All eco 202 quiz questions

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that a. S = I + NX. b. S = I. c. I = S + NX. d. S = 0.

A

If China decides to trade with France, we know that a. France and China can both benefit. b. France will benefit, but trade with a less developed country could not benefit China. c. it will not benefit either country because their cultural differences are too vast. d. it will not benefit France because workers in China are more productive.

A

If the Apple corporation sells a bond it is a. borrowing directly from the public. b. selling shares of ownership directly to the public. c. selling shares of ownership indirectly to the public. d. borrowing indirectly from the public.

A

If the Fed raised the reserve requirement, the demand for reserves would a. increase, so the federal funds rate would rise. b. decrease, so the federal funds rate would fall. c. increase, so the federal funds rate would fall. d. decrease, so the federal funds rate would rise

A

If the reserve requirement is 10 percent, which of the following pairs of changes would both allow a bank to lend out an additional $10,000? a. The Fed buys a $10,000 bond from the bank or the Fed lends the bank $10,000. b. The Fed buys a $10,000 bond from the bank or someone deposits $10,000 in the bank. c. The Fed sells a $10,000 bond to the bank or the Fed lends the bank $10,000. d. The Fed sells a $10,000 bond to the bank or someone deposits $10,000 in the bank.

A

Money is a. the most liquid asset but an imperfect store of value. b. the most liquid asset and a perfect store of value. c. not the most liquid asset but a perfect store of value. d. neither the most liquid asset and nor a perfect store of value.

A

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see a. a decrease in the demand for energy drinks. b. no change in the demand for energy drinks. c. an increase in the demand for energy drinks. d. a decrease in the supply of energy drinks.

A

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 20 bushels of corn and 800 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by a. 380 bushels of corn and 100 bushels of oats. b. 800 bushels of corn and 100 bushels of oats. c. 380 bushels of corn and 1000 bushels of oats. d. 100 bushels of corn and 380 bushels of oats.

A

The imposition of a binding price ceiling on a market causes a. quantity demanded to be greater than quantity supplied. b. quantity demanded to be less than quantity supplied. c. quantity demanded to be equal to quantity supplied. d. the price of the good to be greater than its equilibrium price.

A

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease total revenue? a. 0.8 b. 1 c. 2.5 d. 3.3

A

Which of the following do economists not generally regard as a legitimate reason for the government to intervene in a market? a. To protect an industry from foreign competition b. To promote efficiency c. To enforce property rights d. To promote equality

A

Which of the following increases when the Fed makes open-market sales? a. Neither currency nor reserves b. Reserves but not currency c. Currency but not reserves d. Currency and reserves

A

Which of the following would likely be studied by a microeconomist rather than a macroeconomist? a. The impact of minimum-wage laws on employment in the fast food industry b. The effect of a national healthcare program on the nation's unemployment rate c. A comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth d. The effect of a war on government spending

A

A price floor is a. a source of efficiency in a market. b. a legal minimum on the price at which a good can be sold. c. often imposed when buyers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. d. a legal maximum on the price at which a good can be sold.

B

A shortage results when a a. binding price ceiling is removed from a market. b. binding price ceiling is imposed on a market. c. nonbinding price ceiling is imposed on a market. d. nonbinding price ceiling is removed from a market.

B

Analysis of data on workers and those looking for work is conducted by economists at the a. Department of the Treasury. b. Department of Labor. c. Office of Management and Budget. d. Congressional Budget Office.

B

Economists sometimes give conflicting advice because a. economics is more of a belief system than a science. b. economists have different values and scientific judgments. c. economists acting as scientists do not like to agree with economists acting as policy advisers. d. graduate students in economics are encouraged to argue with each other.

B

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the a. closer to the vertical axis the demand curve will sit. b. flatter the demand curve will be. c. steeper the demand curve will be. d. further to the right the demand curve will sit.

