___ECO101_102

___ECO101_102 - V iew Results FINAL EXAM ­ SUMMER User ID:...

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Unformatted text preview: V iew Results FINAL EXAM ­ SUMMER User ID: yyoo Attempt : 1 / 1 Out of: 300 Started: August 2, 2005 8:12pm Finished: August 2, 2005 9:39pm T ime spent : 1 hr , 26 min., 42 sec. Student finished 1 hr , 33 min., 1 8 sec. ahead of the 1 80 min. time limit. Question 1 (3 points) Economics: Student response: Percent V alue Student Response Answer Choices 1 00.0% a. assumes individuals are rational and respond to diff erent incentives. b. assumes government invol vement in the economy is always beneficial. c. assumes individuals reall y have no choices other than what society imposes on them. d. assumes irrationality if people are paid enough. Score: 3 / 3 Question 2 (3 points) Scarcity implies that people must Student response: Percent V alue Student Response Answer Choices a. be miserable. b. be selfish. 1 00.0% c. make choices. d. not be selfish. Score: 3 / 3 Question 3 (3 points) If you intentionall did something to make yourself worse off, you would be y violating the: Student response: Percent V alue Student Response Answer Choices a. Ceteris Paribus assumption. b. time consistency assumption. 1 00.0% c. rationality assumption. d. the nor mative assumption. Score: 3 / 3 Question 4 (3 points) The father of modern economics is Student response: Percent V alue Student Response Answer Choices a. Thomas Hobbes. 1 00.0% b. Adam Smith c. John Maynard Keynes. d. Alan Greenspan. Score: 3 / 3 Question 5 (3 points) If a curve has a negative slope, then Student response: Percent V alue Student Response Answer Choices 1 00.0% a. one variable falls as the other rises. b. one variable does not change. c. one variable has a smaller value than another . d. one variable changes after another variable. Score: 3 / 3 Question 6 (3 points) The line in the graph indicates that : Student response: Percent V alue Student Response Answer Choices a. there is no mathematical relationship between X and Y b. there is a direct relationship between X and Y 1 00.0% c. there is an inverse relationship between X and Y d. there is a nor mative relationship between X and Y Score: 3 / 3 Question 7 (3 points) A downward­sloping, straight line has a decreasing slope. Student response: Percent V alue Student Response Answer Choices a. T rue. 1 00.0% b. False. Score: 3 / 3 Question 8 (3 points) The slope of the line in the graph is eq ual to: Student response: Percent V alue Student Response Answer Choices 1 00.0% a. ?3/4 b. ?4/3 c. 3/4 d. 5/6 e. 1 Score: 3 / 3 Question 9 (3 points) The production possibilities frontier illustrates Student response: Percent V alue Student Response Answer Choices a. the constant rate of technological progress. 1 00.0% b. the fundamental concept of scarcity . c. the rapid growth in the U .S. economy . d. that coal always trades f or parkland. Score: 3 / 3 Question 1 0 (3 points) A PPF will be bowed outward if Student response: Percent V alue Student Response Answer Choices a. there is scarcity . b. increased production of one good means less production of the other good. c. the suppl y of resources is fixed. 1 00.0% d. resources are not eq uall y well­suited to the production of both goods. Score: 3 / 3 Question 1 1 (3 points) Moving from one point to another along a given production possibilities frontier , producing more of one good req uires that Student response: Percent V alue Student Response Answer Choices 1 00.0% a. less of the other good be produced. b. the production of the other good be held constant. c. more of the other good be produced. d. a better technology be employed. Score: 3 / 3 Question 12 (3 points) Which of the points in the graph are efficient? Student response: Percent V alue Student Response Answer Choices a. C and F onl y b. C, D and F onl y c. A, C, D, F and G onl , y 1 00.0% d. A, C, F and G onl , y Score: 3 / 3 Question 1 3 (3 points) Generall y , specialization leads to Student response: Percent V alue Student Response Answer Choices a. constant opportunity costs. 1 00.0% b. greater productivity . c. the production of f ewer capital goods. d. greater self­reliance. Score: 3 / 3 Question 1 4 (3 points) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 labor hours to produce one computer The 5 . opportunity cost of one computer in France is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. 3 bushels of wheat. b. 1/3 bushel of wheat. c. 4 computers. d. 7 5 labor hours. Score: 3 / 3 Question 1 5 (3 points) Division of labor increases the output of society by Student response: Percent V alue Student Response Answer Choices a. eliminating scarcity . b. reducing the choices people have to make to a more manageable number . c. ensuring that people are happier in perf ming their work or . 1 00.0% d. allowing resources to specialize in the tasks f which they have a or comparative advantage. Score: 3 / 3 Question 1 6 (3 points) If T aiwanese workers can produce everything more cheapl than American workers, y then Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Americans can still gain by trading with T aiwan. b. Americans can onl y lose if they import from T aiwan. c. T aiwan can onl y lose if it trades with America. d. There are no gains from trade that are possible in this case. Score: 3 / 3 Question 1 (3 points) 7 The ter m "comparative disadvantage" means one party in a trade Student response: Percent V alue Student Response Answer Choices a. has a lower opportunity cost than its trading partner . 1 00.0% b. has a higher opportunity cost than its trading partner . c. has an absolute advantage in the goods that it is trading. d. has no basis f or trade with a trading partner . Score: 3 / 3 Question 1 8 (3 points) Bobby can vacuum two rooms in ten minutes or dust two rooms in twenty minutes. The opportunity cost of dusting one more room is Student response: Percent V alue Student Response Answer Choices a. vacuuming one room. 1 00.0% b. vacuuming two rooms. c. that he will not give up vacuuming any rooms. d. none of the above. Score: 3 / 3 Question 1 9 (3 points) According to the law of demand, we would expect Student response: Percent V alue Student Response Answer Choices a. the demand curve to be negativel y sloped. b. the demand curve to be positivel y sloped. c. the total q uantity demanded by the market to move in the same direction as price. 0.0% d. income to increase as q uantity demanded increases. Score: 0 / 3 Question 20 (3 points) Which of the f ollowing is a deter minant of demand? Student response: Percent V alue Student Response Answer Choices a. cost of production 1 00.0% b. income c. number of suppliers d. technology Score: 3 / 3 Question 2 1 (3 points) A decrease in price Student response: Percent V alue Student Response Answer Choices 1 00.0% a. causes a downward movement (to the right) along the same demand curve. b. causes an upward movement (to the left) along the same demand curve. c. changes the demand curve. d. causes a downward movement (to the right) along the same demand curve if income decreases. Score: 3 / 3 Question 22 (3 points) In the figure below , an increase in population (which will increase the number of buyers of the good) will change demand from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. D1 to D2 b. D2 to D1 c. D3 to D2 d. D3 to D1 Score: 3 / 3 Question 23 (3 points) An increase in the price of steel to producers of refrigerators will cause the Student response: Percent V alue Student Response Answer Choices a. q uantity supplied of refrigerators to increase. b. q uantity demanded f or steel to increase. 1 00.0% c. suppl y curve f or refrigerators to shift left. d. demand f or refrigerators to decrease. Score: 3 / 3 Question 2 4 (3 points) Any improvement in overall production technology that per mits more output to be produced with the same level of inputs causes Student response: Percent V alue Student Response Answer Choices a. a movement up the suppl y curve resulting in both a higher eq uilibrium price and q uantity . 1 00.0% b. a rightward shift of the suppl y curve so that more is off ered at each price. c. no movement of the suppl curve, but a fall in price and a decrease in y q uantity supplied. d. a leftward shift of the suppl y curve so that less is off ered f or sale at each price. Score: 3 / 3 Question 25 (3 points) Suppl y curves represent producers' Student response: Percent V alue Student Response Answer Choices a. inventories. b. willingness to buy . 1 00.0% c. willingness to sell. d. total production. Score: 3 / 3 Question 26 (3 points) Studies at Cornell University revealed that chickens grow 2 percent more weight when a red mitten is placed in their cage and V ivaldi is played in the coop. Resultant f eed savings are estimated at $60 million a year . In the chicken market, the Student response: Percent V alue Student Response Answer Choices a. demand curve shifts to the right. 1 00.0% b. suppl y curve shifts to the right. c. price will rise. d. q uantity sold will fall. Score: 3 / 3 Question 2 7 (3 points) A sur plus will tend to occur at which price in the f ollowing figure? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. P1 b. P2 c. P3 d. None of the above. Score: 3 / 3 Question 28 (3 points) Suppose there is a new technology that lowers the cost of producing CDs. What impact would this be likel y to have on the eq uilibrium price and q uantity of CDs? Student response: Percent V alue Student Response Answer Choices a. price increase, q uantity increase b. price decrease, q uantity decrease c. price increase, q uantity decrease 1 00.0% d. price decrease, q uantity increase Score: 3 / 3 Question 29 (3 points) A decrease in the price of an input going into the production of a product will result in Student response: Percent V alue Student Response Answer Choices a. a decrease in eq uilibrium price and a decrease in eq uilibrium q uantity . b. an increase in eq uilibrium price and an increase in eq uilibrium q uantity . 1 00.0% c. a decrease in eq uilibrium price and an increase in eq uilibrium q uantity . d. an increase in eq uilibrium price and no change in eq uilibrium q uantity . Score: 3 / 3 Question 30 (3 points) At price P1 in the f ollowing figure, what will tend to happen? Student response: Percent V alue Student Response Answer Choices a. There will be a shortage, and the price will fall. b. There will be a shortage and the price will rise. c. There will be a sur plus, and the price will rise. 1 00.0% d. There will be a sur plus, and the price will fall. Score: 3 / 3 Question 3 1 (3 points) An excise tax is a tax on imported goods. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 32 (3 points) Examine the graph. If the government imposes a minimum wage of $4.00 per hour , Student response: Percent V alue Student Response Answer Choices a. there will be a shortage of 20,000 units of labor . b. there will be a sur plus of 20,000 units of labor . c. the labor market will be in eq uilibrium at a wage of $6.00 per hour and 20,000 units of labor . 1 00.0% d. the minimum wage will not aff ect the market. Score: 3 / 3 Question 33 (3 points) If the population of an area increases, Student response: Percent V alue Student Response Answer Choices a. demand in the market will decrease. b. suppl y in the market will increase. 1 00.0% c. demand in the market will increase. d. suppl y in the market will decrease. Score: 3 / 3 Question 3 4 (3 points) An increase in the demand f or chocolate bars results in Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a price increase and a q uantity increase. b. a price decrease and a q uantity decrease. c. a price increase and a q uantity decrease. d. a price decrease and a q uantity increase. Score: 3 / 3 Question 35 (3 points) T o deter mine how well an economy is doing, it is better to use Student response: Percent V alue Student Response Answer Choices a. nominal GDP figures. 1 00.0% b. real GDP figures. c. GDP figures measured by the expenditure approach. d. GDP figures measured by the income approach. Score: 3 / 3 Question 36 (3 points) The observation that goods and services flow in one direction and money payments flow in another direction is the principle behind Student response: Percent V alue Student Response Answer Choices 0.0% a. the double coincidence of wants. b. a barter economy . c. a pure command economy . d. the circular flow of income. Score: 0 / 3 Question 3 7 (3 points) Investment goods are Student response: Percent V alue Student Response Answer Choices 1 00.0% a. goods that are used to produce other goods. b. goods that yield a high rate of return. c. goods that last f or more than a short period of time. d. financial instruments. Score: 3 / 3 Question 38 (3 points) Which of the f ollowing is NOT shown by the circular flow model? Student response: Percent V alue Student Response Answer Choices a. The flow of resources in one direction and money in the other . b. The eq uality of aggregate spending and aggregate income. c. The interaction of households, fir ms, and the government. 1 00.0% d. The total amount of goods and services the economy is capable of producing Score: 3 / 3 Question 39 (3 points) Anticipating more sales during the upcoming f ootball season, a manufacturer of sports memorabilia increases his production in Jul This is an example of y . Student response: Percent V alue Student Response Answer Choices a. savings. 1 00.0% b. inventory investment. c. business investment. d. consumption, because the goods will be sold during the f ootball season. Score: 3 / 3 Question 40 (3 points) Which of the f ollowing is not a method to measure GDP? Student response: Percent V alue Student Response Answer Choices a. income approach b. expenditure approach 1 00.0% c. net value approach Score: 3 / 3 Question 4 1 (3 points) GDP measured by the income approach is ____ GDP measured by the expenditure approach. Student response: Percent V alue Student Response Answer Choices a. less than 1 00.0% b. eq ual to c. greater than d. not the same thing as Score: 3 / 3 Question 42 (3 points) Which of the f ollowing is NOT considered a component of government spending in calculating GDP? Student response: Percent V alue Student Response Answer Choices a. the cost of the f ederal prison system b. the cost of building a new road c. payments to plow public roads after a snowstor m 1 00.0% d. unemployment compensation payments Score: 3 / 3 Question 43 (3 points) Suppose the price index increases from 300 to 306. What is the inflation rate? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. 2% b. 3% c. 6% d. none of the above Score: 3 / 3 Question 4 4 (3 points) The base year CPI is always _______. Student response: Percent V alue Student Response Answer Choices a. 0 b. 1 c. 1 0 1 00.0% d. 1 00 Score: 3 / 3 Question 45 (3 points) The index of leading indicators Student response: Percent V alue Student Response Answer Choices a. predicts how the economy will perf m two to three years into the future. or b. predicts recessions, but not economic expansions. c. has a poor record of accuratel y predicting the future of the economy . 1 00.0% d. includes various measures that "lead" the economy , meaning that changes in these measures occur bef ore the economy as a whole is aff ected. Score: 3 / 3 Question 46 (3 points) Suppose the critics of the CPI are correct, and it overstates the eff ect of price changes. Because the CPI uses a fixed market basket of goods, it should be too high every year . Thus, Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the CPI overstates inflation as well. b. inflation, which is the change in the CPI, will still be measured correctl y . c. the CPI will understate inflation. d. the CPI will understate inflation some years, and overstate it others, depending on how prices change. Score: 3 / 3 Question 4 7 (3 points) The substitution problem with a fixed­weight index means that the index does not accuratel y reflect the changes from one year to the next when Student response: Percent V alue Student Response Answer Choices a. the economy produces diff erent products so the market basket changes. 1 00.0% b. consumers demand less high­priced goods and more low­priced goods. c. suppliers try to sell higher profit items and cease producing lower profit items. d. structural changes occur in the economy . Score: 3 / 3 Question 48 (3 points) A change in the producer price index (PPI) is thought to be useful in predicting future Student response: Percent V alue Student Response Answer Choices a. changes in the stock price index. b. changes in consumer confidence. 1 00.0% c. changes in the consumer price index. d. changes in the rate of output of goods and services. Score: 3 / 3 Question 49 (3 points) In an expansion, Student response: Percent V alue Student Response Answer Choices 0.0% a. real GDP is decreasing. b. inflation rates usuall y fall. c. the unemployment rate will decrease. Score: 0 / 3 Question 50 (3 points) Who believed that fluctuations in the business cycle were the result of class conflicts between labor and capital? Student response: Percent V alue Student Response Answer Choices a. Schumpeter 1 00.0% b. Marx c. Rousseau d. Keynes Score: 3 / 3 Question 5 1 (3 points) Unemployment that occurs when people are in between jobs, or because of career or seasonal changes, is known as Student response: Percent V alue Student Response Answer Choices 0.0% a. structural unemployment. b. cyclical unemployment. c. frictional unemployment. d. underemployment. Score: 0 / 3 Question 52 (3 points) When the unemployment rate is above the natural rate of unemployment, the government response is likel y to be to Student response: Percent V alue Student Response Answer Choices a. increase job training programs to retrain unemployed workers. 1 00.0% b. implement policies, like tax cuts, to stimulate the economy . c. increase job placement activities. d. any of the above. Score: 3 / 3 Question 53 (3 points) Which of the f ollowing proposals, if f easible, would provide unemployment insurance with the least risk of moral hazard? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. providing unemployment insurance onl to workers activel looking f y y or jobs b. providing unemployment insurance f or onl y a restricted period of time, such a 3 months c. having unemployment benefits decrease steadil over time until they reach y zero d. adding free job training to the standard unemployment insurance benefits Score: 3 / 3 Question 5 4 (3 points) In the United States, the minimum wage is defined as Student response: Percent V alue Student Response Answer Choices a. the wage that the youngest entrant to the job market makes. b. the lowest wage that a cor poration should pay a worker if the cor poration wants to ensure that its employees are well trained. 1 00.0% c. the lowest hourl wage rate a fir m may legall pay its workers, as y y legislated by the U .S. government. d. the wage ceiling above which a fir m no longer must pay its employees additional benefits. Score: 3 / 3 Question 55 (3 points) Inflation tends to redistribute wealth from Student response: Percent V alue Student Response Answer Choices a. borrowers to lenders. 1 00.0% b. lenders to borrowers. c. the government to consumers. d. consumers to the government. Score: 3 / 3 Question 56 (3 points) Suppose V al could earn 5.25% interest on her savings account, while inflation grew steadil y at 3%. She is most likel y to Student response: Percent V alue Student Response Answer Choices 1 00.0% a. put her money in the bank . b. spend her money q uickl y . c. withdraw her money from the bank . Score: 3 / 3 Question 5 7 (3 points) When the government raises revenue by printing money , it is said to have imposed an inflation tax. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 3 / 3 Question 58 (3 points) Empirical evidence suggests that receiving unemployment insurance Student response: Percent V alue Student Response Answer Choices a. causes people to activel y search f or work . b. has no eff ect on people who are unemployed. 1 00.0% c. discourages people from activel y seeking work . d. is the onl y factor that influences how q uickl y people find work after being unemployed. Score: 3 / 3 Question 59 (3 points) The graph below shows the demand f or money The initial interest rate is io. Which . graph correctl y depicts a rise in interest rates above the initial level io? Student response: Percent V alue Student Response Answer Choices a. 1 00.0% b. c. d. Score: 3 / 3 Question 60 (3 points) The U .S. dollar is considered money because Student response: Percent V alue Student Response Answer Choices a. it is convertible to gold or sil . ver b. it is easil y portable. 1 00.0% c. it has been decreed by the U .S. government as legal tender . d. all of the above. Score: 3 / 3 Question 6 1 (3 points) Suppose the money demand curve shifts to the left. This could have been caused by Student response: Percent V alue Student Response Answer Choices a. an increase in the interest rate. b. a decrease in the interest rate. c. an increase in the price level. 1 00.0% d. a decrease in the price level. Score: 3 / 3 Question 62 (3 points) Checking accounts are part of Student response: Percent V alue Student Response Answer Choices a. M1 . b. M2. c. M3. 1 00.0% d. all of the above. Score: 3 / 3 Question 63 (3 points) Which of the f ollowing will NOT cause a shift in the investment demand curve? Student response: Percent V alue Student Response Answer Choices a. a tax cut b. an increase in real GDP 1 00.0% c. an increase in the interest rate d. optimistic expectations Score: 3 / 3 Question 64 (3 points) Large cor porations, the f ederal government, or state and local governments usuall y issue _________ in order to finance their purchases. Student response: Percent V alue Student Response Answer Choices a. mutual funds b. stocks 1 00.0% c. bonds d. insurance policies Score: 3 / 3 Question 65 (3 points) Y our friend is planning f retirement. If she invests $500 today at 6% annual or interest, what will be the value of her investment in 40 years? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. $5, 1 43 b. $1 ,700 c. $2,200 1 d. $49 Score: 3 / 3 Question 66 (3 points) Which statement about bonds is correct? Student response: Percent V alue Student Response Answer Choices a. Bonds are inherentl y low­risk financial instruments. b. Bonds are inherentl y high­risk financial instruments. c. F or any given venture, bonds will be higher risk than stock . 1 00.0% d. F or any given venture, bonds will be lower risk than stock . Score: 3 / 3 Question 67 (3 points) In which of the f ollowing ways can a cor poration raise new funds f or investment? I. issuing new shares of stock II. having existing stock resold between two owners Student response: Percent V alue Student Response Answer Choices 1 00.0% a. I onl y b. II onl y c. both I and II d. neither I nor II Score: 3 / 3 Question 68 (3 points) A bond is defined by its Student response: Percent V alue Student Response Answer Choices a. rate of return, face value, and coupon rate. b. market interest rate, rate of return, and coupon rate. 1 00.0% c. face value, coupon rate, and maturity date. d. inception date, face value, and maturity date. Score: 3 / 3 Question 69 (3 points) Suppose the F ed wants to decrease the money suppl Then it should y . Student response: Percent V alue Student Response Answer Choices a. sell stocks. b. buy stocks. 1 00.0% c. sell government bonds. d. buy government bonds. Score: 3 / 3 Question 70 (3 points) If the F decides to buy bonds on the open market, which of the f ed ollowing is true? Student response: Percent V alue Student Response Answer Choices a. This is an easing of the money suppl y . b. The money suppl y will shift right. c. The eq uilibrium interest rate will decrease. 1 00.0% d. All of the above are true. Score: 3 / 3 Question 7 1 (3 points) Suppose the money market is in eq uilibrium. If the F ed sells government bonds, then the eq uilibrium interest rate will _____ and the eq uilibrium q uantity of money will _____. Student response: Percent V alue Student Response Answer Choices a. increase, increase 1 00.0% b. increase, decrease c. decrease, increase d. decrease, decrease Score: 3 / 3 Question 7 2 (3 points) Which group has primary responsibility f or the F ederal Reserve System? Student response: Percent V alue Student Response Answer Choices a. the Congress of the United States 1 00.0% b. the Board of Governors of the F ed c. the twel ve regional F ederal Reserve banks d. the chair man of the F ederal Reserve Score: 3 / 3 Question 7 3 (3 points) Which of the f ollowing is an example of "near money"? Student response: Percent V alue Student Response Answer Choices a. checking accounts b. cash 1 00.0% c. savings accounts d. bank's reserves Score: 3 / 3 Question 7 4 (3 points) Banks could not create money if the reserve req uirement were 1 00%. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 3 / 3 Question 7 5 (3 points) If a bank currentl y has $1 000 in deposits and the req uired reserve ratio is 20%, then that single bank can make loans of Student response: Percent V alue Student Response Answer Choices a. $200. 1 00.0% b. $800. c. $5,000. d. $20,000. Score: 3 / 3 Question 7 6 (3 points) If the reserve req uirement is 12%, the increase in the money suppl y that results from $880,000 in new deposits eq uals __________. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. $7 333,333 , b. $1 ,000,000 c. $1 05,600 d. $74,400 7 Score: 3 / 3 Question 7 7 (3 points) The nominal rate of interest Student response: Percent V alue Student Response Answer Choices a. Rises when the inflation rate rises. b. Rises when the inflation rate falls. 0.0% c. Eq uals the real rate of interest minus the rate of inflation. d. All of the above. Score: 0 / 3 Question 7 8 (3 points) Which of the f ollowing graphs correctl y depicts the change in eq uilibrium in the market f or loanable funds that would result from increased taxes on businesses? Student response: Percent V alue Student Response Answer Choices a. 1 00.0% b. c. d. Score: 3 / 3 Question 79 (3 points) What might cause a household to save less in response to an increase in the nominal interest rate? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. A rise in inflation greater than the rise in the nominal interest rate b. An increase in the real interest rate eq ual to the rise in the nominal interest rate c. a decrease in inflation eq ual to the increase in the nominal interest rate d. an offsetting decrease in the discount rate Score: 3 / 3 Question 80 (3 points) When interest rates rise, households tend to consume _______ and save _______. Student response: Percent V alue Student Response Answer Choices a. more; more b. more; less 1 00.0% c. less; more d. less; less Score: 3 / 3 Question 8 1 (3 points) How would an decrease in consumer income aff ect total output? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Output would fall, because the aggregate demand curve would shift inward. b. Output would fall, because the economy would move up and to the left along the same aggregate demand curve. c. Output would rise, because the aggregate demand curve would shift outward. d. Output would rise, because the economy would move down the aggregate demand curve. Score: 3 / 3 Question 82 (3 points) The aggregate demand curve is a graphical representation of Student response: Percent V alue Student Response Answer Choices a. aggregate spending as a function of income. 1 00.0% b. aggregate spending as a function of the price level. c. government spending as a function of total demand. d. aggregate income as a function of the price level. Score: 3 / 3 Question 83 (3 points) Which of the f ollowing statements about the relationship between aggregate spending and aggregate income is true? Student response: Percent V alue Student Response Answer Choices a. Aggregate income must exceed aggregate spending, or the economy will be in debt. b. Aggregate spending must exceed aggregate income, or the economy will be in debt. 1 00.0% c. Aggregate income always eq uals aggregate spending. d. The relationship between aggregate spending and aggregate income depends on how high the tax rate is. Score: 3 / 3 Question 8 4 (3 points) How would an increase in consumer income aff ect total output? Student response: Percent V alue Student Response Answer Choices a. Output would fall, because the aggregate demand curve would shift inward. b. Output would fall, because the economy would move up the aggregate demand curve. 1 00.0% c. Output would rise, because the aggregate demand curve would shift outward. d. Output would rise, because the economy would move down the aggregate demand curve. Score: 3 / 3 Question 85 (3 points) Real wages decline when Student response: Percent V alue Student Response Answer Choices a. workers are paid less than they are worth. b. fir ms cut back on production in response to a decline in aggregate demand. 1 00.0% c. the price level rises faster than the level of wages. d. the level of wages rises faster than the level of prices. Score: 3 / 3 Question 86 (3 points) When producers expect prices to fall, the short run aggregate suppl y curve Student response: Percent V alue Student Response Answer Choices 1 00.0% a. shifts downward. b. shifts upward. c. pivots upward. d. pivots downward. Score: 3 / 3 Question 8 7 (3 points) Under what circumstances will the economy move to long­run eq uilibrium the fastest? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. If people make decisions using rational expectations b. If people make decisions using adaptive expectations c. The economy moves to eq uilibrium q uickl y regardless of the way people make decisions. Score: 3 / 3 Question 88 (3 points) In the graph below Yf represents the __________, and P1 represents the , __________. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. long run eq uilibrium level of output ; short run level of prices b. short run eq uilibrium level of output ; long run level of prices c. long run eq uilibrium level of output ; long run level of prices d. short run eq uilibrium level of output ; long run level of prices Score: 3 / 3 Question 89 (3 points) In the short run, what happens to the level of output when the government increases its spending? Student response: Percent V alue Student Response Answer Choices a. Aggregate demand shifts outward, decreasing the eq uilibrium level of output. b. Aggregate demand shifts inward, decreasing the eq uilibrium level of out put. 1 00.0% c. Aggregate demand shifts outward, increasing the eq uilibrium level of output. d. Aggregate demand shifts inward, increasing the eq uilibrium level of output. Score: 3 / 3 Question 90 (3 points) Examine the graph below . What would be the natural process by which this economy would move back to a long­run eq uilibrium? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Since output is beyond Yf, suppliers will expect higher future prices and will have to pay more f or resources, which will cause SRAS to shift upward. b. Since output is beyond Yf, suppliers will expect higher future prices and will have to pay more f or resources, which will cause SRAS to shift downward. c. Since output is beyond Yf, suppliers will expect lower future prices and will have to pay less f or resources, which will cause SRAS to shift downward. d. Since unemployment is high, consumers will demand f ewer goods and services, so AD will shift inward. Score: 3 / 3 Question 9 1 (3 points) Imagine that the economy is in a recession. Which one of the f ollowing tactics is a way to increase output by shifting aggregate demand outward? Student response: Percent V alue Student Response Answer Choices a. Raising taxes to increase the government sur plus 1 00.0% b. Increasing government spending c. Increase the req uired reser ve ratio d. Imposing tariffs on f oreign goods Score: 3 / 3 Question 92 (3 points) Proponents of rational expectations believe that an increase in government spending during a time of recession will lead to Student response: Percent V alue Student Response Answer Choices a. an inward shift of the aggregate demand curve. b. a deeper recession due to "crowding out." c. a paradoxical increase in the budget sur plus. 1 00.0% d. an offsetting reduction in spending by households and businesses. Score: 3 / 3 Question 93 (3 points) If the government begins to buy back T reasury bills, which of the f ollowing can you inf er? Student response: Percent V alue Student Response Answer Choices a. G>T b. G=T 1 00.0% c. T>G d. NX>0 Score: 3 / 3 Question 94 (3 points) The goal of Keynesian fiscal policy during a recession is to Student response: Percent V alue Student Response Answer Choices a. do nothing ­ let the economy recover on its own. 1 00.0% b. move the economic eq uilibrium back to the full­employment level by increasing aggregate demand. c. move the economic eq uilibrium back to the full­employment level by decreasing aggregate suppl y . d. reduce long run aggregate suppl so that the economy can reach full y employment without a long period of adjustment. Score: 3 / 3 Question 95 (3 points) Suppose the economy has experienced a suppl y shock and is currentl y at P1 on the graph below . If the F ed does nothing, Student response: Percent V alue Student Response Answer Choices a. aggregate demand will eventuall y increase, bringing the economy back to full employment. 1 00.0% b. excess suppl y will cause prices and wages to fall, and SRAS will move downward toward the full­employment level of output. c. excess demand will cause further increases in prices and wages, causing SRAS to shift upward. Score: 3 / 3 Question 96 (3 points) The belief that money is neutral is most likel y to be endorsed by Student response: Percent V alue Student Response Answer Choices a. Keynesian economists. b. monetarists. 1 00.0% c. classical economists. Score: 3 / 3 Question 9 7 (3 points) The success or failure of monetary policy depends on the speed at which prices adjust. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 3 / 3 Question 98 (3 points) Accommodating monetary policy is intended to Student response: Percent V alue Student Response Answer Choices a. accelerate the crowding­out eff ect. 1 00.0% b. reduce the crowding­out eff ect. c. accommodate suppl y shocks. d. decrease the eff ects of suppl y shocks. Score: 3 / 3 Question 99 (3 points) In the q uantity theory of money , velocity means Student response: Percent V alue Student Response Answer Choices a. the rate of the change in GDP . b. the rate at which business inventories turn over in a year . 1 00.0% c. the rate at which the money suppl y turns over in a year . d. the rate at which the F ed incrases the money suppl y . Score: 3 / 3 Question 1 00 (3 points) Unemployment __________ when real GDP declines. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. rises b. falls c. is unaff ected d. may either rise or fall Score: 3 / 3 T otal score: 285 / 300 = 95.0% V iew Results TEST 5 User ID: hlee9 Attempt : 1 / 1 Out of: 1 50 Started: Jul 2 2005 8:1 y7 , 0pm Finished: Jul 2 2005 8:5 y7 , 4pm T ime spent 43 min. 54 : sec. Student finished 3 hr 6 min., 6 sec. ahead of the 2 , 1 40 min. time limit. Question 1 (3 points) If the government wishes to increase aggregate demand, it could Student response: Percent V alue Student Response Answer Choices 0.0% a. encourage the F ed to increase the money suppl y . b. increase government spending. c. cut taxes. d. do any of the above. Score: 0 / 3 Question 2 (3 points) When domestic prices fall, net exports Student response: Percent V alue Student Response Answer Choices a. rise, becaue exporters earn more f or the goods they sell. b. fall, because exporters earn less f or the goods they sell. 1 00.0% c. rise, because f oreign countries purchase more domestic goods. d. fall, because f oreign countries purchase f ewer domestic goods. Score: 3 / 3 Question 3 (3 points) Suppose consumers and businesses are f eeling insecure about the future of the economy , and people are afraid the economy is entering a recession. How would this aff ect the aggregate demand curve? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Aggregate demand would shift inward because autonomous consumption and investment would probabl y fall. b. This would cause a movement to the left along the same aggregate demand curve. c. Aggregate demand would increase as consumers and businesses increase their expenditures. d. Savings would fall as a result of the insecurity , so aggregate demand would increase. Score: 3 / 3 Question 4 (3 points) When the government raises taxes, total output Student response: Percent V alue Student Response Answer Choices 1 00.0% a. falls, because consumers and businesses reduce their spending. b. rises, because consumers and businesses reduce their spending. c. rises, because the government is able to reduce its deficit. d. rises, because the government has more money to spend. Score: 3 / 3 Question 5 (3 points) What is the eff ect of an autonomous increase in net export on aggregate demand and total output? Student response: Percent V alue Student Response Answer Choices a. The aggregate demand curve shifts inward, reducing the total output. b. The economy moves down the aggregate demand curve, increasing output. c. The economy moves up the aggregate demand curve, reducing output. 1 00.0% d. The aggregate demand curve shifts outward, increasing total output. Score: 3 / 3 Question 6 (3 points) When prices fall, overall consumer spending Student response: Percent V alue Student Response Answer Choices a. declines. 1 00.0% b. rises. c. is unaff ected as long as income remains high. d. remains unchanged, because consumer spending is measured in real, not nominal, ter ms. Score: 3 / 3 Question 7 (3 points) Which of the f ollowing statements about the relationship between aggregate spending and aggregate income is true? Student response: Percent V alue Student Response Answer Choices a. Aggregate income must exceed aggregate spending, or the economy will be in debt. b. Aggregate spending must exceed aggregate income, or the economy will be in debt. 1 00.0% c. Aggregate income always eq uals aggregate spending. d. The relationship between aggregate spending and aggregate income depends on how high the tax rate is. Score: 3 / 3 Question 8 (3 points) Which of the f ollowing statements accuratel describes the eff y ect of a price decrease on investment spending? Student response: Percent V alue Student Response Answer Choices a. Investment spending falls, because interest rates rise. 1 00.0% b. Investment spending rises, because interest rates fall. c. Investment spending rises, because business can now charge more f the or goods they sell. d. Investment spending remains unchanged, because it is measured in real, not nominal, ter ms. Score: 3 / 3 Question 9 (3 points) When prices rise, Student response: Percent V alue Student Response Answer Choices a. real GDP increases. b. f oreign demand increases. 1 00.0% c. the demand f or money increases. d. investment spending increases. Score: 3 / 3 Question 1 0 (3 points) From the microeconomic perspective, the income eff ect occurs when Student response: Percent V alue Student Response Answer Choices a. tax cuts provide more disposable income. b. tax increases provide less disposable income. 1 00.0% c. rising prices decrease consumer wealth and demand. d. increased production leads to an increase in an ecomony's level of income. Score: 3 / 3 Question 1 1 (3 points) An improvement in techonolgy will Student response: Percent V alue Student Response Answer Choices a. shift the long­run aggregate suppl y curve to the left. 1 00.0% b. shift the long­run aggregate suppl y curve to the right. c. increase the slope of the long­run aggregate curve. d. decrease the slope of the long­run aggregate suppl y curve. Score: 3 / 3 Question 12 (3 points) The shape of the long­run aggregate suppl y curve is Student response: Percent V alue Student Response Answer Choices a. upward­sloping. b. downward­sloping. 1 00.0% c. vertical. d. horizontal. Score: 3 / 3 Question 1 3 (3 points) In the short rum, producers____________ when the prices of their goods increase. Student response: Percent V alue Student Response Answer Choices a. reduce output 1 00.0% b. increase output c. raise prices d. lower prices Score: 3 / 3 Question 1 4 (3 points) What is the relationship between the price level and the level of output in the long run? Student response: Percent V alue Student Response Answer Choices a. When the price level rises, output increases. b. When the price level rises, output decreases. c. The relationship depends on how q uickl producers respond to changes in y prices. 1 00.0% d. There is no relationship between the price level and the level of output. Score: 3 / 3 Question 1 5 (3 points) Suppose producers in the economy expect prices to increase in the future. The short­run aggregate suppl will _________, while the long­run aggregate suppl y y will ___________. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. shift upward; not shift b. shift upward; shift left c. shift downward; not shift d. shift downward; shift right Score: 3 / 3 Question 1 6 (3 points) In the long run, the aggregate suppl y curve slopes upward, but in the short run the aggregate suppl y curve is vertical. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 1 (3 points) 7 When prices increase in the short run, Student response: Percent V alue Student Response Answer Choices a. total revenue decreases. b. aggregate demand will increase. 1 00.0% c. fir ms will increase production. d. profit opportunities are lost. Score: 3 / 3 Question 1 8 (3 points) In the short run, suppl shocks cause prices to __________ and the output to y __________. Student response: Percent V alue Student Response Answer Choices a. increase;increase 1 00.0% b. increase;decrease c. decrease;increase d. decrease;decrease Score: 3 / 3 Question 1 9 (3 points) Examine the graph below . This economy is Student response: Percent V alue Student Response Answer Choices 0.0% a. suff ering the eff ects of a suppl y shock . b. producing beyond its full­employment level of output. c. benefiting from and increased pool of resources. d. experiencing high unemployment. Score: 0 / 3 Question 20 (3 points) What is the relationship between aggregate output demanded and the price level? Student response: Percent V alue Student Response Answer Choices a. Aggregate output rises when the price level rises. 1 00.0% b. Aggregate output falls when the price level rises. c. Aggregate output is unaff ected by the price level. d. Aggregate output rises in the short run when the price level rises, but falls in the long run. Score: 3 / 3 Question 2 1 (3 points) Under what circumstances will the economy move to long­run eq uilibrium the fastest? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. If people make decisions using rational expectations b. If people make decisions using adaptive expectations c. The economy moves to eq uilibrium q uickl y regardless of the way people make decisions. Score: 3 / 3 Question 22 (3 points) What is the short run eff ect of a tax increase on the eq uilibrium level of aggregate output and prices in the economy? Student response: Percent V alue Student Response Answer Choices a. Both the level of output and the price level increase. 1 00.0% b. Both the level of output and the price level decrease. c. The level of output decreases and the price level increases. d. The level of output increases and the price level decreases. Score: 3 / 3 Question 23 (3 points) Which of the f ollowing events would shift the short­run aggregate suppl y curve? Student response: Percent V alue Student Response Answer Choices a. A change in output b. A change in aggregate demand 1 00.0% c. A change in technology d. A change in the price level Score: 3 / 3 Question 2 4 (3 points) In the short run, what happens to the level of output when the government increases its spending? Student response: Percent V alue Student Response Answer Choices a. Aggregate demand shifts outward, decreasing the eq uilibrium level of output. b. Aggregate demand shifts inward, decreasing the eq uilibrium level of out put. 1 00.0% c. Aggregate demand shifts outward, increasing the eq uilibrium level of output. d. Aggregate demand shifts inward, increasing the eq uilibrium level of output. Score: 3 / 3 Question 25 (3 points) Suppose the economy is in long­run eq uilibrium, but a war causes the suppl y of resources to decrease. What impact will this have on the economy? Student response: Percent V alue Student Response Answer Choices a. The LRAS and SRAS curves will shift outward, causing prices to fall and output to increase. 1 00.0% b. The LRAS and SRAS curves will shift inward, causing prices to increase and output to fall. c. Onl y the SRAS curve will shift inward, causing prices to increase and output to fall. d. The LRAS, SRAS, and AD curves will shift inward, so onl y output will fall. Score: 3 / 3 Question 26 (3 points) Which of the f ollowing will shift the classical aggregate supl y curve outward? Student response: Percent V alue Student Response Answer Choices a. an increase in the money suppl y b. a depletion of natural resources 0.0% c. a decrease in the aggregate price level d. improvements in technology Score: 0 / 3 Question 2 7 (3 points) Suppose a suppl y shock causes an inward shift of the short­run aggregate suppl y curve. In the short run, Student response: Percent V alue Student Response Answer Choices a. prices and output fall. 1 00.0% b. prices rise, and output falls. c. prices fall, and output rises. d. prices and output rise. Score: 3 / 3 Question 28 (3 points) The amount by which annual government spending exceeds annual government tax revenue is called Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the deficit b. the debt c. the dividend d. M1 Score: 3 / 3 Question 29 (3 points) Which of the f ollowing statements helps to explain why the economy can be slow to recover from a recession? Student response: Percent V alue Student Response Answer Choices a. Workers are less motivated because of reduced expectations, which reduces total output. b. There is not as much money in circulation to fuel new investment. 1 00.0% c. Wages do not fall q uickl y , which delays an adjustment to a higher output level. d. Aggregate suppl shifts inward proportionatel which leads to a "vicious y y , cycle." Score: 3 / 3 Question 30 (3 points) Good deflation is characterized by Student response: Percent V alue Student Response Answer Choices 1 00.0% a. an increase in suppl y at every price. b. a decrease in suppl y at every price. c. an increase in demand at every price. d. a decrease in demand at every price. Score: 3 / 3 Question 3 1 (3 points) In the short run, what happens to the level of output and the level of prices as a result of a technological improvement? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Prices fall and output rises. b. Prices and output rise. c. Prices and output fall. d. None of the above. Score: 3 / 3 Question 32 (3 points) An example of fiscal policy is Student response: Percent V alue Student Response Answer Choices a. buying securities. 1 00.0% b. raising taxes. c. raising the discount rate. d. lowering the req uired reserve ratio. Score: 3 / 3 Question 33 (3 points) A suppl shock will shift the short­run aggregate suppl curve __________ and y y create ______________. Student response: Percent V alue Student Response Answer Choices a. inward; excess suppl y b. outward; excess suppl y 1 00.0% c. inward; excess demand d. outward; excess demand. Score: 3 / 3 Question 3 4 (3 points) What is the goal of automatic stabilizers? Student response: Percent V alue Student Response Answer Choices a. T o reduce the volatility in the currency market 1 00.0% b. T o flatten the peaks and valleys in the business cycle c. T o enhance the multiplier eff ect by increasing the eff ectiveness of fiscal policy d. T o minimize unemployment Score: 3 / 3 Question 35 (3 points) Which of the f ollowing is NOT a type of lag that can delay the desired eff ects of fiscal policy? Student response: Percent V alue Student Response Answer Choices a. Recognition lag 1 00.0% b. Political lag c. Administration lag d. Operational lag Score: 3 / 3 Question 36 (3 points) Suppose a law was passed to authorize more spending on roads, but several months later the first dollar had not been spent. This delay is an example of a(n) Student response: Percent V alue Student Response Answer Choices a. recognition lag b. political lag c. administration lag 1 00.0% d. operational lag Score: 3 / 3 Question 3 7 (3 points) The goal of Keynesian fiscal policy during a recession is to Student response: Percent V alue Student Response Answer Choices a. do nothing ­ let the economy recover on its own. 1 00.0% b. move the economic eq uilibrium back to the full­employment level by increasing aggregate demand. c. move the economic eq uilibrium back to the full­employment level by decreasing aggregate suppl y . d. reduce long run aggregate suppl so that the economy can reach full y employment without a long period of adjustment. Score: 3 / 3 Question 38 (3 points) A flat­payment tax system, e.g., all taxpayers owe the government a flat f ee of $5000 regardless of income, would be an example of an automatic stabilizer . Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 39 (3 points) Which of the f ollowing statements is true? Student response: Percent V alue Student Response Answer Choices a. The multiplier eff ects tends to minimize the eff ects of the business cycle. 1 00.0% b. Automatic stabilizers can partiall y counteract the multiplier eff ect. c. Automatic stabilizers exaggerate the multiplier eff ect. d. Automatic stabilizers eliminate the business cycle. Score: 3 / 3 Question 40 (3 points) If government spending exceeds government revenues, the government runs a budget deficit, which it can pay f or by Student response: Percent V alue Student Response Answer Choices a. reducing spending. b. increasing taxes. 1 00.0% c. issuing T reasury bills. d. raising interest rates. Score: 3 / 3 Question 4 1 (3 points) The f ederal budget deficit increased substantiall y during which of the f ollowing administrations? Student response: Percent V alue Student Response Answer Choices a. The Kennedy Administration 1 00.0% b. The Reagan Administration c. The F ord Administration d. The Nixon Administration Score: 3 / 3 Question 42 (3 points) Most economists believe that, in the short run, an increase in money suppl y will Student response: Percent V alue Student Response Answer Choices a. raise prices by the same proportional amount. 1 00.0% b. increase output. c. decrease output. d. decrease velocity . Score: 3 / 3 Question 43 (3 points) Which of the f ollowing situations would be most likel y to yield "good deflation"? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T echnological change improves workers' productivity . b. There is a suppl y shock in the energy industry . c. Consumers, f eeling good about the future, start spending more money . d. The government runs a sur plus, reducing the crowding­out eff ect. Score: 3 / 3 Question 4 4 (3 points) The belief that money is neutral is most likel y to be endorsed by Student response: Percent V alue Student Response Answer Choices a. Keynesian economists. b. monetarists. 1 00.0% c. classical economists. Score: 3 / 3 Question 45 (3 points) Suppose the economy has experienced a suppl y shock and is currentl y at P1 on the graph below . If the F ed does nothing, Student response: Percent V alue Student Response Answer Choices a. aggregate demand will eventuall y increase, bringing the economy back to full employment. 1 00.0% b. excess suppl y will cause prices and wages to fall, and SRAS will move downward toward the full­employment level of output. c. excess demand will cause further increases in prices and wages, causing SRAS to shift upward. Score: 3 / 3 Question 46 (3 points) Expansionary monetary policy shifts the aggregate demand curve outward. Student response: Percent V alue Student Response Answer Choices a. T rue 0.0% b. False Score: 0 / 3 Question 4 7 (3 points) If GDP is $4 trillion and the money suppl y is $1 trillion, what can be concluded? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. velocity = 4 b. velocity = 1/4 c. prices = 4 d. prices = 1/4 Score: 3 / 3 Question 48 (3 points) Ref er to the graph below . If the F ed wants to bring the economy back to the full­ employment level of output, it can intervene with _______ monetary policy , which will _________ prices in the long run. Student response: Percent V alue Student Response Answer Choices a. contractionary ; decrease b. contractionary ; increase c. expansionary ; decrease 1 00.0% d. expansionary ; increase Score: 3 / 3 Question 49 (3 points) In the long run, what is the eff ect of an increase in the money suppl y? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Inflation b. Crowding out of private investment c. An increase in aggregate demand d. Stagflation Score: 3 / 3 Question 50 (3 points) Which of the f olowing tools can the F ederal Reserve use to lower interest rates? Student response: Percent V alue Student Response Answer Choices a. increasing the discount rate b. raising the reserve req uirement 1 00.0% c. buying T reasury bills d. selling T reasury bills Score: 3 / 3 T otal score: 1 38 / 1 50 = 92.0% The U .S. dollar is considered money because Student response: Percent V alue Student Response Answer Choices a. it is convertible to gold or sil . ver b. it is easil y portable. 1 00.0% c. it has been decreed by the U .S. government as legal tender . d. all of the above. Score: 3 / 3 Question 2 (3 points) The opportunity cost of money is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the interest rate. b. the price of stocks. c. the price level. d. real GDP . Score: 3 / 3 Question 3 (3 points) One common problem with commodity money is that Student response: Percent V alue Student Response Answer Choices a. it has little intrinsic value. b. it is not useful as a unit of account. 1 00.0% c. it may not be divisible. d. gold is in short suppl y . Score: 3 / 3 Question 4 (3 points) Which of the f ollowing is a false statement about paper money? Student response: Percent V alue Student Response Answer Choices 0.0% a. P aper money is a f m of fiat money or . b. P aper money has no intrinsic value. c. Most ma jor currencies today are paper money . d. All of these statements are true. Score: 0 / 3 Question 5 (3 points) Which of the f ollowing actions would most eff ectivel y reduce the demand f or money? Student response: Percent V alue Student Response Answer Choices 0.0% a. cutting taxes b. sending tax rebate checks to all American households c. mandating price increases on key consumer goods d. none of the above Score: 0 / 3 Question 6 (3 points) If income decreases, which of the f ollowing will occur? Student response: Percent V alue Student Response Answer Choices a. Money suppl y will shift left. b. Money demand will shift left. 0.0% c. The interest rate will increase. Score: 0 / 3 Question 7 (3 points) If the money suppl y increases, then interest rates will rise. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 8 (3 points) Look at the graph below . If the interest rate is R1 , then Student response: Percent V alue Student Response Answer Choices a. the money suppl y curve will shift to the left until the money market is in eq uilibrium. b. the money demand curve will shift to the right until the money market is in eq uilibrium. 1 00.0% c. the interest rate will fall until the money market is in eq uilibrium. d. any of the above can happen. Score: 3 / 3 Question 9 (3 points) Look at the graph below . If the interest rate is R1 , people use the excess suppl y of money to buy bonds. This means that Student response: Percent V alue Student Response Answer Choices a. the MD curve will shift to the right. b. the MS curve will shift to the left. 1 00.0% c. issuers of bonds can lower the interest rate. d. issuers of bonds can raise the interest rate. Score: 3 / 3 Question 1 0 (3 points) If the interest rate is below its eq uilibrium value, Student response: Percent V alue Student Response Answer Choices a. people buy bonds to increase the interest rate. 1 00.0% b. issuers of bonds off er higher interest rates to induce people to hold bonds instead of money . c. both a and b. d. neither a nor b. Score: 3 / 3 Question 1 1 (3 points) Which of the f ollowing will cause the money demand curve to shift to the left? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. income decreases b. interest rates rise c. prices rise d. the F ed sells bonds Score: 3 / 3 Question 12 (3 points) If Emil y writes a check f or her groceries, she is using money as a Student response: Percent V alue Student Response Answer Choices 1 00.0% a. medium of exchange. b. store of value. c. unit of account. d. means of liq uidity . Score: 3 / 3 Question 1 3 (3 points) Exchanges of stocks take place in Student response: Percent V alue Student Response Answer Choices 1 00.0% a. centralized physical locations known as stock exchanges and online through internet brokers. b. New Y ork City onl y . c. the principal financial city of each country , such as New Y ork City f or the United States and London f or England. d. a decentralized fashion around the world. Score: 3 / 3 Question 1 4 (3 points) A share of stock in a cor poration is a Student response: Percent V alue Student Response Answer Choices a. guarantee to a fixed amount of income from the cor poration. b. legal claim to a lump­sum payment at a specified point of time in the future. c. legal claim to a dividend, regardless of the cor poration's ability to pay its interest payments. 1 00.0% d. legal claim to a share of the company's future profits. Score: 3 / 3 Question 1 5 (3 points) Owning the bond of a company Student response: Percent V alue Student Response Answer Choices a. is eq uivalent to owning stock in the company . b. means that you profit if the company loses money . 1 00.0% c. means that the company owes you money . d. means that you owe the company money . Score: 3 / 3 Question 1 6 (3 points) A legal claim against a fir m that usuall entitles the owner of the claim to y receive a fixed annual coupon payment, plus a lump­sum payment at some future date, is known as Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a bond. b. a share of stock . c. a dividend payment. d. a reinvestment coupon. Score: 3 / 3 Question 1 (3 points) 7 If profits are reinvested in the cor poration, then Student response: Percent V alue Student Response Answer Choices a. payments made to bondholders will be less. b. there is less available to distribute to stockholders. c. the company will sell more bonds in order to pay dividends to stockholders. 0.0% d. the high profits indicate that common stockholders will get larger dividends than nor mal. Score: 0 / 3 Question 1 8 (3 points) The person least likel to receive a payment from a cor poration in a year of y losses is the Student response: Percent V alue Student Response Answer Choices a. bank that loaned money to the cor poration. 0.0% b. bondholder . c. stockholder . Score: 0 / 3 Question 1 9 (3 points) Financial inter mediation is best defined as the process by which Student response: Percent V alue Student Response Answer Choices a. inflation is controlled. b. cor porations issue new stock . c. liabilities are liq uidated. 1 00.0% d. financial institutions accept savings from savers and make loans to investors. Score: 3 / 3 Question 20 (3 points) Suppose you will receive an inheritance in 20 years worth $5 million. If the interest rate is 8 percent, the present value of the inheritance is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. $1 7 .05 million. b. $2 million. c. $5 million. d. $40 million. Score: 3 / 3 Question 2 1 (3 points) Which of the f ollowing f mulas expresses the true relationship between savings or and investment? Student response: Percent V alue Student Response Answer Choices a. I+(T ­G)­NX = S b. I+G­NX=S c. S+T ­NX=I 1 00.0% d. S+(T ­G)­NX=I Score: 3 / 3 Question 22 (3 points) Imagine that an entrepreneur has raised $1 million to pursue a business 0 opportunity $5 million was raised in debt financing with 8% fixed annual . interest, and $5 million was raised in eq uity financing. (The entrepreneur is paid a salary but has no eq uity stake.) After one year , the entrepreneur shuts down the venture, having earned $1 million. How much did the eq uity holders 3 make? Student response: Percent V alue Student Response Answer Choices a. $6.5 million 1 00.0% b. $76 million . c. $5 million d. $6.96 million Score: 3 / 3 Question 23 (3 points) There is an inverse relationship between a country's standard of living and its rate of savings and investment. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 2 4 (3 points) Open market operations ref er to Student response: Percent V alue Student Response Answer Choices a. F ed policies designed to open f oreign markets to domesticall y produced goods and services. 1 00.0% b. the F buying and selling government securities to influence key ed interest rates. c. F ed policies designed to stimulate the banking system. d. none of the above. Score: 3 / 3 Question 25 (3 points) The F ed can aff ect interest rates by Student response: Percent V alue Student Response Answer Choices a. changing the reserve req uirements. b. changing the discount rate. c. open market operations. 1 00.0% d. all of the above. Score: 3 / 3 Question 26 (3 points) When the F ed increases the discount rate, Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the money suppl y curve shifts to the left. b. the money suppl y curve shifts to the right. c. the money demand curve shifts to the left. d. the money demand curve shifts to the right. Score: 3 / 3 Question 2 7 (3 points) Which of the f ollowing is NOT a tool of monetary policy used by the F ed? Student response: Percent V alue Student Response Answer Choices a. deter mining the discount rate b. setting the reserve req uirement 1 00.0% c. adjusting the market interest rate d. conducting open market operations Score: 3 / 3 Question 28 (3 points) When the F ed purchases government bonds, Student response: Percent V alue Student Response Answer Choices a. the money suppl y curve shifts to the left. 1 00.0% b. the money suppl y curve shifts to the right. c. the money demand curve shifts to the left. d. the money demand curve shifts to the right. Score: 3 / 3 Question 29 (3 points) If the F ed decreases reserve req uirements, which of the f ollowing is true? Student response: Percent V alue Student Response Answer Choices a. This is called a tightening of the money suppl y . 0.0% b. Money suppl y will shift left. c. The eq uilibrium interest rate will increase. d. None of the above are true. Score: 0 / 3 Question 30 (3 points) Which of the f ollowing is NOT a function of the F ederal Reserve System? Student response: Percent V alue Student Response Answer Choices a. T o issue currency . b. T o regulate financial institutions. c. T o provide banking services f or the f ederal government. 1 00.0% d. T o regulate the stock markets. Score: 3 / 3 Question 3 1 (3 points) When we say the F ed is the "lender of last resort," we mean Student response: Percent V alue Student Response Answer Choices a. if the government cannot borrow money anywhere else, it goes to the F ed f or funds. b. it provides short­ter m financial help to businesses and individuals who cannot get loans elsewhere. 1 00.0% c. it extends credit to financial institutions experiencing temporary difficulties, but financial institutions pref er not to borrow from the F ed. d. it lends money to the U .S. T reasury to help fund new currency . Score: 3 / 3 Question 32 (3 points) Which of the f ollowing is NOT a monetary policy tool of the F ed? Student response: Percent V alue Student Response Answer Choices a. the req uired reserve ratio 1 00.0% b. the prime rate c. the discount rate d. open market operations Score: 3 / 3 Question 33 (3 points) When Bank A makes loans, and the money is deposited into a diff erent bank , Bank B, Student response: Percent V alue Student Response Answer Choices 0.0% a. the total amount of deposits at Bank A decreases. b. the total amount of deposits at Bank B increases. c. the total amount of loans at Bank A decreases. d. none of the above. Score: 0 / 3 Question 3 4 (3 points) If the F ed buys $1 000 in bonds from bank A, then Student response: Percent V alue Student Response Answer Choices 1 00.0% a. bank A will increase its loans. b. bank A will decrease its loans. c. bank A will decrease its deposits. Score: 3 / 3 Question 35 (3 points) Banks could not create money if the reserve req uirement were 1 00%. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 3 / 3 Question 36 (3 points) Which of the F ed's tools has become largel y symbolic? Student response: Percent V alue Student Response Answer Choices a. altering the req uired reserve ratio 1 00.0% b. changing the discount rate c. buying or selling securities on the open market d. lowering bank taxes Score: 3 / 3 Question 3 7 (3 points) Use this inf mation to answer the next three q uestions. Suppose someone deposits or $500 cash in her checking account after selling a government bond, so that the bank's reserves and deposits increase by $500. If the legal reserve req uirement is 5% (0.05), how much is this bank req uired to hold on reserve? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. $25 b. $250 c. $45 7 d. $500 e. none of the above Score: 3 / 3 Question 38 (3 points) What is the deposit multiplier? Student response: Percent V alue Student Response Answer Choices a. 5 b. 50 1 00.0% c. 20 d. 0.05 e. none of the above Score: 3 / 3 Question 39 (3 points) What is the total amount by which the money suppl y can increase as a result of the initial $500 deposit? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. $1 0,000 b. $500 c. $2500 d. none of the above. Score: 3 / 3 Question 40 (3 points) Suppose the reserve req uirement is 1 0 percent. If the F ed sells $1 000 in bonds to bank A, then the money suppl y will Student response: Percent V alue Student Response Answer Choices a. increase by $1 000. b. decrease by $1 000. c. increase by $1 0,000. 1 00.0% d. decrease by $1 0,000. Score: 3 / 3 Question 4 1 (3 points) Suppose the reserve req uirement is 1 0 percent. If the F ed buys $1 000 in bonds from bank A, then the F ed credits the reserves at bank A with a(n) Student response: Percent V alue Student Response Answer Choices a. increase of $1 00. 1 00.0% b. increase of $1 000. c. decrease of $1 00. d. decrease of $1 000. Score: 3 / 3 Question 42 (3 points) In practice, which tool does the F ed use most often to increase or decrease the money suppl y? Student response: Percent V alue Student Response Answer Choices 0.0% a. req uired reserve ratio b. discount rate c. prime rate d. open market operations Score: 0 / 3 Question 43 (3 points) The nominal rate of interest Student response: Percent V alue Student Response Answer Choices a. Rises when the inflation rate rises. b. Rises when the inflation rate falls. c. Eq uals the real rate of interest minus the rate of inflation. 0.0% d. All of the above. Score: 0 / 3 Question 4 4 (3 points) Which of the f ollowing f mulas is correct? or Student response: Percent V alue Student Response Answer Choices 0.0% a. nominal interest rate = price + % change in real interest rate b. nominal interest rate = real interest rate + % change in prices c. real interest rate = price + % change in nominal interest rate d. real interest rate = price + nominalinterest rate Score: 0 / 3 Question 45 (3 points) The real rate of interest Student response: Percent V alue Student Response Answer Choices a. Eq uals the nominal rate of interest plus the rate of inflation. 1 00.0% b. Eq uals the nominal rate of interest minus the rate of inflation. c. Eq uals the nominal rate of interest when there is deflation. d. None of the above. Score: 3 / 3 Question 46 (3 points) At higher interest rates, businesses Student response: Percent V alue Student Response Answer Choices a. demand f or loanable funds increases. b. suppl y of loanable funds falls. 1 00.0% c. want to borrow less money . d. want to borrow more money . Score: 3 / 3 Question 4 7 (3 points) The demand curve f or loanable funds is Student response: Percent V alue Student Response Answer Choices a. horizontal. b. vertical. c. upward sloping. 1 00.0% d. downward sloping. Score: 3 / 3 Question 48 (3 points) The demand curve f or loanable funds by businesses is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. downward sloping because more investment projects are profitable the lower the interest rate. b. downward sloping because of the law of diminishing marginal utility . c. horizontal because they can borrow as much as they want at the current interest rate. d. of an indeter minate slope because business investment decisions tend to be related more to "animal spirits" than to rational decision making. Score: 3 / 3 Question 49 (3 points) Which of the f ollowing graphs correctl y depicts the change in eq uilibrium in the market f or loanable funds that would result from the government running a larger budget sur plus? Student response: Percent V alue Student Response Answer Choices a. 0.0% b. c. d. Score: 0 / 3 Question 50 (3 points) Excess suppl y of loanable funds causes an upward adjustment of the interest rate. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False (‚g “ .. ( 7@ @@ . ) Macroeconomics is concerned primaril y with Student response: Percent V alue Student Response Answer Choices a. the way things are produced. b. the prices of particular goods and services. c. the behavior of consumers. 1 00.0% d. the perf mance of the aggregate economy or . Score: 3 / 3 Question 2 (3 points) Economic models might look at i. The relationship between government tax policies and incomes. ii. The relationship between new construction and the price of homes in the market f or housing. iii. The relationship between inflation and unemployment. Which of these models would be used by someone studying macroeconomics? Student response: Percent V alue Student Response Answer Choices a. onl y iii b. ii and iii 1 00.0% c. i and iii d. onl y ii Score: 3 / 3 Question 3 (3 points) The fundamental issue of economics is to Student response: Percent V alue Student Response Answer Choices a. allow everyone to have five yachts and two automobiles. b. redistribute income and eliminate poverty . c. reduce unemployment so that lower welfare payments are necessary . 1 00.0% d. learn to cope with the scarcity of virtuall y all resources. Score: 3 / 3 Question 4 (3 points) Eliminating important details in economic anal ysis is necessary to understand the complexity of the economy . Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 5 (3 points) An example of a nor mative macroeconomic q uestion is Student response: Percent V alue Student Response Answer Choices a. does government spending increase unemployment? b. does government spending increase inflation? c. do government actions increase growth in the economy? 1 00.0% d. does government spending increase economic well­being? Score: 3 / 3 Question 6 (3 points) Which of the f ollowing is an example of a positive statement? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. If you drop a q uarter off the top of the Sears T ower in Chicago, it will fall to the ground. b. The minimum wage should be raised to $7 and hour . c. There is too much crime in the United States; something should be done about it. d. People should learn to love each other . Score: 3 / 3 Question 7 (3 points) Which would be least consistent with the kind of rational decision­making assumed in economics? Student response: Percent V alue Student Response Answer Choices a. Alfred chooses love over money . b. Bernice acts on the basis of faulty inf mation and, as a result, makes a or mistake. 1 00.0% c. Carlisle chooses the more costl of two ways to achieve a given end y because he does not care about costs. d. Daphne contributes some of her income to charity . Score: 3 / 3 Question 8 (3 points) There are not enough of f our goods to satisfy the wants of people. F or good A, this is true when the price is $1 0. This is true f or good B at a price of $1 or , f good C at a price of 25 cents, and f or good D at a price of zero. Which situation reflects scarcity rather than shortage? Student response: Percent V alue Student Response Answer Choices a. A b. C 1 00.0% c. D d. B Score: 3 / 3 Question 9 (3 points) Fred and Ann both decide to see the same movie when they are given free movie tickets. We know that Student response: Percent V alue Student Response Answer Choices 1 00.0% a. both bear an opportunity cost since they could have done other things instead of see the movie. b. both bear the same opportunity cost since they are doing the same thing. c. the cost of going to the movie is greater f or the one who had more choices to do other things. d. neither bear an opportunity cost because the tickets were free. Score: 3 / 3 Question 1 0 (3 points) The government plays almost no role in the U .S. economy . Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 1 1 (3 points) In a laissez­faire system, individuals and the government make all economic decisions. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 12 (3 points) Which of the f ollowing statements is correct? Student response: Percent V alue Student Response Answer Choices a. China is a pure command economy . b. Singapore is a pure market economy . c. The United States is a pure market economy . 1 00.0% d. All economies in the world are a mixture of command and market elements. Score: 3 / 3 Question 1 3 (3 points) Economics is a social science rather than a "hard" science like physics because Student response: Percent V alue Student Response Answer Choices a. economists abstract from reality in creating their theories. b. economics is easier to study than physics. c. economists must explain their theories to policy makers who lack f mal or mathematical training. 1 00.0% d. economists study human behavior , which is aff ected by an unpredictable and vast range of influences. Score: 3 / 3 Question 1 4 (3 points) T o decide how to allocate scarce resources, a laissez­faire economic system relies on Student response: Percent V alue Student Response Answer Choices a. central planning. 1 00.0% b. prices. c. barter . d. a mix of planning and markets. Score: 3 / 3 Question 1 5 (3 points) An example of a real variable is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the change in the number of cars produced from one year to the next. b. the change in the price of cars from one year to the next. c. the change in a person's salary from one year to the next. d. the increase in the minimum wage. Score: 3 / 3 Question 1 6 (3 points) If a curve has a negative slope, then Student response: Percent V alue Student Response Answer Choices 1 00.0% a. one variable falls as the other rises. b. one variable does not change. c. one variable has a smaller value than another . d. one variable changes after another variable. Score: 3 / 3 Question 1 (3 points) 7 The slope is defined as: Student response: Percent V alue Student Response Answer Choices a. Rise + run 1 00.0% b. The rise divided by the run. c. Change in X divided by the change in Y d. Simpl y the change in the Y variable Score: 3 / 3 Question 1 8 (3 points) A direct relationship between two variables indicates that Student response: Percent V alue Student Response Answer Choices 1 00.0% a. they are positivel y related. b. a change in one will not aff ect the other . c. the slope is negative. d. an increase in one will cause a decrease in the other . Score: 3 / 3 Question 1 9 (3 points) The origin of a graph is the point at which Student response: Percent V alue Student Response Answer Choices a. a demand curve starts. b. both variables have positive values. 1 00.0% c. both variables have values eq ual to zero. d. any two curves on the graph intersect. Score: 3 / 3 Question 20 (3 points) Graphs are always used to keep track of three variables simultaneousl y . Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 2 1 (3 points) A line that is tangent to a curve Student response: Percent V alue Student Response Answer Choices 1 00.0% a. shares one point with the curve. b. shares two points with the curve. c. shares no points with the curve. d. All of the above are correct. Score: 3 / 3 Question 22 (3 points) The algebraic f mula f or or a straight line is Student response: Percent V alue Student Response Answer Choices a. a = y + bx 1 00.0% b. y = a + bx c. b = a + yx d. x = a + by Score: 3 / 3 Question 23 (3 points) The data used to construct a graph can show a steep line or a flat line depending on how the axes are measured. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 3 / 3 Question 2 4 (3 points) Given the eq uation f or a linear function, y = 20 + 0.67x, what is the value of y when x is zero? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. 20 b. 0.67 c. 1 3.4 d. zero Score: 3 / 3 Question 25 (3 points) A relativel y flat demand curve indicates that the demand f or a product is very sensitive to a change in price. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 3 / 3 Question 26 (3 points) Whenever a society f orgoes current consumption to invest in capital goods, the Student response: Percent V alue Student Response Answer Choices a. less the society can consume next year . b. easier it will be f the society to consume less in the future because or people will become accustomed to less. 1 00.0% c. more the society can produce and consume in the future. d. less capital the society can produce in the future. Score: 3 / 3 Question 2 7 (3 points) In the f ollowing figure, a point such as A Student response: Percent V alue Student Response Answer Choices a. is pref erable over B. 1 00.0% b. is an efficient use of resources. c. is a misallocation of resources. d. is not obtainable. Score: 3 / 3 Question 28 (3 points) Which of the points in the graph are efficient? Student response: Percent V alue Student Response Answer Choices a. C and F onl y b. C, D and F onl y c. A, C, D, F and G onl , y 1 00.0% d. A, C, F and G onl , y Score: 3 / 3 Question 29 (3 points) The graph shows a production possibilities curve f or a student who spends 8 hours a week studying. How could the student get a B in both classes? Student response: Percent V alue Student Response Answer Choices a. The student could spend 5 hours on economics and 3 on marketing. b. The student could spend 5 hours on marketing and 3 on marketing. 1 00.0% c. The student could increase the total amount of time studying on economics and marketing. d. The student cannot get a B in both classes. Score: 3 / 3 Question 30 (3 points) A point outside a production possibilities curve indicates Student response: Percent V alue Student Response Answer Choices a. that resources are not being used efficientl y . 1 00.0% b. an output combination that society cannot attain given its current level of resources and technology . c. that resources are being used very efficientl y . d. that both goods are characterized by increasing costs. Score: 3 / 3 Question 3 1 (3 points) The production possibilities frontier illustrates Student response: Percent V alue Student Response Answer Choices a. the constant rate of technological progress. 1 00.0% b. the fundamental concept of scarcity . c. the rapid growth in the U .S. economy . d. that coal always trades f or parkland. Score: 3 / 3 Question 32 (3 points) An efficient allocation of resources exists if Student response: Percent V alue Student Response Answer Choices a. one group of people can get more of the things they want without someone else having to give up anything. 1 00.0% b. no one can get more of the things he wants without someone else having to give up something. c. the economy operates at any point under the production possibilities frontier . d. the economy is operating at any point above the production possibilities frontier . Score: 3 / 3 Question 33 (3 points) The shape of this PPF indicates that Student response: Percent V alue Student Response Answer Choices a. the opportunity cost of producing beef is the same as the opportunity cost of producing wheat. 1 00.0% b. as beef production increases, its opportunity cost increases. c. as beef production increases, its opportunity cost decreases. d. as beef production increases, its opportunity cost is constant. Score: 3 / 3 Question 3 4 (3 points) Any point inside the production possibilities frontier is Student response: Percent V alue Student Response Answer Choices a. efficient. 1 00.0% b. inefficient. c. unattainable. d. irrelevant. Score: 3 / 3 Question 35 (3 points) The reason that most PPFs are bowed outward (concave) rather than a straight line is that most resources used in production are Student response: Percent V alue Student Response Answer Choices a. eq uall y suited f or the production of all goods. 1 00.0% b. better suited f or some goods than others. c. used efficientl y in production. d. relativel y more expensive at low levels of production. Score: 3 / 3 Question 36 (3 points) In the figure, how many units of corn are produced at point a? Student response: Percent V alue Student Response Answer Choices a. 2000 1 00.0% b. 2500 c. 3000 d. We can't tell without more inf mation. or Score: 3 / 3 Question 3 7 (3 points) A improvement in technology Student response: Percent V alue Student Response Answer Choices a. will shift the PPF inward. b. will not shift the PPF . 0.0% c. will be shown as a movement from one point to another along the same PPF . d. will shift the PPF outward. Score: 0 / 3 Question 38 (3 points) Any combination of two goods l ying outside the production possibilities frontier Student response: Percent V alue Student Response Answer Choices a. represents the most efficient use of resources. b. req uires f ewer resources than are presentl y available. 1 00.0% c. represents an unattainable combination of goods. d. represents an inefficient combination of goods. Score: 3 / 3 Question 39 (3 points) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 labor hours to produce one computer The 5 . opportunity cost of one computer in France is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. 