MACRO Final

A decrease in interest rates caused by a change in the price level would cause a(n): 1)Increase in the quantity of real output demanded (or movement down along AD) 2)Decrease in the quantity of real output demanded (or movement up along AD) 3)Decrease (or shift left) in aggregate demand 4)Increase (or shift right) in aggregate demand

1

A trough in the business cycle occurs when: 1)Employment and output reach their lowest levels 2)The inflation rate is at its lowest level 3)The natural rate of unemployment is at a minimum point 4)Cyclical unemployment is at a minimum point

1

According to the law of demand, an increase in the price of baseball trading cards causes: 1)people to buy fewer trading cards. 2)people to buy more trading cards. 3)the scarcity of baseball trading cards to increase. 4)baseball trading cards to grow in abundance.

1

Aggregate demand decreases and real output falls but the price level remains the same. Which of the following factors most likely contributes to downward price inflexibility in the immediate short run? 1)Menu costs 2)The multiplier effect 3)The wealth effect 4)Business taxes

1

Cyclical unemployment results from 1)a deficiency of spending on goods and services. 2)the decreasing relative importance of goods and the increasing relative importance of services in the U.S. economy. 3)technological change. 4)the everyday dynamics of a free labor market, with workers voluntarily changing jobs.

1

Fluctuations in an economy's output over short periods of time are called; 1)business cycles. 2)recessions. 3)total product oscillations. 4)expansions

1

From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student's thinking the marginal: 1)Cost of going to the movies is less than the marginal benefit of going to the movies 2)Benefit of studying are greater than the marginal benefit of going to the movies 3)Cost of going to the movies is greater than the marginal cost of studying 4)Benefit of studying is greater than the marginal cost of studying

1

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is 1)300 2)100. 3)200. 4)240.

1

In 1975, McDonald's introduced its Egg McMuffin breakfast sandwich, which remains popular and profitable today. This longevity illustrates the idea of: 1)consumer sovereignty. 2)specialization. 3)opportunity cost. 4)upsloping supply.

1

In a graph with "crop yield" on the vertical axis and "rainfall" on the horizontal axis, the vertical intercept refers to the 1)amount of crop yield when "rainfall" is zero. 2)amount of rainfall when "crop yield" is zero. 3)total crop yield during a given period of time. 4)steepness or flatness of the graph.

1

In the factor market: 1)households supply factors of production to business and are paid by business for doing so. 2)government produces goods and services and supplies them to households and business. 3)business produces goods and services and sells them to households and government. 4)households supply factors of production to business and are paid by government for doing so.

1

Official unemployment statistics 1)understate unemployment because discouraged workers are not counted as unemployed. 2)overstate unemployment because workers who are involuntarily working part time are counted as being employed. 3)include cyclical and structural unemployment but not frictional unemployment. 4)understate unemployment because individuals receiving unemployment compensation are counted as employed.

1

Studies have shown that smoking cigarettes can cause heart disease. Assume this is true, and favorable weather has increased the tobacco harvest in North Carolina. In the market for cigarettes, these two developments would 1)decrease demand and increase supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes. 2)increase demand and increase supply resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cigarettes. 3)decrease demand and increase supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of cigarettes. 4)decrease demand and decrease supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of cigarettes.

1

Suppose that in 2007, Ford sold 500,000 Mustangs at an average price of $18,800 per car; in 2008, 600,000 Mustangs were sold at an average price of $19,500 per car. These statements 1)suggest that the demand for Mustangs increased between 2007 and 2008. 2)constitute an exception to the law of demand in that they suggest an upsloping demand curve. 3)suggest that the supply of Mustangs must have increased between 2007 and 2008. 4)suggest that the demand for Mustangs decreased between 2007 and 2008.

1

Suppose that in each of four successive years, producers sell more of their product and at lower prices. This could be explained 1) in terms of a stable demand curve and increasing supply. 2) by small annual increases in supply accompanied by large annual increases in demand. 3) as an exception to the law of supply. 4) in terms of a stable supply curve and increasing demand.

