Econ Final Multiple Choice

100. The demand for a good or service is determined by a. those who buy the good or service. b. the government. c. those who sell the good or service. d. both those who buy and those who sell the good or service.

a

104. World Wide Delivery Service Corporation develops a way to speed up its deliveries and reduce its costs. We would expect that this would a. raise the demand for existing shares of the stock, causing the price to rise. b. decrease the demand for existing shares of the stock, causing the price to fall. c. raise the supply of the existing shares of stock, causing the price to rise. d. raise the supply of the existing shares of stock, causing the price to fall.

a

105. If an economy uses gold as money, then that economy's money a. was commodity money. b. had no intrinsic value. c. was fiat money. d. had no store of value.

a

115. When the nation of Duxembourg allows trade and becomes an importer of software, a. residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises. b. residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg falls. c. residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg rises. d. residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg falls.

a

119. Which of the following can a country increase in the long run by increasing its money growth rate? a. The nominal wage b. Real output c. Real interest rates d. The real wage

a

64. Refer to Figure 4-6. Suppose that the federal government is concerned about obesity in the United States. Congress is considering two plans. One would require "junk food" producers to include warning labels on all junk food. The other would impose a tax on all products considered to be junk food. If the warning labels are successful, we could illustrate the plan as producing a movement from a. Point A to Point B in Panel 1. b. Point B to Point A in Panel 1. c. Point A to Point C in Panel 2. d. Point C to Point A in Panel 2. (quiz 4)

a

72. If M = 5,000, P = 5.5, and Y = 9,000, what is velocity? a. 10 b. 2 c. 2.75 d. 0.55

a

79. The measure of the money stock called M1 includes a. wealth held by people in their checking accounts. b. wealth held by people in their savings accounts. c. wealth held by people in U.S. Treasury bills. d. everything that is included in M2 plus some additional items.

a

81. Industrial machinery is an example of a. a factor of production that in the past was an output from the production process. b. technological knowledge. c. a production function. d. an item which always has the property called constant returns to scale.

a

92. The difference between slope and elasticity is that slope a. is a ratio of two changes, and elasticity is a ratio of two percentage changes. b. is a ratio of two percentage changes, and elasticity is a ratio of two changes. c. measures changes in quantity demanded more accurately than elasticity. d. None of the above is correct; there is no difference between slope and elasticity.

a

97. If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could a. buy $300,000 worth of bonds. b. buy $225,000 worth of bonds. c. sell $300,000 worth of bonds. d. sell $225,000 worth of bonds.

a

98. The tax burden will fall most heavily on buyers of the good when the demand curve a. is relatively steep, and the supply curve is relatively flat. b. is relatively flat, and the supply curve is relatively steep. c. and the supply curve are both relatively flat. d. and the supply curve are both relatively steep.

a

101. Katarina puts money into an account. One year later she sees that she has 6 percent more dollars and that her money will buy 4 percent more goods. The nominal interest rate was a. 10 percent and the inflation rate was 6 percent. b. 6 percent and the inflation rate was 2 percent. c. 4 percent and the inflation rate was 2 percent. d. 10 percent and the inflation rate was 4 percent.

b

110. Money is a. the most liquid asset and a perfect store of value. b. the most liquid asset but an imperfect 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.

b

114. Suppose you are deciding whether to buy a particular bond. If you buy the bond and hold it for 4 years, then at that time you will receive a payment of $10,000. If the interest rate is 6 percent, you will buy the bond if its price today is no greater than a. $8,225.06. b. $7,920.94. c. $7,672.58. d. $6,998.98.

b

116. Refer to Figure 6-3. A nonbinding price floor is shown in a. both panel (a) and panel (b). b. panel (a) only. c. panel (b) only. d. neither panel (a) nor panel (b).

b

117. Which of the following events is consistent with an increase in the deadweight loss of the gasoline tax from $30 million to $120 million? a. The tax on gasoline increases from $0.30 per gallon to $0.45 per gallon. b. The tax on gasoline increases from $0.30 per gallon to $0.60 per gallon. c. The tax on gasoline increases from $0.25 per gallon to $0.45 per gallon. d. The tax on gasoline increases from $0.25 per gallon to $1.00 per gallon.

b

120. On a given morning, Franco sold 40 pairs of shoes for a total of $800 at his shoe store. a. The $800 is a real variable. The quantity of shoes is a nominal variable. b. The $800 is a nominal variable. The quantity of shoes is a real variable. c. Both the $800 and the quantity of shoes are nominal variables. d. Both the $800 and the quantity of shoes are real variables.

b

61. Consider a good to which a per-unit tax applies. The greater the price elasticities of demand and supply for the good, the a. smaller the deadweight loss from the tax. b. greater the deadweight loss from the tax. c. more efficient is the tax. d. more equitable is the distribution of the tax burden between buyers and sellers.