3 bushels of wheat. b. 1/3 bushel of wheat. c. 4 computers. d. 7 5 labor hours. Score: 3 / 3 Question 40 (3 points) A person has a comparative advantage in an activity whenever she Student response: Percent V alue Student Response Answer Choices a. has an absolute advantage in the activity . 1 00.0% b. can perf m the activity at a lower opportunity cost than can another or person. c. can do the activity in less time than anyone else. d. can do everything better than anyone else. Score: 3 / 3 Question 4 1 (3 points) The ability to produce a particular good using f ewer resources than a second country is Student response: Percent V alue Student Response Answer Choices a. comparative advantage. 1 00.0% b. absolute advantage. c. an unfair advantage. d. a means of securing higher ter ms of trade. Score: 3 / 3 Question 42 (3 points) Which good a country specializes in is deter mined by Student response: Percent V alue Student Response Answer Choices a. unemployment in the country relative to other countries. b. inflation in the country relative to other countries. c. absolute advantage. 1 00.0% d. comparative advantage. Score: 3 / 3 Question 43 (3 points) Generall y , specialization leads to Student response: Percent V alue Student Response Answer Choices a. constant opportunity costs. b. greater productivity . 0.0% c. the production of f ewer capital goods. d. greater self­reliance. Score: 0 / 3 Question 4 4 (3 points) Comparative advantage is deter mined by comparing the slopes of production possibilities frontiers. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 3 / 3 Question 45 (3 points) The f ollowing table illustrates the production possibilities f or two countries if they use all of their resources producing televisions and milk . T elevision Milk Bovinia 1 5 1 5 Myopia 1 0 5 Which of the f ollowing is true f or these countries? Student response: Percent V alue Student Response Answer Choices a. Bovinia has a comparative advantage in both televisions and milk . b. In the absence of trade, Myopia would never produce milk , because it has a comparative advantage in producing televisions. c. Bovinia would never benefit from trade with Myopia, because it has an absolute advantage in producing both goods. 1 00.0% d. Bovinia has a comparative advantage as well as an absolute advantage in producing milk . Score: 3 / 3 Question 46 (3 points) The f ollowing is a schedule comparing output per worker f or wheat and oil in Alpha and Omega. Wheat (in bushels) Oil (in barrels) ALPHA 500 40 OMEGA 1 00 80 Which country has the absolute advantage in wheat production, and which country has the absolute advantage in oil production? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Alpha has the absolute advantage in wheat Omega has the absolute ; advantage in oil. b. Omega has the absolute advantage in wheat ; Alpha has the absolute advantage in oil. c. Alpha has the absolute advantage in both goods. d. Omega has the absolute advantage in both goods. Score: 3 / 3 Question 4 7 (3 points) Comparative advantage is always a(n) ______ concept. Student response: Percent V alue Student Response Answer Choices a. absolute b. efficiency 1 00.0% c. relative d. monetary Score: 3 / 3 Question 48 (3 points) Division of labor increases the output of society by Student response: Percent V alue Student Response Answer Choices a. eliminating scarcity . b. reducing the choices people have to make to a more manageable number . c. ensuring that people are happier in perf ming their work or . 1 00.0% d. allowing resources to specialize in the tasks f which they have a or comparative advantage. Score: 3 / 3 Question 49 (3 points) The ter m "comparative disadvantage" means one party in a trade Student response: Percent V alue Student Response Answer Choices a. has a lower opportunity cost than its trading partner . 1 00.0% b. has a higher opportunity cost than its trading partner . c. has an absolute advantage in the goods that it is trading. d. has no basis f or trade with a trading partner . Score: 3 / 3 Question 50 (3 points) If trade benefits one country , it will make the other country worse off. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False V iew Results TEST 1 User ID: hsong2 Attempt : 1 / 1 Out of: 1 00 Started: June 23, 2005 9:05pm Finished: June 23, 2005 1 0:00pm T ime spent : 54 min. 55 sec. Student finished 2 hr , 5 min., 5 sec. ahead of the 1 80 min. time limit. Question 1 (2 points) Macroeconomics f ocuses on: Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. decisions made by individual households and fir ms. 1 00.0% b. aggregates or total economic q uantities like overall unemployment. 0.0% c. individual fir m decisions regarding product output and price. 0.0% d. household reaction to tax change. Score: 0 / 2 Question 2 (2 points) Economic models Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. are always based on realistic assumptions. 0.0% b. usuall y predict perf ectl y . 0.0% c. are too simple to be of much use. 1 00.0% d. are used to describe cause and eff ect relationships. Score: 0 / 2 Question 3 (2 points) Economics is: Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the study of how limited resources are allocated to satisfy unlimited wants. 0.0% b. the study of how unlimited resources are allocated to satisfy limited wants. 0.0% c. how to make money in the stock market. 0.0% d. none of the above. Score: 2 / 2 Question 4 (2 points) Eliminating important details in economic anal ysis is necessary to understand the complexity of the economy . Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 5 (2 points) Which of the f ollowing is an example of a nor mative statement? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Economists should limit their work to positive anal ysis. 0.0% b. If people are rational they will respond to incentives. 0.0% c. If income falls by 1 0 percent, consumption on gasoline will increase by 5 percent. 0.0% d. Economics ma jors make larger salaries than accounting ma jors. Score: 0 / 2 Question 6 (2 points) An example of a positive macroeconomic q uestion is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. whether government policy makers react to rising unemployment. 0.0% b. whether government policy makers react correctl y to rising unemployment. 0.0% c. both a and b. 0.0% d. neither a nor b. Score: 2 / 2 Question 7 (2 points) Which would be least consistent with the kind of rational decision­making assumed in economics? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Alfred chooses love over money . 0.0% b. Bernice acts on the basis of faulty inf mation and, as a result, makes or a mistake. 1 00.0% c. Carlisle chooses the more costl y of two ways to achieve a given end because he does not care about costs. 0.0% d. Daphne contributes some of her income to charity . Score: 2 / 2 Question 8 (2 points) The problem of economic scarcity applies Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. onl y in industriall y developed countries because resources are scarce. 0.0% b. onl in underdeveloped countries because there are no productive y resources. 0.0% c. onl in economic systems that are just beginning to develop because y specialized resources are scarce. 1 00.0% d. to all economic systems, regardless of their level of development. Score: 2 / 2 Question 9 (2 points) Fred and Ann both decide to see the same movie when they are given free movie tickets. We know that Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. both bear an opportunity cost since they could have done other things instead of see the movie. 0.0% b. both bear the same opportunity cost since they are doing the same thing. 0.0% c. the cost of going to the movie is greater f or the one who had more choices to do other things. 0.0% d. neither bear an opportunity cost because the tickets were free. Score: 0 / 2 Question 1 0 (2 points) According to Adam Smith, which of the f ollowing statements is true? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. People pursuing their own self­interest can lead to poor outcomes, such as pollution. 0.0% b. T oo much monopol y power can become a problem when people are allowed to pursue their own self­interest. 0.0% c. A market system may not do a good job of providing f or the poor . 1 00.0% d. All of the above are true. Score: 2 / 2 Question 1 1 (2 points) In a laissez­faire system, individuals and the government make all economic decisions. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 12 (2 points) Microeconomics approaches the study of economics from the viewpoint of Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. small economic units, such as consumers, fir ms, and units of government. 0.0% b. f oreign governments. 0.0% c. inflation, unemployment, and economic growth. 0.0% d. all of the above are correct. Score: 2 / 2 Question 1 3 (2 points) A friend recommends a movie and you go see it, expecting that you will like it. However you think it is the worst movie you have seen in years, and wish you , hadn't wasted your money on it. This situation Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. shows the rationality assumption is false because you were worse off f or seeing the movie. 0.0% b. shows that you behaved irrationall because you didn't get enough y inf mation about the movie bef or ore seeing it. 1 00.0% c. is consistent with rational behavior because you had thought that you were going to like the movie. Score: 0 / 2 Question 1 4 (2 points) Consumers generall y express their self­interest by Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. attempting to find the lowest price f or a product. 0.0% b. maximizing profits. 0.0% c. finding jobs with the highest wages. 0.0% d. minimizing their economic losses. Score: 2 / 2 Question 1 5 (2 points) Economics addresses such issues as Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. how goods will be produced. 0.0% b. what goods to produce. 0.0% c. who will get the goods that are produced. 1 00.0% d. All of the above are correct. Score: 2 / 2 Question 1 6 (2 points) The slope of a straight line Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. is the rise over the run. 0.0% b. is constant along the whole curve. 0.0% c. will be negative if there is an inverse relationship between the variables. 1 00.0% d. All of the above are true. Score: 2 / 2 Question 1 (2 points) 7 Slope is measured as run/rise. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 1 8 (2 points) A direct relationship between two variables indicates that Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. they are positivel y related. 0.0% b. a change in one will not aff ect the other . 0.0% c. the slope is negative. 0.0% d. an increase in one will cause a decrease in the other . Score: 2 / 2 Question 1 9 (2 points) A graph's origin is the point of intersection of all lines or curves in the graph. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 20 (2 points) Graphs are always used to keep track of three variables simultaneousl y . Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 2 1 (2 points) A tangent is: Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. A straight line that shares a single point with another curve 0.0% b. A straight line that bisects a non­linear curve 0.0% c. The slope of the line segment between 2 points of a non­linear curve 0.0% d. A non­linear curve that gets close to, but never touches, the X or Y axis Score: 2 / 2 Question 22 (2 points) In the f ollowing figure, Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. at all points, the slope of S1 > the slope of S2. 0.0% b. at all points, the slope of S1 < the slope of S2. 0.0% c. at points to the left of A, the slope of S1 > the slope of S2; at points to the right of A, the slope of S1 < the slope of S2. 0.0% d. at points to the left of A, the slope of S1 < the slope of S2; at points to the right of A, the slope of S1 > the slope of S2. Score: 2 / 2 Question 23 (2 points) Graphs are useful because of the way they Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. facilitate inter pretation and anal ysis of data. 0.0% b. convey an idea that might otherwise take many words. 0.0% c. per mit a person to easil y see relationships. 1 00.0% d. All of the above are correct. Score: 2 / 2 Question 2 4 (2 points) If two variables, consumption and income, are directl y related, we can say that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a change in consumption will change income, but not vice versa. 1 00.0% b. if income increases, then consumption increases. 0.0% c. if income increases, then consumption will change, but it is impossible to say in which direction it will change. 0.0% d. if income increases, then consumption will decrease. Score: 2 / 2 Question 25 (2 points) Given the eq uation f or a linear function, y = 20 + 0.67x, what is the value of y when x is zero? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. 20 0.0% b. 0.67 0.0% c. 1 3.4 0.0% d. zero Score: 2 / 2 Question 26 (2 points) Whenever a society f orgoes current consumption to invest in capital goods, the Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. less the society can consume next year . 0.0% b. easier it will be f or the society to consume less in the future because people will become accustomed to less. 1 00.0% c. more the society can produce and consume in the future. 0.0% d. less capital the society can produce in the future. Score: 2 / 2 Question 2 7 (2 points) In the f ollowing figure, a point such as A Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. is pref erable over B. 1 00.0% b. is an efficient use of resources. 0.0% c. is a misallocation of resources. 0.0% d. is not obtainable. Score: 2 / 2 Question 28 (2 points) The graph shows a production possibilities curve f or a student who spends 8 hours a week studying. How could the student get a B in both classes? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. The student could spend 5 hours on economics and 3 on marketing. 0.0% b. The student could spend 5 hours on marketing and 3 on marketing. 1 00.0% c. The student could increase the total amount of time studying on economics and marketing. 0.0% d. The student cannot get a B in both classes. Score: 2 / 2 Question 29 (2 points) When shifting from point A to point B, the opportunity cost of 1 ,000 additional tractors is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. one tractor . 0.0% b. 7 5 tons of butter . 1 00.0% c. 0.7 5 million tons of butter . 0.0% d. 4.7 5 million tons of butter . Score: 2 / 2 Question 30 (2 points) An efficientallocation of resources exists if Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. one group of people can get more of the things they want without someone else having to give up anything. 1 00.0% b. no one can get more of the things he wants without someone else having to give up something. 0.0% c. the economy operates at any point under the production possibilities frontier . 0.0% d. the economy is operating at any point above the production possibilities frontier . Score: 2 / 2 Question 3 1 (2 points) A PPF will be bowed outward if Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. there is scarcity . 0.0% b. increased production of one good means less production of the other good. 0.0% c. the suppl y of resources is fixed. 1 00.0% d. resources are not eq uall y well­suited to the production of both goods. Score: 2 / 2 Question 32 (2 points) Scarcity is illustrated graphicall y by a production possibilities frontier . Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 33 (2 points) The opportunity cost of f ood in ter ms of cars is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. constant. 0.0% b. increasing as more f ood is produced. 0.0% c. decreasing as more f ood is produced. 0.0% d. indeter minate. Score: 2 / 2 Question 3 4 (2 points) In one day , Joe can produce 2 4 bushels of wheat (W) or 8 pounds of rice (R). Joe's opportunity cost of 1 pound of rice is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 3 pounds of rice. 1 00.0% b. 3 bushels of wheat. 0.0% c. 1/3 bushel of wheat. 0.0% d. 1/8 bushel of wheat. Score: 2 / 2 Question 35 (2 points) If an employee in a fast­f ood restaurant can produce 1 0 hamburgers per hour or 20 orders of French fries per hour the cost of one bag of French fries is two , hamburgers. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 36 (2 points) An economy is said to be efficient if it Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. produces all its goods at a low cost using all its resources. 0.0% b. has the most natural resources. 0.0% c. has a high per capita income. 1 00.0% d. maximizes its production with the limited resources and technology it possesses. Score: 2 / 2 Question 3 7 (2 points) The negative slope of a typical production possibilities frontier reflects the fact that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. some systems of market organization are more efficient than others. 0.0% b. the invisible hand always functions smoothl y in a market system without government intervention. 1 00.0% c. when resources are allocated efficientl y , it is impossible to produce more of anything without producing less of something else. 0.0% d. production is onl y possible when resources are allocated efficientl y . Score: 2 / 2 Question 38 (2 points) Bobby can vacuum two rooms in ten minutes or dust two rooms in twenty minutes. The opportunity cost of dusting one more room is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. vacuuming one room. 1 00.0% b. vacuuming two rooms. 0.0% c. that he will not give up vacuuming any rooms. 0.0% d. none of the above. Score: 2 / 2 Question 39 (2 points) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 labor hours to produce one computer The 5 . opportunity cost of one computer in the U .S. is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 80 labor hours. 1 00.0% b. 4 bushels of wheat. 0.0% c. 1/4 bushel of wheat. 0.0% d. 3 bushels of wheat. Score: 0 / 2 Question 40 (2 points) The ability to produce a particular good using f ewer resources than a second country is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. comparative advantage. 1 00.0% b. absolute advantage. 0.0% c. an unfair advantage. 0.0% d. a means of securing higher ter ms of trade. Score: 2 / 2 Question 4 1 (2 points) If Brazil can produce more shoes with one hour of labor than can Argentina, which of the f ollowing is necessaril y true? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Brazil has a comparative advantage in the production of shoes. 0.0% b. Brazil exports shoes to Argentina if there is free trade. 1 00.0% c. Brazil has an absolute advantage in the production of shoes. 0.0% d. All of the above are true. Score: 0 / 2 Question 42 (2 points) In order to maximize society's well being, a country should specialize in producing a good if it Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. can produce the good with f ewer resources than other countries. 1 00.0% b. has the lowest opportunity cost of producing the good. 0.0% c. has the highest opportunity cost of producing the good. Score: 2 / 2 Question 43 (2 points) A bsolute advantage states that a country has an advantage over another if it can produce the good with f ewer resources. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 4 4 (2 points) Comparative advantage is deter mined by comparing the slopes of production possibilities frontiers. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 45 (2 points) The f ollowing table illustrates the production possibilities f or two countries if they use all of their resources producing televisions and milk . T elevision Milk Bovinia 1 5 1 5 Myopia 1 0 5 Which of the f ollowing is true f or these countries? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Bovinia has a comparative advantage in both televisions and milk . 0.0% b. In the absence of trade, Myopia would never produce milk , because it has a comparative advantage in producing televisions. 0.0% c. Bovinia would never benefit from trade with Myopia, because it has an absolute advantage in producing both goods. 1 00.0% d. Bovinia has a comparative advantage as well as an absolute advantage in producing milk . Score: 2 / 2 Question 46 (2 points) Countries A and B produce pickles and ice cream in the f ollowing q uantities when all of their resources are used. Pickles Ice Cream A 1 0 1 0 B 5 20 Which of the f ollowing is true? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. The opportunity cost of a pickle in country B is f our ice cream cones. 0.0% b. The opportunity cost of an ice cream cone in country B is one­f ourth of a pickle. 0.0% c. The opportunity cost cannot be deter mined in country A . 1 00.0% d. Both a and b are true. Score: 2 / 2 Question 4 7 (2 points) Which of the f ollowing statements is FALSE? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. As society increases its wealth, the problem of scarcity disappears. 0.0% b. The factors of production are used to produce outputs that help society satisfy its wants. 0.0% c. Even though a society faces the problem of scarcity it does not , necessaril y suff er from poverty . 0.0% d. Land and labor are both factors of production. Score: 2 / 2 Question 48 (2 points) When nations specialize in their areas of comparative advantage and then trade with the rest of the world, the result is that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the average standard of living in the world will go down. 1 00.0% b. the average standard of living in the world will go up. 0.0% c. the world will move from a point on the production possibilities curve to a point inside the curve. 0.0% d. worldwide economic efficiency will decrease. Score: 2 / 2 Question 49 (2 points) If trade benefits one country , it will make the other country worse off. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 50 (2 points) In a two­person, two­good trading model, the individual with a flatter production possibilities frontier has a comparative advantage in Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. neither good. 0.0% b. both goods. 1 00.0% c. the good on the horizontal axis. 0.0% d. the good on the vertical axis. Score: 2 / 2 T otal score: 86 / 1 00 = 86.0% V iew Results TEST 1 User ID: clee5 Attempt : 1 / 1 Out of: 1 00 Started: June 2 4, 2005 2:5 7pm Finished: June 2 4, 2005 4:3 4pm T ime spent : 1 hr 7 , 3 min., 1 sec. Student finished 1 hr , 22 min., 59 sec. ahead of the 1 80 min. time limit. Question 1 (2 points) Macroeconomics is concerned primaril y with Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the way things are produced. 0.0% b. the prices of particular goods and services. 0.0% c. the behavior of consumers. 1 00.0% d. the perf mance of the aggregate economy or . Score: 2 / 2 Question 2 (2 points) A map is an example of a model because a map Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. describes an area in great detail. 0.0% b. is always as complex as space will per mit. 0.0% c. is two­dimensional. 1 00.0% d. is a simplified representation about reality . Score: 2 / 2 Question 3 (2 points) Economics is generall y concerned with Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the operation of banks in the stock market. 0.0% b. business management. 1 00.0% c. how resources are allocated among alternative goals. 0.0% d. the right time to start a business. Score: 2 / 2 Question 4 (2 points) Eliminating important details in economic anal ysis is necessary to understand the complexity of the economy . Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 5 (2 points) An example of a nor mative macroeconomic q uestion is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. does government spending increase unemployment? 0.0% b. does government spending increase inflation? 0.0% c. do government actions increase growth in the economy? 1 00.0% d. does government spending increase economic well­being? Score: 2 / 2 Question 6 (2 points) Which of the f ollowing is an example of a positive statement? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. If you drop a q uarter off the top of the Sears T ower in Chicago, it will fall to the ground. 0.0% b. The minimum wage should be raised to $7 and hour . 0.0% c. There is too much crime in the United States; something should be done about it. 0.0% d. People should learn to love each other . Score: 2 / 2 Question 7 (2 points) Which would be least consistent with the kind of rational decision­making assumed in economics? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Alfred chooses love over money . 0.0% b. Bernice acts on the basis of faulty inf mation and, as a result, makes or a mistake. 1 00.0% c. Carlisle chooses the more costl y of two ways to achieve a given end because he does not care about costs. 0.0% d. Daphne contributes some of her income to charity . Score: 0 / 2 Question 8 (2 points) Which of the f ollowing must cope with scarcity? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. individuals 0.0% b. companies 0.0% c. governments 1 00.0% d. all of the above Score: 2 / 2 Question 9 (2 points) The additional opportunity cost of one more hour of sleep in the morning is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. measured in ter ms of the most valuable activity f orgone during that hour of additional sleep. 0.0% b. one less hour of sleep at some other time of the day . 0.0% c. not measurable. 0.0% d. not meaninful in ter ms of economics unless it can be measured in monetary ter ms. Score: 2 / 2 Question 1 0 (2 points) The government plays almost no role in the U .S. economy . Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 1 1 (2 points) Central planners in planned economies Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. generall y set production targets f or fir ms. 0.0% b. always consult consumers on the output of goods they want to consume. 0.0% c. allow prices to organize the economy's production. 0.0% d. depend upon the invisible hand to coordinate economic activities. Score: 2 / 2 Question 12 (2 points) Economists make assumptions because Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. they need to incor porate value judgments into their models. 1 00.0% b. anal ysis without assumptions would be impossibl y complex. 0.0% c. they always have perf ect inf mation about the assumptions. or 0.0% d. assumptions are the final product of careful economic anal ysis. Score: 2 / 2 Question 1 3 (2 points) V alue judgments are based on people's tastes, pref erences, and ethical opinions. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 1 4 (2 points) Economic value is created when Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the benefits of a trade exceed the costs of the trade. 0.0% b. a customer gets a product f or less than the cost of producing it. 0.0% c. a store can sell an inf erior product f or full price. 0.0% d. the costs of a trade are exactl y eq ual to the benefits of the trade. Score: 2 / 2 Question 1 5 (2 points) An example of a real variable is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the change in the number of cars produced from one year to the next. 0.0% b. the change in the price of cars from one year to the next. 0.0% c. the change in a person's salary from one year to the next. 0.0% d. the increase in the minimum wage. Score: 2 / 2 Question 1 6 (2 points) The slope of a straight line Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. is the rise over the run. 0.0% b. is constant along the whole curve. 0.0% c. will be negative if there is an inverse relationship between the variables. 1 00.0% d. All of the above are true. Score: 2 / 2 Question 1 (2 points) 7 The slope is defined as: Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Rise + run 1 00.0% b. The rise divided by the run. 0.0% c. Change in X divided by the change in Y 0.0% d. Simpl y the change in the Y variable Score: 2 / 2 Question 1 8 (2 points) X Y 2 8 4 12 6 1 6 8 20 1 4 0 2 Given the above data, X and Y exhibit : Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. A direct relationship 0.0% b. An inverse relationship 0.0% c. No mathematical relationship Score: 2 / 2 Question 1 9 (2 points) A graph's origin is the point of intersection of all lines or curves in the graph. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 20 (2 points) Graphs are always used to keep track of three variables simultaneousl y . Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 2 1 (2 points) A line that is tangent to a curve Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. shares one point with the curve. 0.0% b. shares two points with the curve. 0.0% c. shares no points with the curve. 0.0% d. All of the above are correct. Score: 2 / 2 Question 22 (2 points) When variable A rises by 1 0 units, variable B rises by 1 5 units. The slope of the line describing this relationship is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. always 2/3. 1 00.0% b. either 2/3 or 1 .5, depending on which variable goes on which axis of the graph. 0.0% c. either 1 .5 or ­1 .5, depending on which variable goes on which axis of the graph. 0.0% d. always ­1 .5. Score: 2 / 2 Question 23 (2 points) Why is the choice of units important in constructing a graph? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. It aff ects whether a variable rises or falls. 1 00.0% b. It aff ects the apparent rate of change of one variable relative to the other . 0.0% c. It aff ects which time periods can be considered. 0.0% d. All of the above. Score: 2 / 2 Question 2 4 (2 points) If two variables, consumption and income, are directl y related, we can say that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a change in consumption will change income, but not vice versa. 1 00.0% b. if income increases, then consumption increases. 0.0% c. if income increases, then consumption will change, but it is impossible to say in which direction it will change. 0.0% d. if income increases, then consumption will decrease. Score: 2 / 2 Question 25 (2 points) T o calculate the slope of the total product curve, Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. take the change in Y divided by the change in X. 1 00.0% b. find the slope of a line tangent to the TP curve. 0.0% c. subtract the change in Y from the change in X. 0.0% d. subtract the change in X from the change in Y . Score: 2 / 2 Question 26 (2 points) Whenever a society f orgoes current consumption to invest in capital goods, the Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. less the society can consume next year . 0.0% b. easier it will be f or the society to consume less in the future because people will become accustomed to less. 1 00.0% c. more the society can produce and consume in the future. 0.0% d. less capital the society can produce in the future. Score: 2 / 2 Question 2 7 (2 points) When shifting from point A to point B, the opportunity cost of 1 ,000 additional tractors is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. one tractor . 0.0% b. 7 5 tons of butter . 1 00.0% c. 0.7 5 million tons of butter . 0.0% d. 4.7 5 million tons of butter . Score: 2 / 2 Question 28 (2 points) In the figure below , assume this economy is currentl y operating at point D. What is the opportunity cost of moving to B? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 200 bushels of wheat. 0.0% b. 200 bushels of soybeans. 0.0% c. infinite; B cannot be produced at any cost. 1 00.0% d. zero. Score: 2 / 2 Question 29 (2 points) In the f ollowing figure, a point such as A Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. is pref erable over B. 1 00.0% b. is an efficient use of resources. 0.0% c. is a misallocation of resources. 0.0% d. is not obtainable. Score: 2 / 2 Question 30 (2 points) The production possibilities frontier illustrates Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the constant rate of technological progress. 1 00.0% b. the fundamental concept of scarcity . 0.0% c. the rapid growth in the U .S. economy . 0.0% d. that coal always trades f or parkland. Score: 2 / 2 Question 3 1 (2 points) An efficient allocation of resources exists if Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. one group of people can get more of the things they want without someone else having to give up anything. 1 00.0% b. no one can get more of the things he wants without someone else having to give up something. 0.0% c. the economy operates at any point under the production possibilities frontier . 0.0% d. the economy is operating at any point above the production possibilities frontier . Score: 2 / 2 Question 32 (2 points) An efficient allocation of resources is demonstrated by a point Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. above the production possibilities frontier . 0.0% b. below the production possibilities frontier . 1 00.0% c. on the production possibilities frontier . 0.0% d. near the middle of the production possibilities frontier . Score: 2 / 2 Question 33 (2 points) If an employee in a fast­f ood restaurant can produce 1 0 hamburgers per hour or 20 orders of French fries per hour the cost of one bag of French fries is two , hamburgers. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 3 4 (2 points) The opportunity cost of f ood in ter ms of cars is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. constant. 0.0% b. increasing as more f ood is produced. 0.0% c. decreasing as more f ood is produced. 0.0% d. indeter minate. Score: 2 / 2 Question 35 (2 points) The shape of this PPF indicates that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the opportunity cost of producing beef is the same as the opportunity cost of producing wheat. 1 00.0% b. as beef production increases, its opportunity cost increases. 0.0% c. as beef production increases, its opportunity cost decreases. 0.0% d. as beef production increases, its opportunity cost is constant. Score: 2 / 2 Question 36 (2 points) Any point outside the boundary of a production possibilities frontier is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. efficient. 0.0% b. inefficient. 1 00.0% c. unattainable. 0.0% d. attainable. Score: 2 / 2 Question 3 7 (2 points) The negative slope of a typical production possibilities frontier reflects the fact that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. some systems of market organization are more efficient than others. 0.0% b. the invisible hand always functions smoothl y in a market system without government intervention. 1 00.0% c. when resources are allocated efficientl y , it is impossible to produce more of anything without producing less of something else. 0.0% d. production is onl y possible when resources are allocated efficientl y . Score: 2 / 2 Question 38 (2 points) When a production possibilities frontier shifts outward, society experiences Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. falling production. 1 00.0% b. economic growth. 0.0% c. an allocation of resources from rich people to poor people. 0.0% d. a change in the distribution of income. Score: 2 / 2 Question 39 (2 points) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 labor hours to produce one computer The 5 . opportunity cost of one bushel of wheat in the U .S. is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 3 computers. 0.0% b. 1/3 computer . 0.0% c. 20 labor hours. 1 00.0% d. 1/4 computer . Score: 2 / 2 Question 40 (2 points) A person has a comparative advantage in an activity whenever she Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. has an absolute advantage in the activity . 1 00.0% b. can perf m the activity at a lower opportunity cost than can another or person. 0.0% c. can do the activity in less time than anyone else. 0.0% d. can do everything better than anyone else. Score: 0 / 2 Question 4 1 (2 points) If Brazil can produce more shoes with one hour of labor than can Argentina, which of the f ollowing is necessaril y true? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Brazil has a comparative advantage in the production of shoes. 0.0% b. Brazil exports shoes to Argentina if there is free trade. 1 00.0% c. Brazil has an absolute advantage in the production of shoes. 0.0% d. All of the above are true. Score: 0 / 2 Question 42 (2 points) Which good a country specializes in is deter mined by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. unemployment in the country relative to other countries. 0.0% b. inflation in the country relative to other countries. 0.0% c. absolute advantage. 1 00.0% d. comparative advantage. Score: 2 / 2 Question 43 (2 points) A bsolute advantage states that a country has an advantage over another if it can produce the good with f ewer resources. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 4 4 (2 points) The division of productive activities among persons and regions so that no one individual or area is totall y self­sufficient is known as Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. advantage­taking. 0.0% b. comparative value. 1 00.0% c. specialization. 0.0% d. out­sourcing. Score: 2 / 2 Question 45 (2 points) The average worker in the United States can produce 20 tons of coal or 1 0 tons of iron per hour . The average worker in Canada can produce 1 0 tons of coal or 1 0 tons of iron per hour . Which conclusion is correct? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. The United States has an absolute advantage in the production of iron. 0.0% b. Canada has an absolute advantage in the production of iron. 0.0% c. Canada has an absolute advantage in the production of coal. 1 00.0% d. The United States has an absolute advantage in the production of coal. Score: 2 / 2 Question 46 (2 points) Assume that Harriet can bake 48 cookies or 2 cupcakes in one hour What is 4 . Harriet's opportunity cost per cupcake? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. one cookie 0.0% b. one­half of a cookie 1 00.0% c. two cookies 0.0% d. two cupcakes Score: 2 / 2 Question 4 7 (2 points) Fred has an absolute advantage in painting and Barney has an absolute advantage in washing down walls. Assuming that the population consists onl y of Fred and Barney , we know that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. neither has a comparative advantage in either task . 1 00.0% b. Fred has a comparative advantage in painting and Barney has a comparative advantage in washing down walls. 0.0% c. Fred has a comparative advantage in washing down walls and Barney has a comparative advantage in painting. 0.0% d. we can't tell who has a comparative advantage in painting or in washing down walls. Score: 2 / 2 Question 48 (2 points) The f ollowing table illustrates the production possibilities f or John and Mary if they spend all of their time producing bread and cheese. Bread Cheese John 4 8 Mary 8 1 4 Which of the f ollowing is true f or John and Mary? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Mary has an absolute advantage in producing cheese. 0.0% b. John has a comparative advantage in producing cheese. 0.0% c. Mary has a comparative advantage in producing bread. 1 00.0% d. All of the above are true. Score: 2 / 2 Question 49 (2 points) If trade benefits one country , it will make the other country worse off. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 50 (2 points) The ter m "comparative disadvantage" means one party in a trade Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. has a lower opportunity cost than its trading partner . 1 00.0% b. has a higher opportunity cost than its trading partner . 0.0% c. has an absolute advantage in the goods that it is trading. 0.0% d. has no basis f or trade with a trading partner . Score: 2 / 2 T otal score: 94 / 1 00 = 94.0% The law of demand ensures that a demand curve has a positive slope. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 2 (3 points) An individual's demand schedule Student response: Percent V alue Student Response Answer Choices 1 00.0% a. provides inf mation about what q uantity she is willing and able to or buy at each price. b. tells a seller how many other buyers will try to purchase an item. c. is a schedule that regulates monthl y sales of scarce goods and services. d. is of no use without its accompanying suppl y schedule. Score: 3 / 3 Question 3 (3 points) Why does q uantity demanded decrease when price increases? Student response: Percent V alue Student Response Answer Choices a. People choose to reduce consumption of the item. b. The purchasing power of consumers falls. c. People find substitutes f or the item. 1 00.0% d. All of the above. Score: 3 / 3 Question 4 (3 points) A market demand curve is f ound by Student response: Percent V alue Student Response Answer Choices a. taking the demand curve of the "representative" consumer . b. adding the prices and the q uantities demanded by a consumer . 1 00.0% c. adding the q uantities demanded f or each individual consumer at each price. d. adding the prices each consumer would pay f or each q uantity . Score: 3 / 3 Question 5 (3 points) A demand schedule relates prices of a particular good to q uantities demanded. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 3 / 3 Question 6 (3 points) A demand schedule shows the diff erent q uantities demanded over several time periods. Student response: Percent V alue Student Response Answer Choices 0.0% a. T rue b. False Score: 0 / 3 Question 7 (3 points) An increase in the price of a good (watch ter minology!) Student response: Percent V alue Student Response Answer Choices a. will cause an increase in demand, since the good is now more valuable. b. will cause a decrease in demand. c. will cause an increase in the q uantity demanded, since the good is now more valuable. 1 00.0% d. will cause a decrease in the q uantity demanded. e. will cause a decrease in both demand and the q uantity demanded Score: 3 / 3 Question 8 (3 points) A shift in the demand curve occurs when Student response: Percent V alue Student Response Answer Choices a. suppliers place more goods on the market. b. the price of a good rises. c. consumers want to buy more than bef ore at a given price. 0.0% d. the price of the good falls. Score: 0 / 3 Question 9 (3 points) If incomes rise, most consumers will increase the q uantity demanded of an inf erior good. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 3 / 3 Question 1 0 (3 points) Assume that orange juice and grapefruit juice are substitute goods. If orange juice prices double in 1 7 there will be a 99 , Student response: Percent V alue Student Response Answer Choices 1 00.0% a. rightward shift in the demand f or grapefruit juice. b. rightward shift in the suppl y of grapefruit juice. c. leftward shift in the suppl y of grapefruit juice. d. leftward shift in the demand f or grapefruit juice. Score: 3 / 3 Question 1 1 (3 points) A study of recent data indicates that higher ­income women are more likel y to have an abortion. This suggests (i) abortion is an inf erior good and (ii) the possibility that the demand curve f or abortion has a positive slope. Student response: Percent V alue Student Response Answer Choices a. i and ii b. i but not ii c. ii but not i 1 00.0% d. neither i nor ii Score: 3 / 3 Question 12 (3 points) Assume that the figure below shows demand f or cameras. An increase in the price of photographic film (a complement to cameras) changes demand from Student response: Percent V alue Student Response Answer Choices a. D1 to D2 1 00.0% b. D2 to D1 c. D2 to D3 d. D1 to D3 Score: 3 / 3 Question 1 3 (3 points) If the demand f or steak shifts to the right, the most likel y explanation is that Student response: Percent V alue Student Response Answer Choices a. the price of cattle f eed has fallen. b. consumer income has risen. 0.0% c. the price of steak has fallen. d. cattle production has fallen. Score: 0 / 3 Question 1 4 (3 points) Fir ms often seek to borrow money to expand their capital stock , and the price they pay f or the money is the interest rate. What happens to q uantity of money demanded if the interest rate increases? Student response: Percent V alue Student Response Answer Choices a. It increases. 1 00.0% b. It decreases. c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 3 / 3 Question 1 5 (3 points) In the figure below , an increase in population (which will increase the number of buyers of the good) will change demand from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. D1 to D2 b. D2 to D1 c. D3 to D2 d. D3 to D1 Score: 3 / 3 Question 1 6 (3 points) If you expect the price of ice cream to increase next week , your demand curve f or ice cream will Student response: Percent V alue Student Response Answer Choices a. shift inward. Y ou will buy next week . b. shift inward. Y ou decide not to buy ice cream f or a long time. 1 00.0% c. shift outward. Y ou will buy at the lower price today . d. not shift at all. Score: 3 / 3 Question 1 (3 points) 7 Assuming that hamburgers and mustard are complements, a decrease in the price of hamburgers would increase the demand f or mustard. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 3 / 3 Question 1 8 (3 points) Which of the f ollowing statements about a suppl y curve is FALSE? Student response: Percent V alue Student Response Answer Choices a. It shows a direct (positive) relationship between price and q uantity supplied. b. It shows the q uantity supplied at each specific price. 1 00.0% c. It typicall y slopes downward. d. It has a positive slope. Score: 3 / 3 Question 1 9 (3 points) Which one of the f ollowing statements is FALSE? Student response: Percent V alue Student Response Answer Choices a. There is an inverse (negative) relationship between product price and q uantity supplied. b. There is some price at which q uantity supplied of a product is zero. c. As product price increases, producers are willing to put more of the good on the market f or sale. 0.0% d. In order to entice producers to off er more of a product on the market f or sale, product price must rise. Score: 0 / 3 Question 20 (3 points) Which of the f ollowing is a deter minant of suppl y? Student response: Percent V alue Student Response Answer Choices a. tastes and pref erences 1 00.0% b. technology c. consumer Income d. number of consumers Score: 3 / 3 Question 2 1 (3 points) Other things constant, the onl way to move along a given suppl curve f a y y or product is f or Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the product's price to increase or decrease. b. the product's expected future price to change. c. the number of sellers to increase or decrease. d. technological changes to occur . Score: 3 / 3 Question 22 (3 points) Suppose growing conditions were nearl y perf ect and the corn crop is exceptionall y large. This would be expected to lead to Student response: Percent V alue Student Response Answer Choices a. an increase in the demand f or corn. b. an increase in the price of corn. c. a decrease in the eq uilibrium price and q uantity of corn. 1 00.0% d. a decrease in the eq uilibrium price and an increase in the eq uilibrium q uantity of corn. Score: 3 / 3 Question 23 (3 points) Which of the f ollowing events would increase the suppl y of hot dogs? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the price of the ingredients used to produce hot dogs decreases b. an increase in the price of a hot dog c. an increase in the number of consumers of hot dogs d. today consumers pref er hot dogs more than in the past Score: 3 / 3 Question 2 4 (3 points) Assume that the figure below shows the suppl y of steak . An increase in the price of cattle f eed (an input) will change suppl y from Student response: Percent V alue Student Response Answer Choices a. S1 to S2 1 00.0% b. S2 to S1 c. S2 to S3 d. S1 to S3 Score: 3 / 3 Question 25 (3 points) A decrease in the market price of a product, ceteris paribus, results in Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a movement down (to the left) along a given suppl y curve, decreasing q uantity supplied. b. a movement up (to the right) along a given suppl y curve, increasing q uantity supplied. c. an inward shift of the suppl y curve. d. an outward shift of the suppl y curve. Score: 3 / 3 Question 26 (3 points) Assume that the figure below shows the suppl y of new houses. An improvement in the technology f or building houses will shift suppl y from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. S1 to S2 b. S2 to S1 c. S3 to S2 d. S3 to S1 Score: 3 / 3 Question 2 7 (3 points) Which of the f ollowing will cause an outward shift of the market suppl y curve? Student response: Percent V alue Student Response Answer Choices a. A rise in the price of inputs b. A change in the price of the good 0.0% c. A decrease in technology d. Improvements in technology Score: 0 / 3 Question 28 (3 points) If the price of inputs f or making pizza increases, Student response: Percent V alue Student Response Answer Choices 1 00.0% a. there will be less pizza supplied because the costs are increasing. b. there will be more pizza supplied because the costs are increasing. c. there will be more pizza supplied because the costs are decreasing. d. there will be less pizza supplied because the costs are decreasing. Score: 3 / 3 Question 29 (3 points) Any situation where q uantity supplied does not eq ual q uantity demanded indicates Student response: Percent V alue Student Response Answer Choices a. a shortage. b. a sur plus. c. price control. 1 00.0% d. a market not in eq uilibrium. Score: 3 / 3 Question 30 (3 points) An increase in demand will have what eff ect on eq uilibrium price and q uantity? Student response: Percent V alue Student Response Answer Choices a. Price will increase, q uantity will decrease. b. Price will decrease, q uantity will increase. 1 00.0% c. Both price and q uantity will increase. d. Both price and q uantity will decrease. Score: 3 / 3 Question 3 1 (3 points) Suppose the suppl y of a good decreases. Which of the f ollowing will occur? Student response: Percent V alue Student Response Answer Choices a. price increase, q uantity increase b. price decrease, q uantity decrease 1 00.0% c. price increase, q uantity decrease d. price decrease, q uantity increase Score: 3 / 3 Question 32 (3 points) Which of the f ollowing will shift the demand curve f or milk to the right? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. A decrease in the price of Nestle's Quick chocolate mix (a complement. b. A decrease in the price of orange juice (a substitute). c. A decrease in the price of milk . d. A decrease in the price of cattle f eed (an input). Score: 3 / 3 Question 33 (3 points) If the price of a good decreases, which of the f ollowing will occur? Student response: Percent V alue Student Response Answer Choices a. The demand will increase. 1 00.0% b. The q uantity demanded will increase. c. The suppl y will decrease. d. The q uantity supplied will increase. Score: 3 / 3 Question 3 4 (3 points) The price of coal f ell and the eq uilibrium q uantity traded also f ell. This could have been caused by Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the price of oil falling. b. coal miners receiving large wage increases. c. more efficient mining eq uipment being installed. d. consumer incomes rising. Score: 3 / 3 Question 35 (3 points) This is a hard test, huh. (I think suppl y and demand, particularl y the specific ter minology , is the toughest thing we do all semester .) Theref ore, just pick the answer below that you think I'm looking f or! (Hint : Put option 1 . And if you miss it, I'll never let you f orget it!) Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Economics is a wonderful subject that everyone finds interesting. b. Illinois highways are always well maintained. In fact, they're among the best in the country! c. Spring break should be cancelled because students miss being in the classroom. Score: 3 / 3 Question 36 (3 points) Price per Quantity Demanded Quantity Supplied Constant­ of Constant­Quality of Constant­Quality Quality Unit Units per Y ear Units per Y ear ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ $1 .00 1 ,000 200 2.00 800 400 3.00 600 600 4.00 400 800 5.00 200 1 ,000 According the table, at a price of $2 per unit, which of the f ollowing would exist? Student response: Percent V alue Student Response Answer Choices a. a shortage (excess demand) of 800 units b. a sur plus (excess suppl y) of 800 units c. a shortage (excess demand) of 200 units 1 00.0% d. a shortage (excess demand) of 400 units Score: 3 / 3 Question 3 7 (3 points) In the figure below , if the price is fixed at 30, there will be a Student response: Percent V alue Student Response Answer Choices a. shortage of 2,000. 1 00.0% b. sur plus of 2,000. c. shortage of 1 ,000. d. sur plus of 1 ,000. Score: 3 / 3 Question 38 (3 points) If there are empty seats at the university basketball game when the price per ticket is P*, then this situation can best be represented by which graph below? Student response: Percent V alue Student Response Answer Choices a. 1 00.0% b. c. d. Score: 3 / 3 Question 39 (3 points) In the figure below , the eq uilibrium price and q uantity is Student response: Percent V alue Student Response Answer Choices a. P = 30, Q = 1 ,000. 1 00.0% b. P = 20, Q = 2,000. c. P = 1 0, Q = 1 ,000. d. P = 30, Q = 3,000. Score: 3 / 3 Question 40 (3 points) In free markets, the result of a shortage is to Student response: Percent V alue Student Response Answer Choices a. reduce demand f or the good. b. increase demand f or the good. 1 00.0% c. increase the price. d. decrease the price. Score: 3 / 3 Question 4 1 (3 points) In the figure below , there would be a sur plus of T ­shirts if Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the price were $1 0. b. the price were $8. c. the price were below $8. d. the price were between $8 and $6. Score: 3 / 3 Question 42 (3 points) When there is excess demand f or sugar in the market, the bidding mechanism will Student response: Percent V alue Student Response Answer Choices a. push down the price of sugar . b. result in no change in the reservation prices of consumers. c. have no eff ect on the price of sugar . 1 00.0% d. push up the price of sugar . Score: 3 / 3 Question 43 (3 points) The competitive eq uilibrium point occurs when Student response: Percent V alue Student Response Answer Choices a. there is no tendency to change. b. there is no excess demand. c. there is no excess suppl y . 1 00.0% d. all of the above. Score: 3 / 3 Question 4 4 (3 points) Examine the graph. The eq uilibrium price and q uantity f apartments in this or housing market are Student response: Percent V alue Student Response Answer Choices a. $1 000 and 700 apartments rented. b. $600 and 900 apartments rented. c. $600 and 500 apartments rented. 1 00.0% d. $800 and 700 apartments rented. Score: 3 / 3 Question 45 (3 points) If some transactions are blocked in a rent­controlled apartment market, potential buyers may try to rent the scarce apartments Student response: Percent V alue Student Response Answer Choices a. by attempting to get more suppliers into the market. 1 00.0% b. by bribing landlords. c. by building their own apartments. d. by getting the landlords to raise the rents. Score: 3 / 3 Question 46 (3 points) The eff ect of an excise tax imposed on a BUYER of a good is to Student response: Percent V alue Student Response Answer Choices 1 00.0% a. shift the demand curve to the left. b. shift the suppl y curve to the left. c. shift the demand curve to the right. d. shift the suppl y curve to the right. Score: 3 / 3 Question 4 7 (3 points) If rent controls f or apartments were established above the market rental rates, we would expect Student response: Percent V alue Student Response Answer Choices a. a shortage of apartments to develop b. a sur plus of apartments to develop 1 00.0% c. the q uantity demanded to eq ual the q uantity supplied. d. a building boom in new apartments to start. Score: 3 / 3 Question 48 (3 points) Examine the graph. If the government imposes an excise tax of $2.00 per unit on a supplier , Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the buyer's price increases to $4.00, the seller's price falls to $2.00, and the q uantity traded falls to 1 00 units. b. the seller's price increases to $4.00, the buyer's price falls to $2.00, and the q uantity traded falls to 1 00 units. c. the buyer's price increases to $4.00, the seller's price falls to $2.00, and the q uantity traded increases to 200 units. d. the buyer's and seller's prices remain at $3.00, and the q uantity traded falls to 1 00 units. Score: 3 / 3 Question 49 (3 points) In a free market, what processes would eliminate the excess demand in a rental housing market? Student response: Percent V alue Student Response Answer Choices a. Rent­seeking activities 1 00.0% b. The market bidding mechanism c. Government regulations d. The black market Score: 3 / 3 Question 50 (3 points) If an excise tax is imposed on buyers, the market demand curve will shift inward. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 3 / 3 Question 1 (1 point) On a bank's balance sheet, ______________ are listed as assets, while ______________ are listed as liabilities. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. loans and T ­bills; checking and savings accounts b. checking and savings accounts; loans and T ­bills c. loans and checking accounts; T ­bills and savings accounts d. deposits; loans Score: 1 / 1 Question 2 (1 point) If a pension fund owns stock in a cor poration, the stock would be listed as an asset on its balance sheet. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 3 (1 point) Which of the f ollowing f mulas expresses the true relationship between savings or and investment? Student response: Percent V alue Student Response Answer Choices a. I+(T ­G)­NX = S b. I+G­NX=S c. S+T ­NX=I 1 00.0% d. S+(T ­G)­NX=I Score: 1 / 1 Question 4 (1 point) If you buy 1 00 shares of Exxon stock online, you are trading on the primary market. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 5 (1 point) Imagine that an entrepreneur has raised $1 million to pursue a business 0 opportunity $5 million was raised in debt financing with 8% fixed annual . interest, and $5 million was raised in eq uity financing. (The entrepreneur is paid a salary but has no eq uity stake.) After one year , the entrepreneur shuts down the venture, having earned $1 million. How much did the eq uity holders 3 make? Student response: Percent V alue Student Response Answer Choices a. $6.5 million 1 00.0% b. $76 million . c. $5 million d. $6.96 million Score: 1 / 1 Question 6 (1 point) If a bond's coupon rate is 5% and the bondholder receives a $500 interest payment annuall y , the face value of the bond must be ________. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. $1 0,000 b. $25 c. $1 ,000 d. $1 00,000 Score: 1 / 1 Question 7 (1 point) A bond is defined by its Student response: Percent V alue Student Response Answer Choices a. rate of return, face value, and coupon rate. b. market interest rate, rate of return, and coupon rate. 1 00.0% c. face value, coupon rate, and maturity date. d. inception date, face value, and maturity date. Score: 1 / 1 Question 8 (1 point) If the market interest rate is greater than a bond's coupon rate, then the price of the bond will be less than its face value. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 9 (1 point) If there is a bond with a face value of $500 that pays $50 in interest annuall y , which of the f ollowing statements must be true? Student response: Percent V alue Student Response Answer Choices a. The rate of return is eq ual to 1 0%. b. The market interest rate must be less than 1 0%. c. The market interest rate must be more than 1 0%. 1 00.0% d. The coupon rate is eq ual to 1 0%. Score: 1 / 1 Question 1 0 (1 point) Y ou have won a $1 million prize in the lottery , but f or bureaucratic rasons, you can't claim the $1 million winnings f or two years. If the market interest rate is 12%, what is the present value of your lottery windfall? Student response: Percent V alue Student Response Answer Choices a. $1 ,254,400 b. $7 60,000 c. $1 40,000 ,2 1 00.0% d. $791 7 , 94 Score: 1 / 1 Question 1 1 (1 point) Which of the f ollowing is NOT a role played by financial inter mediaries? Student response: Percent V alue Student Response Answer Choices a. diversifying risk b. lowering transactions costs 1 00.0% c. printing money d. guaranteeing the saf etyof deposits Score: 1 / 1 Question 12 (1 point) Liabilities of financial inter mediaries include all of the f ollowing except Student response: Percent V alue Student Response Answer Choices 1 00.0% a. home mortgage loans. b. checking account deposits in a bank . c. savings account deposits in a bank . Score: 1 / 1 Question 1 3 (1 point) The process by which funds are channeled from savers to investors is known as Student response: Percent V alue Student Response Answer Choices a. Financial creation. 1 00.0% b. Financial inter mediation. c. Financial expediation. d. Financial expropriation. Score: 1 / 1 Question 1 4 (1 point) All of the f ollowing are examples of financial inter mediaries except Student response: Percent V alue Student Response Answer Choices a. insurance companies. b. credit unions. 1 00.0% c. stock exchanges. d. retirement funds. Score: 1 / 1 Question 1 5 (1 point) Suppose a new customer opens a checking account and a savings account in a commercial bank placing $1 , 00,000 in each. Later the bank loans the customer , $1 00,000. F or this bank , Student response: Percent V alue Student Response Answer Choices a. assets increased by $200,000 and liabilities increased by $1 00,000. b. liabilities increased by $200,000 since the checking account and the savings account are liabilities while it generated no new assets. 1 00.0% c. assets increased by $1 00,000 because the loan is an asset and liabilities increased by $200,000 because both the checking deposit and the savings deposit are liabilities to the bank . d. assets increased by $1 00,000 because the loan is an asset and liabilities increased by $1 00,000 because the checking deposit is a liability The savings . deposit is neither an asset nor a liability . Score: 1 / 1 Question 1 6 (1 point) The financial institutions in our banking system are all in the business of transf erring funds from savers to investors. This process is known as Student response: Percent V alue Student Response Answer Choices a. lobbying. b. parachuting. c. money laundering. 1 00.0% d. financial inter mediation. Score: 1 / 1 Question 1 (1 point) 7 A fir m can obtain funds f or investing by Student response: Percent V alue Student Response Answer Choices a. selling stock . b. selling bonds. c. reinvesting profits. 1 00.0% d. all of the above. Score: 1 / 1 Question 1 8 (1 point) A diff erence between a share of stock in a cor poration and a cor porate bond is that Student response: Percent V alue Student Response Answer Choices a. the share of stock is a legal claim while the bond is not. b. the bond owner has voting rights within the cor poration whereas the stockholder does not. 1 00.0% c. the bond owner is entitled to receive a fixed annual coupon payment plus a lump­sum payment at the bond's maturity date, whe reas the stockholder is entitled to a share of future profits. d. stocks are issued in return f or funds that are lent to the cor poration. Score: 1 / 1 Question 1 9 (1 point) Suppose a fir m wanted to go out of business. The fir m sells all its assets and pays off everything it owes to creditors. The stockholders would receive Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the rest of the money , after everyone who has a claim against the fir m is paid. b. nothing. c. one half of the money ; the other half of the money goes to bondholders. d. their annual dividend payment. Score: 1 / 1 Question 20 (1 point) In which of the f ollowing ways can a cor poration raise new funds f or investment? I. issuing new shares of stock II. having existing stock resold between two owners Student response: Percent V alue Student Response Answer Choices 1 00.0% a. I onl y b. II onl y c. both I and II d. neither I nor II Score: 1 / 1 Question 2 1 (1 point) The person most likel y to receive a payment from a cor poration in a year of losses is the Student response: Percent V alue Student Response Answer Choices 1 00.0% a. bondholder . b. investment banker . c. stockholder . Score: 1 / 1 Question 22 (1 point) Moral hazard exists when Student response: Percent V alue Student Response Answer Choices 1 00.0% a. one has diff erent incentives after a transaction than bef ore the transaction. b. people have an incentive to hide certain facts when they try to borrow money . c. we are f orced to transact with someone we think is not honest. d. there is a positive probability that something can go wrong. Score: 1 / 1 Question 23 (1 point) Suppose that you decide to buy 1 00 shares of Pepsi stock (not a new issue), and you call a stock broker and ask her to make the transaction f you. Y will be or ou purchasing the stock in the market known as Student response: Percent V alue Student Response Answer Choices a. the primary market. b. the insider market. 1 00.0% c. the secondary market. d. the collateral market. Score: 1 / 1 Question 2 4 (1 point) Under what circumstances would a person would pref a promise of $1 er 00,000 now over a promise of $500,000 in ten years? (Calculate the future value of the $1 00,000 at the diff erent interest rates and compare that number to $500,000. Alternativel y , you could calculate the present value of the $500,000 and compare it to $1 00,000.) Student response: Percent V alue Student Response Answer Choices a. the interest was 5%. b. the interest rate was 8%. c. the interest rate was 1 0%. 1 00.0% d. the interest rate was 20%. Score: 1 / 1 Question 25 (1 point) If a sports star signs a contract f or 50 million dollars to be paid at 1 0 million dollars a year over five years, the contract does not cost the team owner $50 million dollars in today's dollars since: Student response: Percent V alue Student Response Answer Choices a. $1 0 million five years from now is worth less than $1 0 million today . b. Less than $50 million can be invested in today's dollars and compound into $50 million over 5 years. c. The present value of $50 million over 5 years is less than $50 million today . 1 00.0% d. All of the above. Score: 1 / 1 Question 1 (1 point) Which of the f ollowing will happen if a customer puts more money into a checking account at her bank? Student response: Percent V alue Student Response AnswerChoices 1 00.0% a. The bank's liabilities increase by the amount of the deposit. b. The bank will be able to turn around and loan out an amount of money eq ual to the deposit. c. The bank will ship the money to the F ederal REserve Bank so that it is insured in full. d. The bank's total req uired reserves will increase by the same amount as the deposit. Score: 1 / 1 Question 2 (1 point) If the reserve req uirement is 12%, the increase in the money suppl y that results from $880,000 in new deposits eq uals __________. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. $7 333,333 , b. $1 ,000,000 c. $1 05,600 d. $74,400 7 Score: 1 / 1 Question 3 (1 point) Which of these is NOT a factor that tends to reduce the influence of the F ed over the money suppl y? Student response: Percent V alue Student Response Answer Choices a. near money b. excess reserves held by banks 1 00.0% c. the small req uired reserve ratio d. currency kept at home by consumers Score: 1 / 1 Question 4 (1 point) If a bank currentl y has $1 000 in deposits and the req uired reserve ratio is 20%, then that single bank can make loans of Student response: Percent V alue Student Response Answer Choices a. $200. 1 00.0% b. $800. c. $5,000. d. $20,000. Score: 1 / 1 Question 5 (1 point) When the F ed wants to change interest rates, it does so by Student response: Percent V alue Student Response Answer Choices a. mandating a new f ederal funds rate. b. directl y changing the amount of loans in the banking system. 1 00.0% c. buying and selling government securities. d. issuing new currency . Score: 1 / 1 Question 6 (1 point) Which of the f ollowing statements is not true? Student response: Percent V alue Student Response Answer Choices a. Banks are legall y req uired to hold a certain percentage of the deposits they have as reserves. b. Bank reserves do not earn interest. c. Banks borrow and lend reserves to each other in the f ederal funds market. 1 00.0% d. all are true. Score: 1 / 1 Question 7 (1 point) Suppose the reserve req uirement is 1 0 percent. If the F ed buys $1 000 in bonds from bank A, then the F ed credits the reserves at bank A with a(n) Student response: Percent V alue Student Response Answer Choices a. increase of $1 00. 1 00.0% b. increase of $1 000. c. decrease of $1 00. d. decrease of $1 000. Score: 1 / 1 Question 8 (1 point) The primary influence of a change in the discount rate is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. it signals a change in monetary policy . b. it competes directl with the f y ederal funds rate, thus influencing the borrowing and lending between banks. c. through the borrowing from the F ed that member banks engage in. d. all of the above. Score: 1 / 1 Question 9 (1 point) If the F ed decreases the discount rate, which of the f ollowing will occur? Student response: Percent V alue Student Response Answer Choices a. The money suppl y curve will shift left. 1 00.0% b. The interest rate will decrease. c. The money demand curve will shift right. d. The money demand curve will shift left. Score: 1 / 1 Question 1 0 (1 point) In the year 2000, the F ed increased the discount rate and increased its target f or the f ederal funds rate five times. The most likel y explanation f or this is that Student response: Percent V alue Student Response Answer Choices a. the unemployment rate was rising. 1 00.0% b. the economy had been growing q uickl and inflation had become a y , concern. c. they were trying to increase aggregate demand. d. they were trying to increase the money suppl y . Score: 1 / 1 Question 1 1 (1 point) If the req uired reserve ratio decreases, Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the deposit multiplier increases. b. banks make f ewer loans. c. deposits in other banks will decrease. d. all of the above. Score: 1 / 1 Question 12 (1 point) Suppose the economy is growing rapidl y and inflation is a concern. Which of the f ollowing would the F ed be most likel y to do? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Sell bonds. b. Lower the discount rate. c. T ry to increase the money suppl y . d. Raise reserve req uirements. Score: 1 / 1 Question 1 3 (1 point) If a bank has deposits of $5000 and is loaned up when making loans of $4250, then the req uired reserve ratio is Student response: Percent V alue Student Response Answer Choices a. 0. 1 7 6. b. 0.85. c. 0.425. 1 00.0% d. 0.5. 1 Score: 1 / 1 Question 1 4 (1 point) Most of the money in the economy is a result of Student response: Percent V alue Student Response Answer Choices a. the government printing currency . 1 00.0% b. banks holding part of their deposits as reserves, and making loans with the rest of the deposits. c. banks taking deposits. d. banks holding currency in their vaults. Score: 1 / 1 Question 1 5 (1 point) If a bank has $3,000 in reserves, and the reserve req uirement is 1 5%, how many checking deposits can the bank support? Student response: Percent V alue Student Response Answer Choices a. $2,550 b. $3,000 c. $4,500 1 00.0% d. $20,000 Score: 1 / 1 Question 1 6 (1 point) Which of the f ollowing is the most powerful tool the F ed can use in controlling the money suppl y? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. altering the req uired reserve ratio b. changing the discount rate c. buying or selling securities on the open market d. lowering bank taxes Score: 1 / 1 Question 1 (1 point) 7 Suppose the reserve req uirement is 1 0 percent. If the F ed sells $1 000 in bonds to bank A, then the money suppl y will Student response: Percent V alue Student Response Answer Choices a. increase by $1 000. b. decrease by $1 000. c. increase by $1 0,000. 1 00.0% d. decrease by $1 0,000. Score: 1 / 1 Question 1 8 (1 point) Use this inf mation to answer the next three q uestions. Suppose someone sells or $5000 worth of government securities and deposits the money from the F into ed their checking account so that the bank's reserves and deposits increase by $5000. If the legal reserve req uirement is 20% (0.20), how much is this bank req uired to hold on reserve? Student response: Percent V alue Student Response Answer Choices a. $5000 1 00.0% b. $1 000 c. $2000 d. none of the above Score: 1 / 1 Question 1 9 (1 point) What is the deposit multiplier? Student response: Percent V alue Student Response Answer Choices a. 20 b. 0.20 1 00.0% c. 5 d. none of the above Score: 1 / 1 Question 20 (1 point) What is the total amount by which the money suppl y can increase as a result of the initial $5000 deposit? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. $25,000 b. $5000 c. $1 00,000 d. none of the above Score: 1 / 1 11 . 1 . (1) QID: 1286 7 The opportunity cost of any particular choice is the least expensive alternative to the choice. the best alternative to the choice. the price that one pays f or the choice. the most expensive alternative to the choice. (2) QID: 128 79 If you wait in line one hour to buy a concert ticket f or $30, the opportunity cost of that ticket is the best alternative use of the $30. the best alternative to the one hour it took to buy the ticket. the best alternative to both the $30 and the one hour . not measurable because there is no opportunity cost to consumption. (3) QID: 12880 Scarcity is a problem onl y during a recession or depression. is a problem onl y in developing countries. is a problem onl y among poor people. req uires people to make choices. (4) QID: 12883 The study of economics is primaril y concerned with deter mining the most eq uitable distribution of income in the economy . choices which have to be made concerning the use of scarce resources. demonstrating the superior nature of capitalist economies. keeping businesses from losing money . (5) QID: 1 7 399 Which of the f ollowing is a correct statement? During a depression or recession, economic principles are not neccessaril y valid. Economics laws are important because they allow us to predict and possibl y control economic events. Economics laws are as precise as laws in physics or chemistry . Economics laws are concerned with judging outcomes and theref ore are not scientific. (6) QID: 1 43 52 The opportunity cost of a college education is the cost of books and tuition. the time you spend studying f or tests. the salary that you made at a part­time job last year . the highest salary that you could make if you worked full time instead of going to school. (7) QID: 1 4 524 Which of the f ollowing is not a scarce good? Air Space Water Garbage (8) QID: 1 45 52 A good is not scarce if everybody can have all they want of it. if someone can buy all he/she wants of the good. if people who make enough money can buy all they want of the good. if there is a limited amount of it available. (9) QID: 1 4 527 Scarcity is defined as the unlimited availability of goods and services. the imbalance between rational choice and irrational choice. the imbalance between what is wanted and what is freel y available. none of the above. (1 0) QID: 1 48 52 Rational choice req uires the undertaking of costs­benefits anal ysis. is impossible under conditions of scarcity . is defined as self­interested decision­making. both A and C. (1 1) QID: 1 49 52 Which of the f ollowing best illustrates the concept of opportunity costs? The choice of a pizza purchased today versus a hot dog purchased last month The choice of immediatel y studying an additional two hours or immediatel y going to sleep Eating both bacon and eggs f or breakfast this morning All of the above illustrate the concept of opportunity costs. (12) QID: 1 5250 If everyone made rational choices, then everyone would make identical choices. there would be no tradeoffs in any choice. resources would exceed material wants. individuals diff er in their choices because their inf mation and or constraints are diff erent. (1 3) QID: 1 5252 The opportunity cost of attending college does not include the income you could have earned while in classes. the travel expenses that you incur while traveling to classes. the money spent on books and tuition. money spent on meals while at school. (1 4) QID: 1 5253 Which of the f ollowing choices invol ves giving up something? Buying a new house Studying f or a test Watching television All of the above invol ve giving up something. (1 5) QID: 1 5254 A rational person makes a choice if the choice makes money . the benefits outweigh the costs. the costs outweigh the benefits. the choice is ethical. BCDBB DDACD BDDDB 1 . 1 .2 (1) QID: 1288 4 Economics addresses such issues as how goods will be produced. what goods to produce. who will get the goods that are produced. All the above are correct. (2) QID: 1288 7 Economists use economic models to maintain real­world complexity . to appear as precise as physical scientists. to understand how the real world works. to include every detail in their anal yses. (3) QID: 12888 Economics is the study of how businesses generate profits. how society allocates scarce resources. how to more eq uitabl y distribute income. how money is used in our culture. (4) QID: 12890 The main reason that testing theories is more difficult in economics than in the physical sciences is the difficulty in perf ming an experiment on or an economic system. the difficulty in devising an experiment. the difficulty in evaluating the results of an experiment. the difficulty in developing a theory of the economy . (5) QID: 1289 1 Nor mative statements make statements about how the world is. make statements about the nor mal conditions in the economy . make statements about how much production the economy could have. make statements about how the world ought to be. (6) QID: 12892 Which of the f ollowing is an example of how economists may diff er in their scientific judgments? A disagreement about whether a reduction in inflation is more important than a reduction in unemployment. A disagreement on the eff ects of a change in tax laws on consumer behavior . A disagreement on the fairness of income distribution. A disagreement on whether the minimum wage should be increased. (7) QID: 12893 In economics the ter m "ceteris paribus" means central variable hold all other variables constant in the "unlikel y event that. . ." none of the above (8) QID: 12895 Positive statements are evaluated on the basis of evidence while nor mative statements are evaluated on the basis of an individual's judgment. T rue False (9) QID: 12900 Economic value is created when the benefits of a trade exceed the costs of the trade. a customer gets a product f or less than the cost of producing it. a store can sell an inf erior product f or full price. the costs of a trade are exactl y eq ual to the benefits of the trade. (1 0) QID: 1 3995 Economics is mainl y concerned with the study of money . scarcity . profits. unemployment. DCBAD BBAAB 1 . 1 .3 (1) QID: 12903 An example of a topic that macroeconomists study is consumer demand f or automobiles. the change in the nation's unemployment rate. the market structure of the electric power industry . the shortage of labor in high­tech industries. (2) QID: 12905 An example of a real variable is the change in the number of cars produced from one year to the next. the change in the price of cars from one year to the next. the change in a person's salary from one year to the next. the increase in the minimum wage. (3) QID: 1290 7 An example of a topic that microeconomists study is F ord Motor Company's market share. the change in the unemployment rate. the change in inflation. the change in real GDP . (4) QID: 12909 Microeconomics is the study of individual fir ms, households, and markets. T rue False (5) QID: 1290 1 Which of the f ollowing is not a macroeconomic variable? Real GDP The unemployment rate The rate of inflation The price of pizzas (6) QID: 129 3 1 Macroeconomics approaches the study of economics from the viewpoint of specific product and factor markets. government. consumers. the entire economy . (7) QID: 1 7 3 26 An economist believes that theory is used to ignore reality . support one's opinions. describe a situation. explain the reasons behind real­world phenomena. (8) QID: 1 77 32 Macroeconomics and microeconomics rel y on the same set of tools, which are national legislation and government contracts. antitrust laws. suppl y and demand anal ysis. the theories of John Maynard Keynes. (9) QID: 1 7 3 28 The defining diff erence between macroeconomics and microeconomics is that macroeconomics f ocuses on economic aggregates, and microeconomics f ocuses on individual choices. microeconomics f ocuses on economic aggregates, and macroeconomics f ocuses on individual choices. microeconomics uses suppl y and demand anal ysis, while macroeconomics is interested in government action. microeconomics is interested in profit anal ysis, while macroeconomics is interested in developing countries. (1 0) QID: 1 3996 Which of the f ollowing activities is associated with macroeconomics? An investigation into the relationship between price level and unemployment since World War II An examination of cattle prices over the last decade A study of pricing in the automobile industry An examination of market structure in the software industry BAAAD DDCAA 1 . 