1

The French term "laissez-faire" means 1)"let it be." 2)"circular flow." 3)"there is no free lunch." 4)"public ownership."

1

The economizing problem for individuals is a consequence of the fact that: 1)Economic wants are greater than economic means or incomes 2)Economic means or incomes are greater than economic wants 3)Positive economics is more important than normative economics 4)Normative economics is more important than positive economics

1

The more the current price exceeds the equilibrium price, the 1)greater the resulting surplus will be. 2)greater the resulting shortage will be. 3)smaller the resulting surplus will be. 4)smaller the resulting shortage will be.

1

The role of an assumption in an economic theory is to: 1)Simplify the complex reality 2)Cover special cases 3)Add realism 4)Prove the theory

1

Using the Pie Chart from the class presentation, determine which of the following is the smallest portion of the market basket of goods that makes up the CPI 1)apparel 2)transportation 3)food and beverages 4)housing

1

Which of the following cannot be determined by using a production possibility table? 1)What combination of outputs is best 2)How much less of one output must be produced if more of another output is produced 3)How much output can be produced from a given level of inputs 4)What combination of outputs can be produced

1

Which of the following is a distinguishing feature of laissez-faire capitalism? 1)Minimal government intervention. 2)Public ownership of all capital. 3)A circular flow of goods, resources, and money. 4)Central planning.

1

Which of the following is likely to be a demand shock? 1)Consumers become worried about job loss and buy fewer goods and services than expected. 2)Hurricane Harry knocks out oil drilling platforms in the Gulf of Mexico. 3)The federal government unexpectedly requires automobile producers to raise fuel efficiency standards. 4)Floods in the Midwest destroy crops.

1

Which of the following is likely to be a supply shock? 1)A dramatic increase in energy prices increases production costs for firms in the economy. 2)A surprise tax rebate from the government gives people more money to spend. 3)Government increases spending on education. 4)A surge in consumer optimism prompts increased buying of goods and services.

1

Which of the following is not a typical characteristic of a market system? 1)government ownership of most property resources 2)private property 3)competition in product and resource markets 4)freedom of enterprise

1

Which of the following statements is true about productive and allocative efficiency? 1)Realizing allocative efficiency implies that productive efficiency has been realized. 2)Productive efficiency and allocative efficiency can only occur together; neither can occur without the other. 3)Productive efficiency can only occur if there is also allocative efficiency. 4)Society can achieve either productive efficiency or allocative efficiency, but not both simultaneously

1

Which of the following would decrease the supply of energy drinks? 1)a decrease in the expected future price of energy drinks 2)a decrease in the price of an input used to produce energy drinks 3)an increase in consumer income (assuming that energy drinks are normal goods) 4)a decrease in the number of firms that produce energy drinks

1

A decrease in the demand for eggs due to changes in consumer tastes, accompanied by a decrease in the supply of eggs as a result of an outbreak of Avian flu, will result in 1)a decrease in the equilibrium quantity of eggs and no change in the equilibrium price. 2)a decrease in the equilibrium quantity of eggs; the equilibrium price may increase or decrease. 3)a decrease in the equilibrium price of eggs and no change in the equilibrium quantity. 4)a decrease in the equilibrium price of eggs; the equilibrium quantity may increase or decrease.

2

An economic system 1)requires some sort of centralized authority (such as government) to coordinate economic activity. 2)is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem. 3)is a plan or scheme that allows a firm to make money at some other firm's expense. 4)requires a grouping of private markets linked to one another.

2

Answer the question on the basis of the following information about the cost ratios for two products—fish (F) and chicken (C)—in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C Refer to the given information. If these two nations specialize based on comparative advantage: 1)Singsong will produce chicken and Harmony will catch fish. 2)Harmony will produce chicken and Singsong will catch fish. 3)Harmony will both produce chicken and catch fish. 4)Singsong will both produce chicken and catch fish.

