services, assess quality changes from one period to the next, and measure the inflation rate. -Tally up the cost of the basket of goods and services, subtract the value of goods and services that are no longer counted in the basket, and then calculate the inflation rate.

-Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate.

Which of the following is an investment? -Fred pays a contractor to add two new rooms to his house. -Ben's computer depreciates by 15%. -Frank buys a used car. -Dan purchases $6,800 worth of gold.

-Fred pays a contractor to add two new rooms to his house.

When interest rates rise in the United States, what is the effect on net exports and aggregate expenditure? -Government expenditure rises, and this increases imports, net exports, and aggregate expenditure. -The real value of savings increases, leading to increased imports and decreased exports, and this causes net exports and aggregate expenditure to fall. -Inflows of foreign savings cause the dollar to appreciate, and this reduces exports and increases imports, leading to a fall in net exports and a fall in aggregate expenditure. -Inflows of foreign savings cause the dollar to depreciate, and this increases exports and reduces imports, leading to a rise in net exports and a rise in aggregate expenditure.

-Inflows of foreign savings cause the dollar to appreciate, and this reduces exports and increases imports, leading to a fall in net exports and a fall in aggregate expenditure.

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. What happens to prices and GDP when imported inputs become cheaper? -Prices decrease, and GDP increases. -Prices increase, and GDP decreases. -Both prices and GDP decrease. -Both prices and GDP increase.

-Prices decrease, and GDP increases.

When prices rise in the United States, what is the effect on consumption and aggregate expenditure? -The real value of wealth increases, leading to an increase in consumption and an increase in aggregate expenditure. -The real value of wealth decreases, leading to a decrease in consumption and a decrease in aggregate expenditure. -The real value of debt increases, and this increases consumption and aggregate expenditure. -Real interest rates rise, and this decreases consumption and aggregate expenditures.

-The real value of wealth decreases, leading to a decrease in consumption and a decrease in aggregate expenditure.

Joshua Murphy is planning on studying late into the night for his economics exam. How many cups of coffee should he buy tonight? Joshua should keep buying coffee throughout the evening until the marginal: -benefit of purchasing one more coffee is less than the marginal cost. -benefit of purchasing one more coffee equals the marginal cost. -benefit of purchasing one more coffee is positive. -cost of purchasing one more coffee is positive.

-benefit of purchasing one more coffee equals the marginal cost.

If a bakery buys a second oven, hires a second baker, buys double the number of ingredients, doubles the size of the bakery, and then produces double the number of cakes, then the bakery is experiencing: -constant returns to scale. -increasing returns to scale. -an increase in labor productivity. -technological advancement.

-constant returns to scale.

If the government lowers the corporate tax rate, then the ______ loanable funds shifts to the _______ . -supply of; left -demand for; left -demand for; right -supply of; right

-demand for; right

Hyperinflation is: -extremely high rates of inflation. -inflation that occurs when the economy is in a recession. -a period of high money growth in an economy. -very high rates of economic growth.

-extremely high rates of inflation.

Diminishing marginal benefit: -is not important in determining a consumer's purchase decision. -is when consumers do not follow the rational rule. -is when buying an additional item yields a larger marginal benefit than the previous item. -is when buying an additional item yields a smaller marginal benefit than the previous item.

-is when buying an additional item yields a smaller marginal benefit than the previous item.

A rational buyer will: -buy a product until the marginal benefit of consuming the product is less than the price of the product. -not consider costs versus benefits when purchasing a product. -keep buying a product until marginal benefit equals price. -buy the product only when the marginal benefit of consuming the product is twice as much as the price of the product.

-keep buying a product until marginal benefit equals price.

Menu costs are the: -total costs of producing goods and services. -variety of costs that cause producers to change their prices. -costs of producing restaurant meals. -marginal costs of adjusting prices.

-marginal costs of adjusting prices.

Which of the following lists the functions of money? -carrier of exchange, unit of account, and measure of inflation -store of value, store of interest, and buffer against inflation -medium of exchange, store of value, and unit of account -medium of exchange, measure of inflation, and benchmark of quality

-medium of exchange, store of value, and unit of account

A rise in prices leads to a: -movement down and to the right, along the same aggregate demand curve. -left shift of the aggregate demand curve. -movement up and to the left, along the same aggregate demand curve. -right shift of the aggregate demand curve.

-movement up and to the left, along the same aggregate demand curve.