1 .4 (1) QID: 1294 1 Which of the f ollowing is not a concern of an economic system? The allocation of scarce resources The distribution of the economy's output The mix of goods and services that an economy produces The fair distribution of income among all citizens (2) QID: 1296 1 Planned economic systems encourage entrepreneurship and innovation under the direction of a central planning authority T . rue False (3) QID: 129 1 7 In a market economy , there is no room f or individual initiative. a great amount of central planning. a great concentration of economic power in the hands of a f ew cor porations. reliance on the price system to allocate resources. (4) QID: 1292 1 T o decide how to allocate scarce resources, a laissez­faire economic system relies on central planning. prices. barter . a mix of planning and markets. (5) QID: 12923 Which of the f ollowing is the least serious problem f or laissez­faire economies? Unemployment Consumer sovereignty Providing public goods Income distribution (6) QID: 1292 4 In a mixed economy , the role of the government is to regulate the balance of laissez­faire and planned economic systems. discourage self­interest. move a laissez­faire economy toward a planned economy . move a planed economy toward a laissez­faire economy . (7) QID: 12926 The American economy is called a mixed system because the answers to economic problems are partiall y deter mined by the government and partiall y deter mined by private interests. the products of private enter prise are often purchased by government. the capital of most private enter prises comes from government loans. a ma jority of private enter prises are jointl y owned by the government and private enter prise. (8) QID: 12928 One of the main f eatures of a laissez­faire economic system is central economic planning. limits on the right to own property . a limited role f or government. extensive government control of the market. (9) QID: 12929 One of the characteristics of a planned economy is the pursuit of self­interest with no central direction. consumer sovereignty . well­developed markets. extensive government control of the market. (1 0) QID: 12933 In the real world, all economic systems are mixed systems. A mixed system means that governments may be used to improve economic outcomes. extensive consumer choices exist even in an economy that has government regulation. markets exist side­by­side with government­controlled enter prises. All of the above are correct. (1 1) QID: 12934 Which of the f ollowing situations would not demand that governments get invol ved in the economy? Resource allocation is efficient. Income distribution may be unfair . Market systems may fail to produce some goods that society values. Periods of unemployment and inflation may cause instability in the system. (12) QID: 12936 Many examples of both laissez­faire systems and purel y planned systems exist in the world. T rue False (1 3) QID: 1293 7 Consumers generall y express their self­interest by attempting to find the lowest price f or a product. maximizing profits. finding jobs with the highest wages. minimizing their economic losses. (1 4) QID: 12939 Both market systems and planned systems must find a method to centralize all decision making in a government agency . promote production efficiency but ignore the distribution of income. promote fairness in income distribution but ignore production efficiency . communicate and coordinate the individual choices of consumers, producers, and resource suppliers. DBDBB AACDD ABAD 11 .2. (1) QID: 1 5259 Economists notice specific relationships between data points. T rue False (2) QID: 1 5260 Which of the f ollowing examples represents a method of presenting data in ter ms of the relative size of vertical columns? A pie chart A bar graph A scatter plot A line graph (3) QID: 1 5262 Each point on a two­dimensional graph consists of combinations of f our pieces of inf mation. or numbers that do not represent inf mation. or combinations of variables that represent two pieces of inf mation. or no variables. (4) QID: 1 5264 Each coordinate of a graph is written as the vertical axis y and the horizontal axis x (y ,x). the horizontal axis x and the vertical axis y (x,y). a point not representing an axis. the vertical axis x and the horizontal axis y (y ,x). (5) QID: 1 5265 A scatter plot is inf mation arrayed in a two­dimensional space to or represent two variables f or each data point. a line graph that connects coordinates of a graph. inf mation arrayed in a two­dimensional space to represent three variables or f or each data point. used when drawing a bar graph. (6) QID: 1 5266 If two variables, consumption and income, are directl y related we can say that a change in consumption will change income but not vice versa. if income increases, then consumption increases. if income increases, then consumption will change but it is impossible to say in which direction it will change. if income increases, then consumption will decrease. BBCBA B 1 .2.2 (1) QID: 129 2 7 The slope of a line on a graph is defined as the change in the x­axis variable divided by the change in the y­axis variable. the change in the y­axis variable divided by the change in the x­axis variable. "rise over run." B and C. (2) QID: 1294 7 Which statement about slopes is accurate? A horizontal line has a slope of 2, and a vertical line has a slope of ­2. A horizontal line has an infinite slope, and a vertical line has a slope of zero. A horizontal line has a zero slope, and a vertical line has an infinite slope. The slopes f or horizontal and vertical lines cannot be calculated. (3) QID: 129 7 7 If the price of a soft drink changes from $1 .00 to $2.00, then the demand curve shifts inward. there is a decrease in the q uantity demanded. the demand curve shifts outward. there is an increase in the q uantity demanded. (4) QID: 1 7 52 1 The slope of a demand curve describes consumer behavior by showing that the consumers increase their consumption of a good when price goes down. that suppliers provide more of the good as price goes up. that consumers increase their q uantity demanded as price goes up. that consumers do not care about price. (5) QID: 1 7 522 The slope of a demand curve is the change in the x­axis variable divided by the change in the y­axis variable. T rue False (6) QID: 1 7 523 The slope of the line is defined by the coefficient of Q in the demand f mula P = $12 ­ .50Q. or the vertical intercept. the change in y divided by the change in x. A and C. (7) QID: 1 7 525 The vertical intercept in the demand eq uation is the constant number . T rue False (8) QID: 1 7 526 Given the demand f mula f or or frisbees of P = $8.30 ­ 1 .23Q, what is the proper inter pretation of the value of $8.30? $8.30 represents the highest price the consumer would pay f or one frisbee. $8.30 represents the price that would cause the purchases of frisbees to drop to zero. $8.30 represents the slope of the demand f mula. or Onl y B and C are correct. (9) QID: 1 7 52 7 A graph of the demand curve measures the horizontal axis using price and the vertical axis using q uantity . the relationship of suppl y in a market. the inverse relationship between the price of a product and the q uantity demanded. the diff erence between suppl y and demand. (1 0) QID: 1 7 528 At what price will eight pizzas be demanded? $12.00 $1.00 1 $1 0.00 $8.00 (1 1) QID: 1 79 52 If the price drops from $12 to $6, how many more pizzas will be demanded? Five Three Eight Six DCBAB DABCD C 1 .2.3 (1) QID: 12983 Given the eq uation f or a linear function, y = a + bx, which ter m represents the intercept? b x bx a (2) QID: 1298 4 Given the eq uation f or a linear function, y = 20 + .67x, what is the value of y when x is zero? 20 67 1 3.4 zero (3) QID: 12988 In the consumption function C = $1 000 + .3Y , C is consumption and Y is income. How much is consumption when income is zero? zero $1 000 $300 The answer is indeter minate. (4) QID: 12989 If one variable increases when another one increases, then we say that the two variables are inversel y related. directl y related. nonlinear . negativel y related. (5) QID: 1 5292 A decrease in a consumer's income causes his demand curve to shift outward. shift inward. change slope. remain the same. (6) QID: 1 467 5 When the demand curve shifts, the intercept remains the same. T rue False (7) QID: 1 468 5 When a demand curve shifts, the slope of the curve remains the same. T rue False (8) QID: 1 469 5 A shift in the demand curve is caused by a change in price. a change in q uantity demanded. an exogenous variable. an endogenous variable. (9) QID: 1 4 570 Exogenous variables on a demand curve are changes in consumer income. changes in the price of other goods. changes in consumer expectations. all of the above. (1 0) QID: 1 42 57 A shift in the demand curve illustrates a change from one point on the demand curve to another point. can onl y shift f orward. can onl y shift backward. shifts the whole demand curve inward or outward. (1 1) QID: 1 43 57 A negative relationship between variables exists when there is no relationship. one variable increases while the other variable decreases. there is a direct relationship. there is a positive relationship. (12) QID: 1 46 57 On a demand curve, an increase in the price of a good will cause a shift in the demand curve. cause an increase in the q uantity demanded. cause a decrease in the q uantity demanded. cause no change. (1 3) QID: 1 47 57 Consider the eq uation of linear function y = ­4 + 7x. If it were graphed, the intercept would be 7 . 4. ­4. ­7 . DABBB BACDD BCC 1 .2.4 (1) QID: 1 4 1 54 Suppose a line shows that every time a famil y's income increases by $1 .00, the famil y's spending increases by $.90. If income increases by $300.00, spending must increase by $500.00. $2 70.00. $333.33. an indeter minate amount. (2) QID: 1 4 5 42 A relativel y flat demand curve indicates that the demand f or a product is very sensitive to a change in price. T rue False (3) QID: 1 4 5 43 Economists pref er elasticities f or all of the f ollowing reasons except that they do not depend on units of measurement. they are based on total changes in units. they are based on percentage changes. they depict a relationship independent of how the variables are measured. (4) QID: 1 4 5 46 The slope of the demand curve is measured by the change in q uantity demanded divided by the change in price. the change in the price of one good plus the change in q uantity demanded of that good. the change in price divided by the change in the q uantity demanded. price divided by q uantity . (5) QID: 1 47 54 A steepl y­sloping demand curve shows that the change in q uantity demanded is very sensitive to a change in price. that the change in one variable is not aff ected by a change in another variable. that the price and q uantity demanded have a direct relationship. that the change in q uantity demanded is not very sensitive to a change in price. (6) QID: 1 4 5 49 The slope of a linear function depends on the units of measurement. T rue False (7) QID: 1 450 5 Consider the eq uation of linear function y = ­4 + 7x. If it were graphed, the slope would be 7 . 4. ­4. ­7 . BABCD AA 11 .3. (1) QID: 1249 4 T o calculate the slope of the total product curve, take the change in y divided by the change in x. find the slope of a line tangent to the TP curve. subtract the change in y from the change in x. subtract the change in x from the change in y . (2) QID: 12 450 All of the f ollowing are true of the tangent line except the tangent line just touches total production curve. the slope of the tangent line is eq ual to the slope of the TP curve at a specific point. the tangent line is used to find the slope of the TP curve. the tangent line cannot be used to find the slope of the TP curve. (3) QID: 12 1 45 The slope of the production function is flatter near the bottom of the curve. T rue False (4) QID: 12 452 On an exponentiall y increasing curve, the slope is not constant. the slope is constant. there is no slope. the slope eq uals zero. (5) QID: 12 453 The total product curve is the curve of the production function. is not linear . has a varying slope. all of the above. BDAAD 11 .4. (1) QID: 1222 7 Which point on the graph is not attainable? A D C All points are attainable. (2) QID: 12228 When increasing opportunity costs exist, resources are not perf ectl y substitutable f or each other . T rue False (3) QID: 1223 1 The production possibilities frontier (PPF) represents a collection of points indicating a minimum amount of one good produced f or a given q uantity of another good produced. all the possibilities of an economy , including ones that are not attainable. a collection of points indicating a maximum amount of one good produced f or a given q uantity of another good produced. an inefficient use of resources. (4) QID: 12232 The idea of opportunity costs indicates that if the production of one good is increased, the production of another good must decrease. you can produce whatever you have the opportunity to. you can produce anything if you can cover your costs. all of the above. (5) QID: 12233 Any combination of two goods l ying outside the production possibilities frontier represents the most efficient use of resources. req uires f ewer resources than are presentl y available. represents an unattainable combination of goods. represents an inefficient combination of goods. (6) QID: 1223 4 The PPF is a tool in economics to illustrate the study of scarcity in situations of rational choice. the study of rational choice in situations of scarcity . the study of suppl y and demand. none of the above. (7) QID: 1 7 348 Ref erring to the graph, if this economy moves from point A to point B, it must give up f ood to get more military eq uipment. it must give up military eq uipment to get more f ood. it has to give up both military eq uipment and f ood. it gains both military eq uipment and f ood. (8) QID: 1 7 349 In this production possibilities frontier , if the consumer moves from A to B, the consumer is choosing more leisure and less income. the consumer is choosing more income and less leisure. the consumer is choosing more of both leisure and income. the consumer is choosing less of both leisure and income. (9) QID: 1 71 35 In the production possibilities frontier , points A, B, and C represent f easible outcomes f or this society . T rue False (1 0) QID: 1 7 353 According to the graph, the society has to give up _______ pounds of f ood to build one car . 1 0 1 00 1/1 0 1 000 (1 1) QID: 1 7 4 35 According to the graph, the society has to give up _______ cars to produce another pound of f ood. 1/1 0 1 00 1 0 1 000 (12) QID: 1 7 355 Points on the production possibilities frontier are the onl y efficient production points. T rue False CACAC BBABC CA 1 .4.2 (1) QID: 12238 Mandatory retirement at age 55 will cause an inward shift in the PPF . T rue False (2) QID: 12239 When a production possibilities frontier shifts outward, society experiences falling production. economic growth. an allocation of resources from rich people to poor people. a change in the income distribution. (3) QID: 122 40 An inward shift in the PPF could be caused by the destruction of resources in a war . consumers' pref erences to save more than they consume. a decrease in government spending. unemployment. (4) QID: 1221 4 In a far ming economy of wheat and rice, a war ming trend occurs. This trend increases the production of both goods. However , the rice production is aff ected more than the wheat. The production possibilities frontier will shift outward f or both goods, but the wheat axis will shift further . shift inward f or both goods, but the rice axis will have a greater decrease. shift outward f or both goods, but the wheat axis will have a greater decrease. shift outward f or both goods, but the rice axis will shift further . (5) QID: 122 42 The production possibilities frontier illustrates the suppl y side of an economy because it makes an engineering statement on efficiency . it tells nothing about consumer pref erences. both A and B. none of the above. (6) QID: 122 43 An inward shift in the production possibilities frontier (PPF) could be the result of a decline in the general level of education. T rue False (7) QID: 1224 4 A shift in the production possibilitiesfrontier curve will occur as a result of all of the f ollowing except a change in the endowment of resources. a change in technology . a change in the production of one good relative to another good. a change in land, labor , or capital. (8) QID: 122 45 A choice to produce more of one good and less of another results in a movement along the PPF curve. a shift in the PPF curve. expansion of the economy . none of the above. (9) QID: 122 46 In a far ming economy that produces barley and flax, a new f ertilizer is invented. The f ertilzer onl y works on barley The production possibilities . frontier will onl y shift outward from the barley axis. onl y shift inward from the barley axis. shift outward from both axes. shift inward from both axes. (1 0) QID: 1 48 58 A PPF has computers on the horizontal axis and services on the vertical axis. Since 1 985, that PPF has become flatter . T rue False (1 1) QID: 1 49 58 If a country's PPF shows capital goods on one axis and consumer goods on the other axis, the country's PPF will shift out faster if it spends more on consumer goods in the current time period. T rue False (12) QID: 1 5850 Suppose a PPF has capital goods on the vertical axis and consumption goods on the horizontal axis. The PPF has a constant slope with a vertical intercept of 80 and a horizontal intercept of 1 60. Last year 60 units of , 1 consumption goods were produced, so the economy produced __________ units of capital goods. zero 80 1 60 2 40 (1 3) QID: 1 5852 In an economy , assume that labor is the onl y factor of production. One worker can produce either twel ve pounds of f ood a year or six rifles. The slope of the country's PPF is ­2 if rifles are on the horizontal axis. T rue False (1 4) QID: 1 4 864 Examine the accompanying graph of a society's PPF . The most likel y cause of the shift from PPF1 to PPF2 is a decrease in society's pref erence f or f ood. a decrease in society's pref erence f or the military . destruction of resources because of a war . A and B. (1 5) QID: 1 8649 Examine the accompanying graph of a PPF f or an agricultural society The . most likel y cause of the shift of the PPF is discovery of a new f ertilizer that works onl y on rice. a drought in wheat­producing states. a general decrease in agricultural technology . a shift in society's pref erence f or wheat relative to rice. ABADC ACAAA BAACB 1 .4.3 (1) QID: 1227 4 200 pounds of coff ee 40 pounds of coff ee 1 60 pounds of coff ee 1 pound of coff ee (2) QID: 122 49 3 less units of Good A 1 less unit of Good A 2 more units of Good B There are no opportunity costs associated with the increase in production of Good B. (3) QID: 12250 T rue False (4) QID: 1225 1 coff ee = 90 + 40 (tea) coff ee = 200 ­ 1 (tea) coff ee = 1 60 + 3 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ 4 (tea) coff ee = 1 60 ­ 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ 5 (tea) (5) QID: 12252 Bobby can vacuum two rooms in ten minutes or dust two rooms in twenty minutes. The opportunity cost of dusting one more room is vacuuming one room. vacuuming two rooms. that he will not give up vacuuming any rooms. none of the above. (6) QID: 12253 The production possibilities frontier is a straight line when the opportunity cost is zero. the opportunity cost is constant. the opportunity cost is increasing. the opportunity cost is decreasing. (7) QID: 1225 4 The most output that can be simultaneousl y produced is nine units of Good A and f our units of Good B. The optimal combination is six units of Good A and three units of Good B. If the economy produces eight units of Good A, it can simultaneousl y produce onl y two units of Good B. If the production of Good B increases from zero units to two units, the production of Good A falls by three units. (8) QID: 12255 Bobby can vacuum two rooms in ten minutes or dust two rooms in twenty minutes. Using his unit labor req uirement, Bobby's potential f or vacuuming is twel ve rooms per hour or dusting is f our rooms per hour . six rooms per hour or dusting is six rooms per hour . twel ve rooms per hour or dusting is six rooms per hour . ten rooms per hour or dusting is six rooms per hour . (9) QID: 12256 Bobby can vacuum two rooms in ten minutes or dust two rooms in twenty minutes. Bobby's schedule of possibilities indicates that he can dust two rooms and vacuum six rooms in one hour . he can dust f our rooms and vacuum eight rooms in one hour . he can dust three rooms and vacuum six rooms in one hour . all of the above. (1 0) QID: 1225 7 Bobby can vacuum two rooms in ten minutes or dust two rooms in twenty minutes. Assuming that dusting is on the vertical axis, the slope of Bobby's production possibilities frontier is 2. ­ 4. 4. ­ 1/2. DBBBB BCCCD 11 .5. (1) QID: 1 1 59 3 If there is an agricultural economy in which land can be used either as pasture f or cattle or as crop land f or wheat, the opportunity cost of converting one acre from pasture to wheat production is the profits from the extra wheat production. the pounds of beef that are lost. the number of bushels of wheat produced on an acre. the total number of pounds of beef produced. (2) QID: 1 1 595 F or country A to have a comparative advantage in the production of agricultural products means that, relative to country B, with the same resources, country A is better at producing agricultural products than industrial products. country A is better at producing both agricultural products and industrial products. country A can produce f ewer industrial products than country B. country A can produce more agricultural products than country B can produce. (3) QID: 1 6060 Suppose Canada produces onl y beer and oil. One unit of labor can produce, in a one hour period, either 1 00 barrels of beer or 1 0 barrels of oil. Examine the PPF f or Canada. What is Canada's opportunity cost f or one barrel of oil? 1 0 barrels of beer 1 00 barrels of beer 1 0 hours of labor 1/1 0 of a barrel of beer (4) QID: 1 6067 Suppose Canada produces onl y beer and oil. One unit of labor can produce, in a one hour period, either 1 00 barrels of beer or 1 0 barrels of oil. Examine the PPF f or Canada. What is Canada's opportunity cost f or one barrel of beer? 1 0 barrels of oil 1/1 0 of a barrel of oil 1 labor hour 1 00 barrels of beer BAAB 1 .5.2 (1) QID: 1 1 59 7 The economic ter m "specialization" ref ers to the behavior of trading partners when each partner produces goods, the resources f or which are scarce. produces onl y those goods f or which it has a comparative advantage produces onl y those goods f or which it has an absolute advantage produces goods, the resources f or which are abundant. (2) QID: 1 1 599 The ter m "comparative disadvantage" means one party in a trade has a lower opportunity cost than its trading partner . has a higher opportunity cost than its trading partner . has an absolute advantage in the goods that it is trading. has no basis f or trade with a trading partner . (3) QID: 1 1 592 When each trading partner specializes in the production of a good f or which it has a comparative advantage, each partner can gain from trade, but total production remains unchanged. T rue False (4) QID: 1 5922 In any trade between two trading partners and two goods, it is possible f or one of the partners to have a comparative advantage in both goods. T rue False (5) QID: 1 5923 In a two­person, two­good trading model, the individual with a flatter production possibilities frontier has a comparative advantage in neither good. both goods. the good on the horizontal axis. the good on the vertical axis. (6) QID: 1 5925 Suppose a person can produce either two bushels of wheat per hour or six bushels of corn per hour . This person's opportunity cost of one bushel of corn is three bushels of wheat. one­third of a bushel of wheat. two bushels of wheat. six bushels of wheat. (7) QID: 1 5926 Suppose a person can produce either two bushels of wheat per hour or six bushels of corn per hour . This person's opportunity cost of one bushel of wheat is three bushels of corn. one­third of a bushel of corn. two bushels of corn. six bushels of corn. (8) QID: 1 7 592 When two people divide their labor according to their comparative advantages, one person will have to work harder than the other person does to complete a given task . more work can be completed in a given period of time. less work can be completed in a given period of time. the same amount of work can be completed as when they divide the labor by absolute advantage. (9) QID: 1 5928 T wo producers can gain from trade if the trade is based on absolute advantage. comparative advantage. the relative resource endowments the two partners have. the relative size of each partner's total output. (1 0) QID: 1 5930 When a country is a closed economy , that is, it does not engage in trade with other countries, one should assume that its production possibilities are the same as its consumption possibilities. are set by its ability to find a trading partner . are not limited by its own production. are greater than its consumption possibilities. BBBBC BABBA 1 .5.3 (1) QID: 12267 A country that has an absolute advantage in a good should restrict imports of that good. can produce the good at a lower opportunity cost than its trading partner . should specialize in the production of that good. can produce the good using f ewer resources than its trading partner . (2) QID: 12268 Russia can produce a bushel of corn with f our workers and a bushel of rice with three workers. China can produce a bushel of corn with three workers and a bushel of rice with two workers. Which country has a comparative advantage in the production of corn and which has a comparative advantage in rice? Russia has a comparative advantage in the production of corn, and China has a comparative advantage f or the production of rice. Russia has a comparative advantage in the production of rice, and China has a comparative advantage f or the production of corn. Russia has a comparative advantage in the production of rice. Neither country has a comparative advantage f or corn. China has a comparative advantage in the production of rice. Neither country has a comparative advantage f or corn. (3) QID: 1224 7 Russia can produce a bushel of corn with f our workers and a bushel of rice with three workers. China can produce a bushel of corn with three workers and a bushel of rice with two workers. Which country has an absolute advantage f or either good? Russia has an absolute advantage f or both goods. China has an absolute advantage f or rice. China has an absolute advantage f or both goods. Russia has an absolute advantage f or corn. (4) QID: 122 1 7 If trade benefits one country , it will make the other country worse off. T rue False (5) QID: 1222 7 Russia can produce a bushel of corn with f our workers and a bushel of rice with three workers. China can produce a bushel of corn with three workers and a bushel of rice with two workers. The opportunity cost f or Russia to produce one bushel of corn is one bushel of rice. two bushels of rice. one and one­third bushels of rice. f our bushels of rice. (6) QID: 1223 7 Russia can produce a bushel of corn with f our workers and a bushel of rice with three workers. China can produce a bushel of corn with three workers and a bushel of rice with two workers. The opportunity cost f or China to produce one bushel of corn is one bushel of rice. one and a half bushels of rice. two bushels of rice. three bushels of corn. (7) QID: 12269 Russia can produce a bushel of corn with f our workers and a bushel of rice with three workers. China can produce a bushel of corn with three workers and a bushel of rice with two workers. How would these countries specialize? China would produce corn, and Russia would produce rice. China would produce rice, and Russia would produce corn. China would produce all the rice and all the corn because it has an absolute advantage. None of the above DACBC BB ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ 2. 1 . 1 (1) QID: 60 12 F or most goods, if a consumer's income increases, his/her demand f or the goods will decrease. increase. remain unchanged. none of the above. (2) QID: 603 1 If you expect to get a large salary increase next month, your demand f most or goods will decrease. increase. remain the same. none of the above. (3) QID: 60 1 4 Besides the price of substitutes and complements, other deter minants of demand are the price of inputs and natural resources. technology and the number of sellers. the price of the product, income, and consumers' tastes. A and C. (4) QID: 605 1 T o economists, the Latin phrase ceteris paribus means "all other things eq ual." T rue False (5) QID: 60 1 7 Demand is defined by the behavior of producers. the behavior of consumers or households. the behavior of producers and consumers or households. none of the above. (6) QID: 608 1 When the price of a substitute f good X rises, the demand f good X or or increases. decreases. stays constant. will increase at first but decreases over time. (7) QID: 609 1 When the price of a complement f good X rises, the demand f good X or or increases. decreases. stays constant. will decrease at first but increases over time. (8) QID: 602 1 If a type of clothing suddenl y becomes fashionable, there will be a movement down this good’ demand curve. s movement up this good’ demand curve. s shift outward in the good’ demand curve. s shift inward of the good's demand curve. (9) QID: 6022 Which of the f ollowing is not a deter minant of an individual’ demand f s or a good? Income The price of substitutes and complements The price of the good The number of buyers (1 0) QID: 6023 The law of demand states, all other things being eq ual, that goods will be supplied to just eq ual consumer demand. that consumer demand will deter mine the level of fir m suppl y . that consumers will buy more of a good if the price rises. that consumers will buy more of a good if the price falls. (1 1) QID: 602 4 An increase in the price of F ords will have what likel y eff ect in the market f or Chevrolets? It will have no eff ect. The demand f or Chevrolets will decrease. The demand f or Chevrolets will increase. The suppl y of Chevrolets will increase. (12) QID: 606 1 A demand function is a mathematical f mula that specifies the relationship or between the demand f or a good or service and the variables that influence that demand. T rue False BBCAB ABCDD CA 2. 1 .2 (1) QID: 1228 4 A demand schedule shows the relationship between demand and suppl y . the relationship between the price of a good and the q uantity demanded of the good. the amount of a good purchased at diff erent points in time. the change in demand when a consumer's income changes. (2) QID: 12285 When the price of a good rises, consumers will stop buying the more expensive goods and switch to substitutes. This behavior is explained by the income eff ect. the substitution eff ect. both the income and substitution eff ects. none of the above. (3) QID: 12286 The income eff ect says that when the price of a good increases, consumers buy less of the good because their purchasing power is shrinking in ter ms of that particular good. T rue False (4) QID: 1228 7 Assuming that hamburgers and mustard are complements, a decrease in the price of hamburgers would increase the demand f or mustard. T rue False (5) QID: 12288 The demand curve shows the relationship between the price of a good and the q uantity that the consumer is willing and able to purchase in a given period of time, holding all other factors that influence consumer behavior constant. shows the relationship between the price of a good and the q uantity that the producer is willing and able to suppl in a given period of time, holding all y other factors that influence producer behavior constant. shows the relationship between the price of a good and the q uantity that the consumer is willing and able to purchase in a given period of time, without holding all other factors that influence consumer behavior constant. none of the above. (6) QID: 12289 A change in price of a particular good indicates all of the f ollowing except a change on the demand curve. a change in the q uantity demanded. a shift in the demand curve. demand has moved to a new point on the demand curve. (7) QID: 12290 The demand curve is downward­sloping because as the price of the good rises, the q uantity demanded falls. the law of demand states that as price increases, consumers are willing and able to purchase less. none of the above. A and B. (8) QID: 1 7 366 On a demand curve, a consumer’ income and the good’ price are held constant. s s onl y the price is held constant. all deter minants are held constant. all nonprice deter minants are held constant. (9) QID: 1 7 368 The law of demand states, all other things eq ual, that goods will be supplied to just eq ual consumer demand. that consumer’ demand will deter mine the level of fir m suppl s y . that consumers will buy more of a good if price rises. that consumers will buy more of a good if price falls. BBAAA CDDD 2. 1 .3 (1) QID: 1229 1 If a household's income decreases, the demand f or nor mal goods will decrease, and the demand curve will shift outward. the demand f nor mal goods will decrease, and the demand curve will shift or inward. the suppl y of nor mal goods will decrease, and the suppl y curve will shift inward. the suppl of nor mal goods will decrease, and the suppl curve will shift y y outward. (2) QID: 12293 If the price of bread falls from $3 per loaf to $1 .50 per loaf, the demand curve f or bread will shift inward. the demand curve f or bread will shift outward. the demand curve's slope changes. households will demand a diff erent q uantity of bread. (3) QID: 12294 A decrease in income will cause the demand curve f a particular good to or shift outward. shift inward. remain constant. none of the above. (4) QID: 12295 A movement along the demand curve f a particular good is a response to the or change in price of a particular good. T rue False (5) QID: 12296 A shift in the demand curve is caused by a change in one of the variables that aff ects the demand curve and is called a change in the q uantity demanded. T rue False (6) QID: 1229 7 Households will buy more of a nor mal good at every price when the household income increases. the household income decreases. the household income stays the same. none of the above. (7) QID: 12298 A decrease in income will cause the q uantity demanded f or a nor mal good to increase and the demand curve to shift outward. the q uantity demanded f a nor mal good to decrease and the demand curve to or shift inward. an increase in the demand f or a nor mal good at every price. a decrease in the demand f or a nor mal good at every price. (8) QID: 1 74 37 Which of the f ollowing would be a deter minant of q uantity demanded? The price of the good The price of related goods Income Expectations about the future price of the product (9) QID: 1 75 37 What will happen to the current market f or bread if there is a severe drought in wheat­producing states? The demand f or bread will increase. The demand f or bread will not be aff ected. The suppl y of bread will increase. The demand f or bread will decrease. (1 0) QID: 1 76 37 Which of the f ollowing would not change the demand f or a good? A change in income A change in the price of an input good A change in the expected future price of the good A change in the number of sellers BDBAB ADAAD 2. 1 .4 (1) QID: 12299 Inf erior goods are those that most consumers would pref er not to consume but often do because of low income. T rue False (2) QID: 12300 If you expect the price of ice cream to increase next week , your demand curve f or ice cream will shift inward. Y ou will buy next week . shift inward. Y ou decide not to buy ice cream f or a long time. shift outward. Y ou will buy at the lower price today . not shift at all. (3) QID: 1230 1 Factors that shift the demand curve are changes in income. changes in the price of substitutes and complements. changes in the expected future prices. all of the above. (4) QID: 12302 In the demand and suppl y model, when the price of a good increases, income usuall y increases. the model shows the change by shifting the demand curve. there is movement along the demand curve but it does not shift. all other deter minants of demand can also change. (5) QID: 1230 4 What happens to the demand curve f hot dogs when the price of hot dog buns or decreases? The demand curve f or hot dogs will shift outward. The demand curve f or hot dogs will shift inward. The demand curve f or hot dogs will not shift. The change will occur on the existing demand curve. (6) QID: 12305 When the price of bagels decreases, the demand f or English muffins increases. decreases. shifts to a new point of the existing demand curve. none of the above. (7) QID: 12306 When income decreases, the demand f or inf erior goods decreases. increases. remains constant. none of the above. (8) QID: 1 7 7 37 An increase in the price of F ords will have what likel y eff ect in the market f or Chevrolets? It will have no eff ect. The demand f or Chevrolets will decrease. The demand f or Chevrolets will increase. The suppl y of Chevrolets will increase. (9) QID: 1 7 3 79 If the demand f steak falls when a consumer’ income rises, then there is or s evidence that steak is a nor mal good. T rue False (1 0) QID: 1 7 380 Which of the f ollowing items go together? Change in q uantity demanded and movement along a demand curve Change in income and movement along a demand curve Change in price and shift of the demand curve Change in q uantity demanded and shift in the demand curve ACDCA BBCBA 2. 1 .5 (1) QID: 1230 7 T o derive a market demand curve, add the q uantity demanded by each individual in the market at each price and construct a new demand schedule. T rue False (2) QID: 12308 Suppose the market f automobiles is a national market. If personal income or nationwide increases, the market demand f or automobiles is likel y to decrease. to increase. to remain constant. to be unrelated to national income. (3) QID: 12309 In order to find the market q uantity demanded, subtract each individual's q uantity demanded from the total market q uantity demanded. add the q uantity demanded of the individuals within the market and take the average. add the individual q uantities demanded represented in the market. none of the above. (4) QID: 1230 1 If Sue demands six packs of gum at seventy­five cents each and John demands f our packs of gum at seventy­five cents, the market q uantity demanded at that price is two. five. three. ten. (5) QID: 123 1 1 Factors that shift the market demand curves are the same as f or the individual demand curves. diff erent than the factors f or individual demand curves. not relevant in the individual demand. not capable of shifting the market demand curve enough to make a diff erence. (6) QID: 1 7 383 When an economist anal yzes “market demand” in a particular market, the economist is ref erring to a particular amount demanded at that point in time. one point on the market demand curve. one entry in a demand schedule. the entire demand curve. (7) QID: 1 7 386 The deter minants of market demand include all deter minants of individual demand plus the number of buyers in the market. T rue False (8) QID: 1 77 38 If the population of a market area increases, demand in the market will decrease. suppl y in the market will increase demand in the market will increase. suppl y in the market will decrease. (9) QID: 1 5860 If businesses rapidl y expand during a period of time, they would likel y want to hire more workers. This increase in demand is shown by a movement down the demand curve. a movement up the demand curve. shifting the demand curve to the right. shifting the demand curve to the left. ABCDA DACC 2.2. 1 (1) QID: 1232 1 Suppose a baker invents a new oven that reduces baking time by one­half. The baker would then produce the same q uantity of bread but close the bakery half the time. increase bread production. decrease bread production. produce the same amount of bread using the previous technology . (2) QID: 12322 If sellers expect prices to rise in the future, prices today will rise because sellers might reduce current suppl y and wait f or higher prices. T rue False (3) QID: 12323 The suppl y of coal is fixed because there is onl y a finite amount in the ground that can be mined. T rue False (4) QID: 1232 4 All of the f ollowing factors influence how much of a product is supplied to a market except the industry's technology . the price of the product. consumers' income. the price of inputs used to manufacture the product. (5) QID: 1232 7 A suppl y function is a mathematical representation of the q uantity of a good that a fir m is willing to suppl the market, profitabl as a function of all the y y , variables that influence the fir m's decision. T rue False (6) QID: 12328 If a producer of bread thinks that the price of bread will fall next week , the producer will stop making bread this week . hold some of this week's bread f or next week when consumers will want more. sell all the bread this week if possible. be unaff ected by the price next week . (7) QID: 12329 The deter minants of suppl y are factors that will onl y shift the suppl y curve. factors that will onl y change the q uantity demanded. the same as the deter minants of demand. factors that influence the q uantity of a product that producers choose to put on the market. (8) QID: 12330 Profit is the diff erence between marginal costs and total revenue. the diff erence between the revenue earned and the cost of providing a service. the total amount of revenue a fir m earns from selling its product. the total revenue earned plus income from investments. (9) QID: 1233 1 If the price of inputs f or making pizza increases, there will be less pizza supplied because the costs are increasing. there will be more pizza supplied because the costs are increasing. there will be more pizza supplied because the costs are decreasing. there will be less pizza supplied because the costs are decreasing. (1 0) QID: 1 7 388 The relationship between price and q uantity supplied is positive. negative. the same as the relationship between price and q uantity demanded. nonexistent. There is no relationship between these two variables. (1 1) QID: 1 79 3 1 If a jeweler sees a fall in the price of gold, we would expect the jeweler to be willing and able to produce more jewelry at each possible price. the jeweler to be willing and able to produce less jewelry at each possible price. the demand f or jewelry to increase. the demand f or jewelry to fall. BABCA CDBAA A 2.2.2 (1) QID: 12332 A suppl y schedule is a mathematical representation of the q uantity of a good that a supplier will put on the market. a table showing the amount of a good consumers are willing to buy at various prices. a graph showing the relationship between the price of a good and the q uantity supplied. a table showing the relationship between the price of a good and the q uantity supplied. (2) QID: 12333 In anal yzing a suppl y function and then drawing a suppl y curve from it, you hold the price of a good constant but change the values of the other variables. T rue False (3) QID: 1233 4 In a market f or a product, why is the price of the product higher at higher output levels? Because production costs are higher at higher levels of output Because producers' opportunity costs are higher at higher output levels Because consumers are willing to pay more at higher output levels Because producers want more money and realize that consumers are willing to pay f or it (4) QID: 12335 The suppl curve is a collection of points representing the q uantity of a y particular good that a producer is willing and able to off er f or sale in a given period of time as a function of the price of the particular good. T rue False (5) QID: 12336 The upward­sloping suppl y curve is representative of the law of suppl y . shows that as the price of a good or service increases, the q uantity off ered f or sale generall y increases. illustrates increasing opportunity costs. all of the above. (6) QID: 12338 The opportunity cost of suppl ying more of a particular good falls as the q uantity supplied increases. rises as the q uantity supplied increases. stays the same as q uantity supplied increases. is irrelevant to suppliers because they are interested in profits. (7) QID: 1295 4 Suppose a soybean far mer expects a lower price f or soybeans at harvest time than the market price at the time of planting. This far mer is likel y to plant f ewer acres in soybeans. ignore the future price of soybeans. ignore the prices and plant the same soybeans as the previous year . plant more acres in soybeans. (8) QID: 12956 Suppose a soybean far mer expects a higher price f or soybeans at harvest time than the market price at the time of planting. This far mer is likel y to plant f ewer acres of soybeans. plant the same number of acres in soybeans as the previous year . plant more acres in soybeans to take advantage of the expected higher price. get out of far ming. (9) QID: 12996 The reason that producers suppl y more to a market at higher prices is that as the price increases, the producers' opportunity cost of not producing that good falls. as the price increases, the producers' opportunity cost of not producing that good increases. as the price increases, consumers demand a larger q uantity so producers must , suppl y more. as the price increases, producers' costs decrease, so they produce more at the same cost. (1 0) QID: 1 3239 According to the graph if the price of bread is $1 .50 per loaf, the producer will suppl y ________ loaves of bread. nine six two f our (1 1) QID: 1 3263 According to the suppl curve, if the price of bread is $3.00 per loaf, the y producer will suppl y __________ loaves of bread. seven f ourteen zero two (12) QID: 1 792 3 The law of suppl states that, when the price of a good rises, the q uantity y supplied of the good falls. T rue False DBBAD BACBD AB 2.2.3 (1) QID: 12339 Changes in the input prices or technology are represented by a movement along the suppl y curve and are called changes in q uantity supplied. T rue False (2) QID: 123 40 A suppl y curve is a collection of points on a graph illustrating the relationship between the q uantity supplied f a particular product and the q uantity or demanded. the product's price. the price of the product's inputs. the fir m's expectations about future prices. (3) QID: 123 1 4 If the price f or a main input f or a particular product increases and all other factors are constant, the q uantity supplied decreases. there will be a change in demand f or the product. the suppl y curve will shift inward. there will be no change in other variables. (4) QID: 123 42 An increase in the market price of a product, all other things eq ual, results in a change of position along the existing suppl curve, decreasing the q uantity y supplied. a change of position along the existing suppl y curve, increasing the q uantity supplied. a shift of the suppl y curve inward. a shift of the suppl y curve outward. (5) QID: 123 43 In the hamburger restaurant business, an increase in the price f or ground beef represents a change in the market price f or hamburgers. a change in the price of inputs. a change in technology . a change in future expectations. (6) QID: 123 4 4 In a hamburger restaurant, an increase in the price of ground beef causes a movement along the existing suppl y curve, decreasing the q uantity supplied. a movement along the existing suppl y curve, increasing the q uantity supplied. an inward shift of the suppl y curve. an outward shift of the suppl y curve. (7) QID: 123 45 If the market price of hamburgers increases, the suppl curve shifts outward. y T rue False (8) QID: 1 793 3 Along a given suppl y curve f or any product, suppl y increases as price increases. suppl y increases as technology improves. q uantity supplied increases as price increases. q uantity supplied increases as input prices fall. (9) QID: 1 794 3 As the price of apples increases, apple growers will decrease the suppl y of apples. increase the suppl y of apples. switch to less expensive methods of growing apples. increase the q uantity of apples supplied. (1 0) QID: 1 5865 Suppose that New Y ork does not recognize the physician licensing laws from other states. This non­recognition shifts New Y ork's demand f or medical services to the left. demand f or medical services to the right. suppl y of medical services to the left. suppl y of medical services to the right. BBCBB CBCDC 2.2.4 (1) QID: 123 46 A change in suppl y is the same as a change in q uantity supplied. T rue False (2) QID: 1237 4 Factors other than the price of a particular product will shift the suppl y curve. T rue False (3) QID: 123 49 If the pretzel baker expects that pretzel prices will fall at the end of the month, his fir m will save its suppl or selling at a future date. y f increase its suppl y at the current price. ignore the inf mation and continue as bef or ore. wait to suppl y any pretzels until the market is more stable. (4) QID: 12350 If the cost of flour increases, what will be the eff ect on a baking fir m's suppl y curve f or bread? The suppl y curve will shift inward due to the change in input prices. The suppl y curve will shift inward due to the change in future expectations. The suppl y curve will shift outward due to the change in input prices. The suppl y curve will shift inward due to the change in technology . (5) QID: 1235 1 If the cost of flour decreases, the result(s) f or a bread baking fir m will be a decrease in the cost of production. an increase in the suppl y of bread. a shift outward in the suppl y curve f or bread. all of the above. (6) QID: 12352 If a bread­baking fir m improves its technology by using a new machine that speeds the baking process, the technological improvement will increase the cost of production. shift the suppl y curve shift inward. increase the suppl y of bread. increase demand. (7) QID: 12353 A pretzel fir m experiences a loss when several of its employees are hurt in an accident and are per manentl y disabled and can no longer work . This loss means that the cost of production becomes higher and suppl y falls. the cost of production falls. suppl y increases. suppl y remains constant because the fir m replaces the employees. (8) QID: 1235 4 If a pretzel fir m expects the price of pretzels to rise next week , it will sell more pretzels this week . sell f ewer pretzels this week and save the suppl or the price increase. y f sell no pretzels next week . do nothing. (9) QID: 1 796 3 A decrease in the suppl of F y ord and Chevrolet cars might be caused by an increase in the price of Japanese cars. an increase in wages of U .S. car workers. an increase in demand f or cars. a fall in the price of steel. BABAD CABB 2.2.5 (1) QID: 12355 Assume that all employees in an industry receive a raise based on a new labor contract. How will this raise aff ect the product market f the product these or employees manufacture? Market demand will increase. Output will rise. Market suppl y will increase. Market suppl y will decrease. (2) QID: 12356 A technological improvement in agriculture makes it possible to grow three times as much wheat per acre as had been possible in the past. The most likel y result will be that far mers would switch from wheat to corn production and use the extra land f or wheat. an increase in the demand f or wheat because of the decreasing price of wheat. a decrease in the suppl y of wheat due to the expensive new technology . an increase in the suppl y of wheat because of the reduced cost of production. (3) QID: 12360 Which of the f ollowing will cause an outward shift of the market suppl y curve? A rise in the price of inputs A change in the price of the good Improvements in technology A decrease in technology (4) QID: 1236 1 Which of the f ollowing would cause a decrease in the market suppl or ice cream? y f An increase in the price of ice cream A decrease in the q uantity demanded of ice cream An increase in the price of milk An expectation that the price of ice cream will be lower next week (5) QID: 12362 If technological advances are made in an industry , the market suppl y curve will shift inward. T rue False (6) QID: 12363 The total q uantities of a product that all sellers, collectivel y , are willing and able to off er at alternative prices is the demand curve f or a fir m. the market demand curve. the market suppl y curve. the suppl y curve f or a fir m. (7) QID: 12364 Which of the f ollowing would not cause a shift in the market suppl or pizza? A y f change in the price of pepperoni A change in the price of pizza A technological change made on the ovens used to bake pizzas A change in the price of pizza expected to be sold next week (8) QID: 12365 What will cause an increase in the market suppl y? An increase in the number of producers An increase in the number of consumers A decrease in the number of producers An increase in consumers' income (9) QID: 1 1 380 The market suppl y curve f or wheat depends on each of the f ollowing except the price of wheat­producing land. the price of wheat­producing technology . the tastes and pref erences of wheat consumers. the number of wheat far mers. (1 0) QID: 1 3802 The market suppl y of a good or service is the sum of all individual suppl y curves f or the good or service. is deter mined by all the deter minants of individual suppl y and by the number of sellers. reflects a direct relationship between price and q uantity supplied. all of the above. DDCCB CBACD 2.3. 1 (1) QID: 12369 When excess suppl y exists in any economic market, the market price will rise until the excess suppl y is eliminated. T rue False (2) QID: 123 2 7 When there is excess demand f or sugar in the market, the bidding mechanism will push down the price of sugar . result in no change in the reservation prices of consumers. have no eff ect on the price of sugar . push up the price of sugar . (3) QID: 1234 7 When the q uantity demanded f or a particular good exceeds the q uantity supplied f or that good, the q uantity demanded will increase as the price increases. the q uantity demanded will decrease as the price increases. the q uantity demanded will decrease as the price decreases. the q uantity demanded will remain constant. (4) QID: 1235 7 When there is excess suppl y in the corn market, the bidding mechanism pushes down the price of corn. All of the f ollowing will occur except additional buyers will enter the market. some of the sellers will be pushed out of the market. f ewer buyers will enter the market. the suppl y will be reduced. (5) QID: 1236 7 The competitive eq uilibrium point occurs when there is no tendency to change. there is no excess demand. there is no excess suppl y . all of the above. (6) QID: 1 3808 Suppose there is a sur plus in the bread market. Y ou could predict that price will increase, q uantity demanded will fall, and q uantity supplied will rise. price will increase, q uantity demanded will rise, and q uantity supplied will fall. price will decrease, q uantity demanded will rise, and q uantity supplied will fall. price will decrease, q uantity demanded will fall, and q uantity supplied will rise. BDBCD C 2.3.2 (1) QID: 123 7 7 The first step in a three­step process f anal or yzing the market change is to deter mine how the change will aff ect the demand curve. T rue False (2) QID: 1238 7 Comparative statics is the study of the movement from one eq uilibrium to another . the change in competitve eq uilibrium when when one of the suppl or demand y deter minants changes. the adjustment mechanism f ollowing a change in some factor aff ecting demand or suppl y . all of the above. (3) QID: 123 79 Suppose chocolate bars and jell y beans are substitutes f or each other . If the price of jell y beans increases, then the new competitive eq uilibrium f or chocolate bars occurs where the original suppl y curve intercepts a new demand curve. the original demand curve intercepts a new suppl y curve. the original suppl y curve intercepts the original demand curve. none of the above. (4) QID: 12380 An increase in the demand f or chocolate bars results in a price decrease and a q uantity increase. a price increase and a q uantity increase. a price decrease and a q uantity decrease. a price increase and a q uantity decrease. (5) QID: 12382 Assume that jell y beans and candy bars are substitute goods. If the price of jell y beans increases, the demand curve f or jell y beans will shift inward. T rue False (6) QID: 12383 Which of the f ollowing is not a step in anal yzing how a change in the market aff ects the suppl y and demand f or a good? Identifying which side of the market is aff ected Identifying how the change will aff ect the curve Assuming that both curves will shift Identifying what happens to the eq uilibrium price and q uantity (7) QID: 12385 Excess demand f chocolate bars will cause all of the f or ollowing except an increase in the price of chocolate bars. some buyers to leave the market. new sellers to enter the market. the bidding mechanism to remain constant. (8) QID: 1 1 380 When there is excess demand in a market, there is upward pressure on the price. there is downward pressure on the price. the market is in eq uilibrium. there are too many sellers. (9) QID: 1 1 384 When there is excess suppl y in a market, there is upward pressure on the price. there is downward pressure on the price. the market is in eq uilibrium. there are too many buyers. BDABB CDAB 2.3.3 (1) QID: 12386 Which of the f ollowing events would not cause an outward shift of the demand curve? The price of tea, a coff ee substitute, increases. A price war among producers that results in coff ee selling f or $1 per pound. A new FDA study shows that coff ee cures colds. The price of sugar , a complement, decreases. (2) QID: 1238 7 A drought that destroys half of the corn crops in the Midwestwould cause the eq uilibrium price and q uantity of corn to be higher . the eq uilbrium price of corn to be higher and the eq uilibrium q uantity to be lower . no change in eq uilibrium because demand and suppl y will shift eq uall y . a lower eq uilibrium price and a lower q uantity demanded. (3) QID: 12388 The discovery of mad cow disease in the country's cattle herds would likel y decrease the demand f or beef and increase the demand f or chicken. decrease q uantity demanded f or both beef and chicken. decrease the q uantity demanded f or beef and increase the demand f or chicken. decrease demand f or beef and increase q uantity demanded f or chicken. (4) QID: 12389 If beer and pizza are complements, a decrease in the price of pizza would increase the demand f or beer . T rue False (5) QID: 12390 If cheese is a main ingredient of pizza, what happens to the price of pizza when the price of cheese increases? Pizza prices rise. Pizza prices fall. There is no change in pizza prices. None of the above will occur . (6) QID: 1239 1 Which of the f ollowing would cause a decrease in suppl y? Improved technology Lower labor productivity Decreased price of substitutes Decreased demand (7) QID: 12393 If eq uilibrium price and q uantity both rise, the cause is an increase in demand and a decrease in suppl y . an increase in demand without a change in suppl y . a decrease in both suppl y and demand. a decrease in demand and an increase in suppl y . (8) QID: 12394 An increase in the income of a consumer will cause his/her demand f or a nor mal good to increase. How will an increase in income aff ect the eq uilibrium price and q uantity? Both q uantity and price increase. Quantity increases but price decreases. Quantity decreases but price increases. Both q uantity and price decrease. (9) QID: 12395 Peanut butter and jell are used together to make sandwiches. If the price of y peanut butter increases, what changes will occur in the market f or jell y? The suppl y curve f or jell y shifts inward. The demand curve f or jell y shifts outward. The demand curve f or jell y shifts inward. The suppl y curve f or jell y shifts outward. (1 0) QID: 12396 If a product's suppl y curve shifts outward, the new eq uilibrium q uantity will be __________, and the new eq uilibrium price will be __________. lower ; higher higher ; lower higher ; higher lower ; lower (1 1) QID: 1 1 388 Assume that in a competitve market, price is initiall below the eq uilibrium y level. What economic predictions can we make? Price will decrease, q uantity demanded will decrease, and q uantity supplied will increase. Price will decrease and both q uantity demanded and q uantity supplied will decrease. Price will decrease, q uantity demanded will increase, and q uantity supplied will decrease. Price will increase, q uantity demanded will decrease, and q uantity supplied will increase. (12) QID: 1 1 382 F most goods or services, q uantity demanded increases if suppl increases. or y T rue False (1 3) QID: 1 1 398 Suppose that in the market f or an agricultural commodity such as corn, there is a large increase in the q uantity traded. However , the price remains almost the same. The most likel y explanation f or this phenomenon is that suppl y has increased but demand has remained constant. suppl y has decreased but demand has increased. both suppl y and demand have increased. suppl y has increased and demand has decreased. BBAAA BBACB DAC 2.4. 1 (1) QID: 12530 A price ceiling below the eq uilibrium price will cause excess suppl y . excess demand. a sur plus. no change in the market. (2) QID: 1253 1 Shortages result from price controls above eq uilibrium. price controls below eq uilibrium. unlimited wants and limited resources. q uantity supplied greater than q uantity demanded. (3) QID: 12533 Economists may favor price controls if the controls improve eq uity T . rue False (4) QID: 1253 4 The economic value destroyed by a price control is called positive economic value. deadweight loss. economic value. tax revenue. (5) QID: 12535 A price floor that is less than the eq uilibrium price causes excess suppl y . excess demand. non­price competition. no change in the market. (6) QID: 12536 Price controls benefit markets because they help those with low incomes. T rue False (7) QID: 1253 7 Suppose the eq uilibrium price f or an apartment in a market is $1 ,500 a month. The government controls the price by imposing a price ceiling of $7 50. However , the consumer may still pay $1 ,500 because tenants may agree to pay an extra $7 50 "off the books." the landlord may charge the tenant $7 50 f or a key and central air and heat each month. both A and B. neither A nor B. (8) QID: 12538 When consumers and producers f ollow price controls, their costs can sometimes be as much as the original eq uilibrium price, if not more, because consumers are f orced to pay f or their rent­seeking activities and other practices of non­price competition. producers are f orced to pay f or their rent­seeking activities and other practices of non­price competition. consumers and producers may agree to pay the fines associated with violating the price ceiling. all of the above. (9) QID: 1 7 360 Which of the market outcomes is likel to result from price controls on rental y housing? A sur plus of housing A decrease in the number of building per mits f or new rental property A decrease in the q uantity of apartments demanded Higher ­than­eq uilibrium rents paid by those who get the rent­controlled apartments (1 0) QID: 1 3646 In rental markets where price controls are in place, the law often says that the rent cannot increase as long as the lease is in eff ect. In these markets, tenants often sublet their apartments f or more than the rent they pay This practice is an . example of a black market. overcrowding existing apartment space. a lassez­faire transaction. rent­seeking behavior . (1 1) QID: 1 3688 In a free market, what processes would eliminate the excess demand in a rental housing market? Rent­seeking activities The market bidding mechanism Government regulations The black market BBBBD BCDBA B 2.4.2 (1) QID: 12835 The institution of a minimum wage creates a sur plus of jobs. a sur plus of labor . a shortage of labor . a decrease in deadweight loss. (2) QID: 1283 7 The income eff ect of an increase in wages will cause an employee to perf m or f ewer non­market activities, like mowing their own lawn. spend more hours working. spend f ewer hours in leisure. spend more hours in leisure. (3) QID: 12838 The substitution eff ect of an increase in wages may cause a person to buy cheaper goods instead of more expensive goods. buy more leisure time. buy more expensive goods instead of cheaper goods. buy less leisure time. (4) QID: 1 7 33 1 According to the graph, the market wage rate f or this labor market is $6 per hour . $5 per hour . $3 per hour . indeter minate. (5) QID: 1 3383 According to the graph, if the government imposes a minimum wage of $6 per hour in this labor market, there will be an excess demand of 2,000 units of labor . an excess suppl y of 2,000 units of labor . no eff ect on the labor market. eq uilibrium in this market. (6) QID: 1 3395 According to the graph, if the government imposes a minimunm wage of $4 per hour in this labor market, there will be excess suppl y of 2,000 units of labor . excess demand of 2,000 units of labor . no eff ect on this labor market. an indeter minate eff ect. (7) QID: 1 409 3 One method that employers could use to pass the costs of a government­imposed minimum wage to their employees would be to reduce employee vacations. make employees pay f or their own medical insurance. stop the employer contributions to the employees' retirement systems. all of the above. (8) QID: 1 3562 Which of the f ollowing is not a result of minimum wage laws? An increase in the number of unskilled laborers in the job market An increase in production An increase in teenage unemployment An increase in school dropout rates (9) QID: 1 7 355 Minimum­wage laws specify the highest wage that employers may pay workers. T rue False (1 0) QID: 1 7 35 7 Generall those people who advocate minimum­wage laws believe there are no y , negative eff ects of minimum­wage laws. there are some negative eff ects of the laws but the benefits outweigh the costs. minimum­wage laws will sol ve a maldistribution of income. that the market system should be replaced with a planned economy . (1 1) QID: 1 7 359 The legislative intent of minimum­wage laws is to ensure a middle­class standard of living f or all workers. employment f or all who want it. unemployment insurance. a minimall y adeq uate standard of living. BDDBB CDBBB D 2.4.3 (1) QID: 127 45 In the absence of a tax wedge, the consumer sur plus would be smaller . the producer sur plus would not change. the consumer sur plus and producer sur plus would be smaller . the consumer sur plus and producer sur plus would be larger . (2) QID: 127 46 If an excise tax is imposed on a producer , the producer raises the price, and the demand curve shifts inward. the suppl y curve shifts inward, and a smaller q uantity is demanded at the higher price. the seller will try to get the consumer to pay the entire tax. the suppl y curve shifts outward reflecting the producer's ability to impose the tax on buyers. (3) QID: 127 47 If the government imposes a $2 tax on the sellers of a product, the suppl y curve shifts inward parallel to itself and intersects the demand curve at a lower price and higher q uantity T . rue False (4) QID: 12 1 48 The tax wedge can be identified as the diff erence between the consumer's demand price and the seller's price. the diff erence between the eq uilibrium price and the costs of producer inputs. the diff erence between total sur plus and consumer sur plus. graphicall y the area beneath the demand curve and above the eq uilibrium price. (5) QID: 12 4 48 If an excise tax is imposed on consumers, the market demand curve will shift inward. T rue False (6) QID: 1279 4 A tax­distorted demand curve tells us what the buyer is willing to pay the government. the reservation price f or the consumer . the opportunity cost of the seller . the prices that the consumer is willing to pay to the producer . DBBAA D 3. 1 . 1 (1) QID: 1 1 305 If a country is operating at a point inside its production possibilities frontier , it has unemployed resources. must decrease production of one good to increase production of the other . cannot experience economic growth. has full employment. (2) QID: 1 1 306 Points on the PPF are the onl y efficient production points. T rue False (3) QID: 1 1 309 An economy is efficient if it cannot produce more of one good without giving up some of another . it can produce more of one good without giving up some of the other . it can produce more of all its goods. it cannot increase its profits by producing more. (4) QID: 1 4002 All of the f ollowing events would aff ect the position of a country's production possibilities frontier except immigration laws. investment in new capital stock . discovery of new sources of energy . the level of unemployment. (5) QID: 1 483 5 Which point on the graph is not attainable? A D C All points are attainable. (6) QID: 1 48 5 4 When increasing opportunity costs exist, resources are not perf ectl y substitutable f or each other . T rue False (7) QID: 1 486 5 Which point on the graph does not represent an efficient combination of production of goods A and B? A B C Any point inside the PPF . (8) QID: 1 488 5 The production possibilities frontier (PPF) represents a collection of points indicating a minimum amount of one good produced f or a given q uantity of another good produced. all the possibilities of an economy , including ones that are not attainable. a collection of points indicating a maximum amount of one good produced f or a given q uantity of another good produced. an inefficient use of resources. (9) QID: 1 489 5 The idea of opportunity costs indicates that if the production of one good is increased, the production of another good must decrease. you can produce whatever you have the opportunity to. you can produce anything if you can cover your costs. all of the above. (1 0) QID: 1 490 5 Any combination of two goods l ying outside the production possibilities frontier represents the most efficient use of resources. req uires f ewer resources than are presentl y available. represents an unattainable combination of goods. represents an inefficient combination of goods. (1 1) QID: 1 1 549 Economics is defined by the study of scarcity in situations of rational choice. the study of rational choice in situations of scarcity . the study of suppl y and demand. none of the above. (12) QID: 1 5492 Scarcity is described as limited q uantities of resources that are used to satisfy unlimited wants. T rue False (1 3) QID: 1 493 5 Efficiency means that you do the best with what you have. you produce large q uantities of goods using limited q uantities of resources. natural resources are conserved. none of the above. (1 4) QID: 1 494 5 Ref erring to the graph, if this economy moves from point A to point B, it must give up f ood to get more military eq uipment. it must give up military eq uipment to get more f ood. it has to give up both military eq uipment and f ood. it gains both military eq uipment and f ood. (1 5) QID: 1 495 5 In this production possibilities frontier if the consumer moves from A to B, , the consumer is choosing more leisure and less income. the consumer is choosing more income and less leisure. the consumer is choosing more of both leisure and income. the consumer is choosing less of both leisure and income. (1 6) QID: 1 7 549 According to the production possibilities frontier curve shown below , points A, B, and C represent f easible outcomes f or this society T . rue False (1 ) QID: 1 498 7 5 According to the graph, the society has to give up _______ pounds of f ood to build one car . 1 0 1 00 1/1 0th 1 000 (1 8) QID: 1 5499 According to the graph, the society has to give up _______ cars to produce another pound of f ood. 1/1 0 1 00 1 0 1 000 (1 9) QID: 1 5500 Points on the production possibilities frontier are the onl y efficient production points. T rue False AAADC ADCAC BAABA BCCA 3. 1 .2 (1) QID: 1 1 1 31 In a circular flow diagram, households and fir ms interact in financial markets. in onl y the market f or goods and services. in both the market f goods and services and the market f factors of or or production. in onl y the market f or factors of production. (2) QID: 1 1 3 31 In a circular flow diagram, the two loops are the flow of goods loop and the flow of services loop. the flow of goods, services, and factors loop and the flow of dollars loop. the flow of dollars loop and the flow of factors loop. the flow of income loops. (3) QID: 1 14 31 The circular flow model is a simple model that explains how the economy is organized. a geographic model that shows economic development in a region. a model that shows the flow of money in ma jor financial institutions. an engineering model that shows water flow in stor m water sewers. (4) QID: 1 16 31 Factors of production are the relationship between inputs and outputs. the political considerations that aff ect economic output. the inputs in the production process. the weather as it aff ects the production process. (5) QID: 1 1 31 7 The two markets f ound in the simple circular flow model are money market and stock market. goods and services (product) market and factors of production (resource) market. real market and nominal market. labor market and product market. (6) QID: 1 120 3 In a circular flow model, fir ms suppl y both products and resources. demand both products and resources. demand products and suppl y resources. suppl y products and demand resources. (7) QID: 1 122 3 In the circular flow model, eq uilibrium occurs when all the spending of households eq uals the spending of fir ms. all the spending of households and fir ms eq uals the income received by the factors and goods and services markets. the demand in the factors market eq uals the demand in the resource market. the demand of households eq uals the demand of fir ms. (8) QID: 1 12 3 4 In the circular flow model, households suppl y both products and resources. demand both products and resources. demand products and suppl y resources. suppl y products and demand resources. (9) QID: 1 125 3 F oreign trade allows exports to flow into the circular flow . allows money and resources to leak out of the circular flow . is a component of the factors market. is not a component of the circular flow model. CBACB DBCB 3. 1 .3 (1) QID: 1 12 3 7 The national income accountants place a value on owner ­occupied housing by estimating the rental value of the houses. using the monthl y mortgage payment. using the total price of the house f or the year in which it was sold. eliminating all owner ­occupied houses from GDP calculation. (2) QID: 1 129 3 Gross domestic product is the sum of all employees' compensation, cor porate profits, and interest income. personal consumption expenditures and gross private domestic investment. the market value of all final goods and services produced within a country in one year . the market value of all final goods and services produced by a country's citizens within one year . (3) QID: 1 1 1 33 GDP accounting includes the production represented by all illegal drug trade. the value that citizens place on leisure. the value of anti­pollution eq uipment sold in a year . the goods and services provided by household production. (4) QID: 1 1 3 33 In order to compare GDP from one year to the next, it is necessary to "deflate" the GDP figure from the later year . T rue False (5) QID: 1 1 3 35 Which of the f ollowing would be included in U .S. GDP? The value of a Japanese camera brought into the U .S. by an American tourist The total value of all exports from the U .S. The value of clean air The output of a famil y­owned far m in the Midwestern U .S. (6) QID: 1 1 7 33 GNP is a better measure of total economic output in the U .S. than GDP . T rue False (7) QID: 1 1 3 38 Nominal GDP eq uals price times q uantity . uses a base year to hold prices constant. eq uals real GDP divided by the GDP deflator . measures inflation. (8) QID: 1 1 340 Changes in real GDP indicate inflation. either inflation or deflation. how the actual physical output of the economy has changed. nothing about the economy . (9) QID: 1 11 34 Nominal GDP measures output in ter ms of ________________, while real GDP measures output in ter ms of _____________. physical goods and services; actual dollar value production; prices base year production; base year prices actual dollar value; physical goods and services (1 0) QID: 1 1 34 7 Which of the f ollowing would be included in U .S. GNP? The value of Canadian oil imported into the U .S. The value of a car produced at an American­owned factory in Ger many The output of a Japanese factory in Chicago The box office revenue of an Italian film shown in the U .S. (1 1) QID: 1 1 349 The GDP deflator measures how the overall price level has changed relative to the base year . eq uals real GDP divided by nominal GDP times 1 00. eq uals nominal GDP divided by real GDP times 1 00. A and C onl y . (12) QID: 1 1 3 50 If nominal GDP is $6 billion and real GDP is $5 billion, the GDP deflator is eq ual to _____. .83 1 .2 83.3 120 (1 3) QID: 1 1 3 52 If nominal GDP is $7 million and the GDP deflator is 1 40, real GDP eq uals ______. $20,000 $50,000 $2,000,000 $5,000,000 ACCAD BACDB DDD 3. 1 .4 (1) QID: 1 1 3 53 The chain­weighted procedure f or measuring GDP uses the same prices, or weights, in each year . T rue False (2) QID: 1 1 3 56 The main problem with fixed weights in constructing a price index f or GDP is that structural changes in the economy make fixed price weights unrealistic. fixed price weights are more difficult to construct. fixed prices do not account f or all production. fixed prices do not allow comparison between two countries. (3) QID: 1 1 7 35 The substitution problem with a fixed­weight index means that the index does not accuratel reflect the changes from one year to the next when the economy y produces diff erent products so the market basket changes. consumers demand less relativel y high­priced goods and more relativel y low­priced goods. suppliers try to sell higher profit items and cease producing lower profit items. structural changes occur in the economy . (4) QID: 1 1 3 59 Assume that the government uses a fixed­weight method f calculating real GDP or . Suppose that in the year after the base year , some prices go up a lot but others go down a little. The problem with the fixed­weight method f or calculating GDP in the second year is that consumers substitute the now relativel y more expensive goods f the now relativel less expensive goods, but the fixed­weight method or y values all purchases at base year prices. consumers substitute the now relativel less expensive goods f the now y or relativel y more expensive goods, but the fixed­weight method values all purchases at base year prices. consumers are f orced to buy higher ­priced goods and services, even though some prices have fallen. the fixed­weight method uses the second year prices to calculate real GDP and thus overstates real GDP . (5) QID: 1 1 360 The new BEA procedure f or calculating real GDP corrects f or substitution bias by moving the base year f orward and computing the current year GDP with the previous year as the base year . T rue False BABBA 3. 1 .5 (1) QID: 1 1 362 GDP is not a perf ect measure of individual well­being in a society because it excludes some goods such as leisure, lif e expectancy , and environmental q uality . T rue False (2) QID: 1 1 364 GDP provides a good indication of the size of the economy because it gives increased weight to consumer goods. it measures all new goods and all used goods. is an estimate of individual income. it is a monetary measure of total production. (3) QID: 1 1 367 GDP is a good measure of the well­being of a society A better measure of . individual well­being would be per capita GDP . per capita consumption goods. government spending per person. the level of exports per capita. (4) QID: 1 1 369 If, last year , nominal GDP grew by 12%, the population grew by 4%, and the GDP deflator rose from 1 00 to 1 08, real per capita GDP increased by 12%. real per capita GDP increased by 4%. real per capita GDP was unchanged. real per capita GDP decreased by 8%. (5) QID: 1 1 0 3 7 If the GDP of Japan is $1 0 trillion and the GDP of Mexico is $1 trillion, we can conclude that the average citizen of Japan is 1 0 times better off than the average citizen of Mexico. T rue False (6) QID: 1 1 3 1 7 Although GDP does not measure such q uality of lif e attributes as literacy and lif e expectancy many international studies have shown that high per capita GDP is , associated with longer lif e expectancy and lower rates of literacy . shorter lif e expectancy and higher rates of literacy . longer lif e expectancy and higher rates of literacy . shorter lif e expectancy and lower rates of literacy . (7) QID: 1 1 3 2 7 The sale of stocks and bonds is included in GDP as investment. T rue False ADACB CB 3.2. 