Chapter 1: What Is Economics?
Q1) An incentive
A) could be a reward but could not be a penalty.
B) could be a penalty but could not be a reward.
C) could be either a reward or a penalty.
D) is the opposite of a tradeoff.
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Q2) Scarcity can be eliminated through
A) the use of market mechanisms.
B) exploration that helps us find new resources.
C) wise use of our resources.
D) None of the above because scarcity cannot be eliminated.
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Q3) In the above figure, a negative relationship between price and quantity is shown in
A) Figure A.
B) Figure B.
C) both Figure A and Figure B.
D) neither Figure A nor Figure B.
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Chapter 6: Economic Growth
Q1) As the real wage rate increases, the
A) quantity of labor supplied increases.
B) supply of labor curve shifts rightward.
C) supply of labor curve shifts leftward.
D) quantity of labor supplied increases and the supply of labor shifts rightward.
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Q2) A decrease in the real wage rate
A) shifts the labor demand curve rightward.
B) shifts the labor demand curve leftward.
C) shifts the labor supply curve leftward.
D) none of the above because a change in the real wage rate does not shift either the
labor demand or labor supply curve.
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Q3) Within neoclassical growth theory, technological change ________ saving and
________ investment.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
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Chapter 8: Money, the Price Level, and Inflation
Q1)
Use the figure above to answer this question. Suppose the economy is operating at point
a. A move to ________ could be explained by ________.
A) point c; an increase in the use of credit cards
B) point b; an increase in real GDP
C) point b; an increase in the nominal interest rate
D) point e; an increase in U.S. exports
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Chapter 14: Monetary Policy
Q1) Monetary policy includes adjustments in ________ so as to change ________.
A) the federal funds rate; short-run aggregate supply
B) open market operations; long-run aggregate supply
C) the quantity of money; short-run aggregate supply
D) the federal funds rate; aggregate demand
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Q2) The Fed's actions to fight an inflation shift the
A) aggregate demand curve rightward.
B) aggregate demand curve leftward.
C) long-run aggregate supply curve rightward.
D) long-run aggregate supply curve leftward.
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Q3) Which of the following is NOT a short-run effect of a decrease in the federal funds
rate?
A) Aggregate demand increases.
B) Net exports increase.
C) Aggregate supply increases.
D) Inflation rate increases.
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Chapter 3: Demand and Supply
Q1) The Market for Wapanzo Beans
Quantity Demanded Price Quantity Supplied
(millions of pounds (dollars per (millions of pounds
per year) pound) per year)
Refer to the table above. Suppose that in normal years demand is represented by Case 2
and supply is represented by Case B. In a normal year the price of wapanzo beans will
be
A) $1 per pound.
B) $2 per pound.
C) $3 per pound.
D) $4 per pound.
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Chapter 11: Expenditure Multipliers
Q1) The slope of the aggregate expenditure curve is
A) 0.
B) greater than 0 and less than 1.
C) 1.
D) greater than 1.
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Q2)
In the above figure, if real GDP is greater than $15 trillion, inventories will be
A) below target levels so firms will increase production.
B) below target levels so firms will decrease production.
C) above target levels so firms will increase production.
D) above target levels so firms will decrease production.
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Chapter 5: Monitoring Jobs and Inflation
Q1) A recent accounting graduate from a major business school is searching for a place
to begin his career as an accountant. This individual is best considered as
A) structurally unemployed.
B) seasonally unemployed.
C) cyclically unemployed.
D) frictionally unemployed.
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Q2) An individual with good job prospects who is between jobs is best considered as
A) structurally unemployed.
B) cyclically unemployed.
C) not in the labor force.
D) frictionally unemployed.
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Q3)
Using the information in the table above, calculate the unemployment rate.
A) 53.3 percent
B) 30.8 percent
C) 13.3 percent
D) 7.7 percent Page 7
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Chapter 2: The Economic Problem
Q1)
In the figure above, the marginal cost of the second computer is
A) 2 television sets per computer.
B) 3 television sets per computer.
C) 5 television sets per computer.
D) 30 television sets per computer.
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Chapter 15: International Trade Policy
Q1) The U.S. government limits the amount of sugar that can be imported into the United
States. This policy is
A) an import quota.
B) a tariff.
C) a comparative advantage limitation.
D) None of the above answers are correct.
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Q2) Average tariff levels in the United States in the last decade are
A) about equal to the average since 1930.
B) above the average since 1930.
C) positive, but below the average since 1930.
D) zero, as there are no longer any tariffs in the United States.
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Q3) When considering rent seeking, which of the following is TRUE?
A) The anti-free trade group generally will lobby more than the pro-free trade group.
B) The pro-free trade group generally will lobby more than the anti-free trade group.
C) Usually only the anti-free trade group is concerned about what is best for society at
large.
D) Only the pro-free trade group is concerned about the government's revenue from
tariffs.
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