The GDP deflator is an index that tracks the: -price that businesses pay over time for the inputs used in the production process. -average price that consumers pay over time for a representative basket of goods and services. -price of all goods and services produced domestically. -highest prices consumers pay over time for imported goods and services.

-price of all goods and services produced domestically.

Contractionary fiscal policy _____ taxes, _____ government expenditure, _____ aggregate expenditures, and _____ aggregate demand. -lowers; raises; decreases; lowers -raises; lowers; boosts; raises -lowers; raises; boosts; raises -raises; lowers; decreases; lowers

-raises; lowers; decreases; lowers

If the frictional rate of unemployment is 1.45%, the structural rate of unemployment is 2.3%, and the total unemployment rate is 6%, then we can conclude that: -there is 2.25% actual unemployment. -the equilibrium rate of unemployment is 3.75%. -the labor force participation rate has fallen significantly. -the economy is experiencing an economic boom.

-the equilibrium rate of unemployment is 3.75%.

If a $100 million increase in total income leads to a $62 million increase in consumption, the slope of the consumption function is: 0.38. zero. 0.62. negative.

0.62.

You purchase a certificate of deposit and expect an inflation rate of 1.5% over the next year. Your nominal rate of interest is 2.25%. What is your expected real rate of return? -0.75% 3.75% 0.75% 2.25%

0.75%

Total consumption is $1,800 when income is $2,000, and total consumption increases to $2,600 when income is $3,000. What is the marginal propensity to consume? 0.5 0.8 0.2 1.25

0.8

You purchase a certificate of deposit and expect an inflation rate of 1.25% over the next year. Your nominal rate of interest is 2.1%. What is your expected real rate of return? -0.85% -2.1% 1.25% 0.85%

0.85%

Suppose a labor market is described by the demand equation, Qd = 60 - 2w, and the supply equation, Qs = -10 + w, where Qd is the quantity demanded of labor, Qs is the quantity supplied of labor, and w is the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be willing to work in this market? 5,000,000 15,000,000 10,000,000 20,000,000

15,000,000

In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is: 1.25. 125. 12.5. 1,250.

1.25

What is Uganda's real GDP if its nominal GDP is $27.5 billion (in current US$), and the GDP deflator is 163.4? $27.5 billion $16.8 billion $12.4 billion $44.9 billion

16.8

Which of the following lists only the factors that would cause a decrease in the supply of an item? -A decrease in the number of sellers in the market; a fall in the price of a complement-in-production; an increase in productivity. -A fall in input prices; an increase in productivity; a fall in the price of a substitute-in-production. -A rise in the price of a substitute-in-production; a rise in the price of a complement-in-production; an expectation that the price of the item will rise in the future. -A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production

A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production

Which of the following scenarios depicts a seller who is following the Rational Rule for Sellers? -Mindy sets up a lemonade stand and calculates the cost of an additional cup of lemonade at 50 cents, and sells it for 25 cents. -American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250. -An auto-rickshaw driver in New Delhi, India, calculates a trip to have a marginal cost of 350 rupees and accepts a ride request for 315 rupees. -Andy's Diner finds that the marginal cost of a fish and chips meal is $7 and lists the item for sale at $6.50.

American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250.

According to diminishing marginal utility, which of the following people would gain the lowest marginal benefit from an extra $100 of income? -Devin, head of a three-person household with an annual household income of $120,000 -Ariana, an actress with an annual household income of $1,500,000 -Chin, a single person with an annual household income of $20,000 -Shawna, a single mother of three young children with an annual household income of $19,000

Ariana, an actress with an annual household income of $1,500,000

Statements about what option should be chosen are _____ statements. -valuation -assessment -positive -normative

normative

When you get hired for a well-paying job, you will most likely view older used cars as -complementary goods. -inferior goods. -substitute goods. -normal goods.

inferior goods

Why does an anticipated change in income lead to no change in consumption for a consumption smoother? -Consumption is based on permanent income, which is already factored into anticipated future changes in income. -There are high tax rates on anticipated changes in future income. -The consumer is not aware of anticipated changes in future income -There is a failure of the permanent income hypothesis.

Consumption is based on permanent income, which is already factored into anticipated future changes in income.

Which of the following shows the medium of exchange function of money? -Mena saves his money in a certificate of deposit at the bank. -Darius goes window shopping. -Daniela goes to the store and purchases roses with U.S. dollars. -Wilma wants to sell her old car, and she values it at $2,400.

Daniela goes to the store and purchases roses with U.S. dollars.