2

Command systems are also known as 1)laissez-faire capitalism. 2)communism. 3)market systems. 4)pure capitalism.

2

Countries engaged in international trade specialize in production based on: 1)relative inflation rates. 2)comparative advantage. 3)relative levels of GDP. 4)relative exchange rates.

2

Economics is the study of the ________ people, businesses and societies make to attain their desired objectives, given their ________ resources. 1)decisions; household 2)choices; scarce 3)income; available 4)purchases; unlimited

2

Electric car enthusiasts want to buy more electric cars at a lower price. All of the following events would have this effect except 1)an increase in the number of manufacturers of electric cars. 2)an increase in the price of gasoline. 3)a decrease in the price of lithium, which is used in the electric car batteries. 4)technological advancement in the production of electric car batteries.

2

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the: 1)Marginal cost of waiting is less than the marginal benefit of being served 2)Marginal cost of waiting is greater than the marginal benefit of being served 3)Management is making an assumption that other things are equal 4)Management is exhibiting irrational behavior by not maximizing profits

2

Identifying the relationship between money and prices requires the use of 1)normative economics 2)a positive economics 3)subjective economics 4)scarcity

2

If U.S. output increases by 3.3 percent, we can infer that the United States experiences: 1)a depression. 2)an expansion. 3)a recession. 4)a trough.

2

If two variables are directly related, the relationship will have a graph that 1)is a straight line. 2)is an upward-sloping line. 3) is horizontal. 4)may either be upward-sloping or downward-sloping.

2

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are 1)complementary goods, and the higher price for oil decreased the supply of natural gas. 2)substitute goods, and the higher price for oil increased the demand for natural gas. 3)substitute goods, and the higher price for oil decreased the supply of natural gas. 4)complementary goods, and the higher price for oil increased the demand for natural gas.

2

In a competitive market economy, firms select the least-cost production technique because: 1)this will prevent new firms from entering the industry. 2)to do so will maximize the firms' profits. 3)such choices will result in full employment of available resources. 4)"dollar voting" by consumers mandates such a choice.

2

In a graph showing the relationship between variables X and Y, ceteris paribus means that 1)X and Y are independent. 2)other components are assumed constant. 3)X is positively related to Y. 4) X is inversely related to Y.

2

In order for mutually beneficial trade to occur between two otherwise isolated nations: 1)each nation must be able to produce at least one good absolutely cheaper than the other. 2)each nation must be able to produce at least one good relatively cheaper than the other. 3)each nation must face constant costs in the production of the good it exports. 4)one nation's production must be labor-intensive while the other nation's production is capital-intensive.

2

Lauren makes $150 a day as a bank clerk. She takes two days off work without pay, to fly to another city to attend the concert of her favorite band. The cost of transportation and lodging for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Lauren's decision to attend the concert is: 1)$300 2)$600 3)$450 4)$250

2

Market economies are based upon: 1)government planning and individual good will toward others. 2)private property and individual planning. 3)government planning and individual self-interest. 4)private property and individual good will toward others.

2

Per capita output would be certain to increase if: 1)both output and population increase. 2)output increases and population decreases. 3)both output and population decrease. 4)output decreases and population increases.

2

Savings are generated whenever: 1)consumption exceeds output. 2)current output exceeds consumption. 3)prices are rising. 4)current spending exceeds current income.

2

Shocks to the economy occur: 1)because most economic behavior is unpredictable. 2)when expectations are unmet. whenever the price level changes. 3)whenever government 4)implements fiscal or monetary policy.

2

Suppose that college tuition is higher this year than last year and that more students are enrolled in college this year than last year. Based on this information, we can best conclude that: 1)The law of demand is invalid. 2)despite the increase in price, enrollment rose due to some other factor changing. 3)the demand for a college education is positively sloped. 4)this situation has nothing to do with the law of demand.