1 (1) QID: 1 1 36 7 The expenditures approach calculates GDP by summing the total spending on consumption, investment, net exports, and government purchases. compensation to employees, rental income, profits, interest income, business owners' income, government subsidies, indirect taxes, and depreciation. compensation to employees, rental income, profits, interest income, business owners' income, indirect taxes, and depreciation and subtracting government subsidies. compensation to employees, rental income, profits, interest income, and business owners' income. (2) QID: 1 1 3 7 7 In national income accounting, income derived from the current year's production of all components of GDP is eq ual to gross private domestic investment minus depreciation. the total amount spent to purchase the current year's output. the sum of profits and compensation to employees. cor porate profits and compensation to employees. (3) QID: 1 1 9 3 7 If gross private domestic investment exceeds depreciation in a given year it , means that the economy has increased its productive capacity T . rue False (4) QID: 1 11 38 Which of the f ollowing shows eq uilibrium from the expenditures approach? Y = C + I + G + (X ­ M) total output < total spending total output > total spending saving > investment (5) QID: 1 1 382 If IBM finds that it has produced 1 00,000 more computers in a year than it sells in that year , the value of those computers will be accounted f or as a loss because they cannot be counted as part of GDP . will be included in GDP in the year in which they are sold. will be counted in the current years' GDP as consumption. will be counted in current GDP as inventory investment. (6) QID: 1 1 383 In every economy in the world, total income and total expenditures are not eq ual. T rue False (7) QID: 1 14 38 Which of the f ollowing is not a component of GDP? Housing F oreign currency Investment Government spending (8) QID: 1 1 385 GDP can be calculated by adding wages and salaries, consumption, investment, and net exports. government spending, gross private investment, net exports, and private consumption. transf payments, gross private investment, net exports, and private er consumption. wages, depreciation, government spending, and transf er payments. (9) QID: 1 1 388 Which of the f ollowing is an example of consumption? Government spending on bridge repairs A fir m’ purchase of a new generator s F oreigners’ purchases of domestic goods A household’ purchase of a new television s (1 0) QID: 1 1 390 The expenditures approach to calculating GDP sums each component of total spending in an economy over a given period of time. eq uals the income approach to calculating GDP . is illustrated by the circular flow model. All of the above are correct. ABAAD BBBDD 3.2.2 (1) QID: 1 7 322 The income approach includes employees' salaries and wages, cor porate profits, interest paid to businesses, business owners' incomes, rental income, net payments to factors of production in the rest of the world, and depreciation. T rue False (2) QID: 1 3228 Which of the f ollowing statements best describes the eq uality between total income and total expenditures in the economy? Expenditures and income are eq ual because onl y households buy goods and services from fir ms. Expenditures and income are eq ual because fir ms and government spend money to pay f or wages, rent, profits, and other income items. The government redistributes income by taxing fir ms and giving the taxes to households until expenditures eq ual income. All the choices are correct. (3) QID: 1 3229 In calculating real GDP income and expenditures are eq ual onl , y if households spend all their income by purchasing all the goods and services produced within the year . onl y if households spend all their income and do not save. onl if fir ms pay out all their earnings f wages and other factors of y or production. even if households do not spend all their income or fir ms do not pay out all their earnings. (4) QID: 1 1 323 Cor porate profits are a component of which approach to calculating GDP? The expenditures approach The income approach The savings approach The total product approach (5) QID: 1 3232 T ransf payments are not included in GDP because they do not represent er current production of goods and services. are included in GDP because they are individuals’ incomes. are not included in GDP unless they are Social Security payments. are included in GDP because they will be used f or consumption. (6) QID: 1 3234 Proprietors' income is a component of which approach to calculating GDP? The expenditures approach The income approach The leakages approach The injections approach (7) QID: 1 3235 The income approach to calculating GDP sums all income received in an economy . is derived from the broad measure of national income. is illustrated by the circular flow model. All of the above are correct. (8) QID: 1 3236 National income is the total amount of money received in a country by the factors of production. T rue False (9) QID: 1 7 323 Which of the f ollowing is not a component of national income? Employee compensation T ransf er payments Rent f or land Cor porate profits (1 0) QID: 1 40 32 Personal income minus personal income taxes eq uals national income. net domestic product. disposable income. gross national product. (1 1) QID: 1 42 32 Net domestic product eq uals gross domestic product minus depreciated capital. personal income minus personal income taxes. the sum of national income, indirect business taxes, depreciation, and net f oreign factor income. national income minus transf er payments. ABDBA BDABC A 3.3. 1 (1) QID: 1 43 32 A large increase in the price of military helicopters will have a larger impact on the consumer price index than on the price of gasoline. T rue False (2) QID: 1 46 32 The market basket of goods from which the CPI is derived is composed of natural resources that fir ms use to produce final goods. total production in a year . products that a typical consumer would buy . household production such as child care and housework . (3) QID: 1 4 327 The base year in any price index is always the same year . the year against which any changes are measured. the latest year f or which the government has data. the year immediatel y prior to the one you are studying. (4) QID: 1 48 32 The consumer price index (CPI) compares the cost of a basket of goods consumed in the base year to the cost of the same basket in another year . compares the cost of a basket of goods consumed in the base year to the cost of another basket of goods consumed in another year . measures the changes in the prices of goods included in GDP . is the ratio of the price of a basket of goods to its production costs. (5) QID: 1 49 32 The GDP deflator is often used as the basis to increase Social Security benefits and cost­of­living allowances (COLAs) in labor contracts. T rue False (6) QID: 1 3250 Suppose inflation is predicted to be 6% in the coming year . If instead it is onl y 3%, which group of people will suff er an economic loss? Borrowers Lender Neither group because lower inflation benefits both Both groups because they both experience the same inflation rate (7) QID: 1 1 325 If a person's income increases from $50,000 to $60,000 in a year and the CPI has increased from 120 to 14, the person's standard of living has most likel 4 y risen. fallen. remained the same. indeter minate because the base year is not given. (8) QID: 1 3252 The producer price index (PPI) that measures consumer prices is believed to be better than the CPI and is widel reported as a better measure of inflation. y T rue False (9) QID: 1 7 325 A change in the producer price index (PPI) is thought to be useful in predicting changes in the stock price index. changes in consumer confidence. changes in the consumer price index. changes in the rate of output of goods and services. (1 0) QID: 1 3258 The largest category of consumer spending in the U .S. is housing. f ood and beverages. transportation. medical care. (1 1) QID: 1 3259 If the nominal interest rate is 12% and the inflation rate is 5%, the real rate of return is 12%. 5%. 7%. The real rate of return cannot be deter mined from the inf mation given. or (12) QID: 1 1 326 Which of the f ollowing changes in price indexes shows the greatest rate of inflation: 1 00 to 120, 1 50 to 1 80, or 1 90 to 228? 1 00 to 120 1 50 to 1 80 1 90 to 228 These three indexes show the same rate of inflation. BCBAB ACBCA CD 3.3.3 (1) QID: 1 3268 A price index in one year was 120. The next year the same index was 1 40. What was the approximate percentage change in the price level as measured by that price index? 12% 1% 7 20% 40% (2) QID: 1 3269 In 1 990, the CPI was 1 50. In 2000 it was 200. What was the rate of inflation over this time period as measured by the CPI? 33% 50% 1 00% Y ou cannot deter mine the rate without the base year . (3) QID: 1 7 32 1 An increase in the price of imported electronic eq uipment is measured by the consumer price index but not by the GDP deflator . T rue False (4) QID: 1 7 323 Which of the f ollowing is not a way to measure inflation? Increases in nominal GDP The GDP deflator The consumer price index The producer price index (5) QID: 1 7 324 The First National Bank wants to earn a 5% profit on a $1 000 student loan. The inflation rate this year was 3% but the bank expects the rate to rise next year to 6%. What interest rate should the bank charge f or the loan? 3% 6% 1 1% 1 4% (6) QID: 1 7 325 Suppose a county's entire GDP consists of wheat and rice. In 2000, the country produced 20 bushels of wheat and sold them f or $4.00 per bushel. It produced 1 0 bushels of rice and sold them f or $2.00 per bushel. If the base year prices are $1 .00 per bushel f or wheat and $2.00 per bushel f or rice, nominal GDP in 2000 is $1 00.00 and real GDP is $40.00. nominal GDP in 2000 is $40.00 and real GDP is $1 00.00. nominal GDP in 2000 is $1 00.00 and real GDP is $1 00.00. nominal GDP in 2000 is $40.00 and real GDP is $40.00. (7) QID: 1 7 326 Suppose a county's entire GDP consists of wheat and rice. In 2000, the country produced 20 bushels of wheat and sold them f or $4.00 per bushel. It produced 1 0 bushels of rice and sold them f or $2.00 per bushel. If the base year prices are $1 .00 per bushel f or wheat and $2.00 per bushel f or rice, The GDP deflator f or 2000 is 1 00. The GDP deflator f or 2000 is 40. The GDP deflator f or 2000 is 250. There is not enough inf mation to calculate the GDP deflator or . (8) QID: 1 7 32 7 The diff erence in the way the CPI and the GDP deflator are calculated is that the GDP deflator uses a fixed basket of goods with base year prices while the CPI changes its basket of goods and the prices every year . the GDP deflator uses current year total production with base year prices while the CPI uses a fixed basket of goods and current year prices. the GDP deflator changes its basket every year and uses current prices while the CPI uses a fixed basket and base year prices. the GDP deflator and the CPI are both calculated by using a fixed basket of goods and current year's prices. (9) QID: 1 3280 Suppose the CPI increased from 1 00 to 10. We can conclude that the inflation 1 rate was 1 0 percent. the economy has experienced stagflation. the inflation rate was 10 percent. 1 the economy has experienced hyperinflation. (1 0) QID: 1 1 328 The consumer price index measures changes in the gross domestic product over a period of time. T rue False (1 1) QID: 1 3282 Suppose a country’ entire GDP consists of wheat and rice. In 2000, the country s produced 20 bushels of wheat and sold them f $4.00 per bushel. The country or produced 1 0 bushels of rice and sold them f or $2.00 per bushel. If the base year prices are $1 .00 per bushel f or wheat and $2.00 per bushel f or rice, there is a 120% increase in inflation. there is a 125% increase in inflation. there is a 1 50% increase in inflation. There is not enough inf mation to calculate a change in inflation. or (12) QID: 1 4 328 If the prices of American automobiles increase, the CPI will increase, while the GDP deflator will decrease. the CPI will decrease, while the GDP deflator will remain unchanged. both the CPI and the GDP deflator will increase. both the CPI and the GDP deflator will decrease. BAAAC ACBAB CC 3.3.4 (1) QID: 1 3288 Which of the f ollowing would cause both the U .S. consumer price index and the U .S. GDP deflator to increase? An increase in the price of Sony TVs produced in Japan and sold in the U .S. An increase in the price of F ord pickup trucks produced in the U .S. and sold in the U .S. An increase in the price of agricultural eq uipment made in the U .S. and sold in the U .S. An increase in the price of tanks f or the U .S. military by General Motors (2) QID: 1 3292 The consumer price index is the index that government accountants use to adjust nominal GDP to get real GDP . T rue False (3) QID: 1 3293 If the price of bread rises and consumers decide to purchase less bread and more bagels, the CPI is experiencing a substitution bias. a q uality improvement bias. a new goods bias. a measurement bias. (4) QID: 1 3296 Which of the f ollowing statements about the CPI and the GDP deflator is not true? The CPI tends to overstate the rate of inflation. The GDP deflator is a better measure of overall price changes. The GDP deflator is subject to substitution bias. The CPI is subject to substitution bias. (5) QID: 1 7 329 In which of the f ollowing sectors would a 1 5% increase in price most aff ect the CPI? T ransportation F ood Housing All the above have the same impact because the sectors are eq uall y weighted. (6) QID: 1 3299 If an increase in the price of gasoline causes people to ride bicycles more than bef ore, the consumer price index will underestimate the cost of living. T rue False (7) QID: 1 1 330 Unlike the consumer price index, the GDP deflator can be used to measure the increase in the cost of living f or a typical US household. the increase in nominal GDP that is attributable to price increases rather than production increases. the increase in the f ederal government budget that is a attributable to price increases rather than increased real expenditures. the increase in real GDP that is attributable to price increases rather than production increases. (8) QID: 1 4 330 Which of the f ollowing statements about the CPI is not correct? Quality changes are reflected in the CPI. The CPI's basket of goods does not change from year to year . The CPI has a base year from which changes in price are compared. The CPI uses a base year's basket of goods and the current year's prices to calculate inflation. (9) QID: 1 3306 An increase in the price of construction eq uipment will have a greater influence on the GDP deflator than it would on the consumer price index. T rue False (1 0) QID: 1 7 330 The consumer price index fails to take into account the fact that consumers substitute less expensive goods f or those goods whose prices have risen. T rue False (1 1) QID: 1 1 330 The consumer price index is accurate in measuring changes in the q uality of products. T rue False (12) QID: 1 12 33 Empirical evidence has shown that the U .S. consumer price index and GDP deflator generall y move in the same direction. T rue False BBACC BBAAA BA 3.4. 1 (1) QID: 1 1 33 5 Which of the f ollowing statements about the business cycle is true? Depressions are a mild f m of a recession. or The business cycle has regular and predictable fluctuations. A recession occurs when real GDP falls f or two consecutive q uarters. Recessions and depressions generall y are accompanied by decreasing unemployment. (2) QID: 1 1 336 A recession occurs when real GDP falls f or two consecutive months. T rue False (3) QID: 1 1 33 7 Which of the f ollowing is a phase of the sty lized business cycle? Unemployment Inflation Seasonal unemployment Recession (4) QID: 1 1 339 In the diagram of the business cycle, the trough of the business cycle is at point A B C D (5) QID: 1 1 332 During a recession one would expect the price level to ___________ and unemployment to _____________. increase, increase decrease, decrease increase, decrease decrease, increase (6) QID: 1 3323 Recessions often have benefits associated with them. All of the f ollowing are examples of benefits provided by recessions except increases in investment. efficiency improvements. declining inflation. the balance of payments improvements. (7) QID: 1 3325 Suppose that over the past six months, the unemployment rate has fallen from 5.0% to 4.5%, and real GDP has increased by .7%. Y ou could conclude that inflation is a serious problem in this economy . a recession is in progress in this economy . an expansionary phase of the business cycle is in progress. a trough is about to be reached. (8) QID: 1 3326 The business cycle can generall y be described as the short­run movement in interest rates. the short­run upward and downward movements in total output. the cyclical movement in the balance of trade. the increase in consumer spending that accompanies an increase in output. (9) QID: 1 3328 Changes in the business cycle correspond with changes in which of the f ollowing? Political environment The money suppl y Business conditions The commodity market (1 0) QID: 1 3329 Which of the f ollowing will occur during a recession? Personal income rises; investment spending falls; cor porate profits rise. Personal income falls; investment spending falls; cor porate profits fall. Personal income falls; investment spending rises; cor porate profits rise. Personal income rises; investment spending rises; cor porate profits rise. (1 1) QID: 1 3330 Which of the f ollowing is true about the unemployment rate at the end of a recession? The unemployment rate will remain unchanged. The unemployment rate will graduall y rise. The unemployment rate will graduall y fall. The unemployment rate will eq ual zero. (12) QID: 1 1 333 The fluctuations of an economy are regular and can be predicted. T rue False CBDCD ACBCB CB 3.4.2 (1) QID: 1 3334 According to real business cycle theory , business cycles can be explained by the fact that investment is volatile and causes instability in the economy . changes in resources and technology aff ect the productive capacity of the economy and cause long­run growth to be volatile. too much money from the F ederal government budget deficits causes excess demand within the economy , thus aff ecting long­run growth. most recessions are due to rapid increases in the money suppl y . (2) QID: 1 3336 Real business cycle theory claims that real output onl y changes with a change in the price level. T rue False (3) QID: 1 3338 New classical economists believe that the economy cannot correct itself when it is in a recession and must be corrected with monetary or fiscal policy or some combination of both. T rue False (4) QID: 1 40 33 The idea that policy can be used to stabilize the fluctuations in the business cycle is known as new classical economics. new Keynesian economics. stabilization policy . business­cycle management. (5) QID: 1 42 33 Mainstream economists believe that business cycles are caused by changes in the level of total spending. erratic changes in the money suppl y . changes in technology and resources. political uncertainty . (6) QID: 1 45 33 The Marxian view of the business cycle is that economic fluctuations occur because capitalism must increase the rate of exploitation of workers in order to increase profits. consumers are not spending enough to stimulate growth in the economy . the government does not have enough planning to be able to stop the cycles. "creative destruction" f orces ma jor changes in the composition of the economy . BBBCA A 3.5. 1 (1) QID: 1 48 33 The labor f orce is defined as all persons who are q ualified and able but not working. all non­institutionalized persons over age 1 6 who are working plus those persons who are looking f or jobs. onl y persons who are working. all persons working plus those persons who are not working and have q uit looking f or a job. (2) QID: 1 49 33 The labor f orce participation rate is (the labor f orce divided by the total population) times 1 00. (the labor f orce divided by the adult population) times 1 00. (the number of employed divided by the adult population) times 1 00. (the number of unemployed divided by the adult population) times 1 00. (3) QID: 1 3353 If the total population in the country is 250 million, the adult population is 1 7 5 million, the number of unemployed is 7 million, and the number of employed is 120 million, then the labor f orce participation rate is _____. 5.5% 7 2.6% 50.8% 70% (4) QID: 1 3354 In a recession, the discouraged worker eff ect tends to increase the unemployment rate. T rue False (5) QID: 1 7 335 According to the Bureau of Labor Statistics, a househusband who chooses to stay at home to take care of children is underemployed. not in the labor f orce. unemployed. a discouraged worker . (6) QID: 1 3359 One criticism of the Bureau of Labor Statistic's data­gathering methodology is that the eff ect of the underground economy may underestimate unemployment. part­time workers are not counted in the labor f orce. discouraged workers are not counted as part of the labor f orce. workers who are temporaril y between jobs are not counted as unemployed. (7) QID: 1 3360 Suppose a state has an adult population of 1 0 million people, and the labor f orce participation rate is 80%. The number of people in the state with jobs is 7280,000. The unemployment rate in this state is _____. 7% , 8% 9% 1 0% (8) QID: 1 3362 Since World War II, the labor f orce participation rate f or males has declined and f or f emales has risen. T rue False (9) QID: 1 3363 Assume that the population of a city is 500,000. It has 360,000 people employed, 40,000 unemployed, and 1 00,000 not in the labor f orce. What is this city's unemployment rate? 8% 1 0% 12% 25% (1 0) QID: 1 3365 Assume that the adult population of a city is 500,000. It has 360,000 people employed, 40,000 unemployed, and 1 00,000 not in the labor f orce. What is this city's labor f orce participation rate? 1 0% 40% 7 2% 80% (1 1) QID: 1 3366 General Motors sometimes temporaril y lays off employees when it begins retooling to produce a new model car . The laid­off employees are called back to work after the retooling. These employees are counted as out of the labor f orce. discouraged workers. employed. unemployed. (12) QID: 1 70 33 As the economy moves out of a recession, the discouraged­worker eff ect will tend to ___________________ the unemployment rate. increase decrease have no eff ect on fluctuate around BBBBB CCABD DA 3.5.2 (1) QID: 1 7 33 2 Frictional unemployment is unemployment caused by a changing economy . unemployment caused by a lack of jobs in declining industries. long­ter m unemployment. unemployment caused by a temporary , voluntary change in jobs. (2) QID: 1 7 334 A worker who loses a job at a coal mine because consumers' electric utilities are switching from coal­burning power plants to natural gas power plants is experiencing cyclical unemployment. frictional unemployment. structural unemployment. seasonal unemployment. (3) QID: 1 7 335 Even in a recession, the group least aff ected by unemployment is teenagers. women. white males. African­Americans. (4) QID: 1 7 336 When there is no cyclical unemployment in the economy , structural unemployment is zero. frictional unemployment is zero. unemployment is the sum of frictional and structural unemployment. unemployment is onl y structural unemployment. (5) QID: 1 7 33 7 During a recession, some people become discouraged because they cannot find a job. These discouraged workers drop out of the labor f orce. This phenomenon is most likel y to aff ect males in their prime working years. teenage males and f emales. f emales in their prime working years. males aged 25­64. (6) QID: 1 7 338 The main economic cost of cyclical unemployment is lost economic output. T rue False (7) QID: 1 1 338 In the Keynesian view insufficient total spending in the economy results in , frictional unemployment. structural unemployment. cyclical unemployment. disguised unemployment. (8) QID: 1 3382 During the Great Depression, the U .S. unemployment rate reached almost 25%. Most of these unemployed people were frictionall y unemployed. structurall y unemployed. cyclicall y unemployed. discouraged workers. (9) QID: 1 4 338 The main diff erence between cyclicall unemployed workers and structurall y y unemployed workers is that cyclicall unemployed workers do not have marketable y skills while structurall y unemployed workers do have marketable skills. T rue False (1 0) QID: 1 3385 Which of the f ollowing statements is true regarding cyclical unemployment? Cyclical unemployment is the span of unemployment a worker experiences over his/her lif e cycle. Cyclical unemployment is associated with fluctuations in the natural rate of unemployment. Cyclical unemployment is associated with the short­run ups and downs of the economy . Cyclical unemployment ref ers to long­ter m trends in unemployment. (1 1) QID: 1 7 338 Which group has the highest unemployment rate among teenagers? Black , male White, male Black emale , f White, f emale (12) QID: 1 3388 The unemployment rate is defined as the percentage of the adult population that is either unemployed or no longer looking f or work . T rue False DCCCB ACCBC AB 3.6. 1 (1) QID: 1 3394 The concept of the natural rate of unemployment is the idea that the economy is stable at the short­run natural rate of unemployment. the long­run natural rate of unemployment. the short­run rate of inflation. the long­run rate of inflation. (2) QID: 1 3396 When the economy is at the natural rate of unemployment there is no frictional unemployment. cyclical unemployment. structural unemployment. seasonal unemployment. (3) QID: 1 3398 The natural rate of unemployment theory argues that unemployment is always above the natural rate in the short run. unemployment is always below the natural rate in the short run. unemployment is always eq ual to the natural rate. in the long run, the unemployment rate returns to the natural rate. (4) QID: 1 3399 Suppl shocks that cause an inward shift in the aggregate suppl curve with y y aggregate demand remaining constant will per manentl y increase the natural rate of unemployment. per manentl y decrease the natural rate of unemployment. temporaril y increase the natural rate of unemployment. temporaril y decrease the natural rate of unemployment. (5) QID: 1 402 3 Which of the f ollowing would be a contributing factor to the decline of the natural rate of unemployment in the late 1 990s and earl y part of the twenty­first century? Employees are working harder and f or longer hours. Electronic technology has increased the efficiency of the economy . There have been f ew demands f or wage increases. All of the above are contributing factors. (6) QID: 1 40 3 4 Economists who subscribe to the natural rate hypothesis believe that the long­run Phillips curve is vertical. horizontal. upward sloping. downward sloping. (7) QID: 1 405 3 The main characteristic of the natural rate of unemployment is that it is per manentl y fixed. changes over time. is automaticall y adjusted. is not measurable. (8) QID: 1 406 3 According to the natural rate of unemployment theory an increase in aggregate , demand may temporaril reduce unemployment, but when people adjust their y expectations of inflation, the unemployment rate returns to the natural rate. T rue False (9) QID: 1 408 3 The natural rate of unemployment is set by Congress. the rate of unemployment at which an economy operates efficientl y . the inflation­adjusted rate of unemployment. zero percent. (1 0) QID: 11 442 The trade­off between inflation and unemployment that the downward­sloping Phillips curve illustrates can onl y be represented in the short run. T rue False (1 1) QID: 11 448 The Bureau of Economic Anal ysis (BEA) measures the unemployment rate. T rue False BBDCD ABABA B 3.7 . 1 (1) QID: 1 4 3 31 A minimum wage is likel to have a greater impact on the market f unskilled y or workers than on the market f or skilled workers. T rue False (2) QID: 1 4 5 31 A minimum wage tends to create more unemployment in high­skill job markets. have no impact on unemployment as long as it is set above the eq uilibrium wage. create more unemployment in low­skill job markets. help teenage employees because they receive a higher wage than they otherwise would. (3) QID: 1 46 31 Employees who earn a minimum wage can generall aff y ord onl the basic y necessities. have incomes much higher than the U .S. median. have incomes close to the average U .S. income. have incomes double the poverty level. (4) QID: 1 4 31 7 The minimum wage is a price floor . price ceiling. a voluntary wage. a tax on employers. (5) QID: 1 4 9 31 A minimum wage that is above the market wage increases the q uantity of labor supplied. reduces the q uantity of labor demanded. causes a sur plus of labor . All of the above are true. (6) QID: 1 42 3 1 If two unskilled workers at a wage of $4 per hour each can produce as much as one skilled worker at a wage of $9 per hour , a rational employer would hire the one skilled worker . T rue False (7) QID: 1 422 3 The legislative intent of minimum wage laws is to ensure a middle­class standard of living f or all workers. employment f or all who want it. unemployment compensation. a minimall y adeq uate standard of living. (8) QID: 1 42 3 4 If two unskilled workers at a wage of $4 per hour each can produce as much as one skilled worker at a wage of $9 per hour , the eff ect of a $5 per hour minimum wage on this labor market is that the two unskilled employees get a wage increase. that the skilled employee gets a wage decrease. that the unskilled workers lose their jobs. that the skilled worker loses his job. (9) QID: 1 425 3 The U .S. cannot aff ord to trade with low­wage countries because U industries .S cannot be competitive with the industries in those countries. T rue False (1 0) QID: 1 428 3 Generall y , those who advocate minimum wages believe that there are no negative eff ects of minimum wage laws. there are minimal negative eff ects and higher minimum wage helps the poor . the minimum wage will sol ve a maldistribution of income problem. the market system should be replaced with a planned economy . (1 1) QID: 1 3429 Minimum wage laws specify the highest wage that employers may pay workers. T rue False (12) QID: 1 1 343 Which of the f ollowing is not a result of the minimum wage legislation? An increase in the number of teenagers in the job market An increase in production An increase in teenage unemployment An increase in school dropout rates (1 3) QID: 1 432 3 Which of the f ollowing statements is true regarding minimum wage laws? Eff ective minimum wage laws raise the q uantity of labor supplied and raise the q uantity of labor demanded compared to the competitive eq uilibrium level. Eff ective minimum wage laws raise the q uantity of labor supplied and lower the q uantity of labor demanded compared to the competitive eq uilibrium level. Eff ective minimum wage laws lower the q uantity of labor supplied and lower the q uantity of labor demanded compared to the competitive eq uilibrium level. Eff ective minimum wage laws lower the q uantity of labor supplied and raise the q uantity of labor demanded compared to the competitive eq uilibrium level. ACAAD BDCBB BBB 3.72 . (1) QID: 1 436 3 Unions may increase the disparity in pay between members and non­members by increasing the q uantity of workers demanded in the unionized sector of the labor market. decreasing the q uantity of workers demanded in the unionized sector of the labor market. increasing the wage in the unionized sector thus creating an increase in the q uantity supplied in the non­unionized sector . increasing the wage in the unionized sector thus creating a decrease in the q uantity supplied in the non­unionized sector . (2) QID: 1 438 3 If labor unions manage to hold the wage above the competitive eq uilibrium wage, labor unions may strike until the wage falls back to eq uilibrium. the q uantity of labor supplied will exceed the q uantity of labor demanded and there will be unemployment. the q uantity of labor demanded will exceed the q uantity of labor supplied and there will be unemployment. the q uality of labor will fall due to adverse selection in the labor market. (3) QID: 1 4 3 40 The actions of labor unions tend to raise the wages of insiders and lower the wages of outsiders. T rue False (4) QID: 1 4 1 34 Unions may increase efficiency in some circumstances because they decrease the cost of bargaining between labor management. T rue False (5) QID: 1 4 3 42 Which of the f ollowing is most likel y to use collective bargaining? A group of employers bargaining with an individual employee The Bureau of Labor Statistics gathering data from households An individual union member bargaining with a group of employers Unions negotiating with individual employers to achieve higher wages and benefits (6) QID: 1 4 4 34 Eff ective collective bargaining will raise the wage of union workers. provide better working conditions. increase the benefits of union workers. all of the above. (7) QID: 1 4 3 46 The role of the National Labor Relations Board (NLRB) is to enf orce right­to­ work laws. calculate the unemployment rate. enf orce antitrust laws against unions. enf orce workers’ rights to unionize. (8) QID: 1 47 34 The pur pose of right­to­work laws is to req uire union membership as a condition of employment. to give workers in a unionized fir m the right to choose whether or not to join the union. to prevent employers from hiring per manent replacements when union members strike. to guarantee employment f or everyone in the economy . (9) QID: 1 450 3 Unions increase the level of employment in unionized fir ms. raise wages above the competitive eq uilibrium level. decrease the level of employment in non­unionized fir ms. are economicall y destructive. (1 0) QID: 11 4 58 In the graph shown, the eq uilibrium market wage is __________, and the eq uilibrium q uantity of labor demanded is __________. w0, L0 w1 , L2 w1 , L1 w1 , L0 (1 1) QID: 11 464 The green bar on the graph represents the unemployment that is created when labor unions demand a wage higher than the market eq uilibrium. T rue False CBAAD DDBBA A 3.74 . (1) QID: 1 452 3 If an employer pays an efficiency wage, worker turnover will increase. worker health may be adversel y aff ected. worker q uality may be adversel y aff ected. unemployment may increase. (2) QID: 1 453 3 An efficiency wage is similar to a minimum wage in that state legislation req uires employers to pay it. T rue False (3) QID: 1 455 3 One reason that employers may pay efficiency wages is to increase the workers' ability to buy health insurance. to create some unemployment. their opposition of labor unions. to adversel y select employees. (4) QID: 1 45 3 7 Labor unions may increase efficiency in labor markets in cases where they lower the wage of union outsiders. offset the power of a large employer in a company town. threaten to strike. raise insiders' wages above eq uilibrium. (5) QID: 1 458 3 Which of the f ollowing statements about efficiency wages is correct? Fir ms must pay efficiency wages because they are mandated by law . Fir ms pay the lowest possible wage because low wages promote efficiency . Fir ms may pay above eq uilibrium wages to promote worker efficiency . If fir ms pay efficiency wages, workers may shirk their duties. (6) QID: 1 459 3 Which of the f ollowing kinds of unemployment is not based on a wage above eq uilibrium? Unemployment caused by minimum wages Unemployment from union activity Unemployment due to efficiency wages Job search unemployment (7) QID: 1 46 3 1 The efficiency wage is the lowest wage an employer can pay . is the wage above eq uilibrium that fir ms are mandated to pay . is the wage above eq uilibrium that fir ms voluntaril y pay to increase productivity and profits. reduces the natural rate of unemployment. (8) QID: 1 464 3 Which of the f ollowing statements supports the theory of efficiency wages? Fir ms may find that paying the competitive eq uilibrium wage is inefficient. Workers are more efficient if they work hard f or their wages. Unions will strike if they are not paid higher wages. All of these statements support the theory of efficiency wages. (9) QID: 1 466 3 Gary decides to expand his bakery , so he hires six additional bakers. The market wage f bakers is $12 per hour According to the efficiency wage theory Gary or . , should off er his bakers the market wage of $12 per hour . off er a wage high enough to attract the necessary number of bakers he needs. off er some of his bakers $12 per hour and some of his bakers who will work f or less $1 0 per hour . off a wage greater than $12 per hour to attract the best, most productive er bakers. (1 0) QID: 1 468 3 Employees are better able to assess their own skills than are potential employers. This is known as moral hazard. adverse selection. the theory of efficiency wages. opportunity cost. (1 1) QID: 1 4 370 The efficiency wage influences the q uality of labor by motivating workers. increasing worker morale and productivity . attracting skilled workers. all of the above. DBABC DCADB D 3.75 . (1) QID: 1 485 3 Unemployment insurance tends to decrease the unemployment rate because those individuals receiving unemployment insurance are not counted in the labor f orce. T rue False (2) QID: 1 486 3 The pur pose of unemployment insurance is to reduce income uncertainty associated with periods of unemployment. to provide a welfare program f or unemployed people. to decrease the search costs of unemployment. to provide an incentive f or unemployed workers to turn down unattractive jobs. (3) QID: 1 48 3 7 Most economic studies have shown that unemployment insurance reduces the duration of most spells of unemployment. T rue False (4) QID: 1 489 3 If unemployment insurance paid over 90% of laid­off workers' salaries, the unemployment rate would probabl y understate true unemployment. the unemployment rate would probabl y overstate true unemployment. there would be no impact on the unemployment rate. the natural rate of unemployment would decrease. (5) QID: 1 49 3 1 All of the f ollowing are examples of moral hazard except the person who buys renter’ insurance and leaves his apartment door unlocked. s the famil y who buys flood insurance f or their house that lies on a flood plain. the teenager who buys auto insurance and drives carelessl y . the individual who is activel seeking work and collecting unemployment y insurance. (6) QID: 1 492 3 Which of the f ollowing is true about unemployment insurance? Unemployment insurance can increase unemployment. Unemployment insurance decreases the natural rate of unemployment. Unemployment insurance reduces the amount of time people spend in between jobs. All of these statements are true. (7) QID: 1 493 3 Most people who are unemployed are entitled to collect up to ________ of their previous salary f or up to ________. 50%, 52 weeks 50%, 26 weeks 25%, 52 weeks 40%, 26 weeks (8) QID: 1 495 3 Empirical evidence suggests that receiving unemployment insurance induces people to activel y search f or work . has no eff ect on people who are unemployed. discourages people from activel y searching f or work . is the onl factor that influences how q uickl people find work after being y y unemployed. (9) QID: 11 4 98 Which of the f ollowing groups would benefit the most from a long­ter m unemployment insurance program? The frictionall y unemployed The structurall y unemployed Individuals who are not in the labor f orce The seasonall y unemployed (1 0) QID: 1 4253 If Jim suddenl y loses his job and collects unemployment insurance, Jim is most likel y to spend all of his time and resources activel y searching f or work . receive 25% of his previous salary f or 50 weeks. turn down unattractive job off ers and look f or employment that best suits him. get a part­time job. (1 1) QID: 1 7 42 7 Unemployment insurance provides incentives f recipients to q uickl find or y employment. T rue False BABBD ABCBC B 3.8. 1 (1) QID: 1 49 3 7 Inflation is a period of rising income in the economy . an increase in real GDP in an economy . an increase in the overall price level in the economy . a period of rising wages in the economy . (2) QID: 1 498 3 If prices increase by 1 0,000% in year the economy is said to have an , inflationary spiral. a recessionary spiral. inflation. hyperinflation. (3) QID: 1 3500 Stagflation is characterized by __________________ prices and ________________ unemployment. increasing, low increasing, high decreasing, low decreasing, high (4) QID: 1 3503 Stagflation describes a period in which both prices and unemployment are increasing. T rue False (5) QID: 1 7 350 Which of the f ollowing is not associated with hyperinflation? High shoeleather costs Increasing real GDP The hoarding of goods War or a post­war economy (6) QID: 1 3508 Economists use the ter m inflation to describe a situation in which incomes in the economy are increasing. stock market prices are rising. the overall level of prices in the economy is increasing. the economy is growing rapidl y . (7) QID: 1 3509 Which of the f ollowing measures tells a person how fast the purchasing power of a savings account grows over time? The nominal interest rate The real interest rate Both the real and nominal interest rates The interest rate published by the financial institution (8) QID: 1 1 351 Which of the f ollowing statements regarding inflation is incorrect? Inflation is a general increase in all prices across an economy . Inflation decreases the value of money . Inflation is a period of rising real GDP . Most countries experience a slow increase in the overall price level. (9) QID: 1 1 35 4 Stagflation is a combination of rising prices and output. falling prices and output. falling prices and rising output. rising prices and falling output. (1 0) QID: 1 4289 Bolivia's 38,000% price increase in six months in 1 985 is an example of inflation. hyperinflation. stagflation. deflation. (1 1) QID: 1 4295 In 1 7 .S. prices rose at a rate of 1 94 U 1%, while output f ell by 0.6%. This is an example of inflation. hyperinflation. stagflation. deflation. CDBAB CBCDB C 3.8.2 (1) QID: 1 1 356 Policymakers usuall want to keep inflation low because inflation creates y unemployment. inflation imposes costs on consumers and businesses. inflation har ms everyone. inflation destroys the value of money . (2) QID: 1 1 35 7 If the price level doubles, the q uantity of money supplied doubles. the value of the nominal money has decreased by one­half. the value of the nominal money suppl y has remained unchanged. nominal real GDP has doubled. (3) QID: 1 1 358 A decrease in the price level is the same as an increase in the value of money . T rue False (4) QID: 1 3520 Over time, inflation increases the purchasing power of money . reduces the purchasing power of money . does not aff ect the purchasing power of money . is not related to the purchasing power of money . (5) QID: 1 3522 If P is the price level, 1/P measures the number of dollars needed to buy a basket of goods and services. P measures the q uantity of goods and services that can be bought with $1 . 1/P is the price of goods and services measured in ter ms of actual dollar figures. 1/P is the value of money measured inter ms of goods and services. (6) QID: 1 4 352 The value of money is directl y related to the price level. is inversel y related to the price level. is deter mined by the real interest rate. is deter mined by the nominal interest rate. (7) QID: 1 3525 The combination of cash and interest­bearing assets that consumers decide to hold depends primaril y on their individual levels of wealth. the general price level. their use of credit cards. the prime rate. (8) QID: 1 3528 If P represents the price of goods and services measured in money , then 1/P is the value of money measured in ter ms of goods and services. Hence, when the overall price level rises, the value of money falls. T rue False (9) QID: 1 4209 Suppose 1 990 is the base year , and the price level f or that year is 1 00. If the price level is 17 in 1 0 999, what conclusion can we make? Purchasing power has increased by 7%. Purchasing power has increased by 17%. 0 Purchasing power has decreased by 7%. Purchasing power has decreased by 17%. 0 BBABD BBAC 3.8.3 (1) QID: 1 3529 Which of the f ollowing is a contributor to cost­push inflation? An increase in output and employment An increase in natural resource prices An increase in average costs An increase in employment (2) QID: 1 1 353 The main cause of demand­pull inflation is an increase in the cost of natural resources. an increase in the money suppl y . an increase in consumer demand caused by full employment. an increase in the cost of labor . (3) QID: 1 3533 An increase in spending when there is a moderate amount of unemployment may increase output. T rue False (4) QID: 1 4009 During a recession the inflation rate usuall y falls. the inflation rate increases. the inflation rate is unaff ected by a recession. the behavior of the inflation rate cannot be deter mined. (5) QID: 11 4 1 7 Demand­pull inflation occurs when decreasing demand f or goods and services causes real GDP to decrease while prices increase. decreasing demand f or goods and services causes increasing real GDP and prices. increasing demand f or goods and services causes increasing real GDP and prices. increasing demand f goods and services causes real GDP to decrease while or prices increase. (6) QID: 11 482 Cost­push inflation is often indicative of stagflation. T rue False (7) QID: 1 7 423 If everyone expects inflation, they take action to protect themsel ves from losses in purchasing power The actions that people take would trigger cost­push . inflation. T rue False (8) QID: 1 4239 Which of the f ollowing factors would not cause demand­pull inflation? Excessive government spending A decrease in consumers' saving rate An international oil embargo from oil­producing countries An economy operating at or near its capacity (9) QID: 1 49 42 Which of the f ollowing is not a cause of cost­push inflation? An increase in wages beyond any gain in productivity An increase in natural resource prices An increase in government spending A decrease in labor productivity BCAAC AACC 3.8.4 (1) QID: 1 3536 In the q uantity theory of money , velocity means the rate of the change in GDP . the rate at which business inventories turn over . the rate at which the money suppl y turns over . the rate at which the F ed increases the money suppl y . (2) QID: 1 3538 Which of the f ollowing correctl y expresses the q uantity theory of money? money x the price level = velocity x real output money x velocity = price level x real output velocity x real output = price level x money price level x velocity = real output (3) QID: 1 40 35 If the money suppl increases by 1 y 0% and real GDP increases by 3%, prices will increase by more than 1 0%. 1 0%. 1 3%. less than 1 0%. (4) QID: 1 42 35 In the real business cycle theory , if long­run aggregate suppl increases, then y long­run aggregate demand increases by an eq ual amount, so that real output increases and the price level remains unchanged. less than the amount of increase in aggregate suppl so that real output y , increases and the price level decreases. more than the amount of increase in aggregate suppl so that real output y , increases and the price level increases. an eq ual amount, so that both real output and the price level increase. (5) QID: 1 46 35 The widel y held belief that when the central bank creates money , prices rise is called NAIRU , or the natural rate of unemployment. Okun’ law s . the Friedman dilemma. the q uantity theory of money . (6) QID: 1 4 357 The q uantity theory of money can explain hyperinflation, but not moderate inflation. moderate inflation, but not hyperinflation. moderate inflation and hyperinflation, but not deflation. moderate inflation, hyperinflation, and deflation. (7) QID: 1 48 35 The velocity of money is defined as the rate at which the F ed increases the money suppl y . the rate at which money is being spent. the average number of times per year a dollar changes hands. the average number of times per year a dollar is spent on a consumer good. (8) QID: 1 3550 The q uantity eq uation is written as M x Y = V x P . T rue False (9) QID: 1 4 430 Suppose the U .S. economy is experiencing a recession. Increasing the money suppl y will provoke an expansion. T rue False (1 0) QID: 1 1 43 1 Increasing the money suppl y in an expanding economy will most likel y cause an increase in eq uilibrium GDP . an increase in the price level. a decrease in the unemployment rate. further economic expansion. (1 1) QID: 1 1 438 Assume the velocity of money is held constant. According to the classical view of money , changes in the money suppl y will aff ect either price or output. output is fixed in the long run, so changes in the money suppl y will onl y aff ect the price level. changes in the money suppl y will onl y aff ect output. changes in nominal variables will onl y aff ect real variables. CBDAD DCBAB B 3.8.5 (1) QID: 1 3552 Suppose that Bolivia is experiencing hyperinflation and people go to the bank every day to get cash and then buy their dail y needs immediatel This would be an y . example of menu costs. shoeleather costs. confusion costs. redistribution of wealth. (2) QID: 1 3553 Suppose you have a business selling wholesale auto parts to dealers and car repair shops. Because of inflation you must print and mail out new price lists every month. The costs would be an example of menu costs. shoeleather costs. confusion. redistribution of wealth. (3) QID: 1 3554 If the nominal interest rate is 6% and the inflation rate is 3%, the real interest rate is 3%. 6%. 9%. 1 0%. (4) QID: 1 3558 An inflation tax is a tax on people who hold money . a tax charged to businesses based on the increase in their prices. used by governments when they have a sur plus. a tax on people who hold certificates of deposit. (5) QID: 1 3560 Which of the f ollowing individuals would be har med the most by an unanticipated change in the rate of inflation? People who have cost­of­living adjustments built into their incomes. Bankers who lend money at fixed interest rates. People who borrowed money at lower interest rates. People whose nominal incomes are rising faster than inflation. (6) QID: 1 3563 Printing money to finance a government program imposes a tax on everyone who holds money . reduces the opportunity cost of the program. is exactl y like imposing an income tax to pay f or the project. all of the above. (7) QID: 1 3565 T o avoid the inflation tax, people hold all of their wealth in the f m of or cash. do not hold money . do not file an income tax return. do nothing because the inflation tax is unavoidable. (8) QID: 1 3569 Shoeleather costs of inflation ref er to the decline in real income associated with inflation. the decline in purchasing power associated with inflation. the waste of resources as people attempt to minimize their holdings of money . the fact that inflation increases the prices of goods, including shoeleather . (9) QID: 1 70 35 Which of the f ollowing costs of inflation shrink consumer wealth? Shoeleather costs Menu costs Misallocation of resources All of the above shrinks consumer wealth. (1 0) QID: 1 7 35 1 The idea that inflation results in businesses having to change price tags and listings often is called the ______________ of inflation. menu cost shoeleather cost relative­price variability cost inflation­induced tax distortion (1 1) QID: 1 7 353 When the government raises revenue by printing money , it is said to have imposed an inflation tax. T rue False BAAAB DBCDA A 4. 1 . 1 (1) QID: 1 3559 An economy that does not have enough money in circulation might experience ____________, and too much money in an economy might cause ___________. inflation; a recession a boom; inflation a recession; inflation inflation; a boom (2) QID: 1 3586 Which of the f ollowing regarding money is not true? Money is an asset. Money is backed by gold. Money is a f m of wealth. or Money is not an eq uivalent to income. (3) QID: 1 7 358 If Emil y writes a check f or her groceries, she is using money as a medium of exchange. store of value. unit of account. means of liq uidity . (4) QID: 1 3588 If Jim puts $1 .00 into his piggy bank every day , he is using money as a medium of exchange. store of value. unit of account. means of liq uidity . (5) QID: 1 1 359 Which of the f ollowing serves as a store of value? A dollar bill A T reasury bond Microsoft stock All of the above serve as a store of value. (6) QID: 1 3592 Which of the f ollowing statements about commodity money is true? Commodity money is backed by gold. More people pref er commodity money instead of fiat money . Commodity money has intrinsic value. All of these statements about commodity money are true. (7) QID: 1 3593 M1 includes cash. coins. travelers’ checks. all of the above. (8) QID: 1 3594 M2 includes coins. small time deposits. money market mutual funds. all of the above. (9) QID: 1 3595 Which of the f ollowing is not included in M3? Currency Small time deposits Repurchase agreements All of the above are included in M3. (1 0) QID: 1 3596 Characteristics of money include durability . ability to be standardized. divisibility . all of the above. CBABD CDDDD 4. 1 .3 (1) QID: 1 3598 According to the transaction motive, individuals will hold more money if their real incomes increase. individuals will hold more money if the price level increases. individuals will hold more money if interest rates are low . all of the above statements are true. (2) QID: 1 3599 According to the precautionary motive, people will choose to hold money instead of interest­bearing assets to protect their financial security T . rue False (3) QID: 1 3602 Which of the f ollowing is not a motive f or holding money? The transaction motive The depository motive The precautionary motive The speculative motive (4) QID: 1 3603 A change in the interest rate will shift the money demand curve. cause a movement along the money demand curve. shift the money suppl y curve. not aff ect either curve. (5) QID: 1 1 36 3 According to the graph, the movement from i0 to i1 represents an increase in the money suppl y as a result of falling interest rates. an increase in the q uantity of money demanded as a result of falling interest rates. an increase in the q uantity of money demanded as a result of rising interest rates. an increase in the money suppl as a result of a larger q uantity of money y demanded. (6) QID: 1 3648 According to the graph, the movement from D to D' represents an increase in the q uantity of money demanded as a result of increasing interest rates. an increase in the money suppl y as a result of an increase in the q uantity of money demanded. a change in a factor other than the interest rate that increased the demand f or money at every interest rate. an increase in the interest rate. (7) QID: 1 1 369 When real income increases, people will demand more money to do more shopping. people will demand less money and save more. people will invest more in interest­bearing assets. the demand f or money is unaff ected. (8) QID: 1 703 3 If interest rates are expected to rise, people will demand more money T . rue False (9) QID: 1 708 3 T o protect financial security , people may choose to hold money instead of interest­ bearing assets. T rue False DABBB CABA 4. 1 .4 (1) QID: 1 3608 An interest rate above the market eq uilibrium indicates an excess suppl y of money . an excess demand f or money . a shortage of bank deposits. higher future interest rates. (2) QID: 1 3609 Which of the f ollowing statements is true? Excess demand is the result of an interest rate above eq uilibrium. If the F ed increases the money suppl y , the eq uilibrium interest rate rises. As the price of a bond increases, the interest rate increases. If the price level or real GDP changes, the money demand curve will shift. (3) QID: 1 6420 Which of the f ollowing is most likel to result from an increase in the money y suppl y? The money demand curve will shift inward. Interest rates will rise. The prices of bonds will increase. People will demand more money at every interest rate. (4) QID: 1 862 The free interaction of borrowers and lenders as well as the f orces of suppl y and demand are two deter minants of the interest rate f or loanable funds. T rue False (5) QID: 1 863 Which of the f ollowing ideas can we inf er about the market f or loanable funds as depicted in the graph below? Banks experience a shortage of deposits. The price of the bond will be bid upward. People will begin selling bonds to increase their holdings of cash. As the interest rate falls, the demand f or money will increase. (6) QID: 17 84 An increase in the price level will raise the demand f money and shift the or demand curve f or money outward. T rue False (7) QID: 2 120 Study the graph below . Supposing the aggregate price level has increased, we can predict a movement from point A to point B. point D to point A . point A to point C. point A to point D. ADCAB AC 4.2. 1 (1) QID: 1 4 360 In the financial market, a bond is a riskless, short­ter m government security . represents partial ownership in a fir m and provides the investor with a portion of the fir m’ profits. s is a debt contract that promises lenders a fixed interest payment in the future. a capital investment. (2) QID: 1 4 642 Stocks are assets on a mutual fund's balance sheet, while the fund itself is the liability T . rue False (3) QID: 1 6428 Banks, mutual funds, insurance companies, and pension funds collectivel y make up the consumer lending system. investment system. financial system. saving system. (4) QID: 17 8 7 Large cor porations, the f ederal government, or state and local governments usuall y issue __________ in order to finance their purchases. mutual funds stocks bonds insurance policies (5) QID: 242 1 Lenders with relativel small amounts of money and the desire to invest in a y diverse portf olio of stocks and bonds should invest in commercial paper . a mutual fund. certificates of deposit. T reasury bills. (6) QID: 245 1 Financial inter mediaries are financial institutions through which lenders can indirectl y provide funds to borrowers. markets that facilitate stock and bond transactions. financial institutions through which lenders can directl provide funds to y borrowers. identical to financial markets. (7) QID: 260 1 There is an inverse relationship between a country's standard of living and its rate of savings and investment. T rue False CACCB AB 4.2.3 (1) QID: 1 1 36 5 The profits received from selling stock f more than the purchase price are or called dividends. capital gains. shares. none of the above. (2) QID: 1 1 366 Which of the f ollowing statements is true? Lenders directl y provide funds to borrowers through financial inter mediaries. The financial system is synonymous with the F ederal Reserve System. Eq uity holders have the first claim to the returns on investments. Bonds are debt instruments, while stocks are eq uity instruments. (3) QID: 1 1 367 _____________ are entitled to the first claim to returns on investments. Bondholders Stockholders Creditors T ax collectors (4) QID: 1 1 36 9 Newl y issued securities are sold on the eq uity market. primary market. black market. secondary market. (5) QID: 1 3620 Which of the f ollowing statements regarding municipal bonds is true? Municipal bondholders are req uired to pay taxes onl y on the principal amount of the bond. Because municipal bonds have a tax advantage, they have a relativel y shorter ter m than other bonds. Municipal bonds pay lower interest rates because of their tax advantages. Municipal bondholders must pay taxes on interest earned. (6) QID: 1 1 362 An investor receives _____________ when a stock is sold f or more than the purchase price. a capital gain retained earnings a capital loss dividends (7) QID: 1 3622 Which of the f ollowing is an example of eq uity finance? Buying T reasury bills Buying cor porate bonds Buying municipal bonds Buying stock (8) QID: 1 4 362 Compared to eq uity finance, debt finance off ers more risk than eq uity . ownership in a fir m and a portion of the profits. returns that are limited to the stated interest rate. all of the above. (9) QID: 1 3625 From an investor’ viewpoint, the most important characteristic of a stock is its s price. volume traded. price/earnings ratio. dividend yield. BDABC ADCA 4.2.4 (1) QID: 1 3628 Which three factors define a bond? Rate of return, present value, maturity date Coupon rate, maturity date, rate of return Face value, coupon rate, maturity date Market interest rate, maturity date, coupon rate (2) QID: 1 3629 Calculate the present value of $1 0,000 invested at 12% f or 1 0 years. $3,2 9.7 1 3 $6,635.99 $8,928.5 7 $9,254.67 (3) QID: 1 3630 If the face value of a bond is $1 ,000 and the coupon rate is 8%, the annual interest payment is ______. $8 $80 $800 There is not enough inf mation to calculate the annual interest payment. or (4) QID: 1 1 363 When the market interest rate is less than a bond’ coupon rate, the bond is s trading at a premium. investors can purchase the bond f or a discount. the bond will mature at an earlier date. the bond’ face value is greater than the principal. s (5) QID: 1 3632 If Andy receives $1 50 in annual interest payments on a bond with a $1 ,000 face value, we know that the coupon rate on his bond is ______. 5% 1 5% 50% There is not enough inf mation to calculate the coupon rate. or (6) QID: 1 885 If V al invested $2,500 in the year 2000 at an interest rate of 1 1% annuall y , how much will she have in the year 2035? $94,562.79 $96,43 3 . 7 1 $9 67 7 5.88 , $99, 1 7 1 .5 1 (7) QID: 1 888 Suppose Bond A has a face value of $1 ,000, carries a coupon rate of 8%, and matures in one year . If the rate of return on Bond A is 1 0%, this bond is trading at a premium. T rue False CABAB BB 4.3. 1 (1) QID: 1 3633 Which of the f ollowing is not a role of the F ederal Reserve Bank? T o lend money to banks T o regulate the money suppl y T o oversee banking operations T o insure depository institutions (2) QID: 1 3636 How many F ederal Reserve districts are there in the U .S.? 8 1 0 12 1 4 (3) QID: 1 3638 Which of the f ollowing groups makes up the F ederal Open Market Committee (FOMC)? The seven­member Board of Governors plus seven presidents of the twel ve district banks Five members of the Board of Governors plus five presidents of the twel ve district banks Five members of the Board of Governors plus the twel ve presidents of the district banks The seven­member Board of Governors plus five presidents of the twel ve district banks (4) QID: 1 3640 On the F s balance sheet T ed’ reasury securities appear as assets, and U .S. dollars appear as liabilities. F oreign accounts appear as assets, and f oreign currency appears as a liability . U .S. dollars appear as assets, and gold appears as a liability . None of the above appear on a F s balance sheet. ed’ (5) QID: 1 1 364 The primary role of the F ed is to control inflation through monetary policy set by the F ederal Open Market Committee (FOMC). T rue False (6) QID: 1 3642 Which of the f ollowing is an additional role of the F ed? Maintaining the F ed wire Clearing checks Providing emergency loans All of the above are additional roles of the F ed. (7) QID: 1 4 364 The F ederal Reserve Bank is a type of commercial bank . T rue False DCDAA DB 4.3.3 (1) QID: 1 7 364 Which of the f ollowing is not a monetary policy tool of the F ed? The req uired reserve ratio The prime rate The discount rate Open market operations (2) QID: 1 3649 The F ed's most commonl y used tool of monetary policy is Changing the req uired reserve ratio Changing the discount rate Open market operations Printing currency (3) QID: 1 1 365 The purchase of T reasury securities by the F will increase the money suppl ed y . T rue False (4) QID: 1 3652 The suppl curve of money ______________, while the demand curve f money y or ___________. slopes upward; slopes downward is a vertical line; slopes upward is a vertical line; slopes downward slopes downward; slopes upward (5) QID: 1 3653 Because changing the req uired reserve ratio can have drastic eff ects on the economy , the F ed rarel y exercises this tool of monetary policy T . rue False (6) QID: 1 3655 Lowering the discount will increase the money suppl T y . rue False (7) QID: 1 3658 The F ed can increase the money suppl y by decreasing the prime rate. decreasing the req uired reserve ratio. selling government securities. increasing the discount rate. BCACA AB 4.4. 1 (1) QID: 1 3660 The practice of fractional reserve banking req uires banks to hold a fraction of their liabilities in reserves. req uires banks to hold a fraction of their assets in reserves. allows banks to create money by holding reserves. allows banks to lend all of their deposits. (2) QID: 1 3663 The F ederal Reserve Bank guarantees the value of a dollar bill. T rue False (3) QID: 1 3664 Households can choose to trade currency f or gold. T rue False (4) QID: 2028 Which of the f ollowing f eatures does NOT make gold a good medium of exchange? It is nonperishable. It is indivisible. It is portable. It is recognizable. (5) QID: 2029 Which of the f ollowing represents a f m of commodity money? Gold coins or I.O.U .s Deposit slips f or gold deposits with a goldsmith Pennies (6) QID: 2030 Which of the f ollowing describes how goldsmiths create money? The goldsmith allows customers to keep their gold in his vault. The goldsmith keeps some of the gold deposits that people give him f or saf ekeeping. The goldsmith melts down jewelry that has gone out of sty le, thereby creating money . The goldsmith issues deposit slips f or the gold he holds f or other people, which begin to be accepted as a medium of exchange. (7) QID: 203 1 A goldsmith need not keep all of the gold deposits people leave with him on hand in his vault, because all depositors are not likel y to demand their gold at once. some depositors are likel y to f orget that the goldsmith is keeping their gold f or them. deposits always eq ual withdrawals. none of the above. (8) QID: 2032 Which of the f ollowing could cause a run on a goldsmith? Depositors suspect that the goldsmith may have issued deposit slips f or gold that he may not actuall y have. Depositors suspect that the goldsmith may be stealing their money . Depositors lose confidence in gold. All of the above ABBBA DAD 4.4.3 (1) QID: 1 3668 Suppose that the F sets the req uired reserve ratio at 12%. First Bank has ed $1 ,000,000 in deposits. How much is First Bank able to lend to its customers? $120,000 $880,000 $1 ,000,000 $500,000 (2) QID: 1 3670 If the req uired reserve ratio is 1 0%, the increase in the money suppl that y results from $500,000 of new deposits eq uals $5,000. $50,000. $500,000. $5,000,000. (3) QID: 1 2 367 The money multiplier is the reciprocal of the req uired reserve ratio. is used to calculate the net change in the money suppl y . is one of the F s monetary policy tools. ed’ Onl y A and B are correct. (4) QID: 1 4 367 If First Bank has $1 ,000,000 in deposits and is able to lend up to $860,000, what is the req uired reserve ratio? .86% 8.6% 1 .4% 1 4% (5) QID: 1 5 367 If the F ed decides to increase the req uired reserve ratio, the eff ect on the money suppl y will be minimal. the money suppl y will decrease. the money suppl y will increase. the money suppl y will not be aff ected. (6) QID: 2033 If the req uired reserve ratio is 1 0%, how much can a bank lend out if its deposits total $2 million? $2 million $1 .8 million $200,000 The answer depends on where the bank keeps its reserves. (7) QID: 2034 What is the total change in the money suppl y if the reserve req uirement is 1 0% and deposits rise by $5,000? $500 $4,500 $45,000 $50,000 (8) QID: 2036 By how much does the money suppl increase if the F y ederal Reserve injects $5 million into the system and the req uired reserve ratio is .2? $250,000 $3.6 million $23 million $25 million (9) QID: 203 7 What happens to the money suppl if the F y ederal Reserve reduces the req uired reserve ratio? The money suppl y increases. The money suppl y decreases. The answer depends on what happens to interest rates. None of the above (1 0) QID: 2038 Which of the f ollowing statements describes what happens to a bank’ balance sheet s when a customer opens up a checking account? The checking account appears as a liability , which is balanced on the asset side by the req uired reserves and the loan made with the depositor’ funds. s The checking account appears as an asset, which is balanced on the liability side by the req uired reserves and the loan made with the depositor’ funds. s The checking account does not appear on the balance sheet until the owner of the account begins to write checks. The checking account does not appear on the balance sheet until the bank lends the deposits, creating money . BDDDB BDDAA (1) QID: 1 3679 If the F ederal Reserve purchases government bonds, all of the f ollowing will occur except commercial bank reserves will increase. the discount rate will be f orced up. the money suppl y will increase. there will be a multiple expansion of banking deposits. (2) QID: 1 1 368 The F ed can directl y control the money suppl T y . rue False (3) QID: 1 6829 "Near money" is commodity money . can reduce the money multiplier eff ect. can be directl y controlled by the reserve req uirement ratio. none of the above. (4) QID: 2334 Which of the f ollowing is not a tool used by the F ederal Reserve to increase or decrease the money suppl y? The req uired reserve ratio The discount rate The prime rate Open market operations (5) QID: 2335 In practice, which tool does the F ederal Reserve use most often to increase or decrease the money suppl y? The req uired reserve ratio The discount rate The prime rate Open market operations (6) QID: 2336 The req uired reserve ratio covers which of the f ollowing types of deposits? Savings accounts onl y Checking accounts onl y Checking accounts and savings accounts Checking accounts, savings accounts, and other bank instruments, such as repurchase agreements (7) QID: 233 7 Which of the f ollowing would increase the money suppl y? An increase in the req uired reserve ratio An increase in the discount rate The purchase of government securities by the F ederal Reserve A decrease in the money multiplier (8) QID: 2338 Which of the f ollowing best explains why the F ederal Reserve reduced the req uired reserve ratio in the 1 990s? It wanted to stimulate the economy , which was in a recession. It wanted to reduce aggregate demand, in order to rein in inflation. It wanted to lower prices and increase output. It wanted to raise prices and reduce output. BBBCD BCA 4.5. 1 (1) QID: 1 4 468 Which of the f ollowing correctl y expresses the Fisher eq uation? inflation rate = nominal interest rate + real interest rate real interest rate = inflation rate ­ nominal interest rate nominal interest rate = real interest rate ­ inflation rate real interest rate = nominal interest rate ­ inflation rate (2) QID: 1 4689 Suppose you invest $1 ,000 at 12%, and the rate of inflation is 4% annuall Based on y . the Fisher eq uation, what is the increase or decrease in your real purchasing power? 12% increase 8% increase 8% decrease 4% decrease (3) QID: 1 7 469 Which of the f ollowing will not cause a shift in the investment demand curve? A tax cut An increase in real GDP An increase in the interest rate Optimistic expectations (4) QID: 1 896 The best measure of your increase or decrease in purchasing power as a result of an investment is the nominal interest rate. T rue False (5) QID: 1 899 The deter mination of investment in an economy comes from the eq uality of consumer spending and f oreign spending. aggregate expenditures and consumer savings. consumption and income. the three uses of income and aggregate expenditures. (6) QID: 1 900 According to the Fisher eq uation, when we hold inflation constant, the real and nominal interest rates move one f or one. T rue False (7) QID: 1 1 90 The demand curve f or loanable funds represents the behavior of households. f oreigners. the government. businesses. DBCBD AD 4.5.2 (1) QID: 1 6833 The suppl y curve f or loanable funds slopes upward because as the interest rate increases, the q uantity of loanable funds supplied decreases. people will f orego consumption at higher interest rates and save. as the interest rate increases, the suppl y of loanable funds increases. all of the above. (2) QID: 1 4 683 Which of the f ollowing will increase the suppl of loanable funds in the U y .S.? Expected low interest rates Depreciation of the U .S. dollar Decrease in taxes Reduction in government spending (3) QID: 1 6836 In the macroeconomy , savings comes from more money in circulation, a budget sur plus, and a trade sur plus. the savings of households, a budget sur plus, and a trade deficit. more money in circulation, a budget sur plus, and a trade deficit. the savings of households, a budget deficit, and a trade sur plus. (4) QID: 1236 Which of the f ollowing is aff ected by the rate of interest? The suppl of y loanable funds The demand f or loanable funds The suppl y of and demand f or loanable funds Neither the suppl y of nor the demand f or loanable funds, which are aff ected by exogenous factors (5) QID: 123 7 Which of the f ollowing will occur when the real interest rate rises? People are more willing to f orgo spending in order to save. People are less willing to f orgo spending in order to save. Households are more likel y to increase spending. Businesses are more likel y to increase spending. (6) QID: 1238 Which of the f ollowing would cause an inward shift in the suppl of loanable y funds? T ax incentives f or saving F ears about the future An increase in the budget sur plus A decline in the trade deficit (7) QID: 264 1 When the government runs a budget deficit, investment increases. interest rates are lower than otherwise. the standard of living increases. the suppl y curve f or loanable funds shifts inward. BDBCA DD 4.5.3 (1) QID: 1 7 683 An interest rate below the market eq uilibrium will trigger competition f or loanable funds. deter savers. increase the q uantity of loanable funds demanded. cause downward pressure on the interest rate. (2) QID: 1252 What happens when interest rates are set higher than the eq uilibrium rate? The demand f loanable funds exceeds the suppl and some borrowers are unable to or y , obtain loans. Because the suppl y of loanable funds exceeds demand, banks are unable to lend as much money as they would like. Some businesses are unable to borrow money . Households are unwilling to save. (3) QID: 125 4 Under the Reagan Administration, businesses received tax incentives f or investing. What eff ect did this policy have on the demand and suppl of loanable funds? y Demand f or loanable funds shifted to the right, and interest rates increased. Demand f or loanable funds shifted to the left, and interest rates decreased. The suppl y of loanable funds shifted to the right, and interest rates increased. The suppl y of loanable funds shifted to the left, and interest rates decreased. (4) QID: 1256 Which of the f ollowing factors would be likel y to increase households' suppl y of loanable funds at every interest rate? A tax credit on savings A tax on savings An increase in consumer spending An increase in interest rates (5) QID: 1258 What would be the eff ect of an increase in the demand f or loanable funds at every interest rate? Interest rates would rise. Interest rates would fall. There would be no eff ect on interest rates, because the suppl y of loanable funds would increase by the same amount. None of the above (6) QID: 1264 What is likel y to be the eff ect of a government­imposed ceiling on interest rates below eq uilibrium? The suppl y of loanable funds will exceed demand, and banks will have to scramble to find customers. Demand f or loanable funds will exceed suppl y , and some businesses will be unable to borrow . The ceiling will have no eff ect, as long as the government­imposed ceiling is below the eq uilibrium rate. None of the above (7) QID: 265 1 Excess suppl y of loanable funds causes an upward adjustment of the interest rate. T rue False ABAAA BB 5. 1 . 1 (1) QID: 1 3682 Which of the f ollowing eq uations accuratel represents the macroeconomic y eq uilibrium in an open economy? Y = C + I + G Y = C + I + G ? T Y = a + C + I + G Y = C + I + G + NX (2) QID: 1 4 368 Which of the f ollowing is a component of GDP? Consumption Investment Government spending All of the above are components of GDP . (3) QID: 1 3685 Which of the f ollowing statements regarding the aggregate demand (AD) curve is correct? The AD curve illustrates the q uantity of goods and services that households want to buy at every price. The AD curve shows the direct relationship between the demand of households and the aggregate price level. The AD curve has a positive slope. The AD curve represents the inverse relationship between the expenditures of households, businesses, government, and f oreigners and the aggregate price level. (4) QID: 1 4896 An increasing price level will cause a shift in the aggregate demand curve. a reduction in the overall q uantity of goods and services demanded. the purchasing power of households to increase. the cost of borrowing money to decrease. (5) QID: 1 4899 Keynes’ circular flow model illustrates the flow real variables while holding s nominal variables constant. T rue False (6) QID: 1 908 The aggregate demand (AD) curve graphicall y illustrates the inverse relationship between government spending and the tax rate. aggregate expenditures and the price level. investment spending and the interest rate. real GDP and income. (7) QID: 11 9 5 Businesses cut back spending when the price level rises, because the resulting increased demand f or money drives the interest rate upward. T rue False DDDBA BA 5. 1 .2 (1) QID: 1 3690 The microeconomic demand curve shows how the substitution eff ect causes a decrease in q uantity demanded as a result of increasing prices. shows how the income eff ect causes a decrease in q uantity demanded as a result of increasing prices. measures the eff ect of nominal variables on other nominal variables. All of the above are correct. (2) QID: 1 4900 When the U .S. price level rises, we expect f oreigners to buy more U .S. goods and services. buy less U .S. goods and services. buy the same amount of U .S. goods and services. buy no U .S. goods and services. (3) QID: 1 1 490 When prices rise, real GDP increases. f oreign demand increases. the demand f or money increases. investment spending increases. (4) QID: 1 4902 From the microeconomic perspective, the income eff ect occurs when tax cuts provide more disposable income. tax increases provide less disposable income. rising prices decrease consumer wealth and demand. increased production leads to an increase in an economy’ level of income. s (5) QID: 1 4 490 The aggregate demand curve slopes downward because a decrease in the aggregate price level reduces the q uantity of goods and services demanded. an increase in the aggregate price level reduces the q uantity of goods and services demanded. a decrease in the aggregate price level does not aff ect the q uantity of goods and services demanded. an increase in the aggregate price level increases the q uantity of goods and services demanded. (6) QID: 11 99 The aggregate demand curve measures the real value of nominal variables. aggregate expenditures as a function of the price level. the aggregate price level across the economy and real GDP or income. , all of the above. (7) QID: 1 7 92 An increase in the price level will increase the demand f or money T . rue False DBCCB DA 5. 1 .3 (1) QID: 1 7 490 Government policy can shift the aggregate demand curve either inward or outward. T rue False (2) QID: 1 4909 In the graph shown, an increase in government spending will cause the eq uilibrium to move from point A to point C. point A to point B. point B to point A . point C to point A . (3) QID: 1 1 490 In the graph shown, an increase in the money suppl y will cause the eq uilibrium to move from point A to point C. point B to point A . point A to point B. point C to point A . (4) QID: 1 1 494 A tax cut would cause the eq uilibrium to move from point B to point A . point A to point C. point C to point A . point A to point B. (5) QID: 1 1 496 Which of the f ollowing would not shift the aggregate demand curve? Changes in monetary policy Changes in fiscal policy Changes in the price level Changes in the spending plans of households (6) QID: 1 930 Changes in the price level aff ect consumption, investment, and government spending. consumption and investment. consumption, investment, and f oreign spending. investment, government spending, and f oreign spending. (7) QID: 1 932 Government spending depends on the price level. income. policymakers. all of the above. ABCDC CC 5.2. 1 (1) QID: 1 1 498 There are no profit opportunities in the long run. T rue False (2) QID: 1 4920 The short­run aggregate suppl curve slopes upward because of confusion, y labor unions, and sticky prices. sticky wages, sticky prices, and labor unions. confusion, sticky wages, and sticky prices. sticky wages and sticky prices. (3) QID: 1 1 645 When prices increase in the short run, total revenue decreases. aggregate demand will increase. fir ms will increase production. profit opportunities are lost. (4) QID: 1 934 The short­run aggregate suppl y (SRAS) curve is based on the premise that because all prices will change at the same rate, businesses can alter their production to take advantage of profit opportunities. T rue False (5) QID: 1 936 Suppose that, as a producer , your production costs have increased at the same rate as your revenue. Y ou can conclude that your profit will increase. your profit will decrease. your profit will remain unchanged. predicting the eff ects on your profit is impossible. (6) QID: 1 1 94 When a factor other than the price level, that aff , ects the aggregate q uantity supplied changes, we would expect the short­run aggregate suppl curve to y shift inward or outward. become vertical. become horizontal. be unaff ected. (7) QID: 266 1 In the short run, there is a positive relationship between the aggregate price level and the q uantity of goods and services supplied. T rue False ACCBC AA 5.2.2 (1) QID: 1 7 493 According to Keynes, sticky wages cause the short­run aggregate suppl y curve to be downward sloping. vertical. upward sloping. horizontal. (2) QID: 1 4938 Keynes’ sticky wage theory holds that wages will not immediatel s y adjust to lower levels, and fir ms are able to profit from increased production. wages will immediatel adjust to lower levels, and fir ms do not adjust their y output levels. wages will immediatel adjust to higher levels, and fir ms decrease their y production and profits. wages will not immediatel y adjust to higher levels, and fir ms are able to profit from increased production. (3) QID: 1 4 94 Which of the f ollowing is not a reason why wages might be sticky? Collective bargaining locks in a wage less than inflation. Employees work more when wages rise. The government pays a minimum wage. Employers pay efficiency wages. (4) QID: 1 7 9 8 The classical view of economics states that because all prices adjust immediatel y , fir ms can increase production and profit in the short run. T rue False (5) QID: 2009 The short­run aggregate suppl y (SRAS) curve slopes upward, because there is an inverse relationship between prices and output. fir ms cut back on production in the short run when prices increase. when prices rise, the q uantity demanded decreases. confusion, sticky wages, and sticky prices provide businesses with profit opportunities in the short run. (6) QID: 2022 The belief that the economy adjusts immediatel y to its long­run eq uilibrium is consistent with the Keynesian view . classical view . Marxist view . monetarist view . (7) QID: 2026 The minimum wage law can prevent immediate wage increases and allows fir ms to profit from lower labor costs and high revenue. T rue False CDBBD BA 5.2.3 (1) QID: 1 4802 Which of the f ollowing statements regarding output in the long run is correct? Output depends on the money suppl y . Output is deter mined by the q uantity and productivity of resources. Output is deter mined by the level of interest rates. Output depends on the price level. (2) QID: 1 1 494 In the long run, the aggregate suppl y curve slopes upward, but in the short run the aggregate suppl y curve is vertical. T rue False (3) QID: 1 4942 Increasing prices will cause the short­run aggregate suppl y curve and the long­ run aggregate suppl y curve will shift to the left. T rue False (4) QID: 1 4943 Unemployment _______________ when real GDP declines. rises falls is unaff ected may either rise or fall (5) QID: 1 4 494 The vertical long­run aggregate suppl y curve indicates that when prices rise overall output rises. when prices fall overall output falls. when prices rise overall output falls. prices do not aff ect overall output. (6) QID: 1 4946 Which of the f ollowing will occur if the natural rate of unemployment falls? The long­run aggregate suppl y curve becomes horizontal. The long­run aggregate suppl y curve shifts to the right. The long­run aggregate suppl y curve is not aff ected by changes in the natural rate of unemployment. The long­run aggregate suppl y curve shifts to the left. (7) QID: 1 7 494 Suppose an economy experiences a surge in immigration. Which of the f ollowing is the most likel y result? The long­run aggregate suppl y curve will shift to the left. The long­run aggregate suppl y curve and the short­run aggregate suppl y curve will shift to the left. The long­run aggregate suppl y curve will shift to the right. The long­run aggregate suppl y curve and the short­run aggregate suppl y curve will shift to the right. BBBAD BD 5.3. 