A bakery hires a baker who can make 15 cakes per day. The bakery then decides to hire a second baker who will use the kitchen at the same time as the first baker. The bakery finds that the second baker can produce only an additional nine cakes per day. What concept does this scenario illustrate? -The cost-benefit principle -The opportunity cost principle -Diminishing marginal product -The marginal principle

Diminishing marginal product

Which of the following is NOT true of the incidence of poverty in the United States? -Elderly people are more likely than other age groups to be in poverty. -Children and single moms are most likely to be in poverty. -Most people in poverty will spend much of their lives in poverty, but most people will spend some time in poverty during their lifetime. -People of color are more likely than others to experience poverty.

Elderly people are more likely than other age groups to be in poverty.

What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint? -In microeconomics, spending refers to domestic spending, whereas in macroeconomics, spending refers to foreign spending. -In microeconomics, spending refers to expenditure on consumer goods only, whereas in macroeconomics, spending refers to business expenditures only. -In microeconomics, spending refers to one individual's spending, whereas in macroeconomics, spending refers to government expenditure. -In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.

In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.

Which of the following is NOT one of the four key reasons that the government provides in-kind benefits rather than cash benefits? -An in-kind benefit like child care is a complement to work, which provides some incentive for recipients to provide for themselves rather than rely on the safety net. -In-kind benefits give the recipient the greatest flexibility to choose what matters most. -Taxpayers may care more about reducing homelessness or hunger than what will make the recipient happiest. -Giving goods rather than cash prevents recipients from making bad choices.

In-kind benefits give the recipient the greatest flexibility to choose what matters most.

Suppose that one hour of labor in Singapore can produce 20 computers or 40 cellphones. Further, suppose that one hour of labor in Ireland can produce 10 computers or 15 cellphones. _____ has a comparative advantage in the production of computers. _____ has a comparative advantage in the production of cellphones. -Ireland; Singapore -Singapore; Singapore -Ireland; Ireland -Singapore; Ireland

Ireland; Singapore

What is quantity supplied? -It is a graph that plots the quantities of an item that a seller plans to sell at different prices. -It is the amount of an item that a seller is willing to sell at a particular price. -It is a graph that plots how much a seller produces at different points in time. -It is the amount of an item that a buyer is willing to buy at a particular price.

It is the amount of an item that a seller is willing to sell at a particular price.

You have four friends. Which of your friends can be described as "cyclically unemployed"? -Arthur, who quit his job to look for a better job -Keele, who lost her job after her company lost a lot of customers during an economic downturn -Martha, who is a full-time stay-at-home parent -Regan, who is in a nursing home

Keele, who lost her job after her company lost a lot of customers during an economic downturn

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it? -The marginal principle -The interdependence principle. -The opportunity cost principle. -The cost-benefit principle.

The opportunity cost principle.

The aggregate production function is represented as: Y = f(L, H, K). H = f(L, Y, K). L = f(Y, H, K). K = f(L, H, Y).

Y = f(L, H, K).

A normal good is: -a good for which higher income causes a decrease in demand. -a good which is normally purchased by many consumers. -a good for which higher income causes an increase in demand. -a good which is only purchased by high-income consumers.

a good for which higher income causes an increase in demand.

A seller at a farmer's market wants $10 for a bag of 10 apples. You think his price is too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of five apples for $6. You bargain again, and the seller lets you buy the 10 apples for $8. This scenario is an example of: -a market in action. -perfect competition. -a shortage. -a centrally planned market.

a market in action

Which of the following would lead to a slowdown in economic growth? -the institution of a savings tax credit -an increase in innovation in the economy -an increase in capital accumulation coupled with technological advancement -a reduction in the birth rate coupled with an increase in the retirement rate of a population

a reduction in the birth rate coupled with an increase in the retirement rate of a population

In a voluntary economic transaction between a buyer and a seller, _____ can earn economic surplus from the transaction. -both the buyer and the seller -only the buyer -neither the buyer nor the seller -only the seller

both the buyer and the seller

If Marios is a consumption smoother and has just won a prize of $12,000, we can expect Marios to exhibit: -a small change in consumption. -zero change in saving. -a large change in consumption. -no change in MPC.

a small change in consumption.

If there is a temporary rise in income, a consumption smoother will exhibit _____ in consumption, and a hand-to-mouth consumer will exhibit _____ in consumption. -a small increase; a large increase -no change; a large increase -a large increase; no change -a large increase; a large increase

a small increase; a large increase

A decreasing returns to scale production function is one where increasing all inputs by a certain proportion leads to output rising by: -the same proportion. -a smaller proportion. -exactly double the proportion. -a larger proportion.

a smaller proportion.