b

68. Economists face an obstacle that many other scientists do not face. What is that obstacle? a. It is often difficult to formulate theories in economics. b. It is often impractical to perform experiments in economics. c. Economics cannot be addressed objectively; it must be addressed subjectively. d. The scientific method cannot be applied to the study of economics.

b

78. Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff, a. Turkish consumers of wheat become worse off and Turkish producers of wheat become worse off. b. Turkish consumers of wheat become worse off and Turkish producers of wheat become better off. c. Turkish consumers of wheat become better off and Turkish producers of wheat become worse off. d. Turkish consumers of wheat become better off and Turkish producers of wheat become better off.

b

80. The economy's two most important financial markets are a. the investment market and the saving market. b. the bond market and the stock market. c. banks and the stock market. d. financial markets and financial institutions.

b

84. Refer to Figure 2-12. The shift of the production possibilities frontier from A to B can best be described as a. a downturn in the economy. b. economic growth. c. an enhancement of equality. d. an improvement in the allocation of resources.

b

95. The economy of Umrica uses gold as its money. If the government discovers a large reserve of gold on their land the a. supply of money decreases, the value of money rises, and prices fall. b. supply of money increases, the value of money falls, and prices rise. c. demand for money increases, the value of money rises, and prices rise. d. demand for money decreases, the value of money falls, and prices fall.

b

107. Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to a. cause these factories to pay the U.S. minimum wage. b. increase the rate of technological advance in poor countries so that they can afford to pay higher wages. c. increase poverty in poor countries and benefit U.S. firms which compete with these imports. d. harm U.S. firms which compete with these imports.

c

109. A bank has $8,000 in deposits and $6,000 in loans. It has loaned out all it can, given the reserve requirement. It follows that the reserve requirement is a. 2.5 percent. b. 33.3 percent. c. 25 percent. d. 75 percent.

c

111. The U.S. Congress first instituted a minimum wage in a. 1776. b. 1812. c. 1938. d. 1975.

c

113. Buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the a. tax is placed on the sellers of the product. b. tax is placed on the buyers of the product. c. supply of the product is more elastic than the demand for the product. d. demand for the product is more elastic than the supply of the product

c

118. If a bank with a required reserve ratio of 15 percent receives a deposit of $600, it now has a a. $600 increase in excess reserves and no increase in required reserves. b. $600 increase in required reserves and no increase in excess reserves. c. $510 increase in excess reserves and a $90 increase in required reserves. d. $90 increase in excess reserves and a $510 increase in required reserves.

c

62. When a country allows trade and becomes an importer of a good, a. consumer surplus and producer surplus both increase. b. consumer surplus and producer surplus both decrease. c. consumer surplus increases and producer surplus decreases. d. consumer surplus decreases and producer surplus increases.

c

70. Total surplus in a market is equal to a. value to buyers - amount paid by buyers. b. amount received by sellers - costs of sellers. c. value to buyers - costs of sellers. d. amount received by sellers - amount paid by buyers.

c

73. When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. We can conclude that for Heather, macaroni a. and soy-burgers are both normal goods with income elasticities equal to 1. b. is an inferior good and soy-burgers are normal goods; both have income elasticities of 1. c. is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1. d. and soy-burgers are both inferior goods with income elasticities equal to -1.

c

74. Which of the following can be measured by the level of real GDP per person? a. Productivity and the standard of living b. Productivity but not the standard of living c. The standard of living but not productivity d. Neither the standard of living nor productivity

c

76. Refer to Figure 2-12. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B? a. a decrease in unemployment b. a technological advance in the consumer goods industries c. a general technological advance d. an increase in the availability of capital-producing resources

c

77. Economists use some familiar terms in specialized ways a. to make the subject sound more complex than it is. b. because every respectable field of study has its own language. c. to provide a new and useful way of thinking about the world. d. because it was too difficult to come up with new terms.

c

82. The goal of an economist who formulates new theories is to a. provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works. b. provoke stimulating debate in scientific journals. c. contribute to an understanding of how the world works. d. demonstrate that economists, like other scientists, can formulate testable theories.

c

87. In 2010 the U.S. government was running a large deficit. Some were concerned that pressures might be put on the Federal Reserve to purchase government bonds to help the government finance this deficit. If the Fed were to buy government bonds to help the government finance its expenditures, then the price level would a. fall, so the value of money would fall. b. fall, so the value of money would rise. c. rise, so the value of money would fall. d. rise, so the value of money would rise.

c

88. Fundamental analysis shows that stock in Garske Software Corporation has a present value that is higher than its price. a. This stock is undervalued; you shouldn't consider adding it to your portfolio. b. This stock is overvalued; you should consider adding it to your portfolio. c. This stock is undervalued; you should consider adding it to your portfolio. d. This stock is overvalued; you shouldn't consider adding it to your portfolio.

c

89. Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about a. 0.22. b. 0.82. c. 1.22. d. 2.