1 (1) QID: 1 7 839 The classical view of economics describes how increases in the wage rate cause unemployment. sticky prices create profit opportunities f or fir ms in the short run. prices and wages adjust immediatel y to clear markets. changes in technology or resource endowments can shift the economy’ level of s full employment. (2) QID: 140 8 1 Which of the f ollowing will shift the classical aggregate suppl y curve outward? An increase in the money suppl y A depletion of natural resources A decrease in the aggregate price level Improvements in technology (3) QID: 140 8 4 Classical economists argue that inflationary and recessionary gaps are alleviated by policy intervention such as changes in the money suppl y . are essential to sustained economic growth. never occur . are eliminated by automatic adjustments of internal mechanisms in the economy . (4) QID: 1408 8 In the classical view the outward shift of the demand curve f labor as , or illustrated in the graph below causes the suppl y curve f or labor to shift and the wage rate to remain at w*. the eq uilibrium wage rate to adjust to w*'. unemployment in the economy . a downward adjustment of the wage rate. (5) QID: 2052 7 The graph below shows an increase in aggregate demand. Classical economists would agree that the new eq uilibrium price level is at point ____. A B C D (6) QID: 20649 Improvements in technology or resource endowments will shift the classical suppl y curve outward. T rue False (7) QID: 20653 When the wage rate falls below eq uilibrium, excess demand f or labor is alleviated through which of the f ollowing processes according to the classical theory? (8) QID: 20669 When the labor demand curve shifts outward, which of the f ollowing graphs accuratel depicts the adjustment process according to the classical view of y economics? CDDBC AAD 5.3.2 (1) QID: 1 4949 Which of the f ollowing events will most likel y cause an inward shift of the short­ run aggregate suppl y curve? Government increases spending. The economy experiences a suppl y shock . The F ed tightens the money suppl y . Government increases taxes. (2) QID: 1 4952 Which of the f ollowing events most likel caused the aggregate demand curve to y shift inward? The government increased spending. Consumers demanded more goods and services at every price level. The price of inputs increased. A tax increase reduced consumers’ disposable income. (3) QID: 1 4954 Which of the f ollowing events will most likel cause an outward shift in the y aggregate demand curve? The F ed tightens the money suppl y . Disposable income decreases. The government increases spending. The price of inputs increases. (4) QID: 1 4956 What is the most likel short­run result of an inward shift of the aggregate y demand curve? A lower level of full employment A lower eq uilibrium price and output A higher eq uilibrium price and output A higher level of full employment (5) QID: 1 4958 Rising production costs will shift the short­run aggregate suppl y curve inward. T rue False (6) QID: 2039 When the price level is above the eq uilibrium price, there is short­run excess demand. consumers, businesses, and f oreigners increase their q uantity demanded. businesses recognize increasing profits. all of the above. BDCBA C 5.3.3 (1) QID: 1 6864 When an economy is operating above full employment, we expect prices to adjust upwards. T rue False (2) QID: 1 7 684 Adaptive expectations will speed up the adjustment process that takes place when an economy operates above or below full employment. T rue False (3) QID: 1 6888 Which of the f ollowing will occur when the economy operates below full employment? Consumers' q uantity demanded will decrease. The short­run aggregate suppl y curve will shift inward. Prices will adjust upward. None of the above will occur . (4) QID: 1268 What happens when the economy is operating beyond the full­employment level of output? Prices and wages begin to fall, causing fir ms to increase production until the full­employment level of output is reached. Prices and wages begin to rise, causing fir ms to cut back on production until the full­employment level of output is reached. Prices and wages begin to fall, causing fir ms to cut back on production until the full­employment level of output is reached. Prices and wages begin to rise, causing fir ms to increase production until the full­employment level of output is reached. (5) QID: 128 7 In the long run, what happens to the levels of prices and output as aresult of an outward shift in the short­run aggregate suppl y curve? Prices rise, and output returns to the full­employment level. Prices rise, and output rises to the full­employment level. Prices fall, and output falls below the full­employment level. Prices fall, and output returns to the full­employment level. (6) QID: 1286 A kink in the short­run aggregate suppl y curve reflects the fact that wages tend not to rise rapidl y , because employers are reluctant to increase their workers' wages. some companies tend not to raise their prices, even when they see other companies doing so. businesses hire more workers when the economy is growing. wages rise when the economy operates beyond full employment but tend not to fall when the economy's resources are underemployed. (7) QID: 1298 Adaptive expectation f mation means that people base their expectations of or the future on what has occurred in the past. people base their expectations of the future on new inf mation. or people base their expectations of the future on prices. people base their expectations of the future on output. ABDBA DA 5.3.4 (1) QID: 1 1 69 5 According to the graph below a change in the spending plans of consumers, , businesses, government, or f oreigners is illustrated by the movement from point ______ to point ______. A; B C; A C; B B; C (2) QID: 1 6922 An increase in an economy's resource pool will shift the short­run aggregate suppl y curve inward. cause a movement along the long­run aggregate suppl y curve. will shift both the long­run and short­run aggregate suppl y curves outward. will shift the long­run aggregate suppl y curve inward. (3) QID: 1 6936 Suppose a suppl y shock causes an inward shift of the short­run aggregate suppl y curve. In the short run, prices and output fall. prices rise, and output falls. prices fall, and output rises. prices and output rise. (4) QID: 11 56 In the short run, what is the eff ect of an outward shift in the aggregate demand curve? Prices and output rise. Prices rise, but output remains constant. Prices and output fall. Prices fall, but output increases. (5) QID: 11 5 7 What happens in the short run to prices and output if the price of oil rises temporaril y? Both prices and employment rise. Both prices and employment fall. Prices rise, and output falls below the short­run eq uilibrium level. Prices fall, and output falls below the short­run eq uilibrium level. (6) QID: 1 520 What is the eff ect of technological progress on prices and output? The long­ run aggregate suppl curve shifts outward, but the short­run aggregate suppl y y curve remains unchanged. The short­run aggregate suppl y curve shifts outward, but the long­run aggregate suppl y curve remains unchanged. Both the long­run and the short­run aggregate suppl y curves shift outward. There is no eff ect. (7) QID: 1 522 Over time, the long­run aggregate suppl y curve can shift outward as a result of increases in productivity . decreases in productivity . increases in output. decreases in output. (8) QID: 1 4 52 Which of the f ollowing could cause aggregate demand to decrease? The government reduces taxes. F oreigners decide they want to buy more domestic goods at every price. Consumers decide to increase their savings. The F ederal Reserve increases the money suppl y . ACBAC CAC 5.4. 1 (1) QID: 1 6938 Fiscal and monetary policies are often useful in pulling an economy out of a recession. T rue False (2) QID: 1 6939 Which of the f ollowing policies should be used to stimulate the economy? Raising the req uired reserve ratio Raising the discount rate Reducing government spending Buying government securities (3) QID: 1 6940 An example of fiscal policy is buying securities. raising taxes. raising the discount rate. lowering the req uired reserve ratio. (4) QID: 2339 Which of the f ollowing factors would cause aggregate demand to fall? A decrease in consumer confidence A decrease in investor confidence A decrease in demand by f oreigners All of the above (5) QID: 2340 “Bad deflation” ref ers to the process in which prices and output fall. prices fall and output increases. prices fall too rapidl y . none of the above. (6) QID: 23 1 4 According to classical economists, what happens to prices and output in the long run if there is an autonomous decline in aggregate demand? Prices fall, and output increases. Prices rise, and output increases. Prices fall, and output returns to the full­employment level of output. The full­employment level of output shifts to the left. (7) QID: 2342 Which policy tools could be used to deal with an autonomous decrease in aggregate demand? The F ederal Reserve could decrease the money suppl y . The government could offset the drop in consumer spending with spending of its own. The government could raise taxes. All of the above are correct. (8) QID: 2343 According to supporters of rational expectations, which of the f ollowing explains why increases in government spending do not cause output to rise? The increase in interest rates caused by the increase in government spending crowds out private investment. The decrease in interest rates caused by the increase in government spending crowds out private investment. Consumers recognize that government spending today will have to be paid f or by an increase in taxes tomorrow . Consumers believe that the increase in government spending will not aff ect output. ADBDA CBC 5.4.2 (1) QID: 1 029 7 A suppl shock will shift the short­run aggregate suppl curve __________ and y y create __________. inward; excess suppl y outward; excess suppl y inward; excess demand outward; excess demand (2) QID: 1 052 7 Which of the f ollowing statements regarding the long­run aggregate suppl y (LRAS) curve is true? An inward shift of the LRAS curve will improve an economy's standard of living. Increased immigration can shift the LRAS curve outward. Bad weather can shift the LRAS curve outward. All of the above are true. (3) QID: 1 063 7 Demand­driven deflation is often ref erred to as bad deflation. T rue False (4) QID: 234 4 What was the eff ect on prices and output when oil prices rose in the 170s? 9 The short­run aggregate suppl y curve shifted to the right, output declined, and prices f ell. The short­run aggregate suppl y curve shifted to the left, output declined, and prices rose. The short­run aggregate suppl curve remained unchanged, causing prices and y output to fall. The short­run aggregate suppl y curve remained unchanged, causing prices to rise and output to remain at the full­employment level. (5) QID: 2346 What would happen if the government cut taxes to stimulate aggregate demand during a period of stagflation? Prices, output, and employment would all rise. Prices, output, and employment would all fall. Prices would fall, but output and employment would rise. Prices would rise, but output and employment would fall. (6) QID: 234 7 Which of the f ollowing factors would not cause the eq uilibrium level of output to increase? T echnological developments Immigration Capital accumulation Increases in the money suppl y (7) QID: 2348 In the short run, what happens to the level of output and the level of prices as a result of a technological improvement? Prices fall, and output rises. Prices and output rise. Prices fall, and output falls. None of the above (8) QID: 2345 What would happen if the government decided to reduce inflation by cutting government spending during a period of stagflation? Unemployment and prices would fall, and the level of output would rise. Unemployment and prices would rise, and the level of output would fall. Unemployment would rise while output and prices would fall. Unemployment and output would fall, and prices would rise. CBABA DAC 5.5. 1 (1) QID: 1 067 7 According to the crowding­out eff ect, an increase in government spending will decrease employment. increase investment spending. decrease the demand f or money . increase interest rates. (2) QID: 18 7 1 1 Increasing government spending is an example of expansionary monetary policy . contractionary monetary policy . expansionary fiscal policy . contractionary fiscal policy . (3) QID: 1 7 200 The phenomenon of crowding out occurs when sticky wages, sticky prices, and confusion crowd out competition. increases in government spending raise the interest rate and crowd out investment spending. increases in taxes crowd out consumption. downward pressure on prices crowds out aggregate demand. (4) QID: 1 302 What would be the eff ect of an increase in government spending of $50 million? GDP would increase by $50 million. GDP would increase by less than $50 million. GDP would increase by more than $50 million. GDP would decrease by $50 million. (5) QID: 1 4 30 What eff ect does expansionary fiscal policy have on aggregate demand? It shifts the aggregate demand curve outward. It causes an upward movement along the aggregate demand curve. It shifts the aggregate demand curve inward. It causes a downward movement along the aggregate demand curve. (6) QID: 1 305 Which of the f ollowing does not represent a f m of expansionary fiscal policy? or Increasing government spending Reducing taxes Increasing the money suppl y Providing incentives to businesses and households to spend more (7) QID: 1 363 Which of the f ollowing is not a tool of fiscal policy? Government spending T axes T ax incentives Private investment DCBCA CD 5.5.2 (1) QID: 1 1 77 2 Which of the f ollowing statements is true? The government runs a budget deficit when its tax revenue exceeds its spending. The sum of each year's budget deficit eq uals the national debt. The government finances its debt by issuing T reasury bills. The sum of each year's issuance of T reasury bills eq uals the government debt. (2) QID: 1 4 7 23 Which of the f ollowing f ms of savings can mitigate the eff or ects of crowding out? Household savings A government deficit A trade sur plus All of the above (3) QID: 890 The government can buy back T reasury bills and increase the suppl y of loanable funds when tax revenue exceeds government spending. T rue False (4) QID: 1 365 If government spending exceeds government revenues, the government runs a deficit, which it can pay f or by reducing spending. increasing taxes. issuing T reasury bills. raising interest rates. (5) QID: 1 367 The f ederal budget deficit increased substantiall under which of the f y ollowing administrations? The Kennedy Administration The Reagan Administration The F ord Administration The Clinton Administration (6) QID: 1 70 3 How is investment spending aff ected by an increase in the budget deficit? Investment spending increases to finance the deficit. Investment spending increases as a result of the increase in government spending. Investment spending is crowded out by the increase in the budget deficit. Investment spending is unaff ected by the increase in the budget deficit which aff ects onl y government spending. (7) QID: 1 380 In the earl 990s, the budget deficit was high, but interest rates were lower than y 1 in the 1 980s. Which of the f ollowing best explains the reason this occurred? F oreign savings increased, offsetting the eff ects of the budget deficit. Government spending decreased, reducing the demand f or loanable funds. Household savings increased. The government sold T reasury bills. (8) QID: 1 386 Which of the f ollowing will occur if the U .S. government purchases T reasury bills? The national debt increases. The national debt declines. The f ederal budget deficit increases. The f ederal budget deficit decreases. CAACB CAB 5.5.3 (1) QID: 149 7 2 The time between the realization of economic conditions and the implementation of fiscal policy is called the _____________ lag. operational recognition political administration (2) QID: 1 7 7 1 2 The theory of implementing fiscal policy always works in practice. T rue False (3) QID: 1 7 292 The implementation of fiscal policy might be delayed because of constituent­ supported programs that are difficult to retract. T rue False (4) QID: 1 394 Which of the f ollowing will not occur during a recession? Output declines. Prices rise. Unemployment rises. Consumption spending falls. (5) QID: 1 1 40 The "recognition lag" ref ers to the fact that it takes a while bef ore policymakers recognize that aggregate demand has shifted inward. politicians are often unwilling to recognize the fact that a decline in aggregate demand hurts people, especiall y the poor . government statistics may be inaccurate. all of the above. (6) QID: 1 425 The fact that it may take months to actuall y distribute government spending once that spending has been approved is known as the administration lag. operational lag. recognition lag. bureaucratic lag. (7) QID: 1 1 43 Which of the f ollowing is one of the factors that makes the use of fiscal policy difficult? Once programs have been established, it is difficult to cut spending. Increases in government spending often have no eff ect on aggregate demand. Government programs tend to be less efficient than private sector programs. All of the above. BBABA BA 5.5.4 (1) QID: 1 7 305 Automatic stabilizers control the suppl y of money in an economy . the fluctuations of the business cycle. the volatility of changing interest rates. the volume of imports. (2) QID: 1 435 Which of the f ollowing represents an automatic stabilizer? Medicare Unemployment insurance Social Security All of the above (3) QID: 1 436 How does the tax system act as an automatic stabilizer? When income rises, people move into higher tax brackets, reducing somewhat the amount of money available f or consumption. People in higher tax brackets tend not to pay taxes, which gives them more money to spend on consumption. T axes are automaticall withdrawn from most people's paychecks, giving the y government an immediate source of income. When income rises, people increase their spending dramaticall y in order to avoid taxation, increasing the eff ect of a boom. (4) QID: 1 4 79 Which of the f ollowing does not occur as a result of automatic stabilizers? Recessions are milder than they would otherwise be. Output grows by less than it otherwise would during economic booms. The business cycle varies less than it would in the absence of automatic stabilizers. Increases in income cause greater increases in consumer spending than they otherwise would. (5) QID: 1 486 What eff ect would a decrease in aggregate demand have on output, given the presence of automatic stabilizers? Output would fall but by less than it would without stabilizers. Output would fall, but prices would rise. Output would remain constant despite the drop in aggregate demand. Output would rise but by less than it would without stabilizers. (6) QID: 1 1 53 Which of the f ollowing represents an aim of automatic stabilizers? T o increase consumer spending in a boom and stimulate the economy T o reduce consumer spending in a recession and stimulate the economy T o reduce consumer spending in a boom in order to avoid overheating the economy T o reduce government spending in a recession in order to avoid overheating the economy (7) QID: 22 42 The volatile fluctuations of the business cycle occur because of the multiplier eff ect. T rue False BBADA CA 5.6. 1 (1) QID: 835 In the q uantity theory of money , velocity means the rate of the change in GDP . the rate at which business inventories turn over . the rate at which the money suppl y turns over . the rate at which the F ed increases the money suppl y . (2) QID: 838 Which of the f ollowing correctl y expresses the q uantity theory of money? money x the price level = velocity x real output money x velocity = price level x real output velocity x real output = price level x money price level x velocity = real output (3) QID: 839 If the money suppl increases by 1 y 0% and real GDP increases by 3%, prices will increase by more than 1 0% 1 0%. 1 3% less than 1 0%. (4) QID: 8 45 In the real business cycle theory , if long­run aggregate suppl increases, then y long­run aggregate demand increases by an eq ual amount, so that real output increases and the price level remains unchanged. less than the amount of increase in aggregate suppl so that real output y , increases and the price level decreases. more than the amount of increase in aggregate suppl so that real output y , increases and the price level increases. an eq ual amount, so that both real output and the price level increase. (5) QID: 856 The widel y held belief that when the central bank creates money , prices rise is called NAIRU , or the natural rate of unemployment. Okun’ law s . the Fisher eff ect. the q uantity theory of money . (6) QID: 863 The q uantity theory of money can explain hyperinflation, but not moderate inflation. moderate inflation, but not hyperinflation. moderate inflation and hyperinflation, but not deflation. moderate inflation, hyperinflation, and deflation. (7) QID: 867 Suppose the U .S. economy is experiencing a recession. Increasing the money suppl y will provoke an expansion. T rue False (8) QID: 869 Increasing the money suppl y in an expanding economy will most likel y cause an increase in eq uilibrium GDP . an increase in the price level. a decrease in the unemployment rate. further economic expansion. (9) QID: 8 1 7 Assume the velocity of money is held constant. According to the classical view of money , changes in the money suppl y will aff ect either price or output. changes in the money suppl y will onl y aff ect prices. changes in the money suppl y will onl y aff ect output. changes in nominal variables will onl y aff ect real variables. (1 0) QID: 1 530 Which of the f ollowing statements must be true if the gross national product is greater than the money suppl y? Prices are likel y to increase. Prices are likel y to decrease. The velocity of money is greater than one. The velocity of money is less than one. (1 1) QID: 1 536 What do most economists believe is the short­run eff ect on the real economy when the money suppl y increases? Output increases, because interest rates fall. Output increases, because interest rates rise. Output falls, because interest rates rise. Output falls, because interest rates fall. (12) QID: 1 538 What is the long­run eff ect on the real economy of an increase in the money suppl y? Prices fall, and the level of output returns to its eq uilibrium level. Prices rise, and the level of output returns to its eq uilibrium level. Prices fall, and the level of output falls. Prices rise, and the level of output rises. CBDAD DABBC AB 5.6.2 (1) QID: 7 88 Suppose that the F ed lowers the req uired reserve ratio. Which of the f ollowing events will most likel y occur? The short­run eq uilibrium will be below the economy's level of full employment. Prices will begin to adjust downward. The short­run aggregate suppl y curve will begin to shift outward. The new long­run eq uilibrium at full employment will be at a higher aggregate price level. (2) QID: 805 Contractionary monetary policy will cause prices and output to decrease in the short­run. T rue False (3) QID: 1 43 5 In the short run, what is the eff ect on prices and output when the money suppl y increases? Aggregate demand rises, pushing up prices and output. Aggregate demand rises, pushing down prices and output. Aggregate demand falls, pushing up prices and output. Aggregate demand falls, pushing down prices and output. (4) QID: 1 46 5 What is the eff ect on interest rates and the money suppl y when the F ed lowers the reserve req uirement? Interest rates rise, and the money suppl y increases. Interest rates rise, and the money suppl y decreases. Interest rates fall, and the money suppl y increases. Interest rates fall, and the money suppl y decreases. (5) QID: 1 49 5 Which of the f ollowing tools can the F ederal Reserve use to lower interest rates? Increasing the discount rate Raising the reserve req uirement Buying T reasury bills Selling T reasury bills (6) QID: 1 552 What is the long­run eff ect on the short­run aggregate suppl y (SRAS) curve when the money suppl y increases? The SRAS curve shifts outward in response to the increase in aggregate demand. The SRAS curve shifts inward in response to the increase in aggregate demand. The SRAS curve shifts outward as expectations catch up with actual movements in the price level. The SRAS curve shifts inward as expectations catch up with actual movements in the price level. (7) QID: 1 558 Which of the f ollowing statements about the long­run eff ect of an increase in the money suppl is true? As a result of lower interest rates, businesses may y invest more, but the increase in the price level may reduce spending by f oreigners and consumers. As a result of changes in the price level, exports may increase and imports decline. As a result of the increase in output, real wages may be higher than they were bef ore the increase in the money suppl y . As a result of higher interest rates, business may cut back on investment spending and consumers may cut back on consumption. DAACC DA 5.6.3 (1) QID: 808 Based on the graph below , which of the f ollowing monetary policies should the F ed implement to restore long­run eq uilibrium? Raise the req uired reserve ratio Buy T reasury securities Increase taxes Raise the discount rate (2) QID: 80 1 Based on the graph below which of the f , ollowing can we conclude about the economy? The economy is experiencing hyperinflation. If the F ed intervenes with expansionary monetary policy , the economy will return to its original eq uilibrium level. A suppl y shock has probabl y occurred. The economy's labor pool has increased. (3) QID: 8 1 1 The graph below shows an example of "bad deflation." T rue False (4) QID: 1 563 What is the short­ter m eff ect of expanding the money suppl y? The aggregate demand curve shifts inward. The aggregate demand curve shifts outward. It has no eff ect on the demand curve, which captures fiscal policy onl y . It leads to a decline in employment. (5) QID: 1 565 Which of the f ollowing factors can cause a decline in aggregate demand? An increase in government spending A decrease in consumer spending An increase in imports A decrease in household saving (6) QID: 1 568 Which of the f ollowing represents a way in which the F can expand the money ed suppl y? Raising the req uired reserve ratio Selling T reasury securities Lowering the discount rate All of the above (7) QID: 1 70 5 What is meant by the expression "In the long run, we're all dead"? Long­run eq uilibrium is always reestablished. Deviations from long­run eq uilibrium can have significant conseq uences on people's lives. Prices adjust to changes in aggregate demand and short­run aggregate suppl y . The economy cannot produce at a level of output that exceeds the full­employment level. (8) QID: 1 7 55 Which of the f ollowing best describes stagflation? Prices fall and output increases. Prices fall and output decreases. Prices rise and output increases. Prices rise and output decreases. BCBBB CBD 5.6.4 (1) QID: 826 The use of monetary policy as a means to prevent the crowding out that might occur from expansionary policy is a short­run strategy T . rue False (2) QID: 84 7 The long­run eff ect of increasing the money suppl is an increase in the y aggregate price level with no change in real output. an increase in both the aggregate price level and real output. an increase in real output with no change in the aggregate price level. no change in either the aggregate price level or real output. (3) QID: 1 7 58 In the short run, when the government increases its spending, the demand f or money rises, because private investment is crowded out by the increase in government spending. rises, because income rises as a result of the increase in aggregate demand. falls, because taxes rise. falls, because taxes increase. (4) QID: 1 583 In the long run, what is the eff ect of an increase in the money suppl y? Inflation Crowding out of private investment An increase in aggregate demand Stagflation (5) QID: 1 585 Which of the f ollowing chains of events explains how government spending crowds out investment spending? Government spending increases, lowering prices, lowering the demand f or money orcing businesses to compete f , f or a fixed suppl y of funds and lowering investment. Government spending increases, reducing consumption, lowering output, raising prices, raising the demand f or money , raising interest rates, lowering investment. Government spending increases, raising output, raising prices, raising the demand f or money , raising interest rates, lowering investment. Government spending increases, lowering tax revenues, increasing prices, raising the demand f or money , raising interest rates, lowering investment. (6) QID: 1 7 58 Which of f ollowing policy measures could prevent "crowding out" in the short run? An increase in the money suppl y by the F ederal Reserve A decrease in the money suppl y by the F ederal Reserve An increase in private consumption by the government A decrease in private consumption by the government (7) QID: 1 588 What is the long­run eff ect of monetary policy accommodation by the F ederal Reserve? Stagflation Recession Inflation No eff ect AABAC AC V iew Results Quiz 1 . 1 User ID: skim7 Attempt : 6 / Unlimited Out of: 25 Started: October 29, 200 :1 4 7 8am Finished: October 29, 200 :20am T 4 7 ime spent : 1 min. 42 sec. Question 1 (1 point) Economic rationality invol ves: Student response: Percent V alue Student Response Answer Choices a. the philosophical aspects of economics. 1 00.0% b. individuals making decisions that make themsel ves better off. c. individuals making decisions that make themsel ves worse off. d. none of the above. Score: 1 / 1 Question 2 (1 point) The ultimate pur pose of economics is to Student response: Percent V alue Student Response Answer Choices a. help someone make money . b. help someone know how best to invest money . c. explain how wealth is created. 1 00.0% d. explain choices. Score: 1 / 1 Question 3 (1 point) Which of the f ollowing situations is the best example of scarcity? Student response: Percent V alue Student Response Answer Choices a. People in Haiti have f ewer goods and services than people in the U .S. b. Chinese incomes are rising, enabling consumers to buy more goods. c. Ugandans find that their incomes are decreasing and cannot buy as much as they had in the past. 1 00.0% d. Bolivian far mers wish to build more homes, sheds and barns but do not have enough lumber to construct all of these buildings. e. All of the above are situations that exhibit scarcity . Score: 1 / 1 Question 4 (1 point) Suppose you are studying economics. If you weren't studying economics, you would be studying literature, raising your grade in that class by a letter grade. If you weren't studying literature, you would be working, making $500. If you weren't working, you would be playing cards with friends. If you weren't playing cards with friends, you would be sleeping, which would improve your q uiz score at your earl y­morning accounting class in the morning by 3 points. The opportunity cost of studying economics is Student response: Percent V alue Student Response Answer Choices a. 3 points on the accounting q uiz. b. the enjoyment of playing cards with friends. c. $500. 1 00.0% d. a letter grade in literature. e. all of the other possible activities listed. Score: 1 / 1 Question 5 (1 point) Because of scarcity , every economic decision invol ves Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a trade­off. b. a free good. c. a trade­in. d. an increasing cost. Score: 1 / 1 Question 6 (1 point) Economics is primaril y the study of Student response: Percent V alue Student Response Answer Choices a. how to make money in the stock market. b. how to operate a business successfull y . 1 00.0% c. how society manages its scarce resources. d. the methods that governments might use to transf m a scarce resource into an or economic good. Score: 1 / 1 Question 7 (1 point) Which of the f ollowing is not an example of self­interested (rational) behavior? Student response: Percent V alue Student Response Answer Choices a. A mother q uits a job she likes to take care of her new baby . b. Albert Schweitzer gave up both an academic career and a musical career to be a missionary in Africa. c. A man lights up a cigarette. 1 00.0% d. All are examples of self­interested behavior as used by economists. Score: 1 / 1 Question 8 (1 point) Extremel y cold winter weather destroys oranges on the trees in Florida. The freeze caused Student response: Percent V alue Student Response Answer Choices a. scarcity because there are less oranges now than people want. 1 00.0% b. shortages because the number of oranges are less than people had expected. c. scarcity because people have to switch to other types of citrus fruits. d. shortages because the orange growers will have less money . Score: 1 / 1 Question 9 (1 point) Economics is a social science rather than a "hard" science like physics because Student response: Percent V alue Student Response Answer Choices a. economists abstract from reality in creating their theories. b. economics is easier to study than physics. c. economists must explain their theories to policy makers who lack f mal or mathematical training. 1 00.0% d. economists study human behavior , which is aff ected by an unpredictable and vast range of influences. Score: 1 / 1 Question 1 0 (1 point) An economist studying macroeconomics compared data on unemployment, inflation and economic growth from past years to the current year , and used the comparison to predict future unemployment. This is an example of Student response: Percent V alue Student Response Answer Choices a. developing economic theories. 1 00.0% b. building economic models. c. making economic policy . d. nor mative economics. Score: 1 / 1 Question 1 1 (1 point) Economists make assumptions because Student response: Percent V alue Student Response Answer Choices a. they need to incor porate value judgments into their models. 1 00.0% b. anal ysis without assumptions would be impossibl y complex. c. they always have perf ect inf mation about the assumptions. or d. assumptions are the final product of careful economic anal ysis. Score: 1 / 1 Question 12 (1 point) Economic models: Student response: Percent V alue Student Response Answer Choices a. are developed in order to explain an individual's thinking. 1 00.0% b. should be judged by how well they predict real­world phenomena. c. should be rejected if they are not completel y realistic. d. are developed in order to explain what an individual might say . Score: 1 / 1 Question 1 3 (1 point) Y our friend wonders why traffic during her evening commute is always worse on Fridays. She is not considering: Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the Ceteris P aribus assumption. b. the incentives assumption. c. the rationality assumption. d. none of the above. Score: 1 / 1 Question 1 4 (1 point) Which of the f ollowing is a nor mative statement? Student response: Percent V alue Student Response Answer Choices a. Inflation in 1 963 was 2.9% f or the year . b. Unemployment will increase in the coming year . c. Increased sales taxes will shrink employment. 1 00.0% d. T axes should be raised to finance street repairs. Score: 1 / 1 Question 1 5 (1 point) Which of the f ollowing is a positive economic statement? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. An increase in the price of coff ee leads to less coff ee being purchased. b. People should avoid drinking caffienated coff ee. c. Coff ee always makes people jittery and less productive. d. Coff ee drinkers are drug addicts since they need caff eine. Score: 1 / 1 Question 1 6 (1 point) Which of the f ollowing is a true statement? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. It is difficult to avoid nor mative anal ysis in economics because we are dealing with the behavior of people. b. It is difficult to make positive statements in economics because human behavior is complex and we can never be certain that we are correct. c. It is difficult to distinguish between positive and nor mative statements because both can be refuted by appealing to empirical evidence. d. Positive statements are better than nor mative statements. Score: 1 / 1 Question 1 (1 point) 7 The impact of the national debt on the economy's unemployment is an example of: Student response: Percent V alue Student Response Answer Choices a. microeconomics. 1 00.0% b. macroeconomics. c. irrational economics. d. either microeconomics or macroeconomics. Score: 1 / 1 Question 1 8 (1 point) Microeconomics approaches the study of economics from the viewpoint of Student response: Percent V alue Student Response Answer Choices 1 00.0% a. small economic units, such as consumers, fir ms, and units of government. b. f oreign governments. c. inflation, unemployment, and economic growth. d. all of the above are correct. Score: 1 / 1 Question 1 9 (1 point) Which of the f ollowing is true about the importance of money in economics? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Money is very important in both macroeconomics and microeconomics. b. Money is more important in microeconomics than it is in macroeconomics. c. Money is not very important in either micro or macroeconomics. d. Money is more important in macroeconomics than it is in microeconomics. Score: 1 / 1 Question 20 (1 point) Questions of what to produce, how to produce, and who will get the output must be faced by Student response: Percent V alue Student Response Answer Choices a. onl y developed economies. b. centrall y planned economies. c. the economies of underdeveloped countries. 1 00.0% d. all economies. Score: 1 / 1 Question 2 1 (1 point) If the government takes a laissez­faire approach to the economy , its most likel y response to entering a recession will be to Student response: Percent V alue Student Response Answer Choices a. increase government spending. b. increase the money suppl y . 1 00.0% c. do nothing. Score: 1 / 1 Question 22 (1 point) The nation listed below whose economy comes closest to a centrall y planned economy is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. People's Republic of China. b. Japan. c. United Kingdom. d. United States. Score: 1 / 1 Question 23 (1 point) In a market economy , goods are allocated to Student response: Percent V alue Student Response Answer Choices a. all potential uses. b. all citizens on an eq ual basis. c. citizens with political power . 1 00.0% d. citizens with both the desire and the willingness to pay f or the goods. Score: 1 / 1 Question 2 4 (1 point) The father of modern economics is Student response: Percent V alue Student Response Answer Choices a. Thomas Hobbes. 1 00.0% b. Adam Smith c. John Maynard Keynes. d. Alan Greenspan. Score: 1 / 1 Question 25 (1 point) Adam Smith believed that Student response: Percent V alue Student Response Answer Choices a. people were hard­wired to be selfish. b. the government should manage most aspects of the economy . 1 00.0% c. allowing individuals to pursue their own self­interest is the most eff ective way to make a country wealthy . d. the division of labor should be managed by the government. Score: 1 / 1 T otal score: 25 / 25 = 1 00.0% V iew Results Quiz 1 .2 User ID: skim7 Attempt : 2 / 3 Out of: 25 Started: October 29, 200 4 6:59am Finished: October 29, 200 4 2:0 4pm T ime spent : 7 hr , 4 min., 33 sec. Question 1 (1 point) X Y 2 8 4 2 6 0 8 2 1 0 8 Given the data above, if you were to plot the points you would see a(n): Student response: Percent V alue Student Response Answer Choices a. downward sloping straight line b. upward sloping straight line c. upward sloping non­linear curve d. downward sloping non­linear curve 1 00.0% e. non­linear curve that switches from an inverse to a direct relationship Score: 1 / 1 Question 2 (1 point) Which of the f ollowing pair of variables is most likel to exhibit a direct y relationship? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the amount of sales (in $) and the number of hours that a business is open b. the amount of cloud cover and the amount of sunshine c. the price of bananas and the number of bananas purchased d. the number of acres of soybeans planted and the number of acres of potatoes planted on a single far m Score: 1 / 1 Question 3 (1 point) The slope of the line in the graph is eq ual to: Student response: Percent V alue Student Response Answer Choices 1 00.0% a. ?3/4 b. ?4/3 c. 3/4 d. 5/6 e. 1 Score: 1 / 1 Question 4 (1 point) In the f ollowing figure, Student response: Percent V alue Student Response Answer Choices 1 00.0% a. at all points, the slope of S1 > the slope of S2. b. at all points, the slope of S1 < the slope of S2. c. at points to the left of A, the slope of S1 > the slope of S2; at points to the right of A, the slope of S1 < the slope of S2. d. at points to the left of A, the slope of S1 < the slope of S2; at points to the right of A, the slope of S1 > the slope of S2. Score: 1 / 1 Question 5 (1 point) Why is the choice of units important in constructing a graph? Student response: Percent V alue Student Response Answer Choices a. It aff ects whether a variable rises or falls. 1 00.0% b. It aff ects the apparent rate of change of one variable relative to the other . c. It aff ects which time periods can be considered. d. All of the above. Score: 1 / 1 Question 6 (1 point) The lower left­hand corner of a graph where the two axes meet is called the graph's origin. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 7 (1 point) The data used to construct a graph can show a steep line or a flat line depending on how the axes are measured. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 8 (1 point) Graphs are useful because of the way they Student response: Percent V alue Student Response Answer Choices a. facilitate inter pretation and anal ysis of data. b. convey an idea that might otherwise take many words. c. per mit a person to easil y see relationships. 1 00.0% d. All of the above are correct. Score: 1 / 1 Question 9 (1 point) A straight line through the origin always has a slope of one. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 1 0 (1 point) The tangent at point A on a curve has a positive slope. Theref ore, Student response: Percent V alue Student Response Answer Choices a. the curve has a positive slope at all points. 1 00.0% b. the curve has a positive slope at point A . c. the curve has a negative slope at all points. d. the curve has a negative slope at point A . Score: 1 / 1 Question 1 1 (1 point) When variable A rises by 1 0 units, variable B rises by 1 5 units. The slope of the line describing this relationship is Student response: Percent V alue Student Response Answer Choices a. always 2/3. 1 00.0% b. either 2/3 or 1 .5, depending on which variable goes on which axis of the graph. c. either 1 .5 or ­1 .5, depending on which variable goes on which axis of the graph. d. always ­1 .5. Score: 1 / 1 Question 12 (1 point) The slope of a curved line diff ers from that of a straight line in that Student response: Percent V alue Student Response Answer Choices a. the numerical value of the slope of a straight line is diff erent at every point, but is the same at every point f or a curved line. b. the numerical value of the slope of a straight line is always higher than the numerical value of the slope of a curved line. 1 00.0% c. the numerical value of the slope of a curved line is diff erent at every point, but is the same at every point f or a straight line. d. straight lines are more realistic, but curved lines are not descriptivel y accurate f or the real world. Score: 1 / 1 Question 1 3 (1 point) A downward­sloping, straight line has a decreasing slope. Student response: Percent V alue Student Response Answer Choices a. T rue. 1 00.0% b. False. Score: 1 / 1 Question 1 4 (1 point) The slope of a horizontal line is zero. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue. b. False. Score: 1 / 1 Question 1 5 (1 point) The relationship between two variables is given by the eq uation Y = 5 + 2X. The relationship can be drawn as a line on a graph with Y on the vertical axis and X on the horizontal axis. Which of the f ollowing statements is true? Student response: Percent V alue Student Response Answer Choices a. When X exactl y doubles, Y exactl y doubles. b. Multipl ying both sides of the eq uation by 2 doubles the slope of the line. 1 00.0% c. Subtracting 2 from the right side of the eq uation shifts the line down by 2 units at every level of X. d. The line is twice as steep as the line given by the eq uation Y = 2.5 + 2X. Score: 1 / 1 Question 1 6 (1 point) Suppose a curve has a slope eq ual to zero at some point A o the right of A, the . T curve may Student response: Percent V alue Student Response Answer Choices a. have a positive slope. b. have a negative slope. c. be a straight line. 1 00.0% d. All of the above are correct. Score: 1 / 1 Question 1 (1 point) 7 The f ollowing table gives data relating a variable X (measured on the horizontal axis) to a variable Y (vertical axis). The slope of the line described by this relationship is X 1 3 5 Y 6 1 4 22 Student response: Percent V alue Student Response Answer Choices a. two. 1 00.0% b. f . our c. eight. d. diff erent at diff erent points along the line. Score: 1 / 1 Question 1 8 (1 point) A straight line tangent to a curved line at a point Student response: Percent V alue Student Response Answer Choices a. crosses the curved line at that point. b. crosses the curved line at many points. 1 00.0% c. has the same slope as the curved line at that point. d. has the same slope as the curved line at all points. Score: 1 / 1 Question 1 9 (1 point) A nonlinear function exhibits a relationship between two variables that Student response: Percent V alue Student Response Answer Choices a. is constant over its entire range. 1 00.0% b. changes over the entire range. c. is random. d. is negative. Score: 1 / 1 Question 20 (1 point) The algebraic f mula f or or a straight line is Student response: Percent V alue Student Response Answer Choices a. a = y + bx 1 00.0% b. y = a + bx c. b = a + yx d. x = a + by Score: 1 / 1 Question 2 1 (1 point) Graphicall y , how would an increase in income aff ect the demand f or hamburgers? Student response: Percent V alue Student Response Answer Choices a. The slope of the demand cur ve would increase. b. The slope of the demand cur ve would decrease. 1 00.0% c. The demand curve would shift outward, parallel to the original demand curve. d. The demand curve would shift inward, parallel to the original demand curve. Score: 1 / 1 Question 22 (1 point) Given the eq uation P = $6.00 ­ $.40Q, where P is the price of the good and Q is the q uantity of the good demanded, how many units will this consumer demand if the price is $3.60? Student response: Percent V alue Student Response Answer Choices a. 1 4 units .4 b. 3 units c. 3.6 units 1 00.0% d. 6 units Score: 1 / 1 Question23 (1 point) Suppse V increases her consumption of candy bars by 3 bars f every $.60 al or decrease in the price. The slope of V al's demand curve is Student response: Percent V alue Student Response Answer Choices a. ­$5.00. b. ­$1 .80. 1 00.0% c. ­$.20. d. unable to be deter mined. Score: 1 / 1 Question 2 4 (1 point) Suppose the eq uation f or T ed's demand curve is P = $2.00 ­ $.50Q. If T ed's income increased by $1 00 every week , how might we rewrite the eq uation? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. P = $3.00 ­ $.50Q b. P = $2.00 ­ $1 .50Q c. P = $1 .00 ­ $.50Q d. P = $2.00 ­ $.25Q Score: 1 / 1 Question 25 (1 point) T o find the slope of a nonlinear function between any two points, you must use the "rise over run" f mula that you use f or or a linear function. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 T otal score: 25 / 25 = 1 00.0% V iew Results Quiz 1 .4 User ID: skim7 Attempt : 3 / 3 Out of: 20 Started: November 3, 200 4 12:23pm Finished: November 3, 200 4 12:25pm T ime spent : 1 min. 5 4 sec. Question 1 (1 point) The graphical device which illustrates the concept of scarce resources being efficientl y utilized in the economy is Student response: Percent V alue Student Response Answer Choices a. a budget line. b. a time­series graph. 1 00.0% c. a production possibilities frontier . d. a consumption possibilities line. Score: 1 / 1 Question 2 (1 point) Which of the points in the graph are efficient? Student response: Percent V alue Student Response Answer Choices a. C and F onl y b. C, D and F onl y c. A, C, D, F and G onl , y 1 00.0% d. A, C, F and G onl , y Score: 1 / 1 Question 3 (1 point) The opportunity cost of more capital goods today is Student response: Percent V alue Student Response Answer Choices a. f ewer capital goods in the future. b. f ewer consumer goods in the future. 1 00.0% c. f ewer consumer goods today . d. more unemployed resources in the future. Score: 1 / 1 Question 4 (1 point) Which of the f ollowing would NOT allow society to move to point h in the figure? Student response: Percent V alue Student Response Answer Choices a. an improvement in technology 1 00.0% b. more efficient use of current resources c. an increase in q uantity of labor d. an increase in q uantity of capital Score: 1 / 1 Question 5 (1 point) If all resources are eq uall productive in producing all goods, the production y possibilities curve will be Student response: Percent V alue Student Response Answer Choices a. convex to the origin. b. concave to the origin. 1 00.0% c. linear . d. expanding over time. Score: 1 / 1 Question 6 (1 point) The shape of the production possibilities curve in the figure indicates that Student response: Percent V alue Student Response Answer Choices a. production of corn is characterized by increasing costs while the production of cloth is characterized by decreasing costs. b. production of both corn and cloth is characterized by increasing costs. 1 00.0% c. production of both corn and cloth is characterized by constant costs. d. production of corn is characterized by constant costs and the production of cloth is characterized by increasing costs. Score: 1 / 1 Question 7 (1 point) Suppose an acre of land yields 1 00 bushels of corn and that one bushel of corn provides enough seed f or one­q uarter of an acre of land. The opportunity cost of consuming another bushel of corn today is Student response: Percent V alue Student Response Answer Choices a. 1 00 bushels of corn next year . 1 00.0% b. 25 bushels of corn next year . c. 1 0 bushels of corn next year . d. 2.5 bushels of corn next year . Score: 1 / 1 Question 8 (1 point) If a country's production possibilities curve gets more bowed out over time, it is an indication that Student response: Percent V alue Student Response Answer Choices a. technological change has taken place. b. society is learning to use its resources more efficientl y . c. the q uantity of labor and capital have increased. 1 00.0% d. resources have become more highl y specialized. Score: 1 / 1 Question 9 (1 point) In the figure, how many units of corn are produced at point a? Student response: Percent V alue Student Response Answer Choices a. 2000 1 00.0% b. 2500 c. 3000 d. We can't tell without more inf mation. or Score: 1 / 1 Question 1 0 (1 point) The production possibilities frontier illustrates Student response: Percent V alue Student Response Answer Choices a. the fundamental concept of scarcity . b. the opportunity cost of acq uiring more of one good. c. an economy's maximum output utilizing all resources efficientl y . 1 00.0% d. All of the above are correct. Score: 1 / 1 Question 1 1 (1 point) Any point outside the boundary of a production possibilities frontier is Student response: Percent V alue Student Response Answer Choices a. efficient. b. inefficient. 1 00.0% c. unattainable. d. attainable. Score: 1 / 1 Question 12 (1 point) Which of the f ollowing statements is FALSE? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. As society increases its wealth, the problem of scarcity disappears. b. The factors of production are used to produce outputs that help society satisfy its wants. c. Even though a society faces the problem of scarcity , it does not necessaril y suff er from poverty . d. Land and labor are both factors of production. Score: 1 / 1 Question 1 3 (1 point) The law of increasing costs is due to Student response: Percent V alue Student Response Answer Choices a. taxes. b. scarcity . c. the fact that it is more difficult to use resources efficientl the more y society produces. 1 00.0% d. the fact that resources are not perf ectl y adaptable f or alternative uses. Score: 1 / 1 Question 1 4 (1 point) Resources are also known as Student response: Percent V alue Student Response Answer Choices a. factories. b. minerals. c. stocks, bonds, and other financial instruments. 1 00.0% d. factors of production. Score: 1 / 1 Question 1 5 (1 point) The opportunity cost f or this economy to move from point B to point A is Student response: Percent V alue Student Response Answer Choices a. 1 5 bushels of wheat. b. 90 bushels of wheat. c. 7 5 pounds of beef. 1 00.0% d. 25 pounds of beef. Score: 1 / 1 Question 1 6 (1 point) In one day , Joe can produce 2 4 bushels of wheat (W) or 8 pounds of rice (R). Joe's opportunity cost of 1 bushel of wheat is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. 1/3 pound of rice. b. 3 pounds of rice. c. 1/8 pound of rice. d. 8 pounds of rice. Score: 1 / 1 Question 1 (1 point) 7 Moving from one point to another along a given production possibilities frontier , producing more of one good req uires that Student response: Percent V alue Student Response Answer Choices 1 00.0% a. less of the other good be produced. b. the production of the other good be held constant. c. more of the other good be produced. d. a better technology be employed. Score: 1 / 1 Question 1 8 (1 point) In the figure below , which of the points are efficient allocations of resources? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. A, B, and C b. B and C onl y c. C and B and D d. B onl y Score: 1 / 1 Question 1 9 (1 point) The point at which a PPF intersects the X axis is Student response: Percent V alue Student Response Answer Choices a. unattainable. b. attainable but inefficient. 1 00.0% c. attainable and efficient. d. unattainable and inefficient. Score: 1 / 1 Question 20 (1 point) Assume this economy produces wheat in the f ertile middle of the country and produces rice in the southern wetlands. What could explain th eshcnge in the country's PPF from PPF1 to PPF2? Student response: Percent V alue Student Response Answer Choices a. a drought in the southern wetlands 1 00.0% b. a drought in the middle part of the country c. development of improved varieties of rice d. development of improved varieties of wheat Score: 1 / 1 T otal score: 20 / 20 = 1 00.0% V iew Results Quiz 1 .5 User ID: skim7 Attempt : 2 / 3 Out of: 25 Started: November 3, 200 4 12:38pm Finished: November 3, 200 4 12:40pm T ime spent : 2 min. 3 1 sec. Question 1 (1 point) The person who can perf m a task in the f or ewest hours Student response: Percent V alue Student Response Answer Choices 1 00.0% a. has an absolute advantage in perf ming the task or . b. has a comparative advantage in perf ming the task or . c. has both an absolute advantage and a comparative advantage in perf ming the or task . d. has an absolute advantage in perf ming the task but a comparative or disadvantage in perf ming the task or . Score: 1 / 1 Question 2 (1 point) Fred has an absolute advantage in painting and Barney has an absolute advantage in washing down walls. Assuming that the population consists onl y of Fred and Barney , we know that Student response: Percent V alue Student Response Answer Choices a. neither has a comparative advantage in either task . 1 00.0% b. Fred has a comparative advantage in painting and Barney has a comparative advantage in washing down walls. c. Fred has a comparative advantage in washing down walls and Barney has a comparative advantage in painting. d. we can't tell who has a comparative advantage in painting or in washing down walls. Score: 1 / 1 Question 3 (1 point) Assume that Economy A and Economy B have the same resources, but that individuals in Economy A have specialized whereas individuals in Economy B have not. Given this inf mation, you can deter mine that or Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Economy A will have a higher output than Economy B. b. Economy A will have a lower output than Economy B. c. Economy A and Economy B will have identical outputs. d. Individuals in Economy A will have lower incomes than individuals in Economy B. Score: 1 / 1 Question 4 (1 point) When nations specialize in their areas of comparative advantage and then trade with the rest of the world, the result is that Student response: Percent V alue Student Response Answer Choices a. the average standard of living in the world will go down. 1 00.0% b. the average standard of living in the world will go up. c. the world will move from a point on the production possibilities curve to a point inside the curve. d. worldwide economic efficiency will decrease. Score: 1 / 1 Question 5 (1 point) Comparative advantage is always a(n) ______ concept. Student response: Percent V alue Student Response Answer Choices a. absolute b. efficiency 1 00.0% c. relative d. monetary Score: 1 / 1 Question 6 (1 point) Division of labor increases the output of society by Student response: Percent V alue Student Response Answer Choices a. eliminating scarcity . b. reducing the choices people have to make to a more manageable number . c. ensuring that people are happier in perf ming their work or . 1 00.0% d. allowing resources to specialize in the tasks f which they have a or comparative advantage. Score: 1 / 1 Question 7 (1 point) Division of labor ref ers to Student response: Percent V alue Student Response Answer Choices a. dividing tasks up into several subtasks and having one person perf m these or subtasks in a certain order . b. the separation of hourl y workers from salaried workers. 1 00.0% c. assigning diff erent workers to diff erent tasks. d. separating union workers from nonunion workers. Score: 1 / 1 Question 8 (1 point) Which of the f ollowing statements is FALSE? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. As society increases its wealth, the problem of scarcity disappears. b. The factors of production are used to produce outputs that help society satisfy its wants. c. Even though a society faces the problem of scarcity , it does not necessaril y suff er from poverty . d. Land and labor are both factors of production. Score: 1 / 1 Question 9 (1 point) Look at the f ollowing production possibilities table f or drill presses and corn. The table shows the maximum combination of drills and bushels of corn that can be produced when all resources are full y employed. Drill Presses 1 0 20 30 40 50 Corn (bushels) 1 50 1 40 120 90 500 Based on the above inf mation, or Student response: Percent V alue Student Response Answer Choices a. there is a constant trade­off between corn and drill presses. b. the opportunity cost of producing 30 drill presses instead of 20 drills is 120 bushels of corn. 1 00.0% c. the opportunity cost of producing 40 drill presses instead of 30 drills is 30 bushels of corn. d. the production possibilities curve f drill presses and corn will be a or straight line. Score: 1 / 1 Question 1 0 (1 point) The f ollowing table illustrates the production possibilities f or John and Mary if they spend all of their time producing bread and cheese. Bread Cheese John 4 8 Mary 8 1 4 Which of the f ollowing is true f or John and Mary? Student response: Percent V alue Student Response Answer Choices a. Mary has an absolute advantage in producing cheese. b. John has a comparative advantage in producing cheese. c. Mary has a comparative advantage in producing bread. 1 00.0% d. All of the above are true. Score: 1 / 1 Question 1 1 (1 point) Assuming that onl y two goods are produced in the world, which of the f ollowing is true? Student response: Percent V alue Student Response Answer Choices a. It is impossible f or a country to have an absolute advantage in producing both goods. b. It is possible f or a country to have a comparative advantage in producing both goods. c. If trade exists and a country has an absolute advantage in producing one of the goods, that country will specialize in producing that good. 1 00.0% d. If trade exists, and a country has a comparative advantage in producing one of the goods, that country will specialize in producing that good. Score: 1 / 1 Question 12 (1 point) The average worker in the United States can produce 20 tons of coal or 1 0 tons of iron per hour . The average worker in Canada can produce 1 0 tons of coal or 1 0 tons of iron per hour . The United States has a comparative advantage in the production of Student response: Percent V alue Student Response Answer Choices a. iron. 1 00.0% b. coal. c. both iron and coal. d. neither iron nor coal. Score: 1 / 1 Question 1 3 (1 point) In the f ollowing figure, the opportunity cost of a unit of wheat in ter ms of cotton is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. 1 f or the U .S. and 5 f or Egypt. b. 20 f or the U .S. and 2 f or Egypt. c. 1 f or the U .S. and 2 f or Egypt. d. 20 f or the U .S. and 1 or Egypt. 0 f Score: 1 / 1 Question 1 4 (1 point) T rade between two countries Student response: Percent V alue Student Response Answer Choices a. makes both countries worse off. b. can benefit one country but not both. 1 00.0% c. enables a country to move beyond (to a point outside) its production possibilities frontier . d. can onl y occur if one country is larger . Score: 1 / 1 Question 1 5 (1 point) Jim, Bill and Bob are washing cars and cutting lawns f Ray's Neighborhood y , or Services, Inc. In one day , Jim can wash f our cars or cut two lawns; Bill y can wash three cars or cut one lawn; Bob can wash one car or cut one lawn. Who has the comparative advantage in washing cars? Student response: Percent V alue Student Response Answer Choices a. Jim 1 00.0% b. Bill y c. Bob d. Bill y and Bob have an eq ual comparative advantage. Score: 1 / 1 Question 1 6 (1 point) John takes 1 0 minutes to iron a shirt and 20 minutes to type a paper . Harry takes 1 0 minutes to iron a shirt and 30 minutes to type a paper . Which of the f ollowing statements is correct? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Harry has a comparative advantage in ironing. b. Harry has a comparative advantage in typing. c. Harry has an absolute advantage in typing. d. Harry has an absolute advantage in ironing. e. Neither can gain from specialization and trade. Score: 1 / 1 Question 1 (1 point) 7 If T aiwanese workers can produce everything more cheapl than American workers, y then Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Americans can still gain by trading with T aiwan. b. Americans can onl y lose if they import from T aiwan. c. T aiwan can onl y lose if it trades with America. d. There are no gains from trade that are possible in this case. Score: 1 / 1 Question 1 8 (1 point) Is it possible f or a country to have an absolute disadvantage and a comparative advantage? Student response: Percent V alue Student Response Answer Choices a. No, these are incompatible on theoretical grounds. b. No, theory prevents it, but some economists claim it could occur . 1 00.0% c. Y es, this situation can occur . d. Y es, in theory , although not in reality . Score: 1 / 1 Question 1 9 (1 point) The f ollowing graphs show the potential production f or coats and books in Utopia and T ransyvania. Both countries have eq ual amounts of resources available f l or production of coats or books. Which country has the comparative advantage in producing coats and books? Student response: Percent V alue Student Response Answer Choices a. Utopia has the comparative advantage in producing both goods. 1 00.0% b. Utopia has the comparative advantage in producing coats; T ransyvania l has the comparative advantage in producing books. c. Utopia has the comparative advantage in producing books; T ransyvania has the l comparative advantage in producing coats. d. Neither country has a comparative advantage with either good because opportunity costs are eq ual. Score: 1 / 1 Question 20 (1 point) T rade between nations means that Student response: Percent V alue Student Response Answer Choices a. one country is richer than the other . b. one country becomes richer while the other becomes poorer . 1 00.0% c. both trading nations show some gains. d. both trading nations will gain eq uall y from the trade. Score: 1 / 1 Question 2 1 (1 point) The f ollowing graphs show the potential production f or coats and books in Utopia and T ransyvania. Both countries have eq ual amounts of resources available f l or production of coats or books. Which country has the absolute advantage in producing coats and books? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Utopia has the absolute advantage in producing both goods. b. Utopia has the absolute advantage in producing coats; T ransyvania has the l absolute advantage in producing books. c. Utopia has the absolute advantage in producing books; T ransyvania has the l absolute advantage in producing coats. d. T ransyvania can produce f l ewer goods with the same resources; theref ore it has the absolute as well as comparative advantage. Score: 1 / 1 Question 22 (1 point) Using graphs to illustrate the concepts, Student response: Percent V alue Student Response Answer Choices a. absolute advantage is shown with diff erences in the slope of the production possibilities frontiers, and comparative advantage is shown with a lower curve. 1 00.0% b. absolute advantage is shown with a higher production possibilities frontier , and comparative advantage is shown with diff erences in the slope of the frontiers. c. absolute advantage in one good req uires that the slope of the production possibilities frontier be steeper f or that good. d. absolute advantage cannot be shown with a graph, but comparative advantage can be shown with the position of the curve. Score: 1 / 1 Question 23 (1 point) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 labor hours to produce one computer The 5 . opportunity cost of one bushel of wheat in France is Student response: Percent V alue Student Response Answer Choices a. 4 computers. b. 25 labor hours. c. 3 computers. 1 00.0% d. 1/3 computer . Score: 1 / 1 Question 2 4 (1 point) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 5 labor hours to produce one computer . The U .S. and France could benefit from trade if the U .S. specializes in _____________ and France specializes in ______________. Student response: Percent V alue Student Response Answer Choices a. computers; computers. b. computers; wheat. 1 00.0% c. wheat ; computers. d. wheat ; wheat. Score: 1 / 1 Question 25 (1 point) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 5 labor hours to produce one computer . If the U .S. and France trade based on their comparative advantages, the U .S. will import ______ and France will import ________. Student response: Percent V alue Student Response Answer Choices a. wheat ; wheat. b. computers; computers. c. wheat ; computers. 1 00.0% d. computers; wheat. Score: 1 / 1 T otal score: 25 / 25 = 1 00.0% V iew Results TEST 1 User ID: skim7 Attempt : 1 / 1 Out of: 1 00 Started: October 20, 200 4 12:4 7pm Finished: October 29, 200 4 8:12am T ime spent 1 : 2 1 hr 4 min., 48 sec. , 2 Student exceeded allotted time of 1 80 min. by 208 hr 4 min., 48 sec.. , 2 Question 1 (2 points) Explaining economic growth is: Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. considered part of macroeconomics. 0.0% b. considered part of microeconomics. 0.0% c. more political than economic. 0.0% d. none of the above. Score: 2 / 2 Question 2 (2 points) Economic theory simplifies relationships to explain how the relationships interact. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 3 (2 points) Economics is: Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the study of how limited resources are allocated to satisfy unlimited wants. 0.0% b. the study of how unlimited resources are allocated to satisfy limited wants. 0.0% c. how to make money in the stock market. 0.0% d. none of the above. Score: 2 / 2 Question 4 (2 points) The ceteris paribus assumption is used in economics because Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. it is too difficult to account f or everything that might have an eff ect on behavior . 0.0% b. it makes it easier to track the thought processes of people, which is necessary to develop good theories. 0.0% c. people are self­interested and rational. 0.0% d. the more complex a model is, the better it is. Score: 2 / 2 Question 5 (2 points) An example of a nor mative macroeconomic q uestion is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. does government spending increase unemployment? 0.0% b. does government spending increase inflation? 0.0% c. do government actions increase growth in the economy? 1 00.0% d. does government spending increase economic well­being? Score: 0 / 2 Question 6 (2 points) An increase in the price of gasoline will reduce the amount of gasoline purchased. This is: Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a nor mative economic statement. 1 00.0% b. a positive economic statement. 0.0% c. neither a nor mative nor a positive statement. 0.0% d. none of the above. Score: 2 / 2 Question 7 (2 points) Economics: Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. assumes individuals are rational and respond to diff erent incentives. 0.0% b. assumes government invol vement in the economy is always beneficial. 0.0% c. assumes individuals reall have no choices other than what society y imposes on them. 0.0% d. assumes irrationality if people are paid enough. Score: 2 / 2 Question 8 (2 points) Scarcity exists because Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. human wants are greater than what can be produced with the limited resources available. 0.0% b. not enough new technology is being used to eliminate scarcity . 0.0% c. the world is too small. 0.0% d. people are too greedy and refuse to share what they have with others. Score: 2 / 2 Question 9 (2 points) The additional opportunity cost of one more hour of sleep in the morning is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. measured in ter ms of the most valuable activity f orgone during that hour of additional sleep. 0.0% b. one less hour of sleep at some other time of the day . 0.0% c. not measurable. 0.0% d. not meaninful in ter ms of economics unless it can be measured in monetary ter ms. Score: 2 / 2 Question 1 0 (2 points) The government plays almost no role in the U .S. economy . Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 1 1 (2 points) The government has a dominant role in a market economy such as the U .S. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 12 (2 points) The nation listed below whose economy comes closest to a centrall y planned economy is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. People's Republic of China. 0.0% b. Japan. 0.0% c. United Kingdom. 0.0% d. United States. Score: 2 / 2 Question 1 3 (2 points) Questions of what to produce, how to produce, and who will get the output must be faced by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. onl y developed economies. 0.0% b. centrall y planned economies. 0.0% c. the economies of underdeveloped countries. 1 00.0% d. all economies. Score: 2 / 2 Question 1 4 (2 points) Economic value is created when Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the benefits of a trade exceed the costs of the trade. 0.0% b. a customer gets a product f or less than the cost of producing it. 0.0% c. a store can sell an inf erior product f or full price. 0.0% d. the costs of a trade are exactl y eq ual to the benefits of the trade. Score: 2 / 2 Question 1 5 (2 points) T o decide how to allocate scarce resources, a laissez­faire economic system relies on Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. central planning. 1 00.0% b. prices. 0.0% c. barter . 0.0% d. a mix of planning and markets. Score: 0 / 2 Question 1 6 (2 points) If a curve has a negative slope, then Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. one variable falls as the other rises. 0.0% b. one variable does not change. 0.0% c. one variable has a smaller value than another . 0.0% d. one variable changes after another variable. Score: 2 / 2 Question 1 (2 points) 7 The slope of a straight line Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. is the rise over the run. 0.0% b. is constant along the whole curve. 0.0% c. will be negative if there is an inverse relationship between the variables. 1 00.0% d. All of the above are true. Score: 0 / 2 Question 1 8 (2 points) A direct relationship between two variables indicates that Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. they are positivel y related. 0.0% b. a change in one will not aff ect the other . 0.0% c. the slope is negative. 0.0% d. an increase in one will cause a decrease in the other . Score: 2 / 2 Question 1 9 (2 points) The origin of a graph is the point at which Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a demand curve starts. 0.0% b. both variables have positive values. 1 00.0% c. both variables have values eq ual to zero. 0.0% d. any two curves on the graph intersect. Score: 2 / 2 Question 20 (2 points) Graphs are valuable because they facilitate inter pretation of data. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 2 1 (2 points) A tangent is: Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. A straight line that shares a single point with another curve 0.0% b. A straight line that bisects a non­linear curve 0.0% c. The slope of the line segment between 2 points of a non­linear curve 0.0% d. A non­linear curve that gets close to, but never touches, the X or Y axis Score: 2 / 2 Question 22 (2 points) The tangent at point A on a curve has a positive slope. Theref ore, Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the curve has a positive slope at all points. 1 00.0% b. the curve has a positive slope at point A . 0.0% c. the curve has a negative slope at all points. 0.0% d. the curve has a negative slope at point A . Score: 2 / 2 Question 23 (2 points) Given the eq uation P = $6.00 ­ $.40Q, where P is the price of the good and Q is the q uantity of the good demanded, how many units will this consumer demand if the price is $3.60? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 1 4 units .4 0.0% b. 3 units 0.0% c. 3.6 units 1 00.0% d. 6 units Score: 2 / 2 Question 2 4 (2 points) If two variables, consumption and income, are directl y related, we can say that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a change in consumption will change income, but not vice versa. 1 00.0% b. if income increases, then consumption increases. 0.0% c. if income increases, then consumption will change, but it is impossible to say in which direction it will change. 0.0% d. if income increases, then consumption will decrease. Score: 2 / 2 Question 25 (2 points) Which statement about slopes is accurate? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. A horizontal line has a slope of 2, and a vertical line has a slope of ­2. 0.0% b. A horizontal line has an infinite slope, and a vertical line has a slope of zero. 1 00.0% c. A horizontal line has a zero slope, and a vertical line has an infinite slope. 0.0% d. The slopes f or horizontal and vertical lines cannot be calculated. Score: 2 / 2 Question 26 (2 points) Whenever a society f orgoes current consumption to invest in capital goods, the Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. less the society can consume next year . 0.0% b. easier it will be f or the society to consume less in the future because people will become accustomed to less. 1 00.0% c. more the society can produce and consume in the future. 0.0% d. less capital the society can produce in the future. Score: 2 / 2 Question 2 7 (2 points) When shifting from point A to point B, the opportunity cost of 1 ,000 additional tractors is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. one tractor . 0.0% b. 7 5 tons of butter . 1 00.0% c. 0.7 5 million tons of butter . 0.0% d. 4.7 5 million tons of butter . Score: 2 / 2 Question 28 (2 points) In the figure below , assume this economy is currentl y operating at point D. What is the opportunity cost of moving to B? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 200 bushels of wheat. 0.0% b. 200 bushels of soybeans. 0.0% c. infinite; B cannot be produced at any cost. 1 00.0% d. zero. Score: 2 / 2 Question 29 (2 points) In the f ollowing figure, a point such as E Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. is not obtainable. 0.0% b. is an efficient use of resources. 1 00.0% c. is an inefficient use of resources. 0.0% d. indicates that the society is a capitalist society . Score: 2 / 2 Question 30 (2 points) A PPF will be bowed outward if Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. there is scarcity . 0.0% b. increased production of one good means less production of the other good. 0.0% c. the suppl y of resources is fixed. 1 00.0% d. resources are not eq uall y well­suited to the production of both goods. Score: 2 / 2 Question 3 1 (2 points) An efficient allocation of resources exists if Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. one group of people can get more of the things they want without someone else having to give up anything. 1 00.0% b. no one can get more of the things he wants without someone else having to give up something. 0.0% c. the economy operates at any point under the production possibilities frontier . 0.0% d. the economy is operating at any point above the production possibilities frontier . Score: 0 / 2 Question 32 (2 points) A point outside a production possibilities curve indicates Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. that resources are not being used efficientl y . 1 00.0% b. an output combination that society cannot attain given its current level of resources and technology . 0.0% c. that resources are being used very efficientl y . 0.0% d. that both goods are characterized by increasing costs. Score: 2 / 2 Question 33 (2 points) Any point inside the production possibilities frontier is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. efficient. 1 00.0% b. inefficient. 0.0% c. unattainable. 0.0% d. irrelevant. Score: 2 / 2 Question 3 4 (2 points) If an employee in a fast­f ood restaurant can produce 1 0 hamburgers per hour or 20 orders of French fries per hour the cost of one bag of French fries is two , hamburgers. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 0 / 2 Question 35 (2 points) The reason that most PPFs are bowed outward (concave) rather than a straight line is that most resources used in production are Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. eq uall y suited f or the production of all goods. 1 00.0% b. better suited f or some goods than others. 0.0% c. used efficientl y in production. 0.0% d. relativel y more expensive at low levels of production. Score: 2 / 2 Question 36 (2 points) The production possibilities frontier represents Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the maximum amount of capital and labor available to society . 0.0% b. combinations of goods and services consumers can aff ord. 1 00.0% c. the maximum combinations of two goods that an economy can produce given its resources and technology . 0.0% d. the maximum rate of growth of capital and labor in a country . Score: 2 / 2 Question 3 7 (2 points) Between points b and c in the above figure, the opportunity cost of another bushel of corn is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 1 yard of cloth. 