If there is _____ rise in income, there will be an intermediate increase in total consumption in the economy. -no news of a -a permanent -zero -a temporary

a temporary

As prices _____, they provide useful business intelligence. -aggregate information -are constant -vary randomly -create incentives

aggregate information

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the: -amount where opportunity cost is equal to the marginal benefit. -amount of a good that a person is willing to buy at each price. -amount of a good that a person actually buys at the market price. -amount of a good that a seller is willing to sell at a particular price.

amount of a good that a person is willing to buy at each price.

Which of the following would lead to a slowdown in economic growth? -an increase in capital accumulation in the economy -reduced inefficiency in production -an increase in the dependency ratio -an increase in human capital

an increase in the dependency ratio

The neutral interest rate occurs when the economy is: -experiencing very high inflation. -below its potential. -at its potential. -above its potential.

at its potential.

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is attempting to decide how many more episodes to watch. Kathleen should continue watching episodes as long as the marginal: -benefit of watching another episode is less than the marginal cost. -benefit of watching another episode exceeds the marginal cost. -benefit of watching another episode is positive. -cost of watching another episode is positive.

benefit of watching another episode exceeds the marginal cost.

Diane Jacobs is a student studying economics and currently working on her class schedule for next semester. She considers the fact that more and more data is available every day and that data interpretation skills are learned by taking additional economics courses in her course selection. This acknowledgment highlights the dependencies that exist: -between markets. -between her own individual choices. -between people or businesses in the same market. -through time.

between markets

Argentina and Chile both produce copper and timber. If Chile produces copper much more efficiently than Argentina and timber slightly more efficiently than Argentina, _____ can benefit from trading copper and timber with each other. -only Argentina -only Chile -neither country -both countries

both countries

Russia and Kazakhstan both produce horses and oil. If Kazakhstan is much more efficient than Russia in the production of horses and slightly more efficient than Russia in the production of oil, _____ can benefit from trading horses and oil with each other. -only Kazakhstan -both countries -only Russia -neither country

both countries

The key to using the cost-benefit principle is to think about _____ aspects of a decision. -both financial and nonfinancial -only financial -only nonfinancial -neither financial nor nonfinancial

both financial and nonfinancial

The cost-benefit principle states that _____ are the incentives that shape decisions. -opportunity costs -framing effects -incomes -costs and benefits

costs and benefits

Aggregate expenditure is the sum of: -consumption, planned investment, government expenditure, and net exports. -consumption, exports, and planned investment. -consumption, planned investment, imports, and taxes. -planned Investment, government expenditure, exports, and imports.consumption, planned investment, government expenditure, and net exports.

consumption, planned investment, government expenditure, and net exports.

Property rights refer to: -control over a tangible or intangible resource. -the number of properties owned by an entrepreneur. -the time it takes to start a business venture. -patents owned by a business.

control over a tangible or intangible resource.

If Bishan wants to capitalize on comparative advantage in his life, then he should: -compare his preferences to those of others and trade with those who like things he does not like. -do more of what he is relatively good at and then trade for other things. -do more of what he has an absolute advantage in and trade for other things. -produce either goods or services but not both.

do more of what he is relatively good at and then trade for other things.

Equilibrium in the loanable funds market determines the: -equilibrium real interest rate. -point where there is excess demand for loanable funds. -amount of inventories in an economy. -up-front cost of capital.

equilibrium real interest rate.

As a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will: -fall, due to a fall in demand. -rise, due to a rise in demand. -rise, due to a fall in supply. -fall, due to a rise in supply.

fall, due to a rise in supply

The interdependence principle: -is the same as the cost-benefit principle. -implies that buyers decisions are affected by many factors other than the price of an item. -refers to the marginal benefit of consuming additional units of an item. -implies that consumers depend on each other to make purchase decisions in the market.

implies that buyers decisions are affected by many factors other than the price of an item.

Jonathan Mendez is deciding whether to study for his economics exam at a café down the street or go to a concert a few cities over. The time spent commuting to the concert is ____ in his opportunity cost calculations and represents a _____ cost. -included; nonfinancial -included; financial -not included; sunk -not included; financial

included; nonfinancial

The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle. -opportunity cost -marginal -cost-benefit -interdependence

interdependence

Countries benefit from trade by exporting goods in which their opportunity costs are relatively _____ and importing goods in which their opportunity costs are relatively _____. -low; low -low; high -high; low -high; high

low; high

Which of the following countries enjoyed significant catch-up economic growth in the second half of the twentieth century? -Spain -Argentina -South Korea -United States

south korea

The __________ suggests, decisions about quantities are best made incrementally. -interdependence principle -opportunity cost principle -marginal principle -cost-benefit principle

marginal principle

A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you: -multiply the individual supply of one of the suppliers by ten. -take the individual supply of one supplier. -take one-tenth of the individual supply of each supplier and add it up. -find the average quantity produced by the ten suppliers.

multiply the individual supply of one of the suppliers by ten.