c

Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. 71. Refer to Figure 26-3. Which of the following movements shows the effects of households' decision to save more? a. a movement from Point A to Point B b. a movement from Point F to Point A c. a movement from Point C to Point F d. a movement from Point B to Point C

c

Figure 30-2 In the graph, MS represents the money supply and MD represents money demand. The vertical axis is the value of money measured as 1/P and the horizontal axis is the quantity of money. 94. Refer to Figure 30-2. What quantity is measured along the vertical axis? a. The price level b. The real interest rate c. The value of money d. The quantity of money

c

102. The cross-price elasticity of demand can tell us whether goods are a. normal or inferior. b. elastic or inelastic. c. luxuries or necessities. d. complements or substitutes.

d

103. Which of the following is not correct? a. Gross domestic product is both total income in an economy and total expenditures on the economy's output of goods and services. b. In a closed economy net exports are zero. c. National saving is the sum of private saving and public saving. d. Purchases of capital goods are excluded from GDP.

d

106. The nominal interest rate is 6 percent and the inflation rate is 3 percent. What is the real interest rate? a. 9 percent b. 0.30 percent c. -3 percent d. 3 percent

d

112. Refer to Figure 2-8. Inefficient production is represented by which point(s)? a. K, M b. L c. L, M d. M

d

63. If a tax is levied on the buyers of a product, then there will be a(n) a. downward shift of the supply curve. b. upward shift of the supply curve. c. movement up and to the right along the supply curve. d. movement down and to the left along the supply curve.

d

65. Refer to Figure 6-9. At which price would a price ceiling be nonbinding? a. $4 b. $5 c. $3 d. $7

d

66. When supply and demand both increase, equilibrium a. price will increase. b. price will decrease. c. quantity may increase, decrease, or remain unchanged. d. price may increase, decrease, or remain unchanged.

d

67. A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At a price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the midpoint method, the price elasticity of supply for bagels is about a. 0.62. b. 0.77. c. 1.24. d. 1.63.

d

69. Refer to Figure 8-22. Suppose the government changed the per-unit tax on this good from $3.00 to $1.50. Compared to the original tax rate, this lower tax rate would a. increase tax revenue and increase the deadweight loss from the tax. b. increase tax revenue and decrease the deadweight loss from the tax. c. decrease tax revenue and increase the deadweight loss from the tax. d. decrease tax revenue and decrease the deadweight loss from the tax.

d

75. Refer to Table 5-8. Using the midpoint method, what is the income elasticity of demand for good X? a. -3.5 b. -0.29 c. 0.29 d. 3.5

d

83. The primary economic function of the financial system is to a. keep interest rates low. b. provide expert advice to savers and investors. c. match one person's consumption expenditures with another person's capital expenditures. d. match one person's saving with another person's investment.

d

85. Which of the following is not correct? In a 2006 survey of Ph.D. economists, a. 47 percent favored eliminating the minimum wage. b. 14 percent would maintain the minimum wage at its current level. c. 38 percent would increase the minimum wage. d. 10 percent would decrease the minimum wage.

d

86. Which of the following is not a function of money? a. Unit of account b. Store of value c. Medium of exchange d. Protection against inflation

d

90. Which of the following is not an example of monetary policy? a. The Federal Open Market Committee decides to sell bonds. b. The Federal Open Market Committee decides to buy bonds. c. The Federal Reserve reduces the reserve requirement. d. The Federal Reserve facilitates bank transactions by clearing checks.

d

91. Refer to Figure 6-2. The price ceiling a. is binding. b. causes a shortage. c. causes the quantity demanded to exceed the quantity supplied. d. All of the above are correct.

d

93. Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at a. prices at and above the equilibrium price. b. prices at and below the equilibrium price. c. prices above and below the equilibrium price, but not at the equilibrium price. d. the equilibrium price but not above or below the equilibrium price.

d

96. Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change? a. This month, the economy reduced the unemployment of its resources. b. This month, the economy experienced an improvement in technology. c. This month, the economy experienced an increase in resources d. All of the above are correct.

d

99. The General Agreement on Tariffs and Trade (GATT) was initiated in response to a. in increase in exports of low-priced goods from developing countries to developed countries. b. the replacement of manufacturing jobs with service jobs in developed countries. c. economic dislocations caused by the North American Free Trade Agreement (NAFTA) in the 1990s. d. high tariffs imposed during the Great Depression of the 1930s.

d

Figure 8-3The vertical distance between points A and C represents a tax in the market. 108. Refer to Figure 8-3. Which of the following equations is valid for the deadweight loss of the tax? a. Deadweight loss = (1/2)(P2 - P1)(Q2 + Q1) b. Deadweight loss = (1/2)(P3 - P1)(Q2 + Q1) c. Deadweight loss = (1/2)(P3 - P2)(Q2 - Q1) d. Deadweight loss = (1/2)(P3 - P1)(Q2 - Q1)

d