1 00.0% b. 1 .25 yards of cloth. 1 00.0% c. 0.8yards of cloth. 0.0% d. 2.5 yards of cloth. Score: 2 / 2 Question 38 (2 points) In a far ming economy that produces barley and flax, a new f ertilizer is invented. The f ertilizer works onl y on barley The production possibilities frontier will . Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. shift outward onl y from the barley axis. 0.0% b. shift inward onl y from the barley axis. 0.0% c. shift outward from both axes. 0.0% d. shift inward from both axes. Score: 2 / 2 Question 39 (2 points) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 5 labor hours to produce one computer . If the U .S. and France trade based on their comparative advantages, the U .S. will export ______ and France will export ________. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. wheat ; wheat. 0.0% b. computers; computers. 1 00.0% c. wheat ; computers. 0.0% d. computers; wheat. Score: 2 / 2 Question 40 (2 points) A person has a comparative advantage in an activity whenever she Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. has an absolute advantage in the activity . 1 00.0% b. can perf m the activity at a lower opportunity cost than can another or person. 0.0% c. can do the activity in less time than anyone else. 0.0% d. can do everything better than anyone else. Score: 2 / 2 Question 4 1 (2 points) The ability to produce a particular good using f ewer resources than a second country is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. comparative advantage. 1 00.0% b. absolute advantage. 0.0% c. an unfair advantage. 0.0% d. a means of securing higher ter ms of trade. Score: 0 / 2 Question 42 (2 points) Which good a country specializes in is deter mined by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. unemployment in the country relative to other countries. 0.0% b. inflation in the country relative to other countries. 0.0% c. absolute advantage. 1 00.0% d. comparative advantage. Score: 2 / 2 Question 43 (2 points) Specialization of labor and trade yield greater economic efficiency when applied to interstate trade, Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. but do not yield greater economic efficiency when applied to international trade. 0.0% b. but have no eff ect on efficiency when applied to international trade. 1 00.0% c. and when applied to international trade. 0.0% d. but onl y when specialization is based on absolute advantage. Score: 2 / 2 Question 4 4 (2 points) If one person has an absolute advantage in the production of both goods, then Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. that person must also have the comparative advantage in both goods. 0.0% b. that person cannot benefit from trade. 1 00.0% c. that person will have the comparative advantage in onl y one good. 0.0% d. it is in that person's interest to specialize in the production of both goods. Score: 0 / 2 Question 45 (2 points) The average worker in the United States can produce 20 tons of coal or 1 0 tons of iron per hour . The average worker in Canada can produce 1 0 tons of coal or 1 0 tons of iron per hour . Which conclusion is correct? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. The United States has an absolute advantage in the production of iron. 0.0% b. Canada has an absolute advantage in the production of iron. 0.0% c. Canada has an absolute advantage in the production of coal. 1 00.0% d. The United States has an absolute advantage in the production of coal. Score: 2 / 2 Question 46 (2 points) In Japan the opportunity cost of producing 1 VCR is 1 computer In the United . States the opportunity cost of producing 1 VCR is 2 computers. Japan has a comparative advantage in producing Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. VCRs. 0.0% b. computers. 0.0% c. both goods. 0.0% d. neither good. Score: 2 / 2 Question 4 7 (2 points) Using graphs to illustrate the concepts, Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. absolute advantage is shown with diff erences in the slope of the production possibilities frontiers, and comparative advantage is shown with a lower curve. 1 00.0% b. absolute advantage is shown with a higher production possibilities frontier , and comparative advantage is shown with diff erences in the slope of the frontiers. 0.0% c. absolute advantage in one good req uires that the slope of the production possibilities frontier be steeper f or that good. 0.0% d. absolute advantage cannot be shown with a graph, but comparative advantage can be shown with the position of the curve. Score: 2 / 2 Question 48 (2 points) The person who can perf m a task in the f or ewest hours Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. has an absolute advantage in perf ming the task or . 0.0% b. has a comparative advantage in perf ming the task or . 0.0% c. has both an absolute advantage and a comparative advantage in perf ming the task or . 0.0% d. has an absolute advantage in perf ming the task but a comparative or disadvantage in perf ming the task or . Score: 2 / 2 Question 49 (2 points) The ter m "comparative disadvantage" means one party in a trade Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. has a lower opportunity cost than its trading partner . 1 00.0% b. has a higher opportunity cost than its trading partner . 0.0% c. has an absolute advantage in the goods that it is trading. 0.0% d. has no basis f or trade with a trading partner . Score: 2 / 2 Question 50 (2 points) If there is an agricultural economy in which land can be used either as pasture f or cattle or as crop land f or wheat, the opportunity cost of converting one acre from pasture to wheat production is the Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. profits from the extra wheat production. 1 00.0% b. pounds of beef that are lost. 0.0% c. number of bushels of wheat produced on an acre. 0.0% d. total number of pounds of beef produced. Score: 0 / 2 T otal score: 8 4 / 1 00 = 8 4.0% V iew Results Quiz 2. 1 User ID: skim7 Attempt : 3 / 3 Out of: 25 Started: November 8, 200 4 12:3 1pm Finished: November 8, 200 4 12:36pm T ime spent : 5 min. 6 sec. Question 1 (1 point) The demand curve f or a good Student response: Percent V alue Student Response Answer Choices a. connects points describing how much consumers actuall y bought at diff erent prices during a particular period. b. connects points describing how much consumers actuall y bought at diff erent prices in diff erent periods. 1 00.0% c. connects points describing how much consumers would have been willing and able to buy at diff erent prices during a particular period. d. connects points describing how much consumers would have been willing and able to buy at diff erent prices in diff erent periods. Score: 1 / 1 Question 2 (1 point) In an attempt to f orecast enrollment, a ma jor university hired an economist to give a "head count." One variable which she would probabl emphasize more than any y other in trying to f orecast is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. tuition (the price of attending). b. the employment opportunities that college opens up. c. survey results on public interest in education. d. her instinct about what the public wants. Score: 1 / 1 Question 3 (1 point) The price of labor is the wage rate. What happens to the q uantity of labor demanded if wages increase? Student response: Percent V alue Student Response Answer Choices a. It increases. 1 00.0% b. It decreases. c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 1 / 1 Question 4 (1 point) Demand and q uantity demanded are the same thing. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 5 (1 point) The demand curve depicts inf mation about the q uantities demanded as prices have or changed over several time periods. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 6 (1 point) Which of the f ollowing would cause an upward movement (to the left) along the demand curve f or European autos in the United States? Student response: Percent V alue Student Response Answer Choices a. an increase in the price of American autos b. a decrease in the price of American autos c. an increase in income in the United States 1 00.0% d. an increase in the price of European autos Score: 1 / 1 Question 7 (1 point) The demand curve f or a typical good has Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a negative slope because some consumers switch to other goods as the price of the good rises. b. a negative slope because consumer incomes fall as the price of the good rises. c. a negative slope because the good has less "snob appeal" as its price falls. d. None of the above is correct. Score: 1 / 1 Question 8 (1 point) The law of demand states that Student response: Percent V alue Student Response Answer Choices a. an increase in price will diminish the q uantity demanded onl if income y falls as well. 1 00.0% b. an increase in price will diminish the q uantity demanded if income remains constant. c. an increase in price can lead to an increase in the q uantity demanded onl y if income goes up. d. the eff ect of an increase in price depends on how income changes. Score: 1 / 1 Question 9 (1 point) Assume the demand curve f or cookies is downward sloping. If the price of cookies falls from $1 .50 to $1 .25 per dozen (be careful of ter minology!), Student response: Percent V alue Student Response Answer Choices a. the demand f or cookies will fall. b. the demand f or cookies will rise. 1 00.0% c. a larger q uantity of cookies will be demanded. d. a smaller q uantity of cookies will be demanded. Score: 1 / 1 Question 1 0 (1 point) A decrease in price Student response: Percent V alue Student Response Answer Choices 1 00.0% a. causes a downward movement (to the right) along the same demand curve. b. causes an upward movement (to the left) along the same demand curve. c. changes the demand curve. d. causes a downward movement (to the right) along the same demand curve if income decreases. Score: 1 / 1 Question 1 1 (1 point) A demand schedule shows Student response: Percent V alue Student Response Answer Choices a. the "market potential" f or a product. 1 00.0% b. how much consumers are willing and able to buy at diff erent prices. c. possible combinations of output under diff erent conditions. d. how much producers would like to sell at diff erent prices. Score: 1 / 1 Question 12 (1 point) A demand curve can be thought of as Student response: Percent V alue Student Response Answer Choices a. a graphical display of "market potential." 1 00.0% b. a graphical representation of the inf mation in a demand schedule. or c. showing how much people want to buy . d. a f orecasting tool. Score: 1 / 1 Question 1 3 (1 point) Fir ms often seek to borrow money to expand their capital stock , and the price they pay f or the money is the interest rate. What happens to q uantity of money demanded if the interest rate increases? Student response: Percent V alue Student Response Answer Choices a. It increases. 1 00.0% b. It decreases. c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 1 / 1 Question 1 4 (1 point) If the government has stated that it will buy any amount of good X off ered at $30, thenwhich demand curve below is appropriate? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. b. c. d. Score: 1 / 1 Question 1 5 (1 point) A 1 985 Harvard study showed that the price of cigarettes does not aff ect how much an individual smokes but whether he smokes. If this is correct, which of the below graphs shows the typical individual's demand curve f or cigarettes? (This is a tough one!) Student response: Percent V alue Student Response Answer Choices a. b. 1 00.0% c. d. Score: 1 / 1 Question 1 6 (1 point) If the government has stated that it will pay whatever it must to obtain 1 ,000 units of good X, then which demand curve in the figure below is appropriate? Student response: Percent V alue Student Response Answer Choices a. 1 00.0% b. c. d. Score: 1 / 1 Question 1 (1 point) 7 Which of the f ollowing would cause a decrease in the demand f or Pepsi (i.e., a leftward shift of the Pepsi demand curve)? Student response: Percent V alue Student Response Answer Choices a. An increase in the price of Coke. 1 00.0% b. A decrease in the price of Coke. c. An increase in the price of Pepsi. d. A decrease in the price of Pepsi. Score: 1 / 1 Question 1 8 (1 point) The Wall Street Journal reports that "hard times aid poultry companies as people eat cheaper f owl." In the language of economists, this means Student response: Percent V alue Student Response Answer Choices 1 00.0% a. chicken is an inf erior good. b. chicken is a nor mal good. c. demand f or chicken does not obey the law of demand. d. people's tastes change during recessions. Score: 1 / 1 Question 1 9 (1 point) If VCRs and rental videos are complementary goods, then a decrease in the price of VCRs would increase the Student response: Percent V alue Student Response Answer Choices a. demand f or rental videos. b. q uantity of VCRs demanded. c. q uantity of rental videos demanded. 1 00.0% d. both demand f or rental videos and q uantity of VCRs demanded. Score: 1 / 1 Question 20 (1 point) If price rises, what happens to demand f or a product? Student response: Percent V alue Student Response Answer Choices a. It increases. b. It decreases. c. It does not change. 0.0% d. Uncertain. Economic theory has no answer to this q uestion. Score: 0 / 1 Question 2 1 (1 point) Which of the f ollowing will shift the demand curve f or good X? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a change in the income of buyers of good X b. a change in the price of good X c. a change in the suppl y of good X d. All of the above are correct. Score: 1 / 1 Question 22 (1 point) Market demand curves are f ound by Student response: Percent V alue Student Response Answer Choices a. verticall y summing individual demand curves. 1 00.0% b. horizontall y summing individual demand curves. c. summing individual demand curves in a parallel fashion. d. adding the slopes of individual demand curves. Score: 1 / 1 Question 23 (1 point) In the figure below , an increase in population (which will increase the number of buyers of the good) will change demand from Student response: Percent V alueStudent Response Answer Choices 1 00.0% a. D1 to D2 b. D2 to D1 c. D3 to D2 d. D3 to D1 Score: 1 / 1 Question 2 4 (1 point) Assume that the figure below shows demand f or orange juice. An increase in the price of soda (a substitute f or orange juice) will change demand from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. D1 to D2 b. D2 to D1 c. D3 to D2 d. D3 to D1 Score: 1 / 1 Question 25 (1 point) Assume that the figure below shows demand f new houses, a nor mal good. A or decrease in the income of buyers will change demand from Student response: Percent V alue Student Response Answer Choices a. D1 to D2 1 00.0% b. D2 to D1 c. D2 to D3 d. D1 to D3 Score: 1 / 1 T otal score: 2 4 / 25 = 96.0% V iew Results TEST 2 User ID: skim7 Attempt : 1 / 1 Out of: 1 00 Started: November 1, 200 1 4 2:1 pm Finished: November 1, 200 7 1 4 4:05pm T ime spent : 1 hr , 48 min., 1 4 sec. Student finished 2 hr 1 min., 46 sec. ahead of the 2 , 1 40 min. time limit. Question 1 (2 points) The slope of a demand curve is almost always Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. positive, because when people buy more of a good, the cost of producing it will rise. 0.0% b. positive, because the more money a person has, the more of a particular good will be bought. 0.0% c. negative, because when people buy more of a good, the cost of producing it will fall. 1 00.0% d. negative, because with everything else eq ual, people will buy more of a good when its price is lower . Score: 2 / 2 Question 2 (2 points) A demand curve f or a nor mal good Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. slopes upward and to the right. 0.0% b. is constructed based on the assumption that income is rising. 0.0% c. is constructed based on the assumption that an inverse relationship exists between price and income. 1 00.0% d. shows the inverse relationship between price and q uantity demanded. Score: 2 / 2 Question 3 (2 points) All of the f ollowing will aff ect the position of the demand curve EXCEPT Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. prices of the resources used to produce the product. 0.0% b. income. 0.0% c. consumer tastes and pref erences. 0.0% d. buyers' expectations about future prices. Score: 2 / 2 Question 4 (2 points) If more buyers came into the market f or a good, we would expect to see the market demand curve Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. shift inward. 0.0% b. remain unchanged since none of the deter minants of individual demand changed. 1 00.0% c. shift outward. 0.0% d. reflect a positive relationship between price and q uantity demanded. Score: 2 / 2 Question 5 (2 points) A demand curve can shift due to anything that aff ects consumers' willingness and ability to purchase the good EXCEPT changing price. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 6 (2 points) A demand schedule relates prices of a particular good to q uantities demanded. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 7 (2 points) An increase in demand is shown graphicall y by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a shift of the demand curve to the left. 0.0% b. a movement to the right along the existing demand curve. 1 00.0% c. a shift of the whole demand curve to the right. 0.0% d. a movement up and to the left along the existing demand curve. Score: 2 / 2 Question 8 (2 points) An increase in the price of a good Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. will cause an increase in demand, because the good is now more valuable. 0.0% b. will cause a decrease in demand. 0.0% c. will cause an increase in the q uantity demanded, because the good is now more valuable. 1 00.0% d. will cause a decrease in the q uantity demanded. Score: 0 / 2 Question 9 (2 points) If incomes rise, most consumers will increase the q uantity demanded of an inf erior good. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 1 0 (2 points) Assume that orange juice and grapefruit juice are substitute goods. If orange juice prices double in 1 7 there will be a 99 , Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. rightward shift in the demand f or grapefruit juice. 0.0% b. rightward shift in the suppl y of grapefruit juice. 0.0% c. leftward shift in the suppl y of grapefruit juice. 0.0% d. leftward shift in the demand f or grapefruit juice. Score: 2 / 2 Question 1 1 (2 points) After the price of milk increases, David buys more juice and less cereal. F or David, Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. milk , juice, and cereal are all substitutes. 0.0% b. milk and juice are complements, and milk and cereal are substitutes. 0.0% c. milk , juice, and cereal are all complements. 1 00.0% d. milk and juice are substitutes, and milk and cereal are complements. Score: 2 / 2 Question 12 (2 points) Assume that the figure below shows demand f or cameras. An increase in the price of photographic film (a complement to cameras) changes demand from Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. D1 to D2 1 00.0% b. D2 to D1 0.0% c. D2 to D3 0.0% d. D1 to D3 Score: 2 / 2 Question 1 3 (2 points) An increase in the price of gasoline shifts the demand f or tires to the Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. left, because gasoline and tires are substitutes. 1 00.0% b. left, because gasoline and tires are nor mall y used together . 0.0% c. right, because gasoline and tires are substitutes. 0.0% d. right, because gasoline and tires are nor mall y used together . Score: 2 / 2 Question 1 4 (2 points) Assume the demand curve f or cookies is downward sloping. If the price of cookies falls from $1 .50 to $1 .25 per dozen (be careful of ter minology!), Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the demand f or cookies will fall. 0.0% b. the demand f or cookies will rise. 1 00.0% c. a larger q uantity of cookies will be demanded. 0.0% d. a smaller q uantity of cookies will be demanded. Score: 2 / 2 Question 1 5 (2 points) Which of the f ollowing would cause a decrease in the demand f or Pepsi (i.e., a leftward shift of the Pepsi demand curve)? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. An increase in the price of Coke. 1 00.0% b. A decrease in the price of Coke. 0.0% c. An increase in the price of Pepsi. 0.0% d. A decrease in the price of Pepsi. Score: 2 / 2 Question 1 6 (2 points) T o derive a market demand curve, add the q uantity demanded by each individual in the market at each price and construct a new demand schedule. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 1 (2 points) 7 A change in the price of a particular good will cause all of the f ollowing EXCEPT Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a movement along the same demand curve. 0.0% b. a change in the q uantity demanded. 1 00.0% c. a shift in the demand curve. Score: 2 / 2 Question 1 8 (2 points) The q uantity supplied of a particular good is the amount of the good that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. households are willing to consume at each particular price. 0.0% b. fir ms will actuall y end up buying at a particular price during a given time period. 1 00.0% c. fir ms are willing to sell at each price during a particular time period. 0.0% d. households want fir ms to sell at each price during a particular time period. Score: 2 / 2 Question 1 9 (2 points) An increase in the price of coff ee will Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. decrease the demand f or coff ee. 0.0% b. increase the demand f or coff ee. 1 00.0% c. increase the q uantity supplied of coff ee. 0.0% d. increase the suppl y of coff ee. Score: 2 / 2 Question 20 (2 points) All of the f ollowing will cause the suppl curve of good A to shift rightward y EXCEPT Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a reduction in the prices of inputs used to produce good A . 0.0% b. an increase in the number of fir ms in the industry producing good A . 0.0% c. an improvement in the technology used to produce good A . 1 00.0% d. an increase in the market price of good A . Score: 2 / 2 Question 2 1 (2 points) Which of the f ollowing will NOT aff ect the market suppl y curve f or a good? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. There is a new technology in producing the good. 1 00.0% b. The price of the good increases. 0.0% c. The number of sellers in the market increases. 0.0% d. There is an increase in the prices of the inputs used in production. Score: 2 / 2 Question 22 (2 points) Which of the f ollowing will shift the suppl y curve to the right? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. input prices rise 0.0% b. a new excise tax 1 00.0% c. prices are expected to be higher in the future 1 00.0% d. prices are expected to be lower in the future Score: 2 / 2 Question 23 (2 points) The suppl y of a good can be changed by : Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Costs of inputs. 0.0% b. Number of fir ms in the industry . 0.0% c. T echnology . 1 00.0% d. All of the above. Score: 2 / 2 Question 2 4 (2 points) All of the f ollowing will decrease the suppl y of airline flights EXCEPT Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. A rise in the price of jet fuel (an input). 0.0% b. A reduction in the number of airline companies off ering service. 1 00.0% c. A technological change that makes air planes saf and more fuel­ er efficient. 0.0% d. An increase in the salaries of pilots (an input). Score: 2 / 2 Question 25 (2 points) A decrease in the market price of a product, ceteris paribus, results in Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. a movement down (to the left) along a given suppl y curve, decreasing q uantity supplied. 0.0% b. a movement up (to the right) along a given suppl y curve, increasing q uantity supplied. 0.0% c. an inward shift of the suppl y curve. 0.0% d. an outward shift of the suppl y curve. Score: 2 / 2 Question 26 (2 points) Assume that the figure below shows the suppl y of soda. An increase in the price of syrup used in the production of soda will shift suppl y from Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. S1 to S2 1 00.0% b. S2 to S1 0.0% c. S2 to S3 0.0% d. S1 to S3 Score: 2 / 2 Question 2 7 (2 points) If a pretzel fir m expects the price of pretzels to rise next week , it will Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. sell f ewer pretzels this week and save the suppl or when the price y f increases. 0.0% b. sell more pretzels this week . 0.0% c. sell no pretzels next week . 0.0% d. do nothing. Score: 2 / 2 Question 28 (2 points) A suppl curve is a collection of points on a graph illustrating th y erelationshipo between the q uantity supplied f or a particular product and Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the q uantity demanded. 1 00.0% b. the product's price. 0.0% c. the price of the product's inputs. 0.0% d. the fir m's expectations about future prices. Score: 2 / 2 Question 29 (2 points) Eq uilibrium in a market occurs when Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the market price leads to a decrease in q uantity demanded. 1 00.0% b. q uantity supplied and q uantity demanded are eq ual at the market price. 0.0% c. demand and suppl y indicate a small sur plus of a good. 0.0% d. price is at its minimum. Score: 2 / 2 Question 30 (2 points) An increase in demand will have what eff ect on eq uilibrium price and q uantity? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Price will increase, q uantity will decrease. 0.0% b. Price will decrease, q uantity will increase. 1 00.0% c. Both price and q uantity will increase. 0.0% d. Both price and q uantity will decrease. Score: 2 / 2 Question 3 1 (2 points) Other things remaining eq ual, if the demand f or beef increases, Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. The eq uilibrium price and q uantity of beef will rise. 0.0% b. The eq uilibrium price and q uantity of beef will fall. 0.0% c. The eq uilibrium price of beef will fall and the eq uilibrium q uantity will rise. 0.0% d. The eq uilibrium price of beef will rise and the eq uilibrium q uantity will fall. Score: 2 / 2 Question 32 (2 points) If the price of a good decreases, which of the f ollowing will occur? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. The demand will increase. 1 00.0% b. The q uantity demanded will increase. 0.0% c. The suppl y will decrease. 0.0% d. The q uantity supplied will increase. Score: 2 / 2 Question 33 (2 points) Which of the f ollowing will shift the demand curve f or milk to the right? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. A decrease in the price of Nestle's Quick chocolate mix (a complement. 0.0% b. A decrease in the price of orange juice (a substitute). 0.0% c. A decrease in the price of milk . 0.0% d. A decrease in the price of cattle f eed (an input). Score: 2 / 2 Question 3 4 (2 points) The Red Jacket Mountain V iew Inn in New Hampshire charges $99 per room in the winter ski season and $94 during the summer months. The number of rooms and operating costs are constant year 'round. These prices indicate Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a rightward shift in the demand curve in the summer . 1 00.0% b. a rightward shift in the demand curve in the winter . 0.0% c. a leftward shift in the suppl y curve in the summer . 0.0% d. a leftward shift in the demand curve in the winter . Score: 0 / 2 Question 35 (2 points) This is a hard test, huh. (I think suppl y and demand, particularl y the specific ter minology , is the toughest thing we do all semester .) Theref ore, just pick the answer below that you think I'm looking f or! (Hint : Put option 1 . And if you miss it, I'll never let you f orget it!) Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Economics is a wonderful subject that everyone finds interesting. 0.0% b. Illinois highways are always well maintained. In fact, they're among the best in the country! 0.0% c. Spring break should be cancelled because students miss being in the classroom. Score: 2 / 2 Question 36 (2 points) Price per Quantity Demanded Quantity Supplied Constant­ of Constant­Quality of Constant­Quality Quality Unit Units per Y ear Units per Y ear ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ $1 .00 1 ,000 200 2.00 800 400 3.00 600 600 4.00 400 800 5.00 200 1 ,000 According the table, at a price of $2 per unit, which of the f ollowing would exist? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a shortage (excess demand) of 800 units 0.0% b. a sur plus (excess suppl y) of 800 units 0.0% c. a shortage (excess demand) of 200 units 1 00.0% d. a shortage (excess demand) of 400 units Score: 2 / 2 Question 3 7 (2 points) A sur plus will tend to occur at which price in the f ollowing figure? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. P1 0.0% b. P2 0.0% c. P3 0.0% d. None of the above. Score: 2 / 2 Question 38 (2 points) If there are empty seats at the university basketball game when the price per ticket is P*, then this situation can best be represented by which graph below? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 1 00.0% b. 0.0% c. 0.0% d. Score: 2 / 2 Question 39 (2 points) The demand and suppl curves f video rentals are given below All of the y or . f ollowing are true EXCEPT : Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. At P = $5, q uantity supplied exceeds q uantity demanded. 0.0% b. At P = $4, there is no excess suppl y nor excess demand. 0.0% c. The eq uilibrium price is $4 and the eq uilibrium q uantity is 8. 1 00.0% d. At P = $5, q uantity demanded exceeds q uantity supplied. Score: 2 / 2 Question 40 (2 points) In free markets, the result of a shortage is to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. reduce demand f or the good. 0.0% b. increase demand f or the good. 1 00.0% c. increase the price. 0.0% d. decrease the price. Score: 2 / 2 Question 4 1 (2 points) In January 2,500 q uarts of ice cream are sold in Boston at $2 a q uart. In , F ebruary , 3,000 q uarts are sold at $2.50 a q uart. This change in q uantity sold and price may have been caused by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a reduction in wages in the Boston area. 0.0% b. the introduction of labor ­saving automated ice cream­packing machinery . 1 00.0% c. the release of a medical study showing that ice cream consumption improves mental health. 0.0% d. the decision by Boston ice cream sellers to eliminate discount coupons. Score: 2 / 2 Question 42 (2 points) When there is excess demand f or sugar in the market, the bidding mechanism will Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. push down the price of sugar . 0.0% b. result in no change in the reservation prices of consumers. 0.0% c. have no eff ect on the price of sugar . 1 00.0% d. push up the price of sugar . Score: 2 / 2 Question 43 (2 points) An increase in the demand f or chocolate bars results in Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. a price increase and a q uantity increase. 0.0% b. a price decrease and a q uantity decrease. 0.0% c. a price increase and a q uantity decrease. 0.0% d. a price decrease and a q uantity increase. Score: 2 / 2 Question 4 4 (2 points) Examine the graph. If the government imposes a rent control on this market and sets the maximum apartment rental at $1 000 per month, the market will Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. have a shortage of 400 apartments. 0.0% b. have a sur plus of 400 apartments. 0.0% c. a shortage of 200 apartments. 1 00.0% d. be in eq uilibrium. Score: 2 / 2 Question 45 (2 points) An eff ective, well­intentioned minimum wage law can be expected to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. clear the market f or unskilled workers. 0.0% b. increase employment f or those covered under the law . 0.0% c. lower costs of production f or fir ms who pay workers the minimum wage. 1 00.0% d. reduce the hours worked f or some unskilled workers. Score: 0 / 2 Question 46 (2 points) If rent controls f or apartments were established below the market rental rates, we would expect Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. a shortage of apartments to develop. 0.0% b. a sur plus of apartments to develop. 0.0% c. eq uilibrium rents to fall below the rates set by rent control. 0.0% d. a building boom in apartments. Score: 2 / 2 Question 4 7 (2 points) If some transactions are blocked in a rent­controlled apartment market, potential buyers may try to rent the scarce apartments Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. by attempting to get more suppliers into the market. 1 00.0% b. by bribing landlords. 0.0% c. by building their own apartments. 0.0% d. by getting the landlords to raise the rents. Score: 2 / 2 Question 48 (2 points) If the government decides to increase the minimum wage rate paid to unskilled workers, which of the f ollowing would most likel y occur? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Unemployment among unskilled workers would decrease. 1 00.0% b. Unemployment among unskilled workers would increase. 0.0% c. There would be a shortage of unskilled labor . 0.0% d. Workers and their employers would ignore the minimum wage. Score: 2 / 2 Question 49 (2 points) The tax wedge can be identified as Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the consumer's demand price and the seller's price. 0.0% b. the diff erence between the eq uilibrium price and the costs of producer inputs. 0.0% c. the diff erence between total sur plus and consumer sur plus. 0.0% d. graphicall y the area beneath the demand curve and above the eq uilibrium price. Score: 0 / 2 Question 50 (2 points) If an excise tax is imposed on buyers, the market demand curve will shift inward. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 /2 T otal score: 92 / 1 00 = 92.0% V iew Results Quiz 3.5 User ID: skim7 Attempt : 1 / 3 Out of: 20 Started: November 1 200 7 , 4 12:5 4pm Finished: November 23, 200 4 6:09pm T ime spent 49 : 1 hr 4 min., 28 sec. , 1 Question 1 (1 point) The unemployment rate is defined as Student response: Percent V alue Student Response Answer Choices a. the reciprocal of the labor f orce participation rate. b. the raw number of workers who want a job but do not have one. c. the number of unemployed workers divided by the total adult population. 1 00.0% d. the percentage of the labor f orce that is not employed. Score: 1 / 1 Question 2 (1 point) If the total population in the U .S. is 25 million, the adult population is 2 5 7 1 million, the number employed is 1 40 million, and the number of unemployed is 1 0 million, then the labor f orce participation rate is ________. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. 69.7% b. 5 4.5% c. 65. 1% d. 50.9% Score: 1 / 1 Question 3 (1 point) Critics argue that the Bureau of Labor Statistics' measurement of the unemployment rate understates the actual amount of unemployment because it Student response: Percent V alue Student Response Answer Choices a. does not include children under 1 8. 1 00.0% b. does not factor in part­time employees who would rather have full­time employment. c. unfairl y includes employees who may have been laid off onl y days prior to the survey . d. calculates the rate in a way that exaggerates the eff ect of discouraged workers. Score: 1 / 1 Question 4 (1 point) Which of the f ollowing cases is an example of structural unemployment? Student response: Percent V alue Student Response Answer Choices a. An accountant q uits her job to become an investment banker . b. An auto worker is fired f or poor job perf mance. or 1 00.0% c. A wheat far mer whose income has plummeted because of a new trade , agreement, q uits far ming and starts looking f or a new job. d. A consultant is laid off becuase poor economic conditions have depressed the market f or consultants. Score: 1 / 1 Question 5 (1 point) The government is most likel to intervene when ________ unemployment rises y shar pl y . Student response: Percent V alue Student Response Answer Choices a. structural b. frictional c. seasonal 1 00.0% d. cyclical Score: 1 / 1 Question 6 (1 point) The lowest rate of unemployment that does not create inflationary pressure is called the Student response: Percent V alue Student Response Answer Choices a. NERU: Non­Expansionary Rate of Unemployment. b. MUR: Minimal Unemployment Rate. 1 00.0% c. NAIRU: Non­Accelerating Inflation Rate of Unemployment. d. NRU: Natural Rate of Unemployment Score: 1 / 1 Question 7 (1 point) The natural rate of unemployment is the sum of __________ unemployment and ___________ unemployment. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. frictional; structural b. cyclical; structural c. frictional; cyclical d. seasonal; cyclical Score: 1 / 1 Question 8 (1 point) Which of the f ollowing factors best supports the relationship illustrated by the Phillips curve? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. When unemployment falls, competition f or workers causes wages to rise, and the higher wages are passed along to consumers in the f m of higher prices. or b. When the economy stays at the NAIRU inflationary pressures are minimal, , leading to a stable inflation rate. c. When unemployment rises, the overall economy can contract, which in turn can lead to a rising inflation rate. d. Lower unemployment leads to increased total income, which increass both consumer spending and GDP . Score: 1 / 1 Question 9 (1 point) Welfare ref m in the late 1 or 990s req uired that recipients seek jobs. Most states implemented training programs f or the individuals who entered the labor f orce off of the welfare roles. This policy is useful f combating _____________ or unemployment. Student response: Percent V alue Student Response Answer Choices a. frictional 1 00.0% b. structural c. cyclical d. all three types of Score: 1 / 1 Question 1 0 (1 point) When there is full employment (or when the economy is at the natural rate of unemployment), Student response: Percent V alue Student Response Answer Choices a. unemployment is zero. b. frictional unemployment still exists, but there is no structural or cyclical unemployment. 1 00.0% c. unemployment is still positive. d. inflation is zero. Score: 1 / 1 Question 1 1 (1 point) When the unemployment rate is above the natural rate of unemployment, the government response is likel y to be to Student response: Percent V alue Student Response Answer Choices a. increase job training programs to retrain unemployed workers. 1 00.0% b. implement policies, like tax cuts, to stimulate the economy . c. increase job placement activities. d. any of the above. Score: 1 / 1 Question 12 (1 point) In 1 993 the adult population in the United States was about 1 95 million people. Of these, approximatel y 12 1 million were employed and 9 million were unemployed. Thus, the labor f orce was ______ million people and the unemployment rate was about ______ percent. Student response: Percent V alue Student Response Answer Choices a. 1 95, 4.6 b. 12, 74 1. 1 00.0% c. 1 30, 6.9 d. 20 4, 4.4 Score: 1 / 1 Question 1 3 (1 point) Which of the f ollowing does NOT cause unemployment to increase during a recession? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. The labor f orce shrinks. b. Fir ms hire f ewer workers. c. The duration of unemployment increases. Score: 1 / 1 Question 1 4 (1 point) Which government agency is responsible f or measuring unemployment? Student response: Percent V alue Student Response Answer Choices a. The Bureau of the Census. 1 00.0% b. The Bureau of Labor Statistics. c. The Council of Economic Advisors. d. all of the above. Score: 1 / 1 Question 1 5 (1 point) When output _________, unemployment is expected to ________. Student response: Percent V alue Student Response Answer Choices a. rises; rise. 1 00.0% b. rises; fall. c. falls; remain constant. d. remains constant ; fall. Score: 1 / 1 Question 1 6 (1 point) The total labor f orce is comprised of Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the unemployed and the employed. b. onl y the employed. c. all individuals age 1 6 or over . d. onl y full­time employed individuals between the ages of 1 8 and 55. Score: 1 / 1 Question 1 (1 point) 7 As the baby boom generation entered the labor f orce, the natural rate of unemployment increased, probabl y because Student response: Percent V alue Student Response Answer Choices a. the labor f orce was larger . 1 00.0% b. frictional unemployment increased. c. structural unemployment increased. d. cyclical unemployment increased. Score: 1 / 1 Question 1 8 (1 point) If we compare the unemployment rates across age, race and gender , we find that Student response: Percent V alue Student Response Answer Choices a. f emales have higher unemployment rates than males. b. the rate of white unemployment is lower than that f or blacks. c. adult workers have lower unemployment rates than teenagers. 1 00.0% d. all of the above. Score: 1 / 1 Question 1 9 (1 point) Newer automobiles use many computerized components. "Old sty le" auto mechanics who lose their jobs because they do not know how to fix the computerized components are an example of Student response: Percent V alue Student Response Answer Choices a. frictional unemployment. 1 00.0% b. structural unemployment. c. cyclical unemployment. d. nor mal unemployment. Score: 1 / 1 Question 20 (1 point) Which of the f ollowing people should be included in the labor f orce? Student response: Percent V alue Student Response Answer Choices a. someone who doesn't have a job and isn't looking f or one 1 00.0% b. someone who is unemployed c. someone who is 1 5 years old d. none of the above Score: 1 / 1 T otal score: 20 / 20 = 1 00.0% V iew Results Quiz 3.7 User ID: skim7 Attempt : 2 / 3 Out of: 1 5 Started: December 7 200 , 4 6:1 9am Finished: December 7 200 , 4 6:20am T ime spent : 1 min. 3 1 sec. Question 1 (1 point) A rise in the minimum wage will tend to _________ the q uantity demanded of labor and __________ the q uantity supplied of labor . Student response: Percent V alue Student Response Answer Choices 1 00.0% a. decrease; increase b. increase; decrease c. decrease; decrease d. increase; increase Score: 1 / 1 Question 2 (1 point) Which of the f ollowing statements is NOT a valid argument that critics might use against the minimum wage? Student response: Percent V alue Student Response Answer Choices a. A minimum wage will result in increased unemployment. b. Small business owners will be hurt by the additional labor cost imposed by the minimum wage. c. Unskilled workers will end up suff ering more than skilled workers if a minimum wage is enacted. 1 00.0% d. Because the minimum wage prevents businesses from substituting capital f or labor , total output will fall. Score: 1 / 1 Question 3 (1 point) According to Steven T omlinson, which group of people is most likel y to lose jobs when a minimum wage law is passed? Student response: Percent V alue Student Response Answer Choices a. poor minorities b. upper middle­class whites who own businesses 1 00.0% c. middle­class teenagers d. primaril y union workers Score: 1 / 1 Question 4 (1 point) Which of the f ollowing statements about unions is NOT true? Student response: Percent V alue Student Response Answer Choices a. Unions have a right to f m by law or . b. The National Labor Relations board oversees the activities of unions. 1 00.0% c. Unions have f ought successfull y in many states f or right­to­work laws. d. Unions typicall y demand higher wages and better working conditions f or their members Score: 1 / 1 Question 5 (1 point) Negotiations between labor union representatives and the management of a fir m are called Student response: Percent V alue Student Response Answer Choices a. strikes. 1 00.0% b. collective bargaining. c. legall y binding arbitration. d. f eather bedding. Score: 1 / 1 Question 6 (1 point) Right­to­work laws Student response: Percent V alue Student Response Answer Choices a. shift power away from fir ms by per mitting the f mation of unions. or b. per mit unions to bargain f or no­loss negotiations, i.e., contracts in which the fir ms agree not to fire any union members without cause. c. give employers the right to disband labor unions. 1 00.0% d. make it illegal f an employer to req uire union membership as a or condition of employment. Score: 1 / 1 Question 7 (1 point) Imagine that a fir m employs 1 00 people, all union members, at a salary of $1 0 per hour . If the union bargains the wage up to $12 per hour and f orces the fir m to keep all 1 00 employees, how would we depict this even in a suppl y­and­demand graph? Student response: Percent V alue Student Response Answer Choices a. Shift the labor suppl y curve outward to reflect the higher wage. 1 00.0% b. Shif the fir m's demand curve f or labor outward. c. Move upward along the same demand curve f labor to a new eq uilibrium or point. d. The fir m's demand curve f labor will shift inward to reflect its or disincentive to hire workers at the higher wage. Score: 1 / 1 Question 8 (1 point) In general, a fir m that pays the efficiency wage will demand __________ workers. Student response: Percent V alue Student Response Answer Choices a. more, better ualified ­q 1 00.0% b. f ewer , better ualified ­q c. more, lesser ualified ­q d. f ewer , lesser ualified ­q Score: 1 / 1 Question 9 (1 point) Margaret owns a small accounting fir m, and she needs to hire some additional help. The market wage f or accountants is $20 per hour . According to the efficiency wage theory , Margaret should Student response: Percent V alue Student Response Answer Choices a. pay new accountants $20 per hour in order to maximize economic efficiency . b. pay less than $20 per hour to her new accountants, so that she can avoid a situation of adverse selection. 1 00.0% c. pay more than $20 per hour in order to attract more highl y­skilled accountants. d. hire accountants to the point where marginal social benefit eq uals marginal social cost. Score: 1 / 1 Question 1 0 (1 point) A factory employs a team of 1 0 workers. Each of the 1 0 workers knows how much she can produce, but the factory has no way to measure the output of any individual worker , onl y the team as a whole. This is a situation invol ving Student response: Percent V alue Student Response Answer Choices a. adverse selection. 1 00.0% b. assymetric inf mation. or c. moral hazard. d. non­price selection. Score: 1 / 1 Question 1 1 (1 point) Economists would expect that unemployment insurance would increase the unemployment rate. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 12 (1 point) Mike buys homeowner's insurance, which protects him from the financial risk of having his possessions stolen. If, as a result of having this insurance, Mike becomes less diligent about locking doors and closing windows, economists would say this is a situation invol ving Student response: Percent V alue Student Response Answer Choices a. adverse selection. b. counter ­insurance behavior . c. asymmetric inf mation. or 1 00.0% d. moral hazard. Score: 1 / 1 Question 1 3 (1 point) If unemployment insurance were restricted to two weeks of benefits, workers who lost their jobs due to __________ unemployment would be liekl y to suff er the most. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. structural b. frictional c. voluntary d. contractionary Score: 1 / 1 Question 1 4 (1 point) According to the figure, the market clearing wage rate is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. We. b. Wm. c. We ­ Wm. d. Wm + We. Score: 1 / 1 Question 1 5 (1 point) According to the figure, if the government imposes a minimum wage eq ual to Wm, the eff ect will be Student response: Percent V alue Student Response Answer Choices 1 00.0% a. unemployment shown by the line segment AC. b. an decrease in unemployment Qe to Qd. c. a decrease in labor supplied, from C to E. d. an increase in labor supplied, from A to E. Score: 1 / 1 T otal score: 1 5 / 1 5 = 1 00.0% V iew Results Quiz 3.8 User ID: skim7 Attempt : 1 / 3 Out of: 1 5 Started: November 23, 200 4 6:1 0pm Finished: November 23, 200 4 6:12pm T ime spent : 2 min. 2 4 sec. Question 1 (1 point) The United States experienced a period of stagflation during the 1 70s that was 9 attributable to Student response: Percent V alue Student Response Answer Choices a. post­Watergate malaise. b. rising deficits due to the V ietnam War . 1 00.0% c. shar p increases in oil prices. d. the 1 7 T 9 3 reasury Department decision to print a substantial amount of additional money . Score: 1 / 1 Question 2 (1 point) People are most likel y to revert to barter in periods of Student response: Percent V alue Student Response Answer Choices a. stagflation. b. deflation. 1 00.0% c. hyperinflation. d. recession. Score: 1 / 1 Question 3 (1 point) In the 1 70s, the U 9 .S. experienced a period of inflation due to sudden increases in oil prices. This is an example of Student response: Percent V alue Student Response Answer Choices a. demand­pull inflation. b. the wage­price spiral. c. price destruction. 1 00.0% d. cost­push inflation. Score: 1 / 1 Question 4 (1 point) Which of the f ollowing is an accurate explanation of the wage­price spiral? Student response: Percent V alue Student Response Answer Choices a. When labor costs rise, it causes a self­per petuating f m of cost­push or inflation. 1 00.0% b. Higher prices cause workers to demand higher wages. The higher wages raise production costs, which must be passed along to the consumer in the f m of or further price increases. c. When one fir m pays the efficiency wage, it raises the opportunity cost f or all other workers in the industry , necessitating raises. d. Workers in periods of hyperinflation demand to be paid in the f m of goods, or rather than cash, which further devalues the currency . Score: 1 / 1 Question 5 (1 point) Increased production costs are associated with Student response: Percent V alue Student Response Answer Choices a. demand­pull inflation onl y . b. cost­push inflation onl y . c. neither demand­pull inflation nor cost­push inflation. 1 00.0% d. both demand­pull inflation and cost­push inflation. Score: 1 / 1 Question 6 (1 point) Which of the f ollowing factors would be most likel y to deter mine whether consumer spending increases or decreases during a period of inflation? Student response: Percent V alue Student Response Answer Choices a. the unemployment rate 1 00.0% b. consumers' expectations of the future rate of inflation c. the rate of inflation's impact on consumers' purchasing power d. the source of the inflation (cost­push or demand­pull) Score: 1 / 1 Question 7 (1 point) Which of the f ollowing f ms of payment would be included in the calculation of or the money suppl y? Student response: Percent V alue Student Response Answer Choices a. credit cards 1 00.0% b. checks c. durable goods d. stocks and bonds Score: 1 / 1 Question 8 (1 point) Imagine that the money suppl y's velocity is 8. Which of the f ollowing is an accurate statment? Student response: Percent V alue Student Response Answer Choices a. Any given dollar could not have been passed around more than 8 times during the year . b. One­eighth of the money suppl y changed hands during the year . c. Prices could not have risen by more than 800% during the year . 1 00.0% d. Currency changed hands an average of 8 times during the year . Score: 1 / 1 Question 9 (1 point) Assume that the velocity of the money suppl y is held constant. In the classical view of money , which of the f ollowing statements is true? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Changes in the money suppl y aff ect onl y prices. b. Changing the money suppl y influences both the price level and the q uantity of output. c. The money suppl y must remain fixed. d. A change in the price level must be matched with a reciprocal change in the money suppl y . Score: 1 / 1 Question 1 0 (1 point) Imagine that the money suppl doubles in an economy that produces onl vacuum y y cleaners, and assume that the velocity of the money suppl y is fixed. Bef ore the money suppl was expanded, the level of output was 20 vacuum cleaners and the y price was $1 00 per vacuum. According to the classical view of money , what will be the level of output and price after the money suppl y doubles? Student response: Percent V alue Student Response Answer Choices a. 40 vacuum cleaners; $1 00 b. 40 vacuum cleaners; $200 1 00.0% c. 20 vacuum cleaners; $200 d. 20 vacuum cleaners; $50 Score: 1 / 1 Question 1 1 (1 point) In a period of inflation, since paychecks inflate at the same rate as prices, economists would not expect a negative impact on the consumer . Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 12 (1 point) Inflation tends to redistribute wealth from Student response: Percent V alue Student Response Answer Choices a. borrowers to lenders. 1 00.0% b. lenders to borrowers. c. the government to consumers. d. consumers to the government. Score: 1 / 1 Question 1 3 (1 point) Which of the f ollowing is NOT a cost that can be attributed to inflation? Student response: Percent V alue Student Response Answer Choices a. higher interest rates b. confusion (and resulting inefficiency) about the relative value of investments 1 00.0% c. increased government debts d. wasted time because of consumers' decisions to hold less cash Score: 1 / 1 Question 1 4 (1 point) Suppose the GDP deflator rose from 1 .00 to 1 .06 from 1 995 to 2000. Which of the f ollowing statements is true? Student response: Percent V alue Student Response Answer Choices a. Prices decreased 6% in 5 years. 1 00.0% b. Purchasing power decreased 6% in 5 years. c. Prices increased 60% in 5 years. d. Purchasing power decreased 60% in 5 years. Score: 1 / 1 Question 1 5 (1 point) Suppose V al could earn 5.25% interest on her savings account, while inflation grew steadil y at 3%. She is most likel y to Student response: Percent V alue Student Response Answer Choices 1 00.0% a. put her money in the bank . b. spend her money q uickl y . c. withdraw her money from the bank . Score: 1 / 1 T otal score: 1 5 / 1 5 = 1 00.0% V iew Results Quiz 4. 1 User ID: skim7 Attempt : 1 / 3 Out of: 25 Started: November 23, 200 4 9:05pm Finished: November 23, 200 4 9:0 7pm T ime spent : 1 min. 2 4 sec. Question 1 (1 point) Which of the f ollowing is not a f m of money? or Student response: Percent V alue Student Response Answer Choices a. commodities b. travelers checks 1 00.0% c. credit cards d. checking accounts Score: 1 / 1 Question 2 (1 point) Which of the f ollowing is not a use of money? Student response: Percent V alue Student Response Answer Choices a. store of value 1 00.0% b. measure of inflation c. unit of account d. medium of exchange Score: 1 / 1 Question 3 (1 point) When a consumer uses a $1 0 bill to pay f or $1 0 worth of groceries, the $1 0 bill is serving which of the functions of money? Student response: Percent V alue Student Response Answer Choices a. medium of exchange b. unit of account c. store of value 1 00.0% d. all of the above Score: 1 / 1 Question 4 (1 point) Fiat money is used f or all of the f ollowing pur poses except Student response: Percent V alue Student Response Answer Choices a. as a medium of exchange. b. as a store of value. 1 00.0% c. consumption f or its intrinsic value. d. as a unit of account. Score: 1 / 1 Question 5 (1 point) The most narrowl y defined measure of money is Student response: Percent V alue Student Response Answer Choices a. checking accounts. b. M3. 1 00.0% c. items used as a medium of exchange. d. fiat money . Score: 1 / 1 Question 6 (1 point) Checking accounts are part of Student response: Percent V alue Student Response Answer Choices a. M1 . b. M2. c. M3. 1 00.0% d. all of the above. Score: 1 / 1 Question 7 (1 point) Increases in the price level will cause the money demand curve to shift _____, and increases in income will cause it to shift _____. Student response: Percent V alue Student Response Answer Choices a. in, in b. in, out c. out, in 1 00.0% d. out, out Score: 1 / 1 Question 8 (1 point) The opportunity cost(s) of money include Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the income earned if the money had been used to purchase a financial asset that earns interest. b. the goods that could have been bought. c. the eq uivalent value in gold. d. all of the above. Score: 1 / 1 Question 9 (1 point) The money demand curve assumes which of the f ollowing is NOT constant? Student response: Percent V alue Student Response Answer Choices a. income b. prices 1 00.0% c. interest rate d. none of the above; they are all assumed constant. Score: 1 / 1 Question 1 0 (1 point) The money suppl y curve Student response: Percent V alue Student Response Answer Choices 1 00.0% a. is vertical because the F ed controls the money suppl y . b. is horizontal because the price of money is always the interest rate. c. slopes upward because suppl y curves always slope upward, no matter what the commodity . d. slopes downward because people put less money in interest­bearing accounts at lower interest rates. Score: 1 / 1 Question 1 1 (1 point) Suppose the money demand curve shifts to the left. This could have been caused by Student response: Percent V alue Student Response Answer Choices a. an increase in the interest rate. b. a decrease in the interest rate. c. an increase in the price level. 1 00.0% d. a decrease in the price level. Score: 1 / 1 Question 12 (1 point) If the interest rate is below its eq uilibrium value, Student response: Percent V alue Student Response Answer Choices a. people buy bonds to increase the interest rate. 1 00.0% b. issuers of bonds off er higher interest rates to induce people to hold bonds instead of money . c. both a and b. d. neither a nor b. Score: 1 / 1 Question 1 3 (1 point) T wo individuals hold cash. The first holds $500, while the second holds $1 000. If the interest rate is 1 0%, the opportunity cost of holding money is Student response: Percent V alue Student Response Answer Choices a. $50 f or the first person and $1 00 f or the second. b. 1 0 percent f or each. 1 00.0% c. both a and b. d. neither a nor b. Score: 1 / 1 Question 1 4 (1 point) Suppose there is an increase in income. Then we should expect Student response: Percent V alue Student Response Answer Choices a. the interest rate to fall as people want to spend more money . 1 00.0% b. the interest rate to rise as the demand f or money shifts to the right. c. the money suppl y curve to shift to the right as people spend more money . d. none of the above. Score: 1 / 1 Question 1 5 (1 point) Suppose the economy is in eq uilibrium. If the F ed decreases the money suppl y , the eq uilibrium interest rate will Student response: Percent V alue Student Response Answer Choices 1 00.0% a. increase. b. decrease. c. stay the same. Score: 1 / 1 Question 1 6 (1 point) Which of the f ollowing will cause the money demand curve to shift to the left? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. income decreases b. interest rates rise c. prices rise d. the F ed sells bonds Score: 1 / 1 Question 1 (1 point) 7 Assuming the money market is in eq uilibrium, a decrease in the price level will cause Student response: Percent V alue Student Response Answer Choices a. money suppl y to shift left. b. money suppl y to shift right. c. money demand to shift right. 1 00.0% d. the eq uilibrium interest rate to fall. Score: 1 / 1 Question 1 8 (1 point) The money demand curve is Student response: Percent V alue Student Response Answer Choices a. downward sloping because as the real interest rate rises, people wish to hold more cash. 1 00.0% b. downward sloping because as the real interest rate rises, people wish to hold less cash. c. a vertical line. Score: 1 / 1 Question 1 9 (1 point) Suppose the interest rate is at R1 in the graph below . Then Student response: Percent V alue Student Response Answer Choices a. the money suppl y curve will shift to the left until the money market is in eq uilibrium. b. the money demand curve will shift to the right until the money market is in eq uilibrium. 1 00.0% c. the interest rate will fall until the money market is in eq uilibrium. d. any of the above can happen. Score: 1 / 1 Question 20 (1 point) If Marty puts some cash under the mattress f or spending later in the decade, he is benefiting from the money's function as a(n) ___________. Student response: Percent V alue Student Response Answer Choices a. unit of account 1 00.0% b. store of value c. intrinsic­value good d. medium of exchange Score: 1 / 1 Question 2 1 (1 point) The fundamental value of money is that it Student response: Percent V alue Student Response Answer Choices a. minimizes the risk of inflation from non­standard currency . b. does not degrade rapidl y . c. can be divided up into smaller parts f or exchange. 1 00.0% d. lowers the cost of making trades in an economy . Score: 1 / 1 Question 22 (1 point) The interest rate does not aff ect the demand f assets because assets are not or liq uid. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 23 (1 point) Over the past f ew decades, it has become easier to convert assets to cash. F or this reason, the __________________ f or holding money has grown less important. Student response: Percent V alue Student Response Answer Choices a. transaction motive b. speculative motive c. accumulation motive 1 00.0% d. precautionary motive Score: 1 / 1 Question 2 4 (1 point) The graph below shows the demand f or money The initial interest rate is io. Which . graph correctl y depicts the eff ect of an increase in prices? Student response: Percent V alue Student Response Answer Choices a. b. 1 00.0% c. d. Score: 1 / 1 Question 25 (1 point) A bond is a Student response: Percent V alue Student Response Answer Choices a. riskless, short­ter m government debt instrument. b. claim to partial ownership in a fir m. 1 00.0% c. debt contract promising lenders a fixed interest payment in the future. d. type of financial inter mediary . Score: 1 / 1 T otal score: 25 / 25 = 1 00.0% V iew Results Quiz 4.3 User ID: skim7 Attempt : 1 / 3 Out of: 1 5 Started: November 23, 200 4 9:09pm Finished: November 23, 200 4 9:1 0pm T ime spent : 0 min. 4 7 sec. Question 1 (1 point) Monetary policy is set by Student response: Percent V alue Student Response Answer Choices a. a consortium of depository institutions. b. the F ederal Reserve Board of Governors. 1 00.0% c. the F ederal Open Market Committee. d. the F ederal Reserve Board Chair man. Score: 1 / 1 Question 2 (1 point) On the F ed's balance sheet, you would find _____________ listed as assets and _____________ listed as liabilities. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T ­bills; U .S. dollars b. U .S. dollars; f oreign currency c. U .S. dollars; reserve deposits d. T ­bills; coins Score: 1 / 1 Question 3 (1 point) The chair man of the F ederal Reserve Board of Governors is Student response: Percent V alue Student Response Answer Choices a. George W . Bush. b. the Secretary of the T reasury . 1 00.0% c. Alan Greenspan. d. elected by the people of the United States. Score: 1 / 1 Question 4 (1 point) Which of the f ollowing F ederal Reserve actions would NOT result in a decrease in the money suppl y? Student response: Percent V alue Student Response Answer Choices a. selling T ­bills 1 00.0% b. lowering the reserve req uirement c. increasing the discount rate Score: 1 / 1 Question 5 (1 point) Which of the f ollowing F ederal Reserve actions could explain the shift depicted in the graph? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. buying T ­bills b. raising the reserve req uirement c. increasing the discount rate d. destroying aged currency Score: 1 / 1 Question 6 (1 point) U .S. dollars can be exchanged f or an amount of gold that varies, depending on the market price f or gold. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 7 (1 point) Which of the f ollowing would make a "run on a bank" more likel y? Student response: Percent V alue Student Response Answer Choices a. hihger interest rates f or savings accounts b. a public announcement of increased reserve req uirements 1 00.0% c. a suspicion that a bank is lending out too much money d. a decrease in the market price of gold Score: 1 / 1 Question 8 (1 point) The F ed's influence is primaril y through actions that directl y aff ect which part of the economy? Student response: Percent V alue Student Response Answer Choices a. the factors market b. the goods market 1 00.0% c. the financial sector d. the government sector Score: 1 / 1 Question 9 (1 point) Which of the f ollowing is NOT a function of the F ederal Reserve System? Student response: Percent V alue Student Response Answer Choices a. T o issue currency . b. T o regulate financial institutions. c. T o provide banking services f or the f ederal government. 1 00.0% d. T o regulate the stock markets. Score: 1 / 1 Question 1 0 (1 point) The F ed's most important function is to Student response: Percent V alue Student Response Answer Choices 1 00.0% a. implement monetary policy . b. regulate the banking industry . c. print money . d. implement fiscal policy . Score: 1 / 1 Question 1 1 (1 point) When we say the F ed is the "lender of last resort," we mean Student response: Percent V alue Student Response Answer Choices a. if the government cannot borrow money anywhere else, it goes to the F ed f or funds. b. it provides short­ter m financial help to businesses and individuals who cannot get loans elsewhere. 1 00.0% c. it extends credit to financial institutions experiencing temporary difficulties, but financial institutions pref er not to borrow from the F ed. d. it lends money to the U .S. T reasury to help fund new currency . Score: 1 / 1 Question 12 (1 point) If the F ed ______ government securities, the money suppl y ______, and the interest rate will _____. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. buys, increases, fall b. sells, increases, fall c. buys, increases, rise d. sells, decreases, fall Score: 1 / 1 Question 1 3 (1 point) Suppose the money market is in eq uilibrium. If the F ed sells government bonds, then the eq uilibrium interest rate will _____ and the eq uilibrium q uantity of money will _____. Student response: Percent V alue Student Response Answer Choices a. increase, increase 1 00.0% b. increase, decrease c. decrease, increase d. decrease, decrease Score: 1 / 1 Question 1 4 (1 point) Which of the f ollowing statements is FALSE? Student response: Percent V alue Student Response Answer Choices a. The United States has 12 F ederal Reserve districts. b. The F ederal Open Market Committee oversees sales and purchases of government securities by the F ed. c. The members of the Board of Governors of the F are appointed by the ed President. 1 00.0% d. Congress must approve any ma jor changes in the F ed's monetary policy . Score: 1 / 1 Question 1 5 (1 point) Which group has primary responsibility f or the F ederal Reserve System? Student response: Percent V alue Student Response Answer Choices a. the Congress of the United States 1 00.0% b. the Board of Governors of the F ed c. the twel ve regional F ederal Reserve banks d. the chair man of the F ederal Reserve Score: 1 / 1 T otal score: 1 5 / 1 5 = 1 00.0% V iew Results Quiz 4.5 User ID: skim7 Attempt : 1 / 3 Out of: 1 5 Started: November 23, 200 4 9:1 5pm Finished: November 23, 200 4 9:1 8pm T ime spent : 2 min. 1 9 sec. Question 1 (1 point) Funds borrowed and saved are brought into eq uilibrium through adjustments in ______________. Student response: Percent V alue Student Response Answer Choices a. inflation b. the money suppl y c. deposits 1 00.0% d. interest rates Score: 1 / 1 Question 2 (1 point) John takes out a loan that increases his purchasing power by 8% over one year . If inflation is 5%, what is the nominal interest rate? Student response: Percent V alueStudent Response Answer Choices 1 00.0% a. 1 3% b. 3% c. 8% d. ­3% Score: 1 / 1 Question 3 (1 point) John takes out a loan that increases his purchasing power by 5% over one year . If inflation is 2%, what is the real interest rate? Student response: Percent V alue Student Response Answer Choices a. 7% b. 3% 1 00.0% c. 5% d. ­3% Score: 1 / 1 Question 4 (1 point) When interest rates rise, households tend to consume _______ and save _______. Student response: Percent V alue Student Response Answer Choices a. more; more b. more; less 1 00.0% c. less; more d. less; less Score: 1 / 1 Question 5 (1 point) What might cause a household to save less in response to an increase in the nominal interest rate? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. A rise in inflation greater than the rise in the nominal interest rate b. An increase in the real interest rate eq ual to the rise in the nominal interest rate c. a decrease in inflation eq ual to the increase in the nominal interest rate d. an offsetting decrease in the discount rate Score: 1 / 1 Question 6 (1 point) In the macroeconomy , savings comes from Student response: Percent V alue Student Response Answer Choices a. the savings of households, a government budget sur plus, and a trade sur plus. 1 00.0% b. the savings of households, a government budget sur plus, and a trade deficit. c. the savings of households, a government budget deficit, and a trade sur plus. d. the consumption of households, a government budgets sur plus, and a trade sur plus. Score: 1 / 1 Question 7 (1 point) When there is excess demand f loanable funds, interest rates will rise in or response. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 8 (1 point) Which of the f ollowing graphs correctl y depicts the change in eq uilibrium in the market f or loanable funds that would result from a government policy that gave tax credits f or business investment? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. b. c. d. Score: 1 / 1 Question 9 (1 point) Which of the f ollowing graphs correctl y depicts the change in eq uilibrium in the market f or loanable funds that would result from the government running a larger budget sur plus? Student response: Percent V alue Student Response Answer Choices a. b. 1 00.0% c. d. Score: 1 / 1 Question 1 0 (1 point) If our trade deficit increases significantl y , how will that aff ect the money market? Student response: Percent V alue Student Response Answer Choices a. The eq uilibrium interest rate will rise. 1 00.0% b. The eq uilibrium interest rate will fall. c. The eq uilibrium interest rate is unaff ected by the trade deficit. d. The eq uilibrium interest rate could rise or fall, depending on how the trade deficit is paid down. Score: 1 / 1 Question 1 1 (1 point) A fir m deter mines that an investment is not worthwhile at the current rate of interest of 8 percent. If the interest rate changes to Student response: Percent V alue Student Response Answer Choices a. 1 0 percent, the investment will be worth making. b. 1 5 percent, the investment will be worth making. c. 6 percent, the investment will be worth making. 1 00.0% d. 6 percent, the investment may be worth making, but we need more inf mation to be sure. or Score: 1 / 1 Question 12 (1 point) The suppl y curve of loanable funds slopes up because Student response: Percent V alue Student Response Answer Choices 1 00.0% a. people will give up more current consumption and increase savings onl y if they are rewarded even more in the future. b. of the law of diminishing marginal returns. c. of the income eff ect of interest rates. d. saving increases with income. Score: 1 / 1 Question 1 3 (1 point) The nominal rate of interest Student response: Percent V alue Student Response Answer Choices a. Is adjusted f or inflation. 1 00.0% b. Is the stated rate of interest. c. Is expressed as an after ­tax percentage. d. All of the above. Score: 1 / 1 Question 1 4 (1 point) Businesses demand loanable funds because they Student response: Percent V alue Student Response Answer Choices a. have deficits to cover . b. pref er to purchase capital goods in the current year . 1 00.0% c. make investments that they believe will increase productivity and profitability . d. pref er earlier consumption to later consumption. Score: 1 / 1 Question 1 5 (1 point) The demand curve f or loanable funds by businesses is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. downward sloping because more investment projects are profitable the lower the interest rate. b. downward sloping because of the law of diminishing marginal utility . c. horizontal because they can borrow as much as they want at the current interest rate. d. of an indeter minate slope because business investment decisions tend to be related more to "animal spirits" than to rational decision making. Score: 1 / 1 T otal score: 1 5 / 1 5 = 1 00.0% V iew Results TEST 4 User ID: skim7 Attempt : 1 / 1 Out of: 1 00 Started: November 23, 200 4 9:56pm Finished: November 23, 200 1:39pm T 4 1 ime spent : 1 hr , 43 min., 1 6 sec. Student finished 1 hr 6 min., 4 , 1 4 sec. ahead of the 1 80 min. time limit. Question 1 (2 points) If we were to rank the three types of money from the largest measure to the smallest, we would have the ordering Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. M1 , M2, M3. 1 00.0% b. M3, M2, M1 . 0.0% c. All are eq ual. 0.0% d. They cannot be ranked, because they measure diff erent things. Score: 2 / 2 Question 2 (2 points) One common problem with commodity money is that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. it has little intrinsic value. 0.0% b. it is not useful as a unit of account. 1 00.0% c. it may not be divisible. 0.0% d. gold is in short suppl y . Score: 2 / 2 Question 3 (2 points) From the definitions of M1 and M2, we know that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. M1 is always larger than M2. 1 00.0% b. M2 is always larger than M1 . 0.0% c. M1 and M2 are always eq ual. 0.0% d. M1 is sometimes larger than M2, and sometimes smaller than M2. Score: 2 / 2 Question 4 (2 points) The definition of M2 includes which of the f ollowing types of money? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T ravelers' checks 0.0% b. Eurodollar deposits 0.0% c. Stocks 0.0% d. Repurchase agreements Score: 2 / 2 Question 5 (2 points) When the demand f or money exceeds the suppl y , Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. more money will be printed to meet the demand. 1 00.0% b. the interest rate will rise. 0.0% c. the interest rate will fall. 0.0% d. inflation will decrease. Score: 0 / 2 Question 6 (2 points) If income decreases, which of the f ollowing will occur? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Money suppl y will shift left. 1 00.0% b. Money demand will shift left. 0.0% c. The interest rate will increase. Score: 0 / 2 Question 7 (2 points) If the money suppl y increases, then interest rates will rise. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 8 (2 points) The graph below shows the demand f or money The initial interest rate is io. Which . graph correctl y depicts a rise in interest rates above the initial level io? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 1 00.0% b. 0.0% c. 0.0% d. Score: 2 / 2 Question 9 (2 points) The graph below shows the demand f or money If the F . ederal Reserve has the power to set the money suppl y at a fixed level, we depict the money suppl y curve as a(n) Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. upward­sloping line that intersects the demand curve. 0.0% b. downward sloping line parallel to the demand curve. 0.0% c. horizontal line. 1 00.0% d. vertical line. Score: 2 / 2 Question 1 0 (2 points) If the interest rate is below its eq uilibrium value, Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. people buy bonds to increase the interest rate. 1 00.0% b. issuers of bonds off er higher interest rates to induce people to hold bonds instead of money . 0.0% c. both a and b. 0.0% d. neither a nor b. Score: 2 / 2 Question 1 1 (2 points) The money demand curve is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. downward sloping because as the real interest rate rises, people wish to hold more cash. 1 00.0% b. downward sloping because as the real interest rate rises, people wish to hold less cash. 0.0% c. a vertical line. Score: 2 / 2 Question 12 (2 points) If Emil y writes a check f or her groceries, she is using money as a Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. medium of exchange. 0.0% b. store of value. 0.0% c. unit of account. 0.0% d. means of liq uidity . Score: 2 / 2 Question 1 3 (2 points) The Dow Jones Industrial A verage is an index used to track the average price of all stocks on the New Y ork Stock Exchange. How many cor porate stocks are included in the DOW? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 500 1 00.0% b. 30 0.0% c. 250 0.0% d. 90 Score: 2 / 2 Question 1 4 (2 points) A person who is willing to bear more risk will buy Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. bonds. 0.0% b. government bonds. 1 00.0% c. stock . Score: 2 / 2 Question 1 5 (2 points) The value of a future amount expressed in today's dollars is known as Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Present value. 0.0% b. Allocative efficiency . 0.0% c. The real rate of interest. 0.0% d. The nominal rate of interest. Score: 2 / 2 Question 1 6 (2 points) Exchanges of stocks take place in Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. centralized physical locations known as stock exchanges and online through internet brokers. 0.0% b. New Y ork City onl y . 0.0% c. the principal financial city of each country , such as New Y ork City f or the United States and London f or England. 0.0% d. a decentralized fashion around the world. Score: 2 / 2 Question 1 (2 points) 7 Capital gains are Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the profit received by investors when stocks are sold f or more than their purchase price. 0.0% b. the interest earned on a bond. 0.0% c. the dividend payments issued to eq uity holders. 0.0% d. government payments to holders of T ­bills. Score: 2 / 2 Question 1 8 (2 points) _______________ are entitled to the first claim on the returns from an investment. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Stockholders 1 00.0% b. Bondholders 0.0% c. Laborers 0.0% d. Financial inter mediaries Score: 2 / 2 Question 1 9 (2 points) Financial inter mediaries are institutions that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. set interest rates. 1 00.0% b. transf er funds in the f m of loans from savers to investors. or 0.0% c. create money . 0.0% d. provide checking accounts. Score: 0 / 2 Question 20 (2 points) If you invest $1 0,000 today and can be assured of 8% annual returns, what will be the value of your investment in 5 years? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. $54,000 1 00.0% b. $1 4,693 0.0% c. $6,806 0.0% d. $1 4,000 Score: 2 / 2 Question 2 1 (2 points) If a pension fund owns stock in a cor poration, the stock would be listed as an asset on its balance sheet. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 22 (2 points) Suppose that you decide to buy 1 00 shares of Pepsi stock (not a new issue), and you call a stock broker and ask her to make the transaction f you. Y will be or ou purchasing the stock in the market known as Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the primary market. 0.0% b. the insider market. 1 00.0% c. the secondary market. 0.0% d. the collateral market. Score: 2 / 2 Question 23 (2 points) There is an inverse relationship between a country's standard of living and its rate of savings and investment. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 2 4 (2 points) The F ed can aff ect interest rates by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. changing the reserve req uirements. 0.0% b. changing the discount rate. 0.0% c. open market operations. 1 00.0% d. all of the above. Score: 2 / 2 Question 25 (2 points) The F ederal Reserve is invol ved in clearing individuals' checks and wiring money between financial institutions. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 26 (2 points) When the F ed purchases government bonds, Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the money suppl y curve shifts to the left. 1 00.0% b. the money suppl y curve shifts to the right. 0.0% c. the money demand curve shifts to the left. 0.0% d. the money demand curve shifts to the right. Score: 2 / 2 Question 2 7 (2 points) Which of the f ollowing actions by the F ed would cause an increase in the money suppl y? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Decrease the discount rate. 0.0% b. Increase the reserve req uirement. 0.0% c. Sell securities (bonds). Score: 2 / 2 Question 28 (2 points) If the F ed wants to increase the money suppl y , it can Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. buy T reasury securities. 0.0% b. lower the interest rate on T reasury securities. 0.0% c. increase the discount rate. 0.0% d. req uire banks to hold more reserves. Score: 2 / 2 Question 29 (2 points) Fractional reserve banking means that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the f ederal banking system is decentralized, operating through 12 districts rather than one central bank . 1 00.0% b. banks are req uired to hold a fraction of their liabilities in the f m of cash in their vaults or as deposits with the F or ed. 0.0% c. banks must "synchronize" their customers' withdrawals and deposits so that there is a rough balance in liq uidity at any given time. 0.0% d. banks are legall y per mitted to give loans onl y up to the fractional rate, as deter mined by the F ed. Score: 2 / 2 Question 30 (2 points) The F ed's influence is primaril y through actions that directl y aff ect which part of the economy? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the factors market 0.0% b. the goods market 1 00.0% c. the financial sector 0.0% d. the government sector Score: 2 / 2 Question 3 1 (2 points) Suppose the money market is in eq uilibrium. If the F ed sells government bonds, then the eq uilibrium interest rate will _____ and the eq uilibrium q uantity of money will _____. Student response:Percent V alue Correct Response Student Response Answer Choices 0.0% a. increase, increase 1 00.0% b. increase, decrease 0.0% c. decrease, increase 0.0% d. decrease, decrease Score: 2 / 2 Question 32 (2 points) How many F ederal Reserve districts are there in the U .S.? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 8 0.0% b. 1 0 1 00.0% c. 12 0.0% d. 1 4 Score: 2 / 2 Question 33 (2 points) Banks could not create money if the reserve req uirement were 1 00%. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 3 4 (2 points) Which of the F ed's tools has become largel y symbolic? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. altering the req uired reserve ratio 1 00.0% b. changing the discount rate 0.0% c. buying or selling securities on the open market 0.0% d. lowering bank taxes Score: 2 / 2 Question 35 (2 points) Suppose the req uired reserve ratio is 1 percent. An increase of $900 in new 5 deposits at a commercial bank will Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. increase total deposits in the banking system by $1 5. 0.0% b. increase total deposits in the banking system by $1 35. 0.0% c. increase total deposits in the banking system by $900. 1 00.0% d. increase total deposits by in the banking system $6000. Score: 2 / 2 Question 36 (2 points) If the F ed buys $1 000 in bonds from bank A, then Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. bank A will increase its loans. 0.0% b. bank A will decrease its loans. 0.0% c. bank A will decrease its deposits. Score: 2 / 2 Question 3 7 (2 points) Use this inf mation to answer the next three q uestions. Suppose someone deposits or $500 cash in her checking account after selling a government bond, so that the bank's reserves and deposits increase by $500. If the legal reserve req uirement is 5% (0.05), how much is this bank req uired to hold on reserve? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. $25 0.0% b. $250 0.0% c. $45 7 0.0% d. $500 0.0% e. none of the above Score: 2 / 2 Question 38 (2 points) What is the deposit multiplier? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 5 0.0% b. 50 1 00.0% c. 20 0.0% d. 0.05 0.0% e. none of the above Score: 2 / 2 Question 39 (2 points) What is the total amount by which the money suppl y can increase as a result of the initial $500 deposit? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. $1 0,000 0.0% b. $500 0.0% c. $2500 0.0% d. none of the above. Score: 2 / 2 Question 40 (2 points) If the req uired reserve ratio decreases, Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the deposit multiplier increases. 0.0% b. banks make f ewer loans. 0.0% c. deposits in other banks will decrease. 0.0% d. all of the above. Score: 2 / 2 Question 4 1 (2 points) Which of these is NOT a factor that tends to reduce the influence of the F ed over the money suppl y? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. near money 0.0% b. excess reserves held by banks 1 00.0% c. the small req uired reserve ratio 0.0% d. currency kept at home by consumers Score: 2 / 2 Question 42 (2 points) The F ederal Reserve Bank guarantees the value of a dollar bill. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 43 (2 points) The real rate of interest Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Eq uals the nominal rate of interest plus the rate of inflation. 1 00.0% b. Eq uals the nominal rate of interest minus the rate of inflation. 0.0% c. Eq uals the nominal rate of interest when there is deflation. 0.0% d. None of the above. Score: 2 / 2 Question 4 4 (2 points) The real rate of interest is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. f ound by taking the nominal rate of interest and dividing it by the actual rate of inflation. 1 00.0% b. eq ual to the nominal rate of interest less the rate of inflation. 0.0% c. eq ual to the nominal rate of interest plus the rate of inflation. Score: 2 / 2 Question 45 (2 points) The suppl y curve of loanable funds is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. horizontal. 0.0% b. vertical. 1 00.0% c. upward sloping. 0.0% d. downward sloping. Score: 2 / 2 Question 46 (2 points) At higher interest rates, businesses Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. demand f or loanable funds increases. 0.0% b. suppl y of loanable funds falls. 1 00.0% c. want to borrow less money . 0.0% d. want to borrow more money . Score: 2 / 2 Question 4 7 (2 points) When there is excess suppl of loanable funds, interest rates will rise in y response. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 48 (2 points) In the macroeconomy , savings comes from Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the savings of households, a government budget sur plus, and a trade sur plus. 1 00.0% b. the savings of households, a government budget sur plus, and a trade deficit. 0.0% c. the savings of households, a government budget deficit, and a trade sur plus. 0.0% d. the consumption of households, a government budgets sur plus, and a trade sur plus. Score: 2 / 2 Question 49 (2 points) John takes out a loan that increases his purchasing power by 8% over one year . If inflation is 5%, what is the nominal interest rate? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. 1 3% 0.0% b. 3% 0.0% c. 8% 0.0% d. ­3% Score: 2 / 2 Question 50 (2 points) The best measure of your increase or decrease in purchasing power as a result of an investment is the nominal interest rate. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 T otal score: 94 / 1 00 = 94.0% V iew Results Quiz 5. 1 User ID: skim7 Attempt : 1 / 3 Out of: 1 0 Started: December 7 200 , 4 5:33am Finished: December 7 200 , 4 5:3 4am T ime spent : 0 min. 56 sec. Question 1 (1 point) Which of the f ollowing statements about the relationship between aggregate spending and aggregate income is true? Student response: Percent V alue Student Response Answer Choices a. Aggregate income must exceed aggregate spending, or the economy will be in debt. b. Aggregate spending must exceed aggregate income, or the economy will be in debt. 1 00.0% c. Aggregate income always eq uals aggregate spending. d. The relationship between aggregate spending and aggregate income depends on how high the tax rate is. Score: 1 / 1 Question 2 (1 point) How would an increase in consumer income aff ect total output? Student response: Percent V alue Student Response Answer Choices a. Output would fall, because the aggregate demand curve would shift inward. b. Output would fall, because the economy would move up the aggregate demand curve. 1 00.0% c. Output would rise, because the aggregate demand curve would shift outward. d. Output would rise, because the economy would move down the aggregate demand curve. Score: 1 / 1 Question 3 (1 point) When prices rise, overall consumer spending Student response: Percent V alue Student Response Answer Choices 1 00.0% a. declines. b. rises. c. is unaff ected as long as income remains high. d. remains unchanged, because consumer spending is measured in real, not nominal, ter ms. Score: 1 / 1 Question 4 (1 point) Which of the f ollowing statements accuratel describes the eff y ect of a price decrease on investment spending? Student response: Percent V alue Student Response Answer Choices a. Investment spending falls, because interest rates rise. 1 00.0% b. Investment spending rises, because interest rates fall. c. Investment spending rises, because business can now charge more f the or goods they sell. d. Investment spending remains unchanged, because it is measured in real, not nominal, ter ms. Score: 1 / 1 Question 5 (1 point) How does an decrease in the money suppl y aff ect total output? Student response: Percent V alue Student Response Answer Choices a. Output increases, because interest rates rise. 1 00.0% b. Interest rates will rise, which causes output to fall. c. Aggregate demand increases, but total output falls. d. Aggregate demand falls, but total output rises. Score: 1 / 1 Question 6 (1 point) Which policy variables can aff ect aggregate demand? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Government spending, taxes, and the money suppl y b. Consumer spending, business spending, and net exports c. Consumer savings, business spending, and net exports d. Consumer confidence, business confidence, and f oreign confidence in the domestic economy Score: 1 / 1 Question 7 (1 point) Why does an increase in the price level cause interest rates to rise? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. The demand f or money increases. b. Businesses cut back on spending. c. Consumers and businesses cut back on spending. d. The government tends to raise interest rates to reduce the risk of inflation. Score: 1 / 1 Question 8 (1 point) If the government wants to decrease aggregate demand, it could Student response: Percent V alue Student Response Answer Choices a. cut taxes. 1 00.0% b. cut government spending. c. encourage the F ed to increase the money suppl y . d. do any of the above. Score: 1 / 1 Question 9 (1 point) The demand curve f an individual product is downward sloping f the same or or reasons that the aggregate demand curve is downward sloping. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 1 0 (1 point) An increase in the aggregate price level causes the aggregate demand curve to shift to the left. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 T otal score: 1 0 / 1 0 = 1 00.0% V iew Results Quiz 5.2 User ID: skim7 Attempt : 1 / 3 Out of: 1 0 Started: December 7 200 5:34am Finished: December 7 200 5:56am T , 4 , 4 ime spent 2 :1 min. 20 sec. Question 1 (1 point) In the short run, why does aggregate suppl y increase when the price level changes? Student response: Percent V alue Student Response Answer Choices a. Higher prices mean lower profits. b. Higher prices mean higher profits. 1 00.0% c. Prices adjust at diff erent rates. d. Prices adjust simultaneoulsy . Score: 1 / 1 Question 2 (1 point) In the short rum, producers____________ when the prices of their goods increase. Student response: Percent V alue Student Response Answer Choices a. reduce output 1 00.0% b. increase output c. raise prices d. lower prices Score: 1 / 1 Question 3 (1 point) When prices rise, but wages remain fixed in the short run Student response: Percent V alue Student Response Answer Choices 1 00.0% a. fir ms face profit opportunities, because real wages fall. b. fir ms reduce output, because the cost of their inputs increase. c. fir ms' profits decline, because they are unable to attract workers at the old wage. d. fir ms' profits remain unchanged, because in the long run wages will rise to catch up with the increase in prices. Score: 1 / 1 Question 4 (1 point) Real wages decline when Student response: Percent V alue Student Response Answer Choices a. workers are paid less than they are worth. b. fir ms cut back on production in response to a decline in aggregate demand. 1 00.0% c. the price level rises faster than the level of wages. d. the level of wages rises faster than the level of prices. Score: 1 / 1 Question 5 (1 point) What is the relationship between the price level and the level of output in the long run? Student response: Percent V alue Student Response Answer Choices a. When the price level rises, output increases. b. When the price level rises, output decreases. c. The relationship depends on how q uickl producers respond to changes in y prices. 1 00.0% d. There is no relationship between the price level and the level of output. Score: 1 / 1 Question 6 (1 point) When producers expect prices to fall, the short run aggregate suppl y curve Student response: Percent V alue Student Response Answer Choices 1 00.0% a. shifts downward. b. shifts upward. c. pivots upward. d. pivots downward. Score: 1 / 1 Question 7 (1 point) What is the main reason why wages might be fixed in the short run? Student response: Percent V alue Student Response Answer Choices a. Workers are afraid they may be fired if they ask f or raises. 1 00.0% b. Unions are not constantl y renegotiating their wage contracts. c. Unions are constantl y renegotiating their wage contracts. d. Workers fail to recognize that prices have risen. Score: 1 / 1 Question 8 (1 point) The full­employment level of output is the level of output an economy can produce when Student response: Percent V alue Student Response Answer Choices a. everyone is employed full time. b. all economic activities are included in GDP . c. excess capacity is minimized. 1 00.0% d. all resources are full y and efficientl y employed. Score: 1 / 1 Question 9 (1 point) Suppose there is a decrease in the size of the labor f orce. Which of the f ollowing statements is true? Student response: Percent V alue Student Response Answer Choices a. The short­run aggregate suppl y (SRAS) curve will shift inward, but the long­ run aggregate suppl y (LRAS) curve will not move. b. The LRAS will shift inward, but the SRAS will not move. c. Neither SRAS nor the LRAS will shift when the size of the labor f orce changes. 1 00.0% d. Both the SRAS and LRAS will shift inward. Score: 1 / 1 Question 1 0 (1 point) Suppose producers in the economy expect prices to increase in the future. The short­run aggregate suppl will _________, while the long­run aggregate suppl y y will ___________. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. shift upward; not shift b. shift upward; shift left c. shift downward; not shift d. shift downward; shift right Score: 1 / 1 T otal score: 1 0 / 1 0 = 1 00.0% V iew Results Quiz 5.3 User ID: skim7 Attempt : 1 / 3 Out of: 1 0 Started: December 7 200 , 4 5:58am Finished: December 7 200 , 4 5:59am T ime spent : 1 min. 5 1 sec. Question 1 (1 point) Why do prices rise if the economy tries to produce beyond the full­employment level of output? Student response: Percent V alue Student Response Answer Choices a. Unemployment starts to rise. 1 00.0% b. Fir ms have to off er higher and higher prices to attract workers to obtain inputs. c. The F ederal Reserve eventuall y raises interest rates, increasing the prices of inputs. d. It is pysicall impossible to produce beyond the full­employment level of y output. Score: 1 / 1 Question 2 (1 point) In the short run, what happens to the level of output when the government increases its spending? Student response: Percent V alue Student Response Answer Choices a. Aggregate demand shifts outward, decreasing the eq uilibrium level of output. b. Aggregate demand shifts inward, decreasing the eq uilibrium level of out put. 1 00.0% c. Aggregate demand shifts outward, increasing the eq uilibrium level of output. d. Aggregate demand shifts inward, increasing the eq uilibrium level of output. Score: 1 / 1 Question 3 (1 point) In the short run, a suppl y shock will _________ the eq uilibrium level of prices and ___________ the eq uilibrium level output. Student response: Percent V alue Student Response Answer Choices a. reduce;raise b. raise;raise c. reduce;reduce 1 00.0% d. raise;reduce Score: 1 / 1 Question 4 (1 point) Which of the f ollowing events would shift the short­run aggregate suppl y curve? Student response: Percent V alue Student Response Answer Choices a. A change in output b. A change in aggregate demand 1 00.0% c. A change in technology d. A change in the price level Score: 1 / 1 Question 5 (1 point) What is the long run eff ect of increasing output beyond the full­employment level? Student response: Percent V alue Student Response Answer Choices a. Prices and wages rise, and the level of output falls. 1 00.0% b. Prices and wages rise, and the level of output remains unchanged. c. Prices, wages, and the level of output increase. d. Prices, wages, and the level of output decrease. Score: 1 / 1 Question 6 (1 point) The graph below depicts an economy's short run eq uilibrium. Which of the f ollowing events would bring the economy back closer to full employment? Student response: Percent V alue Student Response Answer Choices a. An outward shift short run aggregate suppl y b. A decrease in long run aggregate suppl y 1 00.0% c. A decrease in aggregate demand d. Both an outward shift of short run aggregate suppl y and aggregate demand Score: 1 / 1 Question 7 (1 point) Examine the graph below . Increasing government spending will bring this economy back to full employment. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 8 (1 point) Examine the graph below . What would be the natural process by which this economy would move back to a long­run eq uilibrium? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Since output is beyond Yf, suppliers will expect higher future prices and will have to pay more f or resources, which will cause SRAS to shift upward. b. Since output is beyond Yf, suppliers will expect higher future prices and will have to pay more f or resources, which will cause SRAS to shift downward. c. Since output is beyond Yf, suppliers will expect lower future prices and will have to pay less f or resources, which will cause SRAS to shift downward. d. Since unemployment is high, consumers will demand f ewer goods and services, so AD will shift inward. Score: 1 / 1 Question 9 (1 point) Suppose the economy is in long­run eq uilibrium, but a war causes the suppl y of resources to decrease. What impact will this have on the economy? Student response: Percent V alue Student Response Answer Choices a. The LRAS and SRAS curves will shift outward, causing prices to fall and output to increase. 1 00.0% b. The LRAS and SRAS curves will shift inward, causing prices to increase and output to fall. c. Onl y the SRAS curve will shift inward, causing prices to increase and output to fall. d. The LRAS, SRAS, and AD curves will shift inward, so onl y output will fall. Score: 1 / 1 Question 1 0 (1 point) Suppose the macroeconomy is not at a long­run eq uilibrium position. How long will it take f the economy to adjust back to the full­employment level of or output? Student response: Percent V alue Student Response Answer Choices a. Probabl y just a f ew weeks. b. If people in the economy make decisions based on rational expectations, it may take a very long time. 1 00.0% c. If people in the economy make decisions based on adaptive expectations, it may take a very long time. d. The economy will usuall y adjust q uickl y , regardless of the way people in the economy make decisions. Score: 1 / 1 T otal score: 1 0 / 1 0 = 1 00.0% V iew Results Quiz 5.4 User ID: skim7 Attempt : 1 / 3 Out of: 1 0 Started: December 7 200 , 4 6:00am Finished: December 7 200 , 4 6:0 1am T ime spent : 1 min. 1 9 sec. Question 1 (1 point) Which of the f ollowing statements helps to explain why the economy can be slow to recover from a recession? Student response: Percent V alue Student Response Answer Choices a. Workers are less motivated because of reduced expectations, which reduces total output. b. There is not as much money in circulation to fuel new investment. 1 00.0% c. Wages do not fall q uickl y , which delays an adjustment to a higher output level. d. Aggregate suppl shifts inward proportionatel which leads to a "vicious y y , cycle." Score: 1 / 1 Question 2 (1 point) According to classical economists, if the economy is in a recession, what must the government do to increase output to the full­employment level? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Nothing b. Reduce interest rates c. Increase governmet spending d. Provide a credit f or household savings Score: 1 / 1 Question 3 (1 point) Imagine that the economy is in a recession. Which one of the f ollowing tactics is a way to increase output by shifting aggregate demand outward? Student response: Percent V alue Student Response Answer Choices a. Raising taxes to increase the government sur plus 1 00.0% b. Increasing government spending c. Increase the req uired reser ve ratio d. Imposing tariffs on f oreign goods Score: 1 / 1 Question 4 (1 point) Proponents of rational expectations believe that an increase in government spending during a time of recession will lead to Student response: Percent V alue Student Response Answer Choices a. an inward shift of the aggregate demand curve. b. a deeper recession due to "crowding out." c. a paradoxical increase in the budget sur plus. 1 00.0% d. an offsetting reduction in spending by households and businesses. Score: 1 / 1 Question 5 (1 point) If the government cuts spending during a suppl y shock , the eff ect of the policy will likel y be to __________ prices and __________ unemployment. Student response: Percent V alue Student Response Answer Choices a. increase;increase b. increase;decrease 1 00.0% c. decrease;increase d. decrease;decrease Score: 1 / 1 Question 6 (1 point) If the f increases the money suppl during a suppl shock the eff ed y y , ect of the policy will likel y be to __________ prices and __________ investment spending. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. increase;increase b. increase;decrease c. decrease;increase d. decrease;decrease Score: 1 / 1 Question 7 (1 point) Good deflation is characterized by Student response: Percent V alue Student Response Answer Choices 1 00.0% a. an increase in suppl y at every price. b. a decrease in suppl y at every price. c. an increase in demand at every price. d. a decrease in demand at every price. Score: 1 / 1 Question 8 (1 point) Increasing the money suppl y is an example of fiscal policy that can help stimulate demand. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 9 (1 point) The amount by which annual government spending exceeds annual government tax revenue is called Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the deficit b. the debt c. the dividend d. M1 Score: 1 / 1 Question 1 0 (1 point) Both monetary policy and fiscal policy can be eff ective in pulling an economy out of a recession. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 T otal score: 1 0 / 1 0 = 1 00.0% V iew Results Quiz 5.5 User ID: skim7 Attempt : 1 / 3 Out of: 1 0 Started: December 7 200 , 4 6:02am Finished: December 7 200 , 4 6:03am T ime spent : 0 min. 5 1 sec. Question 1 (1 point) Which of the f ollowing is an example of an unintended eff ect of fiscal policy? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. The crowding­out eff ect b. Increased aggregate demand c. Unemployment insurance d. Reductions in international trade Score: 1 / 1 Question 2 (1 point) Assume that the government increases its spending by $1 million to stimulate 00 demand. In the long run, the eff ect of this spending is to Student response: Percent V alue Student Response Answer Choices a. increase output by more than $1 00 million. b. increase output by $1 00 million. 1 00.0% c. raise prices. d. increase unemployment. Score: 1 / 1 Question 3 (1 point) When the government increases its spending, a likel long run outcome is a y reduction in investment spending. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 4 (1 point) Which of the f ollowing explanations best summarizes the "crowding­out eff ect"? Student response: Percent V alue Student Response Answer Choices a. Increased government spending raises hte interest rate, which leads to greater household savings. This, in turn, increases the suppl y of loanable funds, increasing investment spending. 1 00.0% b. Increased government spending raises the interest rate, which leads to reduced investment spending. c. Increased government spending lowers the interest rate, leading to reduced household savings. d. Increased government spending lowers the interest rate, which discourages savings and leads to a shrinking total pool of loanable funds from which businesses can draw . Score: 1 / 1 Question 5 (1 point) If the government begins to buy back T reasury bills, which of the f ollowing can you inf er? Student response: Percent V alue Student Response Answer Choices a. G>T b. G=T 1 00.0% c. T>G d. NX>0 Score: 1 / 1 Question 6 (1 point) Which of the f ollowing is an automatic stabilizer? Student response: Percent V alue Student Response Answer Choices a. Free­floating exchanges rates b. The price system 1 00.0% c. Unemployment insurance d. Government spending Score: 1 / 1 Question 7 (1 point) A flat­payment tax system, e.g., all taxpayers owe the government a flat f ee of $5000 regardless of income, would be an example of an automatic stabilizer . Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 8 (1 point) The goal of Keynesian fiscal policy during a recession is to Student response: Percent V alue Student Response Answer Choices a. do nothing ­ let the economy recover on its own. 1 00.0% b. move the economic eq uilibrium back to the full­employment level by increasing aggregate demand. c. move the economic eq uilibrium back to the full­employment level by decreasing aggregate suppl y . d. reduce long run aggregate suppl so that the economy can reach full y employment without a long period of adjustment. Score: 1 / 1 Question 9 (1 point) Imagine that our representatives in Congress have concluded that the economy needs the stimulus of additional government spending, but they have spent several months haggling over what type of spending will be authorized. This is an example of a(n) Student response: Percent V alue Student Response Answer Choices a. recognition lag b. political lag 1 00.0% c. administration lag d. operational lag Score: 1 / 1 Question 1 0 (1 point) Which of the f ollowing statements is true? Student response: Percent V alue Student Response Answer Choices a. The multiplier eff ects tends to minimize the eff ects of the business cycle. 1 00.0% b. Automatic stabilizers can partiall y counteract the multiplier eff ect. c. Automatic stabilizers exaggerate the multiplier eff ect. d. Automatic stabilizers eliminate the business cycle. Score: 1 / 1 T otal score: 1 0 / 1 0 = 1 00.0% V iew Results Quiz 5.6 User ID: skim7 Attempt : 1 / 3 Out of: 1 0 Started: December 7 200 , 4 6:03am Finished: December 7 200 , 4 6:06am T ime spent : 2 min. 39 sec. Question 1 (1 point) Classical economists predict that if the money suppl y is expanded by 25%, prices will rise by Student response: Percent V alue Student Response Answer Choices a. less than 25%. 1 00.0% b. exactl y 25%. c. more than 25% but less than 50%. d. more than 50%. Score: 1 / 1 Question 2 (1 point) If GDP is $4 trillion and the money suppl y is $1 trillion, what can be concluded? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. velocity = 4 b. velocity = 1/4 c. prices = 4 d. prices = 1/4 Score: 1 / 1 Question 3 (1 point) Classical economists and non­classical economists disagree about whether changes in the money suppl y can change output over the long ter m. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 4 (1 point) Which of the f ollowing F ed actions could explain the change shown in the graph? Student response: Percent V alue Student Response Answer Choices a. The F ed raised the req uired reserve ratio. 1 00.0% b. The F ed bought T reasury securities. c. The F ed raised the discount rate. d. No F ed action could have caused this shift to take place. Score: 1 / 1 Question 5 (1 point) In the short run, contractionary monetary policy causes output to ___________ and prices to ______________. Student response: Percent V alue Student Response Answer Choices a. rise; rise b. rise; fall c. fall; rise 1 00.0% d. fall; fall Score: 1 / 1 Question 6 (1 point) In the long run, expansionary monetary policy causes output to __________ and prices to ____________. Student response: Percent V alue Student Response Answer Choices a. rise; rise b. rise; stay the same 1 00.0% c. stay the same; rise d. stay the same; stay the same Score: 1 / 1 Question 7 (1 point) The success or failure of monetary policy depends on the speed at which prices adjust. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 8 (1 point) Ref er to the graph below . If the F ed wants to bring the economy back to the full­ employment level of output, it can intervene with _______ monetary policy , which will _________ prices in the long run. Student response: Percent V alue Student Response Answer Choices a. contractionary ; decrease b. contractionary ; increase c. expansionary ; decrease 1 00.0% d. expansionary ; increase Score: 1 / 1 Question 9 (1 point) As the graph illustrates, consumers are worried about the future and have begun saving more money If the F does not intervene in this situation, what will . ed happen to the price level in the long run? Student response: Percent V alue Student Response Answer Choices a. Prices will increase. b. Prices will stay the same. 1 00.0% c. Prices will decrease. d. There is insufficient inf mation to answer the q uestion. or Score: 1 / 1 Question 1 0 (1 point) Accommodating monetary policy is intended to Student response: Percent V alue Student Response Answer Choices a. accelerate the crowding­out eff ect. 1 00.0% b. reduce the crowding­out eff ect. c. accommodate suppl y shocks. d. decrease the eff ects of suppl y shocks. Score: 1 / 1 T otal score: 1 0 / 1 0 = 1 00.0% TEST 1 User ID: xefri Attempt : 1 / 1 Out of: 1 00 Started: Sep 1 4, 2003 2 7 Finished: Sep 1 1:0 4, 2003 22:20 T ime spent : 1 hr ., 12 min., 48 sec. Student finished 1 hr ., 4 7 min., 12 sec. ahead of the 1 80 min. time limit. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) Macroeconomics is concerned primaril y with 0.0% 1 . the way things are produced. 0.0% 2. the prices of particular goods and services. 0.0% 3. the behavior of consumers. 1 00.0% 4. the perf mance of the aggregate economy or . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (2 points) Models are used to describe cause and eff ect relationships. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (2 points) Economics is generall y concerned with 0.0% 1 . the operation of banks in the stock market. 0.0% 2. business management. 1 00.0% 3. how resources are allocated among alternative goals. 0.0% 4. the right time to start a business. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (2 points) The ceteris paribus assumption is used in economics because 1 00.0% 1 . it is too difficult to account f or everything that might have an eff ect on behavior . 0.0% 2. it makes it easier to track the thought processes of people, which is necessary to develop good theories. 0.0% 3. people are self­interested and rational. 0.0% 4. the more complex a model is, the better it is. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (2 points) Nor mative economics 1 00.0% 1 . is the study of what ought to be and invol ves value judgments. 0.0% 2. is synonymous with objective economics. 0.0% 3. is limited to making statements about facts and the actual relationships among variables. 0.0% 4. is concerned with statements that anal yze actual situations in the economy . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (2 points) An increase in the price of gasoline will reduce the amount of gasoline purchased. This is: 0.0% 1 . a nor mative economic statement. 1 00.0% 2. a positive economic statement. 0.0% 3. neither a nor mative nor a positive statement. 0.0% 4. none of the above. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (2 points) Which would be least consistent with the kind of rational decision­making assumed in economics? 0.0% 1 . Alfred chooses love over money . 0.0% 2. Bernice acts on the basis of faulty inf mation and, as a result, makes or a mistake. 1 00.0% 3. Carlisle chooses the more costl of two ways to achieve a given end y because he does not care about costs. 0.0% 4. Daphne contributes some of her income to charity . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (2 points) Scarcity exists because of 1 00.0% 1 . unlimited wants and limited resources. 0.0% 2. the market mechanism. 0.0% 3. specialization and the division of labor . 0.0% 4. the allocation of goods by prices. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (2 points) The opportunity cost of going to college might best be described as 0.0% 1 . the money that must be paid in order to attend college. 0.0% 2. the lowest­valued alternative use of the student's time. 1 00.0% 3. the highest­valued alternative use of the student's time. 0.0% 4. the value that the student attaches to not working. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (2 points) Central planners in planned economies 1 00.0% 1 . generall y set production targets f or fir ms. 0.0% 2. always consult consumers on the output of goods they want to consume. 0.0% 3. allow prices to organize the economy's production. 0.0% 4. depend upon the invisible hand to coordinate economic activities. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (2 points) The government plays almost no role in the U .S. economy . 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (2 points) V alue judgments are based on people's tastes, pref erences, and ethical opinions. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (2 points) Adam Smith believed that 0.0% 1 . people were hard­wired to be selfish. 0.0% 2. the government should manage most aspects of the economy . 1 00.0% 3. allowing individuals to pursue their own self­interest is the most eff ective way to make a country wealthy . 0.0% 4. the division of labor should be managed by the government. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (2 points) Consumers generall y express their self­interest by 1 00.0% 1 . attempting to find the lowest price f or a product. 0.0% 2. maximizing profits. 0.0% 3. finding jobs with the highest wages. 0.0% 4. minimizing their economic losses. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (2 points) Scarcity 0.0% 1 . is a problem onl y during a recession or depression. 0.0% 2. is a problem onl y in developing countries. 0.0% 3. is a problem onl y among poor people. 1 00.0% 4. req uires people to make choices. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 6 (2 points) If a curve has a negative slope, then 1 00.0% 1 . one variable falls as the other rises. 0.0% 2. one variable does not change. 0.0% 3. one variable has a smaller value than another . 0.0% 4. one variable changes after another variable. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) 7 "The hotter it gets, the more water people drink ." This statement implies that the relationship between temperature and water consumption must have 0.0% 1 . a negative slope. 1 00.0% 2. a positive slope. 0.0% 3. a slope always eq ual to one. 0.0% 4. a slope always eq ual to 45 degrees. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 8 (2 points) X Y 2 8 4 12 6 1 6 8 20 1 4 0 2 Given the above data, X and Y exhibit : 1 00.0% 1 . A direct relationship 0.0% 2. An inverse relationship 0.0% 3. No mathematical relationship Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 9 (2 points) A graph's origin is the point of intersection of all lines or curves in the graph. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 20 (2 points) Graphs are valuable because they facilitate inter pretation of data. 1 00.0% 1 rue . T 0.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 1 (2 points) A line that is tangent to a curve 1 00.0% 1 . shares one point with the curve. 0.0% 2. shares two points with the curve. 0.0% 3. shares no points with the curve. 0.0% 4. All of the above are correct. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 22 (2 points) Why is the choice of units important in constructing a graph? 0.0% 1 . It aff ects whether a variable rises or falls. 1 00.0% 2. It aff ects the apparent rate of change of one variable relative to the other . 0.0% 3. It aff ects which time periods can be considered. 0.0% 4. All of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 23 (2 points) In the f ollowing figure, 1 00.0% 1 . at all points, the slope of S1 > the slope of S2. 0.0% 2. at all points, the slope of S1 < the slope of S2. 0.0% 3. at points to the left of A, the slope of S1 > the slope of S2; at points to the right of A, the slope of S1 < the slope of S2. 0.0% 4. at points to the left of A, the slope of S1 < the slope of S2; at points to the right of A, the slope of S1 > the slope of S2. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 4 (2 points) A relativel y flat demand curve indicates that the demand f or a product is very sensitive to a change in price. 1 00.0% 1 rue . T 0.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 25 (2 points) Given the eq uation f or a linear function, y = 20 + 0.67x, what is the value of y when x is zero? 1 00.0% 1 . 20 0.0% 2. 0.67 0.0% 3. 1 3.4 0.0% 4. zero Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 26 (2 points) Whenever a society f orgoes current consumption to invest in capital goods, the 0.0% 1 . less the society can consume next year . 0.0% 2. easier it will be f or the society to consume less in the future because people will become accustomed to less. 1 00.0% 3. more the society can produce and consume in the future. 0.0% 4. less capital the society can produce in the future. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 7 (2 points) Which of the points in the graph are efficient? 0.0% 1 . C and F onl y 0.0% 2. C, D and F onl y 0.0% 3. A, C, D, F and G onl , y 1 00.0% 4. A, C, F and G onl , y Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 28 (2 points) In the figure below , assume this economy is currentl y operating at point D. What is the opportunity cost of moving to B? 0.0% 1 . 200 bushels of wheat. 0.0% 2. 200 bushels of soybeans. 0.0% 3. infinite; B cannot be produced at any cost. 1 00.0% 4. zero. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 29 (2 points) When shifting from point A to point B, the opportunity cost of 1 ,000 additional tractors is 0.0% 1 . one tractor . 0.0% 2. 7 5 tons of butter . 1 00.0% 3. 0.7 5 million tons of butter . 0.0% 4. 4.7 5 million tons of butter . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 30 (2 points) A point outside a production possibilities curve indicates 0.0% 1 . that resources are not being used efficientl y . 1 00.0% 2. an output combination that society cannot attain given its current level of resources and technology . 0.0% 3. that resources are being used very efficientl y . 0.0% 4. that both goods are characterized by increasing costs. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 1 (2 points) A PPF will be bowed outward if 0.0% 1 . there is scarcity . 0.0% 2. increased production of one good means less production of the other good. 0.0% 3. the suppl y of resources is fixed. 1 00.0% 4. resources are not eq uall y well­suited to the production of both goods. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 32 (2 points) An efficient allocation of resources is demonstrated by a point 0.0% 1 . above the production possibilities frontier . 0.0% 2. below the production possibilities frontier . 1 00.0% 3. on the production possibilities frontier . 0.0% 4. near the middle of the production possibilities frontier . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 33 (2 points) The opportunity cost of f ood in ter ms of cars is 1 00.0% 1 . constant. 0.0% 2. increasing as more f ood is produced. 0.0% 3. decreasing as more f ood is produced. 0.0% 4. indeter minate. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 4 (2 points) In one day , Joe can produce 2 4 bushels of wheat (W) or 8 pounds of rice (R). Joe's opportunity cost of 1 pound of rice is 0.0% 1 . 3 pounds of rice. 1 00.0% 2. 3 bushels of wheat. 0.0% 3. 1/3 bushel of wheat. 0.0% 4. 1/8 bushel of wheat. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 35 (2 points) If an employee in a fast­f ood restaurant can produce 1 0 hamburgers per hour or 20 orders of French fries per hour the cost of one bag of French fries is two , hamburgers. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 36 (2 points) The opportunity cost of more capital goods today is 0.0% 1 ewer capital goods in the future. . f 0.0% 2. f ewer consumer goods in the future. 1 00.0% 3. f ewer consumer goods today . 0.0% 4. more unemployed resources in the future. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 7 (2 points) The opportunity cost to the society of moving from point E to point A is 1 00.0% 1 . zero. 0.0% 2. 50 pounds of beef. 0.0% 3. 50 bushels of wheat. 0.0% 4. both C and D. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 38 (2 points) Suppse a PPF has capital goods on the vertical axis and consumption goods on the horizontal axis. The PPF has a constant slope with a vertical intercept of 80 and a horizontal intercept of 1 60. Last year 1 units of consumption goods were , 60 produced, so the economy produced ________ units of capital goods. 1 00.0% 1 . zero 0.0% 2. 80 0.0% 3. 1 60 0.0% 4. 2 40 Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 39 (2 points) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 5 labor hours to produce one computer . If the U .S. and France trade based on their comparative advantages, the U .S. will export ______ and France will export ________. 0.0% 1 . wheat ; wheat. 0.0% 2. computers; computers. 1 00.0% 3. wheat ; computers. 0.0% 4. computers; wheat. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 40 (2 points) The ability to produce a particular good using f ewer resources than a second country is 0.0% 1 . comparative advantage. 1 00.0% 2. absolute advantage. 0.0% 3. an unfair advantage. 0.0% 4. a means of securing higher ter ms of trade. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 1 (2 points) A person has a comparative advantage in an activity whenever she 0.0% 1 . has an absolute advantage in the activity . 1 00.0% 2. can perf m the activity at a lower opportunity cost than can another or person. 0.0% 3. can do the activity in less time than anyone else. 0.0% 4. can do everything better than anyone else. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 42 (2 points) A bsolute advantage states that a country has an advantage over another if it can produce the good with f ewer resources. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 43 (2 points) In order to maximize society's well being, a country should specialize in producing a good if it 0.0% 1 . can produce the good with f ewer resources than other countries. 1 00.0% 2. has the lowest opportunity cost of producing the good. 0.0% 3. has the highest opportunity cost of producing the good. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 4 (2 points) If one person has an absolute advantage in the production of both goods, then 0.0% 1 . that person must also have the comparative advantage in both goods. 0.0% 2. that person cannot benefit from trade. 1 00.0% 3. that person will have the comparative advantage in onl y one good. 0.0% 4. it is in that person's interest to specialize in the production of both goods. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 45 (2 points) The average worker in the United States can produce 20 tons of coal or 1 0 tons of iron per hour . The average worker in Canada can produce 1 0 tons of coal or 1 0 tons of iron per hour . Which conclusion is correct? 0.0% 1 . The United States has an absolute advantage in the production of iron. 0.0% 2. Canada has an absolute advantage in the production of iron. 0.0% 3. Canada has an absolute advantage in the production of coal. 1 00.0% 4. The United States has an absolute advantage in the production of coal. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 46 (2 points) Countries A and B produce pickles and ice cream in the f ollowing q uantities when all of their resources are used. Pickles Ice Cream A 1 0 1 0 B 5 20 Which of the f ollowing is true? 0.0% 1 . The opportunity cost of a pickle in country B is f our ice cream cones. 0.0% 2. The opportunity cost of an ice cream cone in country B is one­f ourth of a pickle. 0.0% 3. The opportunity cost cannot be deter mined in country A . 1 00.0% 4. Both a and b are true. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 7 (2 points) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 5 labor hours to produce one computer . The U .S. and France could benefit from trade if the U .S. specializes in _____________ and France specializes in ______________. 0.0% 1 . computers; computers. 0.0% 2. computers; wheat. 1 00.0% 3. wheat ; computers. 0.0% 4. wheat ; wheat. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 48 (2 points) The f ollowing graphs show the potential production f or coats and books in Utopia and T ransyvania. Both countries have eq ual amounts of resources available f l or production of coats or books. Which country has the absolute advantage in producing coats and books? 1 00.0% 1 . Utopia has the absolute advantage in producing both goods. 0.0% 2. Utopia has the absolute advantage in producing coats; T ransyvania has the l absolute advantage in producing books. 0.0% 3. Utopia has the absolute advantage in producing books; T ransyvania has the l absolute advantage in producing coats. 0.0% 4. T ransyvania can produce f l ewer goods with the same resources; theref ore it has the absolute as well as comparative advantage. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 49 (2 points) The ter m "comparative disadvantage" means one party in a trade 0.0% 1 . has a lower opportunity cost than its trading partner . 1 00.0% 2. has a higher opportunity cost than its trading partner . 0.0% 3. has an absolute advantage in the goods that it is trading. 0.0% 4. has no basis f or trade with a trading partner . Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 50 (2 points) If there is an agricultural economy in which land can be used either as pasture f or cattle or as crop land f or wheat, the opportunity cost of converting one acre from pasture to wheat production is the 0.0% 1 . profits from the extra wheat production. 1 00.0% 2. pounds of beef that are lost. 0.0% 3. number of bushels of wheat produced on an acre. 0.0% 4. total number of pounds of beef produced. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 86 / 1 00 = 86.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ TEST 2 User ID: xefri Attempt : 1 / 1 Out of: 1 00 Started: Sep 30, 2003 1 3:36 Finished: Sep 30, 2003 1 4:50 T ime spent : 1 hr ., 1 3 min., 5 7 sec. Student finished 2 hrs., 46 min., 3 sec. ahead of the 2 40 min. time limit. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) When a demand schedule is drawn on a graph, 0.0% 1 . price is measured on the vertical axis. 0.0% 2. income is held constant. 0.0% 3. the resulting curve has a negative slope. 1 00.0% 4. All of the above are correct. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (2 points) Which of the f ollowing is a deter minant of demand? 0.0% 1 . cost of production 1 00.0% 2. income 0.0% 3. number of suppliers 0.0% 4. technology Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (2 points) The produce manager at IGA has noticed that when they raise the price of r utabaga, the number of rutabaga sold decreases. This decrease in rutabaga sales should be called a decrease in 0.0% 1 . demand. 0.0% 2. suppl y . 1 00.0% 3. q uantity demanded. 0.0% 4. q uantity supplied. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (2 points) A market demand curve is f ound by 0.0% 1 . taking the demand curve of the "representative" consumer . 0.0% 2. adding the prices and the q uantities demanded by a consumer . 1 00.0% 3. adding the q uantities demanded f or each individual consumer at each price. 0.0% 4. adding the prices each consumer would pay f or each q uantity . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (2 points) The law of demand loosel states that a lower price increases the amount of a y commodity that people are willing to buy . 1 00.0% 1 rue . T 0.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (2 points) "Demand" is a series of q uantities demanded, one f or each person in the market. 0.0% 1 rue . T 1 00.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (2 points) A shift in the demand curve occurs when 0.0% 1 . suppliers place more goods on the market. 0.0% 2. the price of a good rises. 1 00.0% 3. consumers want to buy more than bef ore at a given price. 0.0% 4. the price of the good falls. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (2 points) An increase in the price of a good (watch ter minology!) 0.0% 1 . will cause an increase in demand, since the good is now more valuable. 0.0% 2. will cause a decrease in demand. 0.0% 3. will cause an increase in the q uantity demanded, since the good is now more valuable. 1 00.0% 4. will cause a decrease in the q uantity demanded. 0.0% 5. will cause a decrease in both demand and the q uantity demanded Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (2 points) If incomes rise, most consumers will increase the q uantity demanded of an inf erior good. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (2 points) Which of the f ollowing would be most likel to cause an outward shift of the y demand curve f or electricity? 0.0% 1 . a decrease in the price of electricity 0.0% 2. an increase in the price of air conditioners 1 00.0% 3. an increase in the price of heating oil 0.0% 4. a decrease in the price of natural gas Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (2 points) A study of recent data indicates that higher ­income women are more likel y to have an abortion. This suggests (i) abortion is an inf erior good and (ii) the possibility that the demand curve f or abortion has a positive slope. 0.0% 1 . i and ii 0.0% 2. i but not ii 0.0% 3. ii but not i 1 00.0% 4. neither i nor ii Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (2 points) Assume that the figure below shows demand f or steak , a nor mal good. An increase in income of buyers will change demand from 1 00.0% 1 . D1 to D2 0.0% 2. D2 to D1 0.0% 3. D3 to D2 0.0% 4. D3 to D1 Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (2 points) An increase in the price of gasoline shifts the demand f or tires to the 0.0% 1 . left, because gasoline and tires are substitutes. 1 00.0% 2. left, because gasoline and tires are nor mall y used together . 0.0% 3. right, because gasoline and tires are substitutes. 0.0% 4. right, because gasoline and tires are nor mall y used together . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (2 points) If the government has stated that it will pay whatever it must to obtain 1 ,000 units of good X, then which demand curve in the figure below is appropriate? 0.0% 1 . 1 00.0% 2. 0.0% 3. 0.0% 4. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (2 points) In the figure below , an increase in population (which will increase the number of buyers of the good) will change demand from 1 00.0% 1 . D1 to D2 0.0% 2. D2 to D1 0.0% 3. D3 to D2 0.0% 4. D3 to D1 Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 6 (2 points) Which of the f ollowing would NOT change the demand f or a good? 0.0% 1 . A change in income 0.0% 2. A change in the price of a substitute good 0.0% 3. A change in the expected future price of the good. 1 00.0% 4. A change in the number of sellers. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) 7 Assuming that hamburgers and mustard are complements, a decrease in the price of hamburgers would increase the demand f or mustard. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 8 (2 points) An increase in the price of coff ee will 0.0% 1 . decrease the demand f or coff ee. 0.0% 2. increase the demand f or coff ee. 1 00.0% 3. increase the q uantity supplied of coff ee. 0.0% 4. increase the suppl y of coff ee. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 9 (2 points) A suppl y schedule shows 0.0% 1 . the "market potential" f or a product. 1 00.0% 2. how much producers are willing and able to sell at diff erent prices. 0.0% 3. possible combinations of output under diff erent conditions. 0.0% 4. how much consumers would like to buy at diff erent prices. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 20 (2 points) The one thing that does NOT lead to a shift in the suppl y or demand curves of a good is: 0.0% 1 . A change in population. 0.0% 2. A change in tastes and pref erences. 0.0% 3. A change in technology . 1 00.0% 4. A change in the price of that good. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 1 (2 points) Which of the f ollowing is a deter minant of suppl y? 0.0% 1 . tastes and pref erences 1 00.0% 2. technology 0.0% 3. consumer Income 0.0% 4. number of consumers Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 22 (2 points) The market suppl y curve is f ound by 1 00.0% 1 . summing the suppl y curves of individual fir ms. 0.0% 2. plotting the suppl y curves of individual fir ms. 0.0% 3. taking the suppl y curve of the representative fir m. 0.0% 4. plotting the suppl y curves of individual consumers. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 23 (2 points) The suppl y of a good can be changed by : 0.0% 1 . Costs of inputs. 0.0% 2. Number of fir ms in the industry . 0.0% 3. T echnology . 1 00.0% 4. All of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 4 (2 points) Which of the f ollowing events would increase the suppl y of hot dogs? 1 00.0% 1 . the price of the ingredients used to produce hot dogs decreases 0.0% 2. an increase in the price of a hot dog 0.0% 3. an increase in the number of consumers of hot dogs 0.0% 4. today consumers pref er hot dogs more than in the past Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 25 (2 points) The suppl y of newspapers will decline if 1 00.0% 1 . newsprint (an input) becomes more expensive. 0.0% 2. the printers' union makes wage concessions. 0.0% 3. prices are reduced. 0.0% 4. magazine prices rise (assuming magazines are a substitute f or newspapers). Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 26 (2 points) Assume that the figure below shows the suppl y of new houses. An improvement in the technology f or building houses will shift suppl y from 1 00.0% 1 . S1 to S2 0.0% 2. S2 to S1 0.0% 3. S3 to S2 0.0% 4. S3 to S1 Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 7 (2 points) A change in suppl y is the same as a change in q uantity supplied. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 28 (2 points) As the price of apples increases, apple growers will 0.0% 1 . decrease the suppl y of apples. 0.0% 2. increase the suppl y of apples. 0.0% 3. switch to less expensive methods of growing apples. 1 00.0% 4. increase the q uantity supplied of apples. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 29 (2 points) Eq uilibrium in a market occurs when 0.0% 1 . the market price leads to a decrease in q uantity demanded. 1 00.0% 2. q uantity supplied and q uantity demanded are eq ual at the market price. 0.0% 3. demand and suppl y indicate a small sur plus of a good. 0.0% 4. price is at its minimum. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 30 (2 points) Suppose the suppl y of a good decreases. Which of the f ollowing will occur? 0.0% 1 . price increase, q uantity increase 0.0% 2. price decrease, q uantity decrease 1 00.0% 3. price increase, q uantity decrease 0.0% 4. price decrease, q uantity increase Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 1 (2 points) An increase in suppl y will have what eff ect on eq uilibrium price and q uantity? 0.0% 1 . Price will increase, q uantity will decrease. 1 00.0% 2. Price will decrease, q uantity will increase. 0.0% 3. Both price and q uantity will increase. 0.0% 4. Both price and q uantity will decrease. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 32 (2 points) The price of coal f ell and the eq uilibrium q uantity traded also f ell. This could have been caused by 1 00.0% 1 . the price of oil falling. 0.0% 2. coal miners receiving large wage increases. 0.0% 3. more efficient mining eq uipment being installed. 0.0% 4. consumer incomes rising. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 33 (2 points) The removal in 1 966 of the req uirement that Catholics eat fish on Fridays was f ollowed by a 12.5 percent fall in prices of fresh fish. From this can be deduced that the 1 00.0% 1 . demand curve f or fish shifted to the left. 0.0% 2. demand curve f or fish shifted to the right. 0.0% 3. suppl y curve f or fish shifted to the left. 0.0% 4. suppl y curve f or fish shifted to the right. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 4 (2 points) A shift in the demand curve f or sailboats resulting from an increase in incomes will lead to 1 00.0% 1 . higher prices of sailboats. 0.0% 2. lower prices of sailboats. 0.0% 3. a shift in thesuppl y curve f or sailboats. 0.0% 4. lower output of sailboats. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 35 (2 points) This is a hard test, huh. (I think suppl y and demand, particularl y the specific ter minology , is the toughest thing we do all semester .) Theref ore, just pick the answer below that you think I'm looking f or! (Hint : Put option 1 . And if you miss it, I'll never let you f orget it!) 1 00.0% 1 . Economics is a wonderful subject that everyone finds interesting. 0.0% 2. Illinois highways are always well maintained. In fact, they're among the best in the country! 0.0% 3. Spring break should be cancelled because students miss being in the classroom. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 36 (2 points) Price per Quantity Demanded Quantity Supplied Constant­ of Constant­Quality of Constant­Quality Quality Unit Units per Y ear Units per Y ear ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ $1 .00 1 ,000 200 2.00 800 400 3.00 600 600 4.00 400 800 5.00 200 1 ,000 In a free market economy , the eq uilibrium price in the table would adjust to 0.0% 1 . . $1 0.0% 2. $5. 0.0% 3. $4. 1 00.0% 4. $3. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 7 (2 points) In the figure below , the eq uilibrium price and q uantity is 0.0% 1 . P = 30, Q = 1 ,000. 1 00.0% 2. P = 20, Q = 2,000. 0.0% 3. P = 1 0, Q = 1 ,000. 0.0% 4. P = 30, Q = 3,000. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 38 (2 points) A sur plus will tend to occur at which price in the f ollowing figure? 1 00.0% 1 . P1 0.0% 2. P2 0.0% 3. P3 0.0% 4. None of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 39 (2 points) At price P3 in the f ollowing figure, what will tend to happen? 0.0% 1 . There will be a shortage, and the price will fall. 1 00.0% 2. There will be a shortage and the price will rise. 0.0% 3. There will be a sur plus, and the price will rise. 0.0% 4. There will be a sur plus, and the price will fall. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 40 (2 points) Suppose the price of corn was above its eq uilibrium price. Y ou would expect to see 0.0% 1 . a shortage on the market that caused prices to increase further . 1 00.0% 2. sellers begin to lower their price because of the sur plus of corn. 0.0% 3. an increase in the q uantity supplied as the price falls toward eq uilibrium. 0.0% 4. a decrease in demand as the price falls toward eq uilibrium. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 1 (2 points) In January 2,500 q uarts of ice cream are sold in Boston at $2 a q uart. In , F ebruary , 3,000 q uarts are sold at $2.50 a q uart. This change in q uantity sold and price may have been caused by 0.0% 1 . a reduction in wages in the Boston area. 0.0% 2. the introduction of labor ­saving automated ice cream­packing machinery . 1 00.0% 3. the release of a medical study showing that ice cream consumption improves mental health. 0.0% 4. the decision by Boston ice cream sellers to eliminate discount coupons. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 42 (2 points) If cheese is a main ingredient of pizza, what happens to the price of pizza when the price of cheese increases? 1 00.0% 1 . Pizza prices rise. 0.0% 2. Pizza prices fall. 0.0% 3. There is no change in pizza prices because demand didn't shift. 0.0% 4. None of the above are true. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 43 (2 points) The competitive eq uilibrium point occurs when 0.0% 1 . there is no tendency to change. 0.0% 2. there is no excess demand. 0.0% 3. there is no excess suppl y . 1 00.0% 4. all of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 4 (2 points) Examine the graph. If the government imposes a rent control on this market and sets the maximum apartment rental at $600 per month, the market will 1 00.0% 1 . have a shortage of 400 apartments. 0.0% 2. have a sur plus of 400 apartments. 0.0% 3. a shortage of 200 apartments. 0.0% 4. be in eq uilibrium. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 45 (2 points) If rent controls f or apartments were established above the market rental rates, we would expect 0.0% 1 . a shortage of apartments to develop 0.0% 2. a sur plus of apartments to develop 1 00.0% 3. the q uantity demanded to eq ual the q uantity supplied. 0.0% 4. a building boom in new apartments to start. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 46 (2 points) A law req uiring sellers to pay the government a tax on cigarettes has the eff ect of 0.0% 1 . shifting the suppl y curve to the right. 0.0% 2. changing the slope of the suppl y curve. 1 00.0% 3. shifting the suppl y curve to the left. 0.0% 4. changing the slope of the demand curve. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 7 (2 points) Examine the graph. The eq uilibrium price and q uantity f apartments in this or housing market are 0.0% 1 . $1 000 and 700 apartments rented. 0.0% 2. $600 and 900 apartments rented. 0.0% 3. $600 and 500 apartments rented. 1 00.0% 4. $800 and 700 apartments rented. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 48 (2 points) The eff ect of an excise tax imposed on a SELLER of a good is to 0.0% 1 . shift the demand curve to the left. 1 00.0% 2. shift the suppl y curve to the left. 0.0% 3. shift the demand curve to the right. 0.0% 4. shift the suppl y curve to the right. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 49 (2 points) Minimum wage laws specify the highest wage that employers may pay workers. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 50 (2 points) In a free market, what processes would eliminate the excess demand in a rental housing market? 0.0% 1 . Rent­seeking activities 1 00.0% 2. The market bidding mechanism 0.0% 3. Government regulations 0.0% 4. The black market Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 88 / 1 00 = 88.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ TEST 3 User ID: xefri Attempt : 1 / 1 Out of: 120 Started: Oct 26, 2003 20:3 1 Finished: Oct 26, 2003 22:26 T ime spent : 1 hr ., 54 min., 38 sec. Student finished 2 hrs., 5 min., 22 sec. ahead of the 2 40 min. time limit. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) Which of the points in the graph are efficient? 0.0% 1 . C and F onl y 0.0% 2. C, D and F onl y 0.0% 3. A, C, D, F and G onl , y 1 00.0% 4. A, C, F and G onl , y Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (2 points) The production possibilities frontier illustrates 0.0% 1 . the fundamental concept of scarcity . 0.0% 2. the opportunity cost of acq uiring more of one good. 0.0% 3. an economy's maximum output utilizing all resources efficientl y . 1 00.0% 4. All of the above are correct. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (2 points) Resources are also known as 0.0% 1 . factories. 0.0% 2. minerals. 0.0% 3. stocks, bonds, and other financial instruments. 1 00.0% 4. factors of production. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (2 points) The circular flow of income shows the dollar value of output is 0.0% 1 more or less than the total income, depending on whether profits are . positive or negative. 1 00.0% 2. exactl y eq ual to the total income. 0.0% 3. more than the total income because of the existence of profits. 0.0% 4. less than the total income. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (2 points) A circular flow model shows 1 00.0% 1 . flows of resources, products, and payments in the economy . 0.0% 2. changes in national income over time. 0.0% 3. amounts of income diff erent population groups receive in the economy over time. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (2 points) Gross domestic product is the market value of manufacturing production in a year . 0.0% 1 rue . T 1 00.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (2 points) Real GDP 0.0% 1 . includes all f oreign and domestic transactions. 0.0% 2. includes the dollar value of domestic transactions onl y . 1 00.0% 3. tries to isolate the eff ect of changing output, holding prices constant. 0.0% 4. measures GDP in ter ms of prices of goods and services produced. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (2 points) T o deter mine how well an economy is doing, it is better to use 0.0% 1 . nominal GDP figures. 1 00.0% 2. real GDP figures. 0.0% 3. GDP figures measured by the expenditure approach. 0.0% 4. GDP figures measured by the income approach. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (2 points) Nominal GDP measures output in ter ms of current prices. Theref ore, part of an increase in nominal GDP can be attributed to inflation. 1 00.0% 1 rue. . T 0.0% 2. False. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (2 points) There are many difficulties with using GDP as an indicator of social well­being. Which of the f ollowing is NOT one of the difficulties? 0.0% 1 . Household labor is not included in GDP 0.0% 2. GDP cannot take account of changes in leisure time 0.0% 3. GDP fails to account f or changes in air pollution or crime 1 00.0% 4. Inter mediate products are not included in GDP Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (2 points) Which of the f ollowing is NOT a consumption good? 0.0% 1 . a hamburger 1 00.0% 2. a f ork lift 0.0% 3. a blouse 0.0% 4. health care Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (2 points) Which of the f ollowing may cause GDP to underestimate the well­being of society? 0.0% 1 . An increase in pollution. 0.0% 2. A decrease in leisure as people work more. 0.0% 3. An increase in the gap between rich and poor . 1 00.0% 4. An increase in underground transactions. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (2 points) In a circular flow diagram, households and fir ms interact 0.0% 1 . in financial markets. 0.0% 2. onl y in the market f or goods and services. 1 00.0% 3. in both the market f or goods and services and the market f or factors of production. 0.0% 4. in onl y the market f or factors of production. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (2 points) Which of the f ollowing is NOT included in Investment (when calculating GDP using the expenditures method)? 0.0% 1 . fir ms' purchases of new capital eq uipment 1 00.0% 2. purchases of common stock in a cor poration 0.0% 3. changes in the level of fir ms' inventories 0.0% 4. fir ms' expenditures on construction Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (2 points) Which of the f ollowing would be included in the GDP of the United States? 0.0% 1 . the value of leisure time 1 00.0% 2. the value of a car produced in the United States by a Japanese­owned company 0.0% 3. the value of Eli Lill y stock purchased by a U .S. citizen 0.0% 4. the value of housework done in one's own home Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 6 (2 points) Anticipating more sales during the upcoming f ootball season, a manufacturer of sports memorabilia increases his production in Jul This is an example of y . 0.0% 1 . savings. 1 00.0% 2. inventory investment. 0.0% 3. business investment. 0.0% 4. consumption, because the goods will be sold during the f ootball season. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) 7 Disposable income is after ­tax income that is available f or the consumer to spend. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 8 (2 points) Wheat used f or producing bread is 0.0% 1 . a final good. 0.0% 2. not going to generate any employment. 1 00.0% 3. an inter mediate good. 0.0% 4. a durable good. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 9 (2 points) If IBM finds that it has produced 1 00,000 more computers in a year than it sells in that year , the value of those computers 0.0% 1 . will be accounted f or as a loss because they cannot be counted as part of GDP . 0.0% 2. will be included in GDP in the year in which they are sold. 0.0% 3. will be counted in the current year's GDP as consumption. 1 00.0% 4. will be counted in current GDP as inventory investment. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 20 (2 points) Suppose in 1 7 the CPI = 1 98 00.00, in 1 988 the CPI = 10.00, and in 1 1 989 the CPI = 120.7 8. Then the inflation rate 0.0% 1 . was the same in 1 989 as it was in 1 988. 1 00.0% 2. was lower in 1 989 than it was in 1 988. 0.0% 3. was greater in 1 989 than it was in 1 988. 0.0% 4. is impossible to deter mine from the CPI. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 1 (2 points) Suppose the nominal interest rate on some asset is 5% and the inflation rate is 5%. Which of the f ollowing statements is true? 0.0% 1 . The real interest rate is 5%. 0.0% 2. The owner of this asset will gain purchasing power . 0.0% 3. The real interest rate is 1 0%. 1 00.0% 4. The real interest rate is 0%. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 22 (2 points) Given the f ollowing inf mation, calculate the CPI f or or year 1 . Base year CPI = 1 00 T otal cost of goods in base year = $625, T otal cost of goods in year 1 = $7 50 0.0% 1 12.5 . 1 1 00.0% 2. 120 0.0% 3. 125 0.0% 4. 83 Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 23 (2 points) Suppose a typical consumer buys 50 units of f ood and 40 units of clothes in the year 20, when the price per unit of f 11 ood is $20 and the price per unit of clothes is $25. In 202, when the typical consumer buys 60 units of f 1 ood and 60 units of clothes, the price of f ood is $2 4 and the price per unit of clothes remains at $25. If the base year is 20, the inflation rate f 11 or 202 would be 1 0.0% 1 . 22 percent. 1 00.0% 2. 1 0 percent. 0.0% 3. 8.9 percent. 0.0% 4. 20 percent. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 4 (2 points) Deflation ref ers to the situation when 0.0% 1 . the inflation rate is decreasing. 0.0% 2. there is a recession with high inflation. 1 00.0% 3. the price index is falling. 0.0% 4. prices are not changing. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 25 (2 points) The consumer price index, or CPI, 0.0% 1 is a measure of the average price level of all goods and services . produced in the economy in a given year relative to the average price level of all goods and services produced in the economy in a base year . 0.0% 2. is a measure of the average price level of all goods and services produced in the economy in a base year relative to the average price level of all goods and services produced in the economy in a given year . 1 00.0% 3. is a measure of the average price level of the goods and services bought by a typical consumer in a given year relative to the average price level of the goods and services bought by a typical consumer in a base year . 0.0% 4. is a measure of the average price level of the goods and services bought by a typical consumer in a base year relative to the average price level of the goods and services bought by a typical consumer in a given year . Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 26 (2 points) The base year CPI is always _______. 0.0% 1 . 0 0.0% 2. 1 0.0% 3. 1 0 1 00.0% 4. 1 00 Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 7 (2 points) Suppose you sign a contract stipulating a 5­percent increase in wages. That year inflation runs about 1 0 percent. Which of the f ollowing is true? 1 00.0% 1 our real wage f . Y ell. 0.0% 2. Y our nominal wage f ell. 0.0% 3. Although your nominal wage f ell, your real wage increased. 0.0% 4. Both your nominal and real wages increased. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 28 (2 points) Mary's nominal income is $4000. If the value of the consumer price index (CPI) is 200, what is Mary's real income? 0.0% 1 . $8000 0.0% 2. $4000 1 00.0% 3. $2000 0.0% 4. $20 Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 29 (2 points) The largest category of consumer spending in the U .s. is 1 00.0% 1 . housing. 0.0% 2. f ood and beverages. 0.0% 3. transportation. 0.0% 4. medical care. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 30 (2 points) The f our phases of business fluctuations are (in order) 1 00.0% 1 . Expansion, peak , recession, trough 0.0% 2. Expansion, plateau, recession, plateau 0.0% 3. Expansion, trough, recession, peak 0.0% 4. Plateau, expansion, plateau, recession Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 1 (2 points) In an expansion, 0.0% 1 . real GDP is decreasing. 0.0% 2. inflation rates usuall y fall. 1 00.0% 3. the unemployment rate will decrease. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 32 (2 points) If hovercrafts replaced automobiles as a f m of individual transportation, and or this transition caused significant fluctuations in the economy this would be , evidence f or which economist's theory of the business cycle? 0.0% 1 . John Maynard Keynes 0.0% 2. Karl Marx 1 00.0% 3. Joseph Schumpeter 0.0% 4. Adam Smith Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 33 (2 points) An extremel y severe recession is known as a 0.0% 1 . trough. 0.0% 2. peak . 0.0% 3. contraction. 1 00.0% 4. depression. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 4 (2 points) Which of the f ollowing could be expected if the economy is in a recession? 0.0% 1 . The unemployment rate will fall. 1 00.0% 2. The inflation rate will fall. 0.0% 3. Real GDP will increase. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 35 (2 points) Who believed that fluctuations in the business cycle were the result of class conflicts between labor and capital? 0.0% 1 . Schumpeter 1 00.0% 2. Marx 0.0% 3. Rousseau 0.0% 4. Keynes Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 36 (2 points) During a recession, one would expect the price level to ________ and unemployment to _______. 0.0% 1 . increase; increase 1 00.0% 2. decrease; increase 0.0% 3. increase; decrease 0.0% 4. decrease; decrease Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 7 (2 points) High cyclical unemployment is associated with 1 00.0% 1 . economic downturns. 0.0% 2. new tariffs or trade agreements. 0.0% 3. transitional periods in which employees find better jobs. 0.0% 4. times of prosperity and growth in real GDP . Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 38 (2 points) During a recession, the unemployment rate increases because 0.0% 1 . there are more discouraged workers. 0.0% 2. the labor f orce grows. 1 00.0% 3. fir ms hire f ewer workers. 0.0% 4. all of the above. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 39 (2 points) If an auto worker gets laid off because a recession causes the demand f or autos to decrease, what type of unemployment is it? 0.0% 1 . frictional 0.0% 2. structural 1 00.0% 3. cyclical Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 40 (2 points) 1 989 1 999 Adult Population Over 1 6 200 million 220 million Employed 120 million 1 32 million Looking f or Work 8 million 1 0 million Not Looking f or Work 7 2 million 7 8 million The unemployment rate and the labor f orce participation rate f or 1 999 respectivel y were 1 00.0% 1 .0 . 7 4% and 64.55%. 0.0% 2. 4.55% and 93.96%. 0.0% 3. 70 . 4% and 93.96%. 0.0% 4. 12.82% and 60%. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 1 (2 points) The Phillips curve predicts that when unemploymen trises, inflation will 0.0% 1 . rise. 0.0% 2. stay constant. 0.0% 3. exceed the NAIRU in the same proportion as unemployment rose. 1 00.0% 4. fall. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 42 (2 points) People who have dropped out of the labor f orce and who are no longer looking f or a job because they believe the job market has little to off er them are classified by the Labor Department as 0.0% 1 . unemployed. 0.0% 2. nonparticipants. 1 00.0% 3. discouraged workers. 0.0% 4. wage rate busters. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 43 (2 points) The full employment rate of unemployment (or the natural rate of unemployment) is 0.0% 1 . zero. 0.0% 2. always 4%. 0.0% 3. always 6.5%. 1 00.0% 4. variable over time. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 4 (2 points) The lowest rate of unemployment that does not create inflationary pressure is called the 0.0% 1 . NERU: Non­Expansionary Rate of Unemployment. 0.0% 2. MUR: Minimal Unemployment Rate. 1 00.0% 3. NAIRU: Non­Accelerating Inflation Rate of Unemployment. 0.0% 4. NRU: Natural Rate of Unemployment Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 45 (2 points) According to the Bureau of Labor Statistics, a househusband who chooses to stay at home to take care of children is 0.0% 1 . underemployed. 1 00.0% 2. not in the labor f orce. 0.0% 3. unemployed. 0.0% 4. a discouraged worker . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 46 (2 points) Fir ms that pay an efficiency wage are likel y to increase unemployment. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 7 (2 points) If a union succeeds in raising the wages of its members above the eq uilibrium wage, what is a likel y outcome? 1 00.0% 1 . unemployment 0.0% 2. deflation 0.0% 3. increased number of discouraged workers 0.0% 4. an inward shift of the labor suppl y curve Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 48 (2 points) Which of the f ollowing proposals, if f easible, would provide unemployment insurance with the least risk of moral hazard? 1 00.0% 1 . providing unemployment insurance onl y to workers activel y looking f or jobs 0.0% 2. providing unemployment insurance f or onl y a restricted period of time, such a 3 months 0.0% 3. having unemployment benefits decrease steadil y over time until they reach zero 0.0% 4. adding free job training to the standard unemployment insurance benefits Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 49 (2 points) Which of the f ollowing is NOT a likel y outcome of unemployment insurance? 0.0% 1 . a reduction in the financial suff ering of unemployed workers. 0.0% 2. an increase in overall unemployment 1 00.0% 3. a reduction in frictional unemployment 0.0% 4. an increase in the average amount of time workers spend between jobs Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 50 (2 points) Unemployment insurance allows unemployed workers to collect 0.0% 1 . an amount eq ual to their f mer wage f or or a period of 3 months. 1 00.0% 2. up to half of their f mer wage f or or 26 weeks. 0.0% 3. up to a q uarter of their f mer wage f or or 52 weeks. 0.0% 4. $1 00 per week (in 1 7 real dollars). 99 Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 1 (2 points) A rise in the minimum wage will tend to _________ the q uantity demanded of labor and __________ the q uantity supplied of labor . 1 00.0% 1 . decrease; increase 0.0% 2. increase; decrease 0.0% 3. decrease; decrease 0.0% 4. increase; increase Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 52 (2 points) The legislative intent of minimum wage laws is to ensure 0.0% 1 . a middle­class standard of living f or all workers. 0.0% 2. employment f or all who want it. 0.0% 3. unemployment compensation. 1 00.0% 4. a minimall y adeq uate standard of living. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 53 (2 points) Assume that the velocity of the money suppl y is held constant. In the classical view of money , which of the f ollowing statements is true? 1 00.0% 1 . Changes in the money suppl y aff ect onl y prices. 0.0% 2. Changing the money suppl influences both the price level and the y q uantity of output. 0.0% 3. The money suppl y must remain fixed. 0.0% 4. A change in the price level must be matched with a reciprocal change in the money suppl y . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 4 (2 points) Which of the f ollowing is NOT a cost that can be attributed to inflation? 0.0% 1 . higher interest rates 0.0% 2. confusion (and resulting inefficiency) about the relative value of investments 1 00.0% 3. increased government debts 0.0% 4. wasted time because of consumers' decisions to hold less cash Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 55 (2 points) Suppose the GDP deflator rose from 1 .00 to 1 .06 from 1 995 to 2000. Which of the f ollowing statements is true? 0.0% 1 . Prices decreased 6% in 5 years. 1 00.0% 2. Purchasing power decreased 6% in 5 years. 0.0% 3. Prices increased 60% in 5 years. 0.0% 4. Purchasing power decreased 60% in 5 years. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 56 (2 points) People are most likel y to revert to barter in periods of 0.0% 1 . stagflation. 0.0% 2. deflation. 1 00.0% 3. hyperinflation. 0.0% 4. recession. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 7 (2 points) Suppose V al could earn 5.25% interest on her savings account, while inflation grew steadil y at 3%. She is most likel y to 1 00.0% 1 . put her money in the bank . 0.0% 2. spend her money q uickl y . 0.0% 3. withdraw her money from the bank . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 58 (2 points) Imagine that the money suppl y's velocity is 8. Which of the f ollowing is an accurate statment? 0.0% 1 Any given dollar could not have been passed around more than 8 times . during the year . 0.0% 2. One­eighth of the money suppl y changed hands during the year . 0.0% 3. Prices could not have risen by more than 800% during the year . 1 00.0% 4. Currency changed hands an average of 8 times during the year . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 59 (2 points) Which of the f ollowing pairs f o economic concepts are usuall y associated with each other? 1 00.0% 1 . stagflation and cost­push inflation 0.0% 2. stagflation and demand­pull inflation 0.0% 3. economic expansion and cost­push inflation 0.0% 4. economic recession and demand­pull inflation Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 60 (2 points) The value of money 0.0% 1 . is directl y related to the price level. 1 00.0% 2. is inversel y related to the price level. 0.0% 3. is deter mined by the real interest rate. 0.0% 4. is deter mined by the nominal interest rate. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 94 / 120 = 7 8.3% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ TEST 4 User ID: xefri Attempt : 1 / 1 Out of: 1 00 Started: Nov 30, 2003 1 7 Finished: Nov 30, 2003 20:2 T 8:0 1 ime spent 2 hrs., 1 : 3 min., 1 5 sec. Student finished 46 min., 45 sec. ahead of the 1 80 min. time limit. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) A dollar bill is an example of commodity money . 0.0% 1 rue . T 1 00.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (2 points) From the definitions of M1 and M2, we know that 0.0% 1 . M1 is always larger than M2. 1 00.0% 2. M2 is always larger than M1 . 0.0% 3. M1 and M2 are always eq ual. 0.0% 4. M1 is sometimes larger than M2, and sometimes smaller than M2. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (2 points) The U .S. dollar is considered money because 0.0% 1 . it is convertible to gold or sil . ver 0.0% 2. it is easil y portable. 