2

The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power. 1)substitution 2)income 3)scarcity 4)ceteris paribus

2

The equity argument for government intervention in markets relates most likely to which of the fundamental economic questions? 1)How will the economy accommodate growth? 2)For whom to produce 3)How to produce. 4)What to produce.

2

The market system's answer to the fundamental question "How will the system promote progress?" is essentially: 1)Through government-funded research programs." 2)"Through the profit potential that encourages development of new technology." 3)"Through training and retraining programs." 4)"Through redistribution of income to promote greater equality."

2

The opportunity cost of constructing a new public highway is the: 1)Money cost of hiring contractors and construction workers for the new highway 2)Value of other goods and services that are sacrificed in order to construct the new highway 3)Value of shorter driving times and distances when the new highway is completed 4)Expected cost of constructing the new highway in a future year

2

The purpose of the ceteris paribus assumption used in economic analysis is to: 1)Make sure that all relevant factors are considered 2)Focus on the effect of a single factor on a certain variable 3)Avoid making normative statements 4)Distinguish macroeconomics from microeconomics

2

The slope of a graph that shows a direct relationship is 1)either zero or infinite. 2)always positive. 3)either positive or negative. 4)possibly zero.

2

To engage in economic reasoning, one must compare: 1)marginal cost and total benefit. 2)incremental costs and benefits. 3)sunk cost and marginal cost. 4)total cost and total benefit

2

What is the best economic explanation for why a person would drop out of college to take a job or start a business? 1)he has a good idea for starting a business 2)the expected future benefits from starting a business now are greater than the costs 3)the opportunity cost of starting a business is high now, but will be low later in life 4)he has to pay a higher tuition to attend college

2

What visual aid tool would be ideal for communicating how a student apportions his time over the course of a typical weekday? 1)A bar chart 2)A pie chart 3)A histogram 4)an x-y graph

2

Which of the following is a positive economic statement? 1)The government should ban diesel engines in automobiles. 2)Due to a decrease in state funding, university tuition has risen. 3)Foreign citizens should not be allowed to work without a work visa. 4)People should use public transportation more often.

2

Which of the following is one of the Five Fundamental Questions? 1)Who should appoint the head of the central bank? 2)What goods and services will be produced? 3)How much should society save? 4)Which products will be in scarce supply and which in excess supply?

2

A decrease in aggregate supply means: 1)Both the real domestic output and the price level would decrease 2)The real domestic output would increase and rises in the price level would become smaller 3)The real domestic output would decrease and the price level would rise 4)Both the real domestic output and rises in the price level would become greater

3

A major objection to creating a legal market for human organs is that such a market would: 1)encourage healthier lifestyles to maintain saleable organs. 2)increase the present shortage of organs. 3)commercialize human body parts and thus diminish the special nature of human life. 4)create a substantial surplus of unused organs.

3

A market economy: 1)requires government to set prices. 2)allocates according to need. 3)relies on the invisible hand to coordinate supply and demand. 4)distributes property rights.

3

According to a recent study, "Stricter college alcohol policies, such as raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana." On the basis of this information, how would you describe alcohol and marijuana? 1)jointly produced goods 2)substitute goods 3)complementary goods 4)unrelated goods

3

According to the article on Blackboard, which of the following is not listed as a potential cause of the rising prices faced by Americans? 1)Congested ports 2)Rising energy prices 3)Generous unemployment insurance 4)Taxes on imports

3

Assume that a consumer has a given budget or income of $12, and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. Refer to the information given above. If the consumer decides to buy 4 apples, how many bananas can she also buy with the remainder of her budget? 1)4 bananas 2)10 bananas 3)8 bananas 4)6 bananas

3

Assume that a consumer has a given budget or income of $18, and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. Refer to the information given above. If the consumer spent all of her budget on just apples or just bananas, how many apples or bananas maximum would she be able to buy? 1)8 apples or 16 bananas 2)8 apples or 12 bananas 3)12 apples or 24 bananas 4)16 apples or 12 bananas