B

Expenditures on a nation's domestic production a. could be less than, equal to, or greater than its domestic production. b. are equal to its domestic production. c. are greater than its domestic production. d. are less than its domestic production.

B

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then a. Oklahoma should produce just enough corn to satisfy its own residents' demands. b. Iowa has a comparative advantage in the production of corn. c. Iowa has an absolute advantage in the production of corn. d. Iowa should import corn from Oklahoma.

B

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily, a. quantities purchased by a typical urban household. b. market prices. c. profits from producing goods and services. d. values of goods and services based on surveys of consumers.

B

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that a. in order to consume beyond its PPF, the United States should produce a moderate quantity of pork and import the remainder of what it requires from Mexico. b. in order to consume beyond its PPF, the United States should produce more pork than what it requires and export some of it to Mexico. c. Mexico has nothing to gain from importing United States pork. d. in order to consume beyond its PPF, the United States should refrain altogether from producing pork and import all of what it requires from Mexico.

B

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits? a. $4,995 billion b. $4,937.5 billion c. $5,062.5 billion d. $5,000 billion

B

Suppose the price of a bag of frozen chicken nuggets decreases from $6.60 to $6.50 and, as a result, the quantity of bags demanded increases from 600 to 620. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is a. 0.02. b. 2.15. c. 0.03. d. 0.47.

B

U.S. GDP and U.S. GNP are related as follows: a. GNP = GDP + Income earned by foreigners in the U.S. − Income earned by U.S. citizens abroad. b. GNP = GDP − Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad. c. GNP = GDP − Value of exported goods + Value of imported goods. d. GNP = GDP + Value of exported goods − Value of imported goods.

B

Which of the following is included in GDP? a. The market value of owner-occupied housing services, but not the market value of rental housing services b. Both the market value of rental housing services and the market value of owner-occupied housing services c. Neither the market value of owner-occupied housing services nor the market value of rental housing services d. The market value of rental housing services, but not the market value of owner-occupied housing services

B

Which of the following is not an example of a market? a. The availability of internet shopping has expanded the shoe choices for buyers who do not live near large cities. b. In the United States, a sick person cannot legally purchase a lung. c. In Georgia, there are many buyers and sellers of peaches. d. A small town has only one seller of water.

B

Which of the following is true? a. Efficiency and equality can both be achieved if the economic pie is b. Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. c. Government policies usually improve upon both equality and efficiency. d. As long as the economic pie continually gets larger, no one will have to go hungry.

B

If the government levies a $700 tax per motorcycle on sellers of motorcycles, then the price paid by buyers of motorcycles would a. decrease by an indeterminate amount. b. increase by more than $700. c. increase by less than $700. d. increase by exactly $700.

C

If the government's expenditures exceeded its receipts, it would likely a. buy bonds directly from the public. b. borrow money from a bank or other financial intermediary. c. sell bonds directly to the public. d. lend money to a bank or other financial intermediary.

C

In the actual economy, households a. save all of their income. b. spend all of their income. c. divide their income among spending, taxes, and saving. d. buy all goods and services produced in the economy.

C

National saving is a. the total income in the economy that remains after paying for consumption. b. equal to private saving minus public saving. c. the total income in the economy that remains after paying for consumption and government purchases. d. always greater than investment for a closed economy.

C

Suppose that a worker in Radioland can produce either 6 radios or 1 television per year, and a worker in Teeveeland can produce either 1 radios or 6 televisions per year. Each nation has 100 workers. Also, suppose that each country completely specializes in producing the good in which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, then each country's maximum consumption of new radios and televisions per year will be a. 100 radios, 500 televisions in Radioland and 500 radios, 100 televisions in Teeveeland. b. 100 radios, 100 televisions in Radioland and 100 radios, 100 televisions in Teeveeland. c. 500 radios, 100 televisions in Radioland and 100 radios, 500 televisions in Teeveeland. d. 500 radios, 100 televisions in Radioland and 100 radios, 600 televisions in Teeveeland.