The real interest rate is the: -nominal interest rate minus the rate of inflation. -economic growth rate adjusted for the effects of inflation. -percentage of the nominal interest that is inflation. -nominal interest rate plus the rate of inflation.

nominal interest rate minus the rate of inflation.

If you see that inflation between last year and this year is 3%, this means that: -the prices of each and every good and service went up by 3%. -economic growth is also 3%. -on average, prices went up across the economy by 3%. -the consumer price index rose by 3% more than the producer price index.

on average, prices went up across the economy by 3%.

When you calculate marginal costs, they should include: -only variable costs. -only fixed costs. -both the variable and fixed costs. -the market price of the product.

only variable costs

Decisions should reflect the _____ costs, rather than just the _____ costs. -nonfinancial; financial -opportunity; financial -financial; marginal -opportunity; nonfinancial

opportunity; financial

Which of the following encourages the development of new ideas and inventions? -capital accumulation -patents -negative economic growth -government control of resources

patents

A prediction market is a market where: -payoffs are linked to whether an uncertain event occurs. -signals lead to future actions. -information is disaggregated. -information is missing to make a good decision.

payoffs are linked to whether an uncertain event occurs

The opportunity costs of attending college include the: -cost of clothes to wear at school. -cost of room and board. -effort and hard work. -potential income that could be earned working.

potential income that could be earned working.

An income level below which a family is defined to be in poverty is known as the: -relative poverty measure. -bottom quintile. -needs-based indicator. -poverty line.

poverty line

When plotting a demand curve -price is on the vertical axis. -price is on the horizontal axis. -quantity demanded is on the vertical axis. -quantity supplied is on the vertical axis.

price is on the vertical axis.

The producer surplus on a unit sold equals: -price minus marginal cost. -1/2 (price times quantity minus marginal cost). -marginal benefit minus price. -(price minus marginal cost) multiplied by (1/2 quantity sold)

price minus marginal cost

A constant returns to scale production function means that if all inputs are increased by 75%, this should lead to output: -falling by more than 75%. -rising by 75%. -rising by more than 75%. -falling by less than 75%.

rising by 75%.

Which of the following is a social insurance program in the United States? -Social Security -housing assistance -Medicaid -earned income tax credit

social security

An export is a good or service: -purchased from a domestic seller. -sold to a foreign buyer. -sold to a domestic buyer. -purchased from a foreign seller.

sold to a foreign buyer

Which of the following is LEAST likely to be traded internationally? -sporting equipment -sports trading cards -sports arenas -sports broadcasts

sports arena

Technological advancement is NOT represented by which of the following? -the adoption of an existing technology by new firms -the creation of new apps designed to enhance efficiency and reduce wastage in production lines -the invention of the light bulb -the invention of robotic meal preparation

the adoption of an existing technology by new firms

Which of the following is an example of a trade cost associated with a U.S. citizen importing a sweater produced in India? -the cost of the tariff on imported sweaters from India -the cost of the wool used in producing the sweater -the final price of the sweater -the cost of the labor used in producing the sweater

the cost of the tariff on imported sweaters from India

Which principle helps buyers and sellers make decisions about whether to trade? -the equity principle -the law of surplus -the law of diminishing returns -the cost-benefit principle

the cost-benefit principle

Paint and paintbrushes are complements. If the price of paint rises, we can expect: -the demand for paintbrushes to increase. -the demand for paintbrushes to decrease. -the quantity demanded of paintbrushes to remain unchanged. -the quantity demanded of paint to increase.

the demand for paintbrushes to decrease.

The marginal benefit minus the marginal cost equals: -the consumer surplus minus the producer surplus. -the consumer surplus. -the economic surplus. -the efficiency balance.

the economic surplus

When plotting a supply curve -the price goes on the horizontal axis. -the quantity demanded goes on the vertical axis. -the quantity supplied goes on the vertical axis. -the quantity supplied goes on the horizontal axis.

the quantity supplied goes on the horizontal axis.