3

Consumer surplus arises in a market because: 1)At the current market price, quantity supplied is greater than quantity demanded 2)At the current market price, quantity demanded is greater than quantity supplied 3)The market price is below what some consumers are willing to pay for the product 4)The market price is higher than what some consumers are willing to pay for the product

3

Demand-pull inflation 1)occurs when prices of resources rise, pushing up costs and the price level. 2)occurs only when the economy has reached its absolute production capacity. 3)occurs when total spending exceeds the economy's ability to provide output at the existing price level. 4)is also called cost-push inflation.

3

Dr. Homer Simpson, an economics professor, decided to take a year off from teaching to run a commercial fishing boat in Alaska. That year, Professor Simpson would be officially counted as 1)frictionally unemployed. 2)structurally unemployed. 3)employed. 4)not in the labor force.

3

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inflation premium is 1)5 percent. 2)8 percent. 3)3 percent. 4)2 percent

3

If the price index in an certain economy rises in three consecutive years from 100 to 120 to 140, then such an economy is experiencing 1)constant annual inflation 2)appreciating inflation 3)disinflation 4)deflation

3

Mary buys cell-phone services from a company that charges $30 per month. For that $30 she is allowed 600 minutes of free calls and then pays 25 cents per minute for any calls above 600 minutes. Mary has used 300 minutes this month so far. What is her marginal cost per minute of making two more calls lasting 10 minutes each? 1)25 cents 2)$2.50 3)$0 4)4 cents

3

One obvious manifestation of globalization according to the text was: 1)decreasing global productivity. 2)immigrants being seamlessly exchanged between countries. 3)capital being easily moved around the world. 4)foreign goods being traded between domestic consumers.

3

Suppose you are informed that the United States economy grew between 2018 and 2019. Which of the following options most accurately describes this statement? 1)The PPC increased between 2018 and 2019. 2)There were less recessions in 2019 in comparison to 2018. 3)Output grew between 2018 and 2019. 4)More people were employed between 2018 and 2019.

3

The determinants of aggregate demand: 1)demonstrate why real output and the price level are inversely related. 2)include input prices and resource productivity. 3)explain shifts in the aggregate demand curve. 4)explain why the aggregate demand curve is downsloping.

3

The fallacy of composition posits that 1)an economy may not be on its PPC frontier in the short-run 2)being good for the whole doesn't necessarily make something good for the part 3)being good for part of the whole doesn't make something necessarily good for the whole 4)shocks and business cycle fluctuations are inevitable

3

The foreign exchange rate is the rate at which: 1)Immigrants are exchanged between countries. 2)taxes are imposed on foreign imports. 3)one country's currency can be traded for another country's currency. 4)foreign good are traded between domestic consumers.

3

The marginal benefit from consuming another unit of a good: 1)must equal the marginal cost or the unit will not be consumed. 2)must be less than the marginal cost or the unit will not be consumed. 3)equals the increase in total benefits from consuming the unit. 4)equals the total benefit obtained from the consumption of all prior units.

3

The natural rate of unemployment is 1)found by dividing total unemployment by the size of the labor force. 2)higher than the full-employment rate of unemployment. 3)that rate of unemployment occurring when the economy is at its potential output. lower than the full-employment rate of unemployment.

3

The point at which the supply curve and the demand curve intersect is called: 1)equilibrium, because quantity supplied exceeds quantity demanded so there is a surplus. 2)equilibrium, because quantity demanded exceeds quantity supplied so there is a shortage. 3)equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change. 4)irrelevant, because real-world prices never reach this point.

3

The study of individual choices is a focus in 1)macroeconomics 2)positive economics 3)microeconomics 4)Normative economics

3

Three issues central to macroeconomics are 1)output growth, discovery of new resources and inflation 2)output growth, recessions and unemployment 3)output growth, unemployment and inflation 4)money, prices and income distribution

3

When economists say that people act rationally in their self-interest, they mean that individuals 1)are usually impulsive and unpredictable. 2)generally disregard the interests of others. 3)look for and pursue opportunities to increase their utility. 4)are mainly creatures of habit.