C

Suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students purchase 750 cups per day. If the price decreases to $3.75 per cup, which of the following is the most likely outcome? a. Student would continue to purchase 750 cups per day. b. We do not have enough to answer this question. c. Students would purchase more than 750 cups per day. d. Students would purchase fewer than 750 cups per day.

C

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot. a. Only half of the cost of the parking permit is part of the opportunity cost of attending college. b. The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances. c. The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise. d. The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise.

C

The Monetary Policy of Jaune is controlled by the country's central bank known as the Bank of Jaune. The local unit of currency is the Jaunian dollar. Aggregate banking statistics show that collectively the banks of Jaune hold $220 million of required reserves, $55 million of excess reserves, have issued $5,500 million of deposits, and hold $440 million of Jaunian Treasury bonds. Jaunians prefer to use only demand deposits and so all money is on deposit at the bank. Suppose the Bank of Jaune loaned the banks of Jaune $30 million. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much would the money supply change? a. $615 million b. $245 million c. $600 million d. $30 million

C

The source of the supply of loanable funds a. and the demand for loanable funds is investment. b. is investment and the source of demand for loanable funds is saving. c.is saving and the source of demand for loanable funds is investment. d. and the demand for loanable funds is saving.

C

Trade can make everybody better off because it a. reduces competition among domestic companies. b. increases cooperation among nations. c. allows people to specialize according to comparative advantage. d. requires some workers in an economy to be retrained.

C

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that a. the mayor thinks demand is elastic, and the city manager thinks demand is inelastic. b. both the mayor and the city manager think that demand is elastic. c. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic. d. both the mayor and the city manager think that demand is inelastic.

C

You hold bonds issued by the city of Sacramento, California. The interest you earn each year on these bonds a. is not subject to federal income tax and so these bonds pay a higher interest rate than otherwise comparable bonds issued by the U.S. government. b. is subject to federal income tax and so these bonds pay a higher interest rate than otherwise comparable bonds issued by the U.S. government. c. is not subject to federal income tax and so these bonds pay a lower interest rate than otherwise comparable bonds issued by the U.S. government. d. is subject to federal income tax and so these bonds pay a lower interest rate than otherwise comparable bonds issued by the U.S. government.

C

A tax on the sellers of coffee will increase the price of coffee paid by buyers, a. decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee. b. increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee. c. increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee. d. decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

D

Absolute advantage is found by comparing different producers' a. locational and logistical circumstances. b. payments to land, labor, and capital. c. opportunity costs. d. input requirements per unit of output.

D

Instead of conducting laboratory experiments to generate data to test their theories, economists often a. rely upon hypothetical data that were previously concocted by other economists. b. substitute assumptions for data when data are unavailable. c. do without data. d. gather data from historical episodes of economic change.

D

On which of these bonds is the prospect of default most likely? a. A U.S. government bond b. A corporate bond issued by Proctor & Gamble Corporation c. A municipal bond d. A junk bond

D

The "invisible hand" refers to a. the control that large firms have over the economy. b. how central planners made economic decisions. c. government regulations without which the economy would be less efficient. d. how the decisions of households and firms lead to desirable market outcomes.

D

The manager of the bank where you work tells you that your bank has $10 million in excess reserves. She also tells you that the bank has $500 million in deposits and $455 million in loans. Given this information you find that the reserve requirement must be a. 2.0 percent. b. 10.0 percent. c. 9.0 percent. d. 7.0 percent.

D

The production possibilities frontier illustrates a. the combinations of output that an economy should produce. b. the combinations of output that an economy should consume. c. the combinations of output that an economy wants to produce. d. the combinations of output that an economy can produce.

D

To open a print shop you need printers, computers, and furniture. Economists call these expenditures a. business consumption expenditures. b. investment in human capital. c. personal saving. d. capital investment.

D