3

Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good) to increase? 1)unusually good weather that results in a bumper crop of barley 2)an increase in consumer income 3)a decrease in consumer income 4)a drought that sharply reduces barley output

3

A basic difference between a bar chat and a histogram is that 1)None of the above. There is no difference between histograms and bar charts. 2)a histogram provides visualization for codes while a bar chart does same for data. 3)a histogram is plotted for one variable while a bar chart can be plotted for up to three variables 4)a histogram shows the distribution of a variable while a bar chart compares a variable among different groups

4

A decrease in aggregate demand in the short run will reduce: 1)The real domestic output and have no effect on the price level 2)The price level and increase the real domestic output 3)The price level and have no effect on real domestic output 4)Both real output and the price level

4

A lender need not be penalized by inflation if the 1)short-term rate of inflation is less than the long-term rate of inflation. 2)long-term rate of inflation is less than the short-term rate of inflation. 3)inflation is unanticipated by both borrower and lender. 4)lender correctly anticipates inflation and increases the nominal interest rate accordingly.

4

According to the Bureau of Labor Statistics, to be officially unemployed a person must 1)be 21 years of age or older. 2)have lost a job. 3)be waiting to be called back from a layoff. 4)be in the labor force.

4

Alexandra has determined that studying an hour for her economics quiz will improve her grade on the quiz from 75 to 100. She also determines that this improvement is worth $20. To study for an hour for her economics quiz, however, she will have to work one fewer hour at her part-time job. Alexandra should: 1)study for the quiz only if her hourly wage rate is exactly $20. 2)study for the quiz as long as her hourly wage rate is more than $20. 3)not study for the quiz because earning a higher grade cannot have a dollar value. 4)study for the quiz as long as her hourly wage rate is less than $20.

4

At the economy's full employment level, 1)there is only a relatively small amount of cyclical unemployment. 2)only structural unemployment exists. 3)only frictional unemployment exists. 4)the economy achieves its potential output.

4

Banks and other financial institutions 1)often hinder economic activity by creating barriers between household savers and firms wanting to invest in capital goods. 2)lack relevance in the modern economy because they focus primarily on financial assets and generally do not engage in real investment activity. 3)are the primary investors in equipment, factories, and other capital goods. 4)promote economic growth by helping to direct household savings to businesses that want to invest.

4

Differences in production efficiencies among nations in producing a particular good result from: 1)different amounts of skilled labor. 2)different endowments of fertile soil. 3)different levels of technological knowledge. 4)all of these

4

Fred's nominal income rises from $10,000 to $12,000 and the consumer price index rises from 100 to 105. The percentage difference between His increased earning and the higher cost of living is about 1)-20 percent. 2)-2 percent 4)15 percent. 5)25 percent.

4

If A decreases, then B will also decrease. The graph relating the two variables A and B is 1)vertical. 2)downward-sloping. 3)horizontal. 4)upward-sloping.

4

If an economy produces its most wanted goods but uses outdated production methods, it is 1)achieving both productive and allocative efficiency. 2)engaged in roundabout production. 3)achieving productive efficiency but not allocative efficiency. 4)not achieving productive efficiency

4

If an economy promotes a policy of immigration, but does not encourage saving, which of the folllowing is likely to result? 1)an increase in output and output per capita 2)a decrease in output and output per capita 3)a decrease in output, but an increase in output per capita 4)an increase in output, but a decrease in output per capita

4

If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket, then 1)changes in the CPI are unrelated to the true rate of inflation. 2)changes in the CPI understate the true rate of inflation. 3)changes in the CPI accurately reflect the true rate of inflation. 4)changes in the CPI overstate the true rate of inflation.

4

If the dollar appreciates in value relative to foreign currencies: 1)Aggregate demand increases because C increases 2)Aggregate demand decreases because C decreases 3)Aggregate demand increases because net exports increase 4)Aggregate demand decreases because net exports decrease

4

If the price of steel rises, the law of supply predicts that, other things constant, the: 1)supply of steel will decrease. 2)supply of steel will increase. 3)quantity supplied of steel will decrease. 4)quantity supplied of steel will increase.

4

If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then the 1)frictional unemployment rate is 5 percent. 2)natural rate of unemployment will eventually increase. 3)cyclical unemployment rate and the frictional unemployment rate together are 5 percent. 4)cyclical unemployment rate is 4 percent.

4

If there is a shortage of product X, and the price is free to change, 1)the supply curve will shift to the left and the demand curve to the right, eliminating the shortage. 2)the price of the product will decline. 3)fewer resources will be allocated to the production of this good. 4)the price of the product will rise.

4

In the former USSR, state planners decided what was to be produced. They passed orders down to factories, allocating raw materials, workers, and other factors of production to them. This is an example of (a): 1)market economy. 2)government as a referee. 3)corporation. 4)command economy.

4

In the market for a particular pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. The actual price that each has to pay for a pair of shoes is $65. What is the combined amount of consumer surplus of Jena and Jane? 1)$10 2)$130 3)$215 4)$30

4

Inflation initiated by increases in wages or other resource prices is labeled 1)demand-push inflation. 2)demand-pull inflation. 3)cost-pull inflation. 4)cost-push inflation.

4

Inflation means that 1)all prices are rising at approximately the same rate. 2)all prices are rising, but at different rates. 3)real incomes are rising. 4)prices on average are rising, although some particular prices may be falling.

4

The consumer price index was 177.1 in 2001 and 179.9 in 2002. Therefore, the rate of inflation in 2002 was about 1)4.1 percent. 2)3.4 percent. 3)2.8 percent. 4)1.6 percent

4

The most efficient combination of resources in producing a given output is the combination that 1)conserves most on the use of labor. 2)uses a fixed quantity of all resources. 3)comes closest to using the same quantities of land, labor, capital, and entrepreneurial ability. 4)minimizes the cost for each unit of output

4

The slope of a graph with "income" on the horizontal axis and "saving" on the vertical axis becomes steeper. This means that 1)saving has become less responsive to decreases in income. 2)income has become more responsive to increases in saving. 3)saving has become less responsive to increases in income. 4)saving has become more responsive to increases in income.

4

The statement "government should provide affordable health care coverage for every member of society" is 1)a statement that everyone agrees with 2)a statement that everyone disagrees with 3)a positive statement 4)a normative statement

4

The term "recession" describes a situation where 1)Inflation rates exceed normal levels. 2)an economy's ability to produce is destroyed. 3)government takes a less active role in economic matters. 4)output and living standards decline

4

The upward slope of the short-run aggregate supply curve is based on the assumption that: 1)Wages and other resource prices do respond to price level changes 2)Prices of inputs flexible while prices of outputs are fixed 3)Prices of output do not respond to price level changes 4)Wages and other resource prices do not respond to price level changes

4

When governments intervene in markets based on equity considerations, which of the following is likely to occur? 1)Externalities due to the existence of public goods 2)Monopolies due to increasing returns 3)Market failure due to information failure 4)Deadweight loss due to efficiency loss

4

Which of the following is best categorized as a macroeconomic issue? 1)The effect of a drought on the price of corn. 2)The choices a student makes in selecting college courses. 3)The decision by Apple to produce fewer Mac computers. 4)The effect of an increase in federal spending on the unemployment rate.

4

Which of the following will move the supply curve for housing in Florida, a popular retirement state, to the left? 1)Increasing the number of people who are retiring 2)Increase in the cost of insurance 3)Higher real-estate prices 4)Higher construction costs

4