1 00.0% 3. it has been decreed by the U .S. government as legal tender . 0.0% 4. all of the above. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (2 points) The opportunity cost of money is 1 00.0% 1 . the interest rate. 0.0% 2. the price of stocks. 0.0% 3. the price level. 0.0% 4. real GDP . Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (2 points) If the interest rate rises, consumers will tend to hold more cash. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (2 points) If income decreases, which of the f ollowing will occur? 0.0% 1 . Money suppl y will shift right. 0.0% 2. Money demand will shift right. 1 00.0% 3. The interest rate will decrease. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (2 points) Given that the money market is in eq uilibrium, a decrease in the money suppl y will result in 1 00.0% 1 . an increase in the eq uilibrium interest rate. 0.0% 2. a decrease in the eq uilibrium interest rate. 0.0% 3. no change in the eq uilibrium interest rate. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (2 points) The graph below shows the demand f or money If the F . ederal Reserve has the power to set the money suppl y at a fixed level, we depict the money suppl y curve as a(n) 0.0% 1 . upward­sloping line that intersects the demand curve. 0.0% 2. downward sloping line parallel to the demand curve. 0.0% 3. horizontal line. 1 00.0% 4. vertical line. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (2 points) Look at the graph below . If the interest rate is R1 , then 0.0% 1 . the money suppl y curve will shift to the left until the money market is in eq uilibrium. 0.0% 2. the money demand curve will shift to the right until the money market is in eq uilibrium. 1 00.0% 3. the interest rate will fall until the money market is in eq uilibrium. 0.0% 4. any of the above can happen. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (2 points) Assuming the money market is in eq uilibrium, a decrease in the price level will cause 0.0% 1 . money suppl y to shift left. 0.0% 2. money suppl y to shift right. 0.0% 3. money demand to shift right. 1 00.0% 4. the eq uilibrium interest rate to fall. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (2 points) Suppose the money demand curve shifts to the left. This could have been caused by 0.0% 1 . an increase in the interest rate. 0.0% 2. a decrease in the interest rate. 0.0% 3. an increase in the price level. 1 00.0% 4. a decrease in the price level. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (2 points) Which of the f ollowing is NOT a motive f or holding money? 0.0% 1 . the transaction motive 1 00.0% 2. the depository motive 0.0% 3. the precautionary motive 0.0% 4. the speculative motive Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (2 points) A bond is a 0.0% 1 legal claim to a part of a cor poration's future profits that doe not . include voting rights. 1 00.0% 2. legal claim against a fir m, providing a fixed annual coupon payment and a lump­ sum payment at maturity . 0.0% 3. legal claim to a part of a cor poration's future profits that includes voting rights. 0.0% 4. nonlegal promise to provide an annual payment to the holder when the cor poration makes profits. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (2 points) Which type of bond would usuall y pay the highest interest rate? 0.0% 1 .S. government bonds . U 1 00.0% 2. junk bonds 0.0% 3. cor porate bonds 0.0% 4. municipal bonds Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (2 points) A person who is willing to bear more risk will buy 0.0% 1 . bonds. 0.0% 2. government bonds. 1 00.0% 3. stock . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 6 (2 points) When a person deposits a check into her checking account, 0.0% 1 . she owes the bank money . 0.0% 2. no one owes anybody anything. The deposit is an asset to the person, but is neither an asset nor a liability to the bank . 0.0% 3. no one owes anybody anything. The deposit is an asset to both the bank and the person. 1 00.0% 4. the bank owes her money . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) 7 The value of a future amount expressed in today's dollars is known as 1 00.0% 1 . Present value. 0.0% 2. Allocative efficiency . 0.0% 3. The real rate of interest. 0.0% 4. The nominal rate of interest. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 8 (2 points) _______________ are entitled to the first claim on the returns from an investment. 0.0% 1 . Stockholders 1 00.0% 2. Bondholders 0.0% 3. Laborers 0.0% 4. Financial inter mediaries Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 9 (2 points) Which of the f ollowing is an example of a financial inter mediary? 0.0% 1 . a T ­bill 0.0% 2. a brokerage 1 00.0% 3. a bank 0.0% 4. an income­earning consumer Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 20 (2 points) Suppose you will receive an inheritance in 20 years worth $5 million. If the interest rate is 8 percent, the present value of the inheritance is 1 00.0% 1 .05 million. . $1 7 0.0% 2. $2 million. 0.0% 3. $5 million. 0.0% 4. $40 million. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 1 (2 points) Which ofthe f ollowing f mulas expresses the true relationship between savings or and investment? 0.0% 1 . I+(T ­G)­NX = S 0.0% 2. I+G­NX=S 0.0% 3. S+T ­NX=I 1 00.0% 4. S+(T ­G)­NX=I Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 22 (2 points) If a pension fund owns stock in a cor poration, the stock would be listed as an asset on its balance sheet. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 23 (2 points) The profits received from selling stock f more than the purchase price are or called 0.0% 1 . dividends. 1 00.0% 2. capitals gains. 0.0% 3. shares. 0.0% 4. none of the above. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 4 (2 points) The rate of interest that the F ed charges on loans to banks is called the 1 00.0% 1 . discount rate. 0.0% 2. f ederal funds rate. 0.0% 3. prime rate. 0.0% 4. mortgage rate. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 25 (2 points) Which of the f ollowing actions by the F ed would cause an increase in the money suppl y? 1 00.0% 1 . Decrease the discount rate. 0.0% 2. Increase the reserve req uirement. 0.0% 3. Sell securities (bonds). Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 26 (2 points) Suppose the F ed wants to decrease the money suppl Then it should y . 0.0% 1 . sell stocks. 0.0% 2. buy stocks. 1 00.0% 3. sell government bonds. 0.0% 4. buy government bonds. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 7 (2 points) If the F decides to buy bonds on the open market, which of the f ed ollowing is true? 0.0% 1 . This is an easing of the money suppl y . 0.0% 2. The money suppl y will shift right. 0.0% 3. The eq uilibrium interest rate will decrease. 1 00.0% 4. All of the above are true. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 28 (2 points) The F ed can aff ect interest rates by 0.0% 1 . changing the reserve req uirements. 0.0% 2. changing the discount rate. 0.0% 3. open market operations. 1 00.0% 4. all of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 29 (2 points) The F ederal Reserve is invol ved in clearing individuals' checks and wiring money between financial institutions. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 30 (2 points) Which of the f ollowing statements is FALSE? 0.0% 1 . The United States has 12 F ederal Reserve districts. 0.0% 2. The F ederal Open Market Committee oversees sales and purchases of government securities by the F ed. 0.0% 3. The members of the Board of Governors of the F ed are appointed by the President. 1 00.0% 4. Congress must approve any ma jor changes in the F ed's monetary policy . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 1 (2 points) The F ed's influence is primaril y through actions that directl y aff ect which part of the economy? 0.0% 1 . the factors market 0.0% 2. the goods market 1 00.0% 3. the financial sector 0.0% 4. the government sector Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 32 (2 points) Which of the f ollowing is an additional role of the F ed? 0.0% 1 . maintaining the F ed wire 0.0% 2. clearing checks 0.0% 3. providing emergency loans 1 00.0% 4. All of the above are additional roles of the F ed. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 33 (2 points) Money is created by 0.0% 1 . onl y commercial banks. 0.0% 2. onl y commercial banks and savings and loan associations. 0.0% 3. onl y commercial banks and credit unions. 1 00.0% 4. all financial inter mediaries. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 4 (2 points) Monetary policy is the action of the central bank that 0.0% 1 . influences the issuing of coins and currency . 1 00.0% 2. deter mines the availability and cost of money and credit. 0.0% 3. sets the inflation rate. 0.0% 4. all of the above. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 35 (2 points) Which of the f ollowing eq uations is correct? 0.0% 1 . req uired reserve ratio = (reserves ­ deposits) x 1 00 0.0% 2. Reserves = deposits / (req uired reserve ratio) 1 00.0% 3. Deposits = reserves x deposit multiplier 1 00.0% 4. Deposit multiplier = 1 / (req uired reserve ratio) Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 36 (2 points) If the F ed buys $1 000 in bonds from bank A, then 1 00.0% 1 . bank A will increase its loans. 0.0% 2. bank A will decrease its loans. 0.0% 3. bank A will decrease its deposits. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 7 (2 points) Use this inf mation to answer the next three q uestions. Suppose someone deposits or $500 cash in her checking account after selling a government bond, so that the bank's reserves and deposits increase by $500. If the legal reserve req uirement is 5% (0.05), how much is this bank req uired to hold on reserve? 1 00.0% 1 . $25 0.0% 2. $250 0.0% 3. $45 7 0.0% 4. $500 0.0% 5. none of the above Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 38 (2 points) What is the deposit multiplier? 0.0% 1 . 5 0.0% 2. 50 1 00.0% 3. 20 0.0% 4. 0.05 0.0% 5. none of the above Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 39 (2 points) What is the total amount by which the money suppl y can increase as a result of the initial $500 deposit? 1 00.0% 1 . $1 0,000 0.0% 2. $500 0.0% 3. $2500 0.0% 4. none of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 40 (2 points) When the F ed wants to change interest rates, it does so by 0.0% 1 . mandating a new f ederal funds rate. 0.0% 2. directl y changing the amount of loans in the banking system. 1 00.0% 3. buying and selling government securities. 0.0% 4. issuing new currency . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 1 (2 points) If a bank currentl y has $1 000 in deposits and the req uired reserve ratio is 20%, then that single bank can make loans of 0.0% 1 . $200. 1 00.0% 2. $800. 0.0% 3. $5,000. 0.0% 4. $20,000. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 42 (2 points) The F ederal Reserve Bank guarantees the value of a dollar bill. 0.0% 1 rue . T 1 00.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 43 (2 points) Which of the f ollowing could have caused the change in demand f or loanable funds depicted in the graph? 0.0% 1 . tax increases 1 00.0% 2. an increase in real GDP 0.0% 3. an increase in the discount rate 0.0% 4. an increase in inflation Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 4 (2 points) When there is excess suppl of loanable funds, interest rates will rise in y response. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 45 (2 points) The eq uilibrium rate of interest is 0.0% 1 deter mined primaril by business demand f loanable funds since the . y or suppl y curve of loanable funds is horizontal. 0.0% 2. deter mined primaril y by the rate at which households must be compensated to get them to save since the market demand curve f loanable funds is nearl or y horizontal. 0.0% 3. deter mined by the f ederal government. 1 00.0% 4. f ound by the intersection of the downward­sloping demand curve f or loanable funds and the upward­sloping suppl y curve f or loanable funds. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 46 (2 points) The eq uilibrium rate of interest is deter mined by 1 00.0% 1 . The demand and suppl y of loanable funds. 0.0% 2. The F ederalReserve. 0.0% 3. Government regulation. 0.0% 4. The f oreign suppl y of loanable funds. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 7 (2 points) Which of the f ollowing graphs correctl y depicts the change in eq uilibrium in the market f or loanable funds that would result from increased taxes on businesses? 0.0% 1 . 1 00.0% 2. 0.0% 3. 0.0% 4. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 48 (2 points) The nominal rate of interest 0.0% 1 . Is adjusted f or inflation. 1 00.0% 2. Is the stated rate of interest. 0.0% 3. Is expressed as an after ­tax percentage. 0.0% 4. All of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 49 (2 points) Which of the f ollowing graphs correctl y depicts the change in eq uilibrium in the market f or loanable funds that would result from the government running a larger budget sur plus? 0.0% 1 . 0.0% 2. 1 00.0% 3. 0.0% 4. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 50 (2 points) The best measure of your increase or decrease in purchasing power as a result of an investment is the nominal interest rate. 0.0% 1 rue . T 1 00.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 7 2 / 1 00 = 7 2.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ TEST 5 User ID: xefri Attempt : 1 / 1 Out of: 1 00 Started: Dec 1, 2003 2 1 1:32 Finished: Dec 1, 2003 23:36 T 1 ime spent : 2 hrs., 3 min., 53 sec. Student finished 1 hr ., 56 min., 7 sec. ahead of the 2 40 min. time limit. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) When the government raises taxes, total output 1 00.0% 1 . falls, because consumers and businesses reduce their spending. 0.0% 2. rises, because consumers and businesses reduce their spending. 0.0% 3. rises, because the government is able to reduce its deficit. 0.0% 4. rises, because the government has more money to spend. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (2 points) When domestic prices rise, exports 0.0% 1 . rise, becaue exporters earn more f or the goods they sell. 0.0% 2. fall, because exporters earn less f or the goods they sell. 0.0% 3. rise, because f oreign countries purchase more domestic goods. 1 00.0% 4. fall, because f oreign countries purchase f ewer domestic goods. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (2 points) How does an increase in the money suppl y aff ect total output? 1 00.0% 1 . Output increases, because interest rates fall. 0.0% 2. Output increases, because interest rates rise. 0.0% 3. Aggregate demand increases, but total output falls. 0.0% 4. Aggregate demand falls, but total output rises. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (2 points) The aggregate demand curve is a graphical representation of 0.0% 1 . aggregate spending as a function of income. 1 00.0% 2. aggregate spending as a function of the price level. 0.0% 3. government spending as a function of total demand. 0.0% 4. aggregate income as a function of the price level. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (2 points) Suppose consumers and businesses are f eeling insecure about the future of the economy , and people are afraid the economy is entering a recession. How would this aff ect the aggregate demand curve? 1 00.0% 1 . Aggregate demand would shift inward because autonomous consumption and investment would probabl y fall. 0.0% 2. This would cause a movement to the left along the same aggregate demand curve. 0.0% 3. Aggregate demand would increase as consumers and businesses increase their expenditures. 0.0% 4. Savings would fall as a result of the insecurity , so aggregate demand would increase. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (2 points) Which of the f ollowing statements accuratel describes the eff y ect of a price increase on investment spending? 1 00.0% 1 . Investment spending falls, because interest rates rise. 0.0% 2. Investment spending rises, because interest rates fall. 0.0% 3. Investment spending rises, because business can now charge more f or the goods they sell. 0.0% 4. Investment spending remains unchanged, because it is measured in real, not nominal, ter ms. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (2 points) If the government wants to decrease aggregate demand, it could 0.0% 1 . cut taxes. 1 00.0% 2. cut government spending. 0.0% 3. encourage the F ed to increase the money suppl y . 0.0% 4. do any of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (2 points) Which of the f ollowing statements about the relationship between aggregate spending and aggregate income is true? 0.0% 1 . Aggregate income must exceed aggregate spending, or the economy will be in debt. 0.0% 2. Aggregate spending must exceed aggregate income, or the economy will be in debt. 1 00.0% 3. Aggregate income always eq uals aggregate spending. 0.0% 4. The relationship between aggregate spending and aggregate income depends on how high the tax rate is. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (2 points) Which of the f ollowing is a componeint of GDP? 0.0% 1 . Consumption 0.0% 2. Investment 0.0% 3. Government spending 1 00.0% 4. All of the above are components of GDP Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (2 points) When prices rise, 0.0% 1 . real GDP increases. 0.0% 2. f oreign demand increases. 1 00.0% 3. the demand f or money increases. 0.0% 4. investment spending increases. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (2 points) The short­run aggregate suppl y curve illustrates 1 00.0% 1 how output responds to changes in prices bef . ore all prices have adjusted. 0.0% 2. how output responds to changes in prices after all prices have adjusted. 0.0% 3. how producers raise prices in response to increases in their costs. 0.0% 4. how consumers reduce spending in response to increases in prices. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (2 points) An improvement in techonolgy will 0.0% 1 . shift the long­run aggregate suppl y curve to the left. 1 00.0% 2. shift the long­run aggregate suppl y curve to the right. 0.0% 3. increase the slope of the long­run aggregate curve. 0.0% 4. decrease the slope of the long­run aggregate suppl y curve. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (2 points) When producers expect prices to fall, the short run aggregate suppl y curve 1 00.0% 1 . shifts downward. 0.0% 2. shifts upward. 0.0% 3. pivots upward. 0.0% 4. pivots downward. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (2 points) Real wages decline when 0.0% 1 . workers are paid less than they are worth. 0.0% 2. fir ms cut back on production in response to a decline in aggregate demand. 1 00.0% 3. the price level rises faster than the level of wages. 0.0% 4. the level of wages rises faster than the level of prices. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (2 points) Suppose producers in the economy expect prices to increase in the future. The short­run aggregate suppl will _________, while the long­run aggregate suppl y y will ___________. 1 00.0% 1 . shift upward; not shift 0.0% 2. shift upward; shift left 0.0% 3. shift downward; not shift 0.0% 4. shift downward; shift right Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 6 (2 points) Which of the f ollowing statements regarding output in the long run is correct? 0.0% 1 . output depends on the money suppl y . 1 00.0% 2. Output is deter mined by the q uantity and productivity of resources. 0.0% 3. Output is deter mined by the level of interest rates. 0.0% 4. Output depends on the price level. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) 7 The short run aggregate suppl y (SRAS) curve slopes upward, because 0.0% 1 . there is an inverse relationship between prices and output. 0.0% 2. fir ms cut back on production in the short run when prices increase. 0.0% 3. when prices rise, the q uantity demanded decreases. 1 00.0% 4. confusion, sticky wages, and sticky prices provide business with profit opportunities in the short run. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 8 (2 points) A suppl y shock causes excess demand in the short run. 1 00.0% 1 rue . T 0.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 9 (2 points) What is the relationship between aggregate output demanded and the price level? 0.0% 1 . Aggregate output rises when the price level rises. 1 00.0% 2. Aggregate output falls when the price level rises. 0.0% 3. Aggregate output is unaff ected by the price level. 0.0% 4. Aggregate output rises in the short run when the price level rises, but falls in the long run. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 20 (2 points) When people in the economy make decisions about the future based on what has happened in the past, we say they are using 0.0% 1 . rational expectations. 0.0% 2. Keynesian anal ysis. 1 00.0% 3. adaptive expectations. 0.0% 4. the best possible method of decision­making. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 1 (2 points) In the short run, suppl shocks cause prices to __________ and the output to y __________. 0.0% 1 . increase;increase 1 00.0% 2. increase;decrease 0.0% 3. decrease;increase 0.0% 4. decrease;decrease Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 22 (2 points) In the graph below Yf represents the __________, and P1 represents the , __________. 1 00.0% 1 . long run eq uilibrium level of output ; short run level of prices 0.0% 2. short run eq uilibrium level of output ; long run level of prices 0.0% 3. long run eq uilibrium level of output ; long run level of prices 0.0% 4. short run eq uilibrium level of output ; long run level of prices Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 23 (2 points) Suppose the economy is in long­run eq uilibrium, but a war causes the suppl y of resources to decrease. What impact will this have on the economy? 0.0% 1 . The LRAS and SRAS curves will shift outward, causing prices to fall and output to increase. 1 00.0% 2. The LRAS and SRAS curves will shift inward, causing prices to increase and output to fall. 0.0% 3. Onl y the SRAS curve will shift inward, causing prices to increase and output to fall. 0.0% 4. The LRAS, SRAS, and AD curves will shift inward, so onl y output will fall. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 4 (2 points) What is the long run eff ect of increasing output beyond the full­employment level? 0.0% 1 . Prices and wages rise, and the level of output falls. 1 00.0% 2. Prices and wages rise, and the level of output remains unchanged. 0.0% 3. Prices, wages, and the level of output increase. 0.0% 4. Prices, wages, and the level of output decrease. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 25 (2 points) Examine the graph below . What would be the natural process by which this economy would move back to a long­run eq uilibrium? 1 00.0% 1 . Since output is beyond Yf, suppliers will expect higher future prices and will have to pay more f or resources, which will cause SRAS to shift upward. 0.0% 2. Since output is beyond Yf, suppliers will expect higher future prices and will have to pay more f or resources, which will cause SRAS to shift downward. 0.0% 3. Since output is beyond Yf, suppliers will expect lower future prices and will have to pay less f or resources, which will cause SRAS to shift downward. 0.0% 4. Since unemployment is high, consumers will demand f ewer goods and services, so AD will shift inward. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 26 (2 points) Adaptive expectations will speed up the adjustment process that takes place when an economy operates above or below full employment. 0.0% 1 rue . T 1 00.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 7 (2 points) Adaptive expectation f mation means that or 1 00.0% 1 . people base their expectations of the future on what has occurred in the past. 0.0% 2. people base their expectations of the future on new inf mation. or 0.0% 3. people base their expectations of the future on prices. 0.0% 4. people base their expectations of the future on output. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 28 (2 points) Which of the f ollowing statements helps to explain why the economy can be slow to recover from a recession? 0.0% 1 . Workers are less motivated because of reduced expectations, which reduces total output. 0.0% 2. There is not as much money in circulation to fuel new investment. 1 00.0% 3. Wages do not fall q uickl y , which delays an adjustment to a higher output level. 0.0% 4. Aggregate suppl y shifts inward proportionatel y , which leads to a "vicious cycle." Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 29 (2 points) Proponents of rational expectations believe that an increase in government spending during a time of recession will lead to 0.0% 1 . an inward shift of the aggregate demand curve. 0.0% 2. a deeper recession due to "crowding out." 0.0% 3. a paradoxical increase in the budget sur plus. 1 00.0% 4. an offsetting reduction in spending by households and businesses. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 30 (2 points) According to classical economists, if the economy is in a recession, what must the government do to increase output to the full­employment level? 1 00.0% 1 . Nothing 0.0% 2. Reduce interest rates 0.0% 3. Increase governmet spending 0.0% 4. Provide a credit f or household savings Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 1 (2 points) Suppl y­driven deflation is often ref erred to as bad deflation. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 32 (2 points) Fiscal and monetary policies are often useful in pulling an economy out of a recession. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 33 (2 points) In the short run, what happens to the level of output and the level of prices as a result of a technological improvement? 1 00.0% 1 . Prices fall and output rises. 0.0% 2. Prices and output rise. 0.0% 3. Prices and output fall. 0.0% 4. None of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 4 (2 points) Which of the f ollowing is NOT a type of lag that can delay the desired eff ects of fiscal policy? 0.0% 1 . Recognition lag 1 00.0% 2. Political lag 0.0% 3. Administration lag 0.0% 4. Operational lag Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 35 (2 points) Suppose a law was passed to authorize more spending on roads, but several months later the first dollar had not been spent. This delay is an example of a(n) 0.0% 1 . recognition lag 0.0% 2. political lag 0.0% 3. administration lag 1 00.0% 4. operational lag Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 36 (2 points) During the mid 1 980s, the budget deficit __________ and the interest rate __________. 1 00.0% 1 . increased;increased 0.0% 2. increased;decreased 0.0% 3. decreased;increased 0.0% 4. decreased;decreased Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 7 (2 points) The goal of Keynesian fiscal policy during a recession is to 0.0% 1 . do nothing ­ let the economy recover on its own. 1 00.0% 2. move the economic eq uilibrium back to the full­employment level by increasing aggregate demand. 0.0% 3. move the economic eq uilibrium back to the full­employment level by decreasing aggregate suppl y . 0.0% 4. reduce long run aggregate suppl so that the economy can reach full y employment without a long period of adjustment. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 38 (2 points) If the government begins to buy back T reasury bills, which of the f ollowing can you inf er? 0.0% 1 . G>T 0.0% 2. G=T 1 00.0% 3. T>G 0.0% 4. NX>0 Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 39 (2 points) When the government increases its spending, a likel long run outcome is a y reduction in investment spending. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 40 (2 points) If government spending exceeds government revenues, the government runs a budget deficit, which it can pay f or by 0.0% 1 . reducing spending. 0.0% 2. increasing taxes. 1 00.0% 3. issuing T reasury bills. 0.0% 4. raising interest rates. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 1 (2 points) The phenomenon of crowding out occurs when 0.0% 1 . sticky wages, sticky prices, and confusion crowd out competition. 1 00.0% 2. increases in government spending raise the interest rate and crowd out investment by fir ms. 0.0% 3. increases in taxes crowd out consumption. 0.0% 4. downward pressure on prices crowds out aggregate demand. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 42 (2 points) Which of the f ollowing is an example of monetary policy that accommodates expansionary fiscal policy? 1 00.0% 1 . lowering the discount rate 0.0% 2. raising the req uired reserve ratio 0.0% 3. setting price controls on key inputs in the economy 0.0% 4. lowering taxes to increase the flow of consumer funds Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 43 (2 points) Which of the f ollowing situations would be most likel y to yield "good deflation"? 1 00.0% 1 echnological change improves workers' productivity . T . 0.0% 2. There is a suppl y shock in the energy industry . 0.0% 3. Consumers, f eeling good about the future, start spending more money . 0.0% 4. The government runs a sur plus, reducing the crowding­out eff ect. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 4 (2 points) The school of rational expectations holds that if consumers and businesses can adjust their behavior q uickl y in response to monetary policy , the policy becomes more eff ective. 0.0% 1 rue . T 1 00.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 45 (2 points) Suppose the economy has experienced a suppl y shock and is currentl y at P1 on the graph below . If the F ed does nothing, 0.0% 1 . aggregate demand will eventuall y increase, bringing the economy back to full employment. 1 00.0% 2. excess suppl y will cause prices and wages to fall, and SRAS will move downward toward the full­employment level of output. 0.0% 3. excess demand will cause further increases in prices and wages, causing SRAS to shift upward. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 46 (2 points) The belief that money is neutral is most likel y to be endorsed by 0.0% 1 . Keynesian economists. 0.0% 2. monetarists. 1 00.0% 3. classical economists. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 7 (2 points) In the short run, contractionary monetary policy causes output to ___________ and prices to ______________. 0.0% 1 . rise; rise 0.0% 2. rise; fall 0.0% 3. fall; rise 1 00.0% 4. fall; fall Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 48 (2 points) Classical economists and non­classical economists disagree about whether changes in the money suppl y can change output over the long ter m. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 49 (2 points) In the q uantity theory of money , velocity means 0.0% 1 . the rate of the change in GDP . 0.0% 2. the rate at which business inventories turn over in a year . 1 00.0% 3. the rate at which the money suppl y turns over in a year . 0.0% 4. the rate at which the F ed incrases the money suppl y . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 50 (2 points) Contractionary monetary policy will cause prices and output to decrease in the short run. 1 00.0% 1 rue . T 0.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 80 / 1 00 = 80.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ FINAL EXAM ­ fall semester User ID: xefri Attempt : 1 / 1 Out of: 1 00 Started: Dec 1 8, 2003 09:25 Finished: Dec 1 8, 2003 1 1:06 T ime spent : 1 hr ., 40 min., 3 1 sec. Student finished 1 hr ., 1 9 min., 29 sec. ahead of the 1 80 min. time limit. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) Which of the f ollowing is a characteristic of money? 0.0% 1 . indivisible 0.0% 2. perishable 1 00.0% 3. portable 0.0% 4. all of the above Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (2 points) From the definitions of M1 and M2, we know that 0.0% 1 . M1 is always larger than M2. 1 00.0% 2. M2 is always larger than M1 . 0.0% 3. M1 and M2 are always eq ual. 0.0% 4. M1 is sometimes larger than M2, and sometimes smaller than M2. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (2 points) One common problem with commodity money is that 0.0% 1 . it has little intrinsic value. 0.0% 2. it is not useful as a unit of account. 1 00.0% 3. it may not be divisible. 0.0% 4. gold is in short suppl y . Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (2 points) If the money suppl y increases, then interest rates will rise. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (2 points) Suppose you will receive an inheritance in 20 years worth $5 million. If the interest rate is 8 percent, the present value of the inheritance is 1 00.0% 1 .05 million. . $1 7 0.0% 2. $2 million. 0.0% 3. $5 million. 0.0% 4. $40 million. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (2 points) The graph below shows the demand f or money The initial interest rate is io. Which . graph correctl y depicts a rise in interest rates above the initial level io? 0.0% 1 . 1 00.0% 2. 0.0% 3. 0.0% 4. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (2 points) Suppose there is an increase in income. Then we should expect 0.0% 1 . the interest rate to fall as people want to spend more money . 1 00.0% 2. the interest rate to rise as the demand f or money shifts to the right. 0.0% 3. the money suppl y curve to shift to the right as people spend more money . 0.0% 4. none of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (2 points) Financial inter mediaries are institutions that 0.0% 1 . set interest rates. 1 00.0% 2. transf er funds in the f m of loans from savers to investors. or 0.0% 3. create money . 0.0% 4. provide checking accounts. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (2 points) The Dow Jones Industrial A verage is an index used to track the average price of all stocks on the New Y ork Stock Exchange. How many cor porate stocks are included in the DOW? 0.0% 1 . 500 1 00.0% 2. 30 0.0% 3. 250 0.0% 4. 90 Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (2 points) Owning the bond of a company 0.0% 1 . is eq uivalent to owning stock in the company . 0.0% 2. means that you profit if the company loses money . 1 00.0% 3. means that the company owes you money . 0.0% 4. means that you owe the company money . Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (2 points) If a bond's coupon rate is 5% and the bondholder receives a $500 interest payment annuall y , the face value of the bond must be ________. 1 00.0% 1 . $1 0,000 0.0% 2. $25 0.0% 3. $1 ,000 0.0% 4. $1 00,000 Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (2 points) If the F decides to buy bonds on the open market, which of the f ed ollowing is true? 0.0% 1 . This is an easing of the money suppl y . 0.0% 2. The money suppl y will shift right. 0.0% 3. The eq uilibrium interest rate will decrease. 1 00.0% 4. All of the above are true. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (2 points) Open market operations ref er to 0.0% 1 F policies designed to open f . ed oreign markets to domesticall produced y goods and services. 1 00.0% 2. the F buying and selling government securities to influence key ed interest rates. 0.0% 3. F ed policies designed to stimulate the banking system. 0.0% 4. none of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (2 points) When the F ed purchases government bonds, 0.0% 1 . the money suppl y curve shifts to the left. 1 00.0% 2. the money suppl y curve shifts to the right. 0.0% 3. the money demand curve shifts to the left. 0.0% 4. the money demand curve shifts to the right. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (2 points) Fractional reserve banking means that 0.0% 1 the f . ederal banking system is decentralized, operating through 12 districts rather than one central bank . 1 00.0% 2. banks are req uired to hold a fraction of their liabilities in the f m or of cash in their vaults or as deposits with the F ed. 0.0% 3. banks must "synchronize" their customers' withdrawals and deposits so that there is a rough balance in liq uidity at any given time. 0.0% 4. banks are legall y per mitted to give loans onl y up to the fractional rate, as deter mined by the F ed. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 6 (2 points) Which of the f ollowing F ederal Reserve actions would NOT result in a decrease in the money suppl y? 0.0% 1 . selling T ­bills 1 00.0% 2. lowering the reserve req uirement 0.0% 3. increasing the discount rate Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (2 points) 7 Large cor porations, the f ederal government, or state and local governments usuall y issue _________ in order to finance their purchases. 0.0% 1 . mutual funds 0.0% 2. stocks 1 00.0% 3. bonds 0.0% 4. insurance policies Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 8 (2 points) An increase in the price level will raise the demand f money and shift the or demand curve f or money outward. 1 00.0% 1 rue . T 0.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 9 (2 points) Which of the F ed's tools has become largel y symbolic? 0.0% 1 . altering the req uired reserve ratio 1 00.0% 2. changing the discount rate 0.0% 3. buying or selling securities on the open market 0.0% 4. lowering bank taxes Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 20 (2 points) Which of the f ollowing is an example of "near money"? 0.0% 1 . checking accounts 0.0% 2. cash 1 00.0% 3. savings accounts 0.0% 4. bank's reserves Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 1 (2 points) Suppose the req uired reserve ratio is 1 percent. An increase of $900 in new 5 deposits at a commercial bank will 0.0% 1 . increase total deposits in the banking system by $1 5. 0.0% 2. increase total deposits in the banking system by $1 35. 0.0% 3. increase total deposits in the banking system by $900. 1 00.0% 4. increase total deposits by in the banking system $6000. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 22 (2 points) If the req uired reserve ratio decreases, 1 00.0% 1 . the deposit multiplier increases. 0.0% 2. banks make f ewer loans. 0.0% 3. deposits in other banks will decrease. 0.0% 4. all of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 23 (2 points) If the government runs a bigger deficit, the suppl y curve f or loanable funds will shift outward. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 4 (2 points) Which of the f ollowing graphs correctl y depicts the change in eq uilibrium in the market f or loanable funds that would result from increased taxes on businesses? 0.0% 1 . 1 00.0% 2. 0.0% 3. 0.0% 4. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 25 (2 points) The eq uilibrium rate of interest is 0.0% 1 deter mined primaril by business demand f loanable funds since the . y or suppl y curve of loanable funds is horizontal. 0.0% 2. deter mined primaril y by the rate at which households must be compensated to get them to save since the market demand curve f loanable funds is nearl or y horizontal. 0.0% 3. deter mined by the f ederal government. 1 00.0% 4. f ound by the intersection of the downward­sloping demand curve f or loanable funds and the upward­sloping suppl y curve f or loanable funds. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 26 (2 points) If our trade deficit increases significantl y , how will thataff ect the money market? 0.0% 1 . The eq uilibrium interest rate will rise. 1 00.0% 2. The eq uilibrium interest rate will fall. 0.0% 3. The eq uilibrium interest rate is unaff ected by the trade deficit. 0.0% 4. The eq uilibrium interest rate could rise or fall, depending on how the trade deficit is paid down. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 7 (2 points) Which of the f ollowing will NOT cause a shift in the investment demand curve? 0.0% 1 . a tax cut 0.0% 2. an increase in real GDP 1 00.0% 3. an increase in the interest rate 0.0% 4. optimistic expectations Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 28 (2 points) When the government raises taxes, total output 1 00.0% 1 . falls, because consumers and businesses reduce their spending. 0.0% 2. rises, because consumers and businesses reduce their spending. 0.0% 3. rises, because the government is able to reduce its deficit. 0.0% 4. rises, because the government has more money to spend. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 29 (2 points) How would an decrease in consumer income aff ect total output? 1 00.0% 1 Output would fall, because the aggregate demand curve would shift . inward. 0.0% 2. Output would fall, because the economy would move up and to the left along the same aggregate demand curve. 0.0% 3. Output would rise, because the aggregate demand curve would shift outward. 0.0% 4. Output would rise, because the economy would move down the aggregate demand curve. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 30 (2 points) Which of the f ollowing statements accuratel describes the eff y ect of a price increase on investment spending? 1 00.0% 1 . Investment spending falls, because interest rates rise. 0.0% 2. Investment spending rises, because interest rates fall. 0.0% 3. Investment spending rises, because business can now charge more f or the goods they sell. 0.0% 4. Investment spending remains unchanged, because it is measured in real, not nominal, ter ms. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 1 (2 points) An increase in the aggregate price level causes the aggregate demand curve to shift to the left. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 32 (2 points) An improvement in techonolgy will 0.0% 1 . shift the long­run aggregate suppl y curve to the left. 1 00.0% 2. shift the long­run aggregate suppl y curve to the right. 0.0% 3. increase the slope of the long­run aggregate curve. 0.0% 4. decrease the slope of the long­run aggregate suppl y curve. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 33 (2 points) What is the relationship between the price level and the level of output in the long run? 0.0% 1 . When the price level rises, output increases. 0.0% 2. When the price level rises, output decreases. 0.0% 3. The relationship depends on how q uickl y producers respond to changes in prices. 1 00.0% 4. There is no relationship between the price level and the level of output. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 4 (2 points) In the graph below Yf represents the __________, and P1 represents the , __________. 1 00.0% 1 . long run eq uilibrium level of output ; short run level of prices 0.0% 2. short run eq uilibrium level of output ; long run level of prices 0.0% 3. long run eq uilibrium level of output ; long run level of prices 0.0% 4. short run eq uilibrium level of output ; long run level of prices Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 35 (2 points) When people in the economy make decisions about the future based on what has happened in the past, we say they are using 0.0% 1 . rational expectations. 0.0% 2. Keynesian anal ysis. 1 00.0% 3. adaptive expectations. 0.0% 4. the best possible method of decision­making. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 36 (2 points) A suppl y shock causes excess demand in the short run. 1 00.0% 1 rue . T 0.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 7 (2 points) Examine the graph below . Increasing government spending will bring this economy back to full employment. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 38 (2 points) In the short run, there is a positive relationship between the aggregate price level and the q uantity of goods and services supplied. 1 00.0% 1 rue . T 0.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 39 (2 points) Adaptive expectation f mation means that or 1 00.0% 1 . people base their expectations of the future on what has occurred in the past. 0.0% 2. people base their expectations of the future on new inf mation. or 0.0% 3. people base their expectations of the future on prices. 0.0% 4. people base their expectations of the future on output. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 40 (2 points) Good deflation is characterized by 1 00.0% 1 . an increase in suppl y at every price. 0.0% 2. a decrease in suppl y at every price. 0.0% 3. an increase in demand at every price. 0.0% 4. a decrease in demand at every price. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 1 (2 points) Imagine that the economy is in a recession. Which one of the f ollowing tactics is a way to increase output by shifting aggregate demand outward? 0.0% 1 . Raising taxes to increase the government sur plus 1 00.0% 2. Increasing government spending 0.0% 3. Increase the req uired reserve ratio 0.0% 4. Imposing tariffs on f oreign goods Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 42 (2 points) Increasing the money suppl y is an example of fiscal policy that can help stimulate demand. 0.0% 1 rue . T 1 00.0% 2. False Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 43 (2 points) During the mid 1 980s, the budget deficit __________ and the interest rate __________. 1 00.0% 1 . increased;increased 0.0% 2. increased;decreased 0.0% 3. decreased;increased 0.0% 4. decreased;decreased Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 4 (2 points) A flat­payment tax system, e.g., all taxpayers owe the government a flat f ee of $5000 regardless of income, would be an example of an automatic stabilizer . 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 45 (2 points) Suppose the economy has experienced a suppl y shock and is currentl y at P1 on the graph below . If the F ed does nothing, 0.0% 1 . aggregate demand will eventuall y increase, bringing the economy back to full employment. 1 00.0% 2. excess suppl y will cause prices and wages to fall, and SRAS will move downward toward the full­employment level of output. 0.0% 3. excess demand will cause further increases in prices and wages, causing SRAS to shift upward. Score 0 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 46 (2 points) The belief that money is neutral is most likel y to be endorsed by 0.0% 1 . Keynesian economists. 0.0% 2. monetarists. 1 00.0% 3. classical economists. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 7 (2 points) The school of rational expectations holds that if consumers and businesses can adjust their behavior q uickl y in response to monetary policy , the policy becomes more eff ective. 0.0% 1 rue . T 1 00.0% 2. False Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 48 (2 points) Accommodating monetary policy is intended to 0.0% 1 . accelerate the crowding­out eff ect. 1 00.0% 2. reduce the crowding­out eff ect. 0.0% 3. accommodate suppl y shocks. 0.0% 4. decrease the eff ects of suppl y shocks. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 49 (2 points) In the short run, what happens to the level of output and the level of prices as a result of a technological improvement? 1 00.0% 1 . Prices fall and output rises. 0.0% 2. Prices and output rise. 0.0% 3. Prices and output fall. 0.0% 4. None of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 50 (2 points) Which of the f ollowing represents an automatic stabilizer? 0.0% 1 . Medicare 1 00.0% 2. Unemployment insurance 0.0% 3. Social Security 0.0% 4. All of the above. Score 2 / 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 7 2 / 1 00 = 7 2.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Quiz 3. 1 User ID: xefri Attempt : 3 / 3 Out of: 20 Started: Oct 12, 2003 1 5:36 Finished: Oct 12, 2003 1 7 T 5:3 ime spent : 1 min., 1 0 sec. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) In the f ollowing figure, a point such as A 1 . is pref erable over B. 1 00.0% 2. is an efficient use of resources. 3. is a misallocation of resources. 4. is not obtainable. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (1 point) In the f ollowing figure, a point such as E 1 . is not obtainable. 2. is an efficient use of resources. 1 00.0% 3. is an inefficient use of resources. 4. indicates that the society is a capitalist society . Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (1 point) The production possibilities frontier shows 1 all combinations of prices and q uantities f all goods and services . or produced in the economy . 2. all combinations of prices and q uantities f all goods and services or demanded by consumers. 1 00.0% 3. the maximum combinations of goods and services that an economy is able to produce given a fixed suppl y of resources and technology . Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (1 point) An improvement in technology causes 1 00.0% 1 . the production possibilities frontier to shift outward. 2. the production possibilities frontier to shift inward. 3. a movement from one point to another along the same production possibilities frontier . The curve won't shift. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (1 point) Investment goods are 1 00.0% 1 . goods that are used to produce other goods. 2. goods that yield a high rate of return. 3. goods that last f or more than a short period of time. 4. financial instruments. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (1 point) One pur pose of financial markets is to 1 00.0% 1 . turn a household's savings into a fir m's investment. 2. increase the availability of espresso in coff ee houses. 3. act as an accountant f or the government. 4. implement tax policy . Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (1 point) The two principal components A and B of the circular flow model illustrated in the figure below are the 1 . government and f oreign trade. 2. net national product and personal income. 1 00.0% 3. fir ms and households. 4. households and government. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (1 point) In the circular flow of income there are households and fir ms, and households 1 buy goods and services and fir ms suppl goods. Resources are supplied by . y other fir ms. 2. demand goods and services which are supplied by fir ms, and the fir ms demand resources that are supplied by inter mediate fir ms. 1 00.0% 3. demand goods and services which are supplied by fir ms, while suppl ying resources that are demanded by fir ms. 4. buy goods and services while fir ms sell goods and services. Fir ms obtain labor from households, capital from government, and raw materials from fir ms. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (1 point) Which of the f ollowing is NOT shown by the circular flow model? 1 . The flow of resources in one direction and money in the other . 2. The eq uality of aggregate spending and aggregate income. 3. The interaction of households, fir ms, and the government. 1 00.0% 4. The total amount of goods and services the economy is capable of producing Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (1 point) Which of the f ollowing may cause GDP to underestimate the well­being of society? 1 . An increase in pollution. 2. A decrease in leisure as people work more. 3. An increase in the gap between rich and poor . 1 00.0% 4. An increase in underground transactions. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (1 point) If 1 million CDs are produced yearl y in the U .S., and they sell f or $1 5 each, then 1 . the contribution of CDs to U .S. GDP is $1 5. 2. the value of the CDs in U .S. GDP is $1 million. 1 00.0% 3. the value of the CDs in U .S. GDP is $1 5 million. 4. we cannot tell how much CDs contribute to U .S. GDP because some CDs may be exported. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (1 point) T oyota owns several manufacturing and assembl y plants in the U .S. Cars sold as final output from those plants 1 . are part of Japanese GDP because they are owned by a Japanese company . 2. are part of Japanese GDP because the workers are employed by a Japanese company . 3. are part of U .S. GDP because the workers are American citizens. 1 00.0% 4. are part of U .S. GDP because the cars are produced in the U .S. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (1 point) A country's gross domestic product, or GDP , 1 . is usuall y measured monthl y . 2. is onl y measured monthl y . 1 00.0% 3. is usuall y measured q uarterl y or annuall y . 4. is onl y measured q uarterl y or annuall y . Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (1 point) If nominal GDP increased from $5 trillion to $9 trillion while prices increased from $1 0 to $20, then real GDP 1 . increased. 1 00.0% 2. decreased. 3. stayed the same. 4. we cannot tell. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (1 point) Real GDP is calculated by 1 . holding q uantity and prices constant. 2. letting both prices and q uantities change. 3. holding q uantities constant and letting prices change. 1 00.0% 4. holding prices constant and letting q uantities change. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 6 (1 point) Given the inf mation in the table below or , if 1 999 is the base year , real GDP in 2000 eq uals F ood Clothes Y ear Quantity Price Quantity Price 1 999 1 0 1 5 2 2000 1 1 1 4 3 1 . 25. 2. 23. 1 00.0% 3. 1 9. 4. 1 8. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) 7 Real GDP is nominal GDP adjusted f or 1 . the change in the mix of goods produced. 1 00.0% 2. inflation. 3. both a and b. 4. neither a nor b. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 8 (1 point) In the circular flow model, who supplies land, labor , and capital to fir ms? 1 . other fir ms 2. the government 1 00.0% 3. households 4. financial institutions Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 9 (1 point) Per capita real GDP eq uals 1 . real GDP/investment capital. 2. real GDP/human capital. 3. real GDP in the nation's capital, Washington D.C. 1 00.0% 4. real GDP/population. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 20 (1 point) When economists talk about economic growth, they are usuall y ref erring to 1 . the percentage change in nominal GDP . 2. the percentage change in real GDP . 3. the percentage change in nominal investment. 4. the percentage change in real investment. Score 0 / 1 (Question not answered.) ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 1 9 / 20 = 95.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Quiz 3.2 User ID: xefri Attempt : 3 / 3 Out of: 1 5 Started: Oct 12, 2003 11 7 5 Finished: Oct 12, 2003 1 1 ime spent : 7 6 T : : 59 sec. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) Which of the f ollowing would be added to this year's GDP? 1 . one hundred shares of IBM stock that T ony bought in F ebruary 2. the used car T racy sold to Justin 3. George's purchase of a fishing rod and reel at a garage sale 1 00.0% 4. the Big Mac Extra V alue Meal that Amy bought f or lunch Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (1 point) Which of the f ollowing would NOT be included in an economist's definition of investment spending? 1 . the purchase of robots by Motor Magic Manufacturing 2. the construction of a new office building by the Mountain City Real Estate Company 1 00.0% 3. the purchase of General Motors stock by David Rockef eller 4. a decrease in the inventory levels at ABC Refrigerator Sales. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (1 point) Which of the f ollowing is NOT considered a component of government spending in calculating GDP? 1 . the cost of the f ederal prison system 2. the cost of building a new road 3. payments to plow public roads after a snowstor m 1 00.0% 4. unemployment compensation payments Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (1 point) Net exports are part of GDP because 1 . we consume the goods produced by other countries. 1 00.0% 2. exports are produced within the country and theref ore should be included in GDP but imports are produced abroad and need to be subtracted from , GDP . 3. the amount of goods consumed in one country always adds to its well­being, wherever the goods are produced. 4. if we add exports and imports it would be double counting. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (1 point) GDP measured by the income approach is ____ GDP measured by the expenditure approach. 1 . less than 1 00.0% 2. eq ual to 3. greater than 4. not the same thing as Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (1 point) Wheat used f or producing bread is 1 . a final good. 2. not going to generate any employment. 1 00.0% 3. an inter mediate good. 4. a durable good. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (1 point) Residential housing is part of the _____ component of GDP . 1 . consumption 2. investment 0.0% 3. savings 4. none of the above. Score 0 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (1 point) The value of net exports is a positive number in the national income accounts when 1 . depreciation exceeds investment. 1 00.0% 2. exports exceed imports. 3. imports exceed exports. 4. GDP exceeds disposable income. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (1 point) Social Security payments by the government are not counted as part of GDP because 1 . the government runs a deficit, and Social Security taxes are used to help cover the deficit. 2. Social Security is just part of savings, and people get it back when they retire. 1 00.0% 3. Social Security is a transf er payment, and invol ves no production. 4. Actuall y , Social Security payments are considered part of GDP . Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (1 point) Which of the f ollowing is NOT a component of national income? 1 00.0% 1 . excise taxes 2. rent f or land 3. employee compensation 4. proprietors' income Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (1 point) Disposable income is calculated by subtracting _________ from personal income. 1 . transf er payments 1 00.0% 2. personal income taxes 3. excise taxes 4. Social Security contributions Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (1 point) National income eq uals 1 . net domestic product minus indirect business taxes. 2. f oreign factors minus indirect business taxes. 1 00.0% 3. net domestic product minus f oreign factors minus indirect business taxes. 4. indirect business taxes minus f oreign factors minus net domestic product. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (1 point) Net domestic product eq uals 1 00.0% 1 . aggregate income minus depreciated capital. 2. national income minus personal income taxes minus cor porate taxes. 3. undistributed cor porate profits minus f oreign factors. 4. aggregate income minus aggregate spending. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (1 point) National income is derived by subtracting from net domestic product those factors that do not contribute value to national income. 1 00.0% 1 rue . T 2. False Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (1 point) Net investment (gross investment minus depreciation) measures the rate at which an economy's capital stock is changing. 1 00.0% 1 rue . T 2. False Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 1 4 / 1 5 = 93.3% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Quiz 3.3 User ID: xefri Attempt : 2 / 3 Out of: 20 Started: Oct 1 2003 22:0 7 , 1 Finished: Oct 1 2003 22:03 T 7 , ime spent : 1 min., 2 4 sec. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) Mary's nominal income is $4000. If the value of the consumer price index (CPI) is 200, what is Mary's real income? 1 . $8000 2. $4000 1 00.0% 3. $2000 4. $20 Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (1 point) If the inflation rate is 7% and the nominal rate of interest is 4%, what is the real rate of interest? 1 . 3% 1 00.0% 2. ­3% 3. 1 1% 4. 1 5% .7 Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (1 point) If the CPI increases from 1 50 to 1 65, what is the rate of inflation? 1 . 6% 2. 5.5% 1 00.0% 3. 1 0% 4. 1 5% Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (1 point) Which of the f ollowing statements is correct? 1 . Because higher q uality goods cost more, the CPI adjusts f or q uality changes when it takes into account the higher prices of goods. 2. Because we consume less energy as goods become more energy efficient, the CPI accounts f or improved energy efficiency by counting energy use less. 3. The CPI compares spending in diff erent years. Because spending depends on the goods consumed, the CPI accounts f or changing consumption patterns. 1 00.0% 4. None of the above. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (1 point) Over the last 60 years the prices of most goods have increased dramaticall F y or . example, from 1 930 to 1 990 the average price f or a loaf of bread rose 60 cents. This means 1 . consumers are worse off now because they must spend more on goods. 1 00.0% 2. that we need to measure the real prices of goods, adjusting f or inflation, bef ore we can tell if consumers are better off or worse off. 3. real output has increased, because higher prices mean goods are worth more. 4. the real cost of producing bread has increased. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (1 point) Nominal GDP is $5000 and the price index is 250. What is real GDP? 1 . $20 2. $5250 1 00.0% 3. $2000 4. $2500 5. none of the above Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (1 point) In order to know whether consumers are better off today than in the past, economists 1 . compare nominal output today to nominal output in the past. 2. compute the inflation rate, and see if it has increased. 1 00.0% 3. adjust nominal output f or inflation, and compare real output now to real output in the past. 4. all of the above. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (1 point) A decrease in the general level of prices is known as 1 . inflation. 2. reflation. 1 00.0% 3. deflation. 4. disinflation. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (1 point) If the consumer price index uses 1 992 as its base year , then 1 . the inflation rate in 1 992 will always be measured as zero. 1 00.0% 2. the CPI f or 1 992 will eq ual 1 00. 3. when we measure the CPI f or any year after 1 992 it will always exceed 1 00. 4. all of the above. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (1 point) Suppose a typical consumer bought 20 units of f ood and 1 5 units of clothes in the year 230 when the price per unit of f 7 , ood was 1 00 and the price per unit of clothes was 200. In 2308, when the typical consumer bought 20 units of f ood and 20 units of clothes, the price of f ood had increased to 10, while the price per unit of 1 clothes remained at 200. If the base year is 230 what is the CPI f 7 , or 2308? NOTE: Be careful to use the correct q uantities. This is the tricky part! 1 1 . 10 2. 1 03.33 1 00.0% 3. 14 0 4. 12 4 Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (1 point) Suppose the critics of the CPI are correct, and it overstates the eff ect of price changes. Because the CPI uses a fixed market basket of goods, it should be too high every year . Thus, 1 00.0% 1 . the CPI overstates inflation as well. 2. inflation, which is the change in the CPI, will still be measured correctl y . 3. the CPI will understate inflation. 4. the CPI will understate inflation some years, and overstate it others, depending on how prices change. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (1 point) If the real rate of interest on an asset is negative, this means that 1 . the nominal interest rate is greater than the inflation rate. 1 00.0% 2. the asset holder is losing purchasing power . 3. the economy is in a recession. 4. all of the above. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (1 point) Mary receives a pension of $4000 a year Suppose that when she first began . receiving the $4000 pension ten years ago, prices were half what they are today . Mary's nominal income has _______ while her real income has _______. 1 . increased; stayed the same. 1 00.0% 2. stayed the same, decreased. 3. decreased; stayed the same. 4. decreased; decreased. 5. none of the above. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (1 point) Why is the measurement of the CPI so important? 1 . People need to know how much it costs to support themsel ves each month. 1 00.0% 2. Some wage contracts and Social Security payments are adjusted based on changes in the CPI. 3. Real interest rates rise and fall based on the CPI. 4. Unemployment rises and falls based on the CPI. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (1 point) The index of leading indicators 1 . predicts how the economy will perf m two to three years into the future. or 2. predicts recessions, but not economic expansions. 3. has a poor record of accuratel y predicting the future of the economy . 1 00.0% 4. includes various measures that "lead" the economy , meaning that changes in these measures occur bef ore the economy as a whole is aff ected. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 6 (1 point) Use this inf mation to answer the next f or our q uestions. Assume that an economy produces onl y three goods: marshmallow bunnies, eggs, and Easter baskets. In 1 998, 200 packages of bunnies were sold at a price of $1 each, 500 dozen eggs were sold at $0.80 per dozen, and 90 Easter baskets were sold at $1 0 each. Find the total expenditures on these goods in 1 998. 1 00.0% 1 . $1 ,500 2. $1.80 1 3. 790 4. none of the above Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) 7 Find total expenditures on these goods in 1 999 (using 1 998 as the base year) if the 1 999 price of bunnies is $10 per package, the 1 . 1 999 price of eggs is $1 , and the 1 999 price of Easter baskets is $12. 1 00.0% 1 . $1 800 2. $1 4.20 3. 790 4. none of the above Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 8 (1 point) What is the value of the price index in 1 999 (using 1 998 as the base year)? 1 . 83.3 1 00.0% 2. 120 3. 1 9.49 1 4. 1 .2 5. none of the above Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 9 (1 point) What is the inflation rate in 1 999? 1 00.0% 1 . 20% 2. ­20% 3. can't be deter mined from the inf mation given or Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 20 (1 point) What is the main reason why the CPI and the GDP deflator yield diff erent rates of inflation? 1 00.0% 1 . The CPI calculates how much it costs to purchase last year's basket of goods at this year's prices, while the GDP deflator calculates how much it costs to produce this year's level of production at last year's prices. 2. The GDP deflator calculates how much it costs to purchase last year's basket of goods at this year's prices, while the CPI calculates how much it costs to produce this year's level of production at last year's prices. 3. The two indexes measure diff erent types of prices. 4. Diff erent indexes never yield exactl y the same results. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 20 / 20 = 1 00.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Quiz 3.4 User ID: xefri Attempt : 3 / 3 Out of: 1 5 Started: Oct 2 4, 2003 23:1 8 Finished: Oct 2 4, 2003 23:20 T ime spent : 1 min., 28 sec. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) Which of the f ollowing statements is most correct? 1 00.0% 1 During a recession, lower demand f goods and services causes less . or inflation. 2. During a recession, higher demand f goods and services causes higher or inflation. 3. During a recession, deflation causes lower demand f or goods and services. 4. During a recession, lower demand f goods and services causes higher or inflation. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (1 point) Most experts agree that business cycles ended after World War II. 1 rue . T 1 00.0% 2. False Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (1 point) One historical example of a trough in the business cycle came during 1 00.0% 1 . the Panic of 1 893. 2. World War I. 3. World War II. 4. the 1 990s. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (1 point) If teh unemployment rate is decreasing and prices are rising, the economy is likel y in what stage of the business cycle? 1 . recession 2. depression 3. trough 1 00.0% 4. expansion Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (1 point) If inflation is falling and trade balances are improving, then the economy is probabl y in a recession. 1 00.0% 1 rue . T 2. False Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (1 point) Imagine that in the first q uarter of this year , the number of jobs swelled, and both interest rates and prices increased. In the second q uarter of this year , the number of jobs decreased slightl y , while both interest rates and prices f ell shar pl y . Between the first and second q uarters, we may have experienced a(n) _________ in the business cycle. 1 00.0% 1 . peak 2. expansion 3. trough 4. eq uilibrium point Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (1 point) Who believed that fluctuations in the business cycle were the result of class conflicts between labor and capital? 1 . Schumpeter 1 00.0% 2. Marx 3. Rousseau 4. Keynes Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (1 point) Advocates of the real business cycle theory would be most likel y to believe that which of the f ollowing factors could influence the business cycle? 1 . A change in interest rates by the F ederal REserve board 2. A dropoff in consumer spending 1 00.0% 3. a shar p rise in oil prices 4. T ensions between union leaders and top­level management Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (1 point) Which of the f ollowing phrases best summarizes the attitude of new classical economists toward managing business cycles? 1 . Manage the money suppl y carefull y . 2. If consumers stop spending, the government should start. 3. Subsidize creative destruction. 1 00.0% 4. Keep your hands off. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (1 point) John Maynard Keynes believed that a decrease in consumer spending could lead to an economic contraction. T o correct this problem, he proposed that governments should spend money on public goods such as roads and schools. 1 00.0% 1 rue . T 2. False Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (1 point) The long­run trend in real GDP is 1 . constant. 2. downward. 1 00.0% 3. upward. 4. such that it cannot be described as a trend. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (1 point) When, over a sustained period of time, the growth of real GDP falls below what is considered the nor mal growth rate, the economy experiences 1 . inflation. 2. deflation. 3. expansion. 1 00.0% 4. recession. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (1 point) When economy­wide business fluctuations are positive, they are ref erred to as 1 . contractions. 1 00.0% 2. expansions. 3. anti­cycles. 4. corrections. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (1 point) During a recession, 1 . incomes rise and employment decreases. 1 00.0% 2. incomes fall and unemployment increases. 3. incomes fall and unemployment falls. 4. incomes rise and unemployment increases. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (1 point) A period when real GDP is increasing is known as a(n) 1 . peak . 1 00.0% 2. expansion. 3. incline. 4. recession. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 1 5 / 1 5 = 1 00.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ V iew Results Quiz 3.5 User ID: skim7 Attempt : 1 / 3 Out of: 20 Started: November 1 200 7 , 4 12:5 4pm Finished: November 23, 200 4 6:09pm T ime spent 49 : 1 hr 4 min., 28 sec. , 1 Question 1 (1 point) The unemployment rate is defined as Student response: Percent V alue Student Response Answer Choices a. the reciprocal of the labor f orce participation rate. b. the raw number of workers who want a job but do not have one. c. the number of unemployed workers divided by the total adult population. 1 00.0% d. the percentage of the labor f orce that is not employed. Score: 1 / 1 Question 2 (1 point) If the total population in the U .S. is 25 million, the adult population is 2 5 7 1 million, the number employed is 1 40 million, and the number of unemployed is 1 0 million, then the labor f orce participation rate is ________. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. 69.7% b. 5 4.5% c. 65. 1% d. 50.9% Score: 1 / 1 Question 3 (1 point) Critics argue that the Bureau of Labor Statistics' measurement of the unemployment rate understates the actual amount of unemployment because it Student response: Percent V alue Student Response Answer Choices a. does not include children under 1 8. 1 00.0% b. does not factor in part­time employees who would rather have full­time employment. c. unfairl y includes employees who may have been laid off onl y days prior to the survey . d. calculates the rate in a way that exaggerates the eff ect of discouraged workers. Score: 1 / 1 Question 4 (1 point) Which of the f ollowing cases is an example of structural unemployment? Student response: Percent V alue Student Response Answer Choices a. An accountant q uits her job to become an investment banker . b. An auto worker is fired f or poor job perf mance. or 1 00.0% c. A wheat far mer whose income has plummeted because of a new trade , agreement, q uits far ming and starts looking f or a new job. d. A consultant is laid off becuase poor economic conditions have depressed the market f or consultants. Score: 1 / 1 Question 5 (1 point) The government is most likel to intervene when ________ unemployment rises y shar pl y . Student response: Percent V alue Student Response Answer Choices a. structural b. frictional c. seasonal 1 00.0% d. cyclical Score: 1 / 1 Question 6 (1 point) The lowest rate of unemployment that does not create inflationary pressure is called the Student response: Percent V alue Student Response Answer Choices a. NERU: Non­Expansionary Rate of Unemployment. b. MUR: Minimal Unemployment Rate. 1 00.0% c. NAIRU: Non­Accelerating Inflation Rate of Unemployment. d. NRU: Natural Rate of Unemployment Score: 1 / 1 Question 7 (1 point) The natural rate of unemployment is the sum of __________ unemployment and ___________ unemployment. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. frictional; structural b. cyclical; structural c. frictional; cyclical d. seasonal; cyclical Score: 1 / 1 Question 8 (1 point) Which of the f ollowing factors best supports the relationship illustrated by the Phillips curve? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. When unemployment falls, competition f or workers causes wages to rise, and the higher wages are passed along to consumers in the f m of higher prices. or b. When the economy stays at the NAIRU inflationary pressures are minimal, , leading to a stable inflation rate. c. When unemployment rises, the overall economy can contract, which in turn can lead to a rising inflation rate. d. Lower unemployment leads to increased total income, which increass both consumer spending and GDP . Score: 1 / 1 Question 9 (1 point) Welfare ref m in the late 1 or 990s req uired that recipients seek jobs. Most states implemented training programs f or the individuals who entered the labor f orce off of the welfare roles. This policy is useful f combating _____________ or unemployment. Student response: Percent V alue Student Response Answer Choices a. frictional 1 00.0% b. structural c. cyclical d. all three types of Score: 1 / 1 Question 1 0 (1 point) When there is full employment (or when the economy is at the natural rate of unemployment), Student response: Percent V alue Student Response Answer Choices a. unemployment is zero. b. frictional unemployment still exists, but there is no structural or cyclical unemployment. 1 00.0% c. unemployment is still positive. d. inflation is zero. Score: 1 / 1 Question 1 1 (1 point) When the unemployment rate is above the natural rate of unemployment, the government response is likel y to be to Student response: Percent V alue Student Response Answer Choices a. increase job training programs to retrain unemployed workers. 1 00.0% b. implement policies, like tax cuts, to stimulate the economy . c. increase job placement activities. d. any of the above. Score: 1 / 1 Question 12 (1 point) In 1 993 the adult population in the United States was about 1 95 million people. Of these, approximatel y 12 1 million were employed and 9 million were unemployed. Thus, the labor f orce was ______ million people and the unemployment rate was about ______ percent. Student response: Percent V alue Student Response Answer Choices a. 1 95, 4.6 b. 12, 74 1. 1 00.0% c. 1 30, 6.9 d. 20 4, 4.4 Score: 1 / 1 Question 1 3 (1 point) Which of the f ollowing does NOT cause unemployment to increase during a recession? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. The labor f orce shrinks. b. Fir ms hire f ewer workers. c. The duration of unemployment increases. Score: 1 / 1 Question 1 4 (1 point) Which government agency is responsible f or measuring unemployment? Student response: Percent V alue Student Response Answer Choices a. The Bureau of the Census. 1 00.0% b. The Bureau of Labor Statistics. c. The Council of Economic Advisors. d. all of the above. Score: 1 / 1 Question 1 5 (1 point) When output _________, unemployment is expected to ________. Student response: Percent V alue Student Response Answer Choices a. rises; rise. 1 00.0% b. rises; fall. c. falls; remain constant. d. remains constant ; fall. Score: 1 / 1 Question 1 6 (1 point) The total labor f orce is comprised of Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the unemployed and the employed. b. onl y the employed. c. all individuals age 1 6 or over . d. onl y full­time employed individuals between the ages of 1 8 and 55. Score: 1 / 1 Question 1 (1 point) 7 As the baby boom generation entered the labor f orce, the natural rate of unemployment increased, probabl y because Student response: Percent V alue Student Response Answer Choices a. the labor f orce was larger . 1 00.0% b. frictional unemployment increased. c. structural unemployment increased. d. cyclical unemployment increased. Score: 1 / 1 Question 1 8 (1 point) If we compare the unemployment rates across age, race and gender , we find that Student response: Percent V alue Student Response Answer Choices a. f emales have higher unemployment rates than males. b. the rate of white unemployment is lower than that f or blacks. c. adult workers have lower unemployment rates than teenagers. 1 00.0% d. all of the above. Score: 1 / 1 Question 1 9 (1 point) Newer automobiles use many computerized components. "Old sty le" auto mechanics who lose their jobs because they do not know how to fix the computerized components are an example of Student response: Percent V alue Student Response Answer Choices a. frictional unemployment. 1 00.0% b. structural unemployment. c. cyclical unemployment. d. nor mal unemployment. Score: 1 / 1 Question 20 (1 point) Which of the f ollowing people should be included in the labor f orce? Student response: Percent V alue Student Response Answer Choices a. someone who doesn't have a job and isn't looking f or one 1 00.0% b. someone who is unemployed c. someone who is 1 5 years old d. none of the above Score: 1 / 1 T otal score: 20 / 20 = 1 00.0% V iew Results Quiz 3.7 User ID: skim7 Attempt : 2 / 3 Out of: 1 5 Started: December 7 200 , 4 6:1 9am Finished: December 7 200 , 4 6:20am T ime spent : 1 min. 3 1 sec. Question 1 (1 point) A rise in the minimum wage will tend to _________ the q uantity demanded of labor and __________ the q uantity supplied of labor . Student response: Percent V alue Student Response Answer Choices 1 00.0% a. decrease; increase b. increase; decrease c. decrease; decrease d. increase; increase Score: 1 / 1 Question 2 (1 point) Which of the f ollowing statements is NOT a valid argument that critics might use against the minimum wage? Student response: Percent V alue Student Response Answer Choices a. A minimum wage will result in increased unemployment. b. Small business owners will be hurt by the additional labor cost imposed by the minimum wage. c. Unskilled workers will end up suff ering more than skilled workers if a minimum wage is enacted. 1 00.0% d. Because the minimum wage prevents businesses from substituting capital f or labor , total output will fall. Score: 1 / 1 Question 3 (1 point) According to Steven T omlinson, which group of people is most likel y to lose jobs when a minimum wage law is passed? Student response: Percent V alue Student Response Answer Choices a. poor minorities b. upper middle­class whites who own businesses 1 00.0% c. middle­class teenagers d. primaril y union workers Score: 1 / 1 Question 4 (1 point) Which of the f ollowing statements about unions is NOT true? Student response: Percent V alue Student Response Answer Choices a. Unions have a right to f m by law or . b. The National Labor Relations board oversees the activities of unions. 1 00.0% c. Unions have f ought successfull y in many states f or right­to­work laws. d. Unions typicall y demand higher wages and better working conditions f or their members Score: 1 / 1 Question 5 (1 point) Negotiations between labor union representatives and the management of a fir m are called Student response: Percent V alue Student Response Answer Choices a. strikes. 1 00.0% b. collective bargaining. c. legall y binding arbitration. d. f eather bedding. Score: 1 / 1 Question 6 (1 point) Right­to­work laws Student response: Percent V alue Student Response Answer Choices a. shift power away from fir ms by per mitting the f mation of unions. or b. per mit unions to bargain f or no­loss negotiations, i.e., contracts in which the fir ms agree not to fire any union members without cause. c. give employers the right to disband labor unions. 1 00.0% d. make it illegal f an employer to req uire union membership as a or condition of employment. Score: 1 / 1 Question 7 (1 point) Imagine that a fir m employs 1 00 people, all union members, at a salary of $1 0 per hour . If the union bargains the wage up to $12 per hour and f orces the fir m to keep all 1 00 employees, how would we depict this even in a suppl y­and­demand graph? Student response: Percent V alue Student Response Answer Choices a. Shift the labor suppl y curve outward to reflect the higher wage. 1 00.0% b. Shif the fir m's demand curve f or labor outward. c. Move upward along the same demand curve f labor to a new eq uilibrium or point. d. The fir m's demand curve f labor will shift inward to reflect its or disincentive to hire workers at the higher wage. Score: 1 / 1 Question 8 (1 point) In general, a fir m that pays the efficiency wage will demand __________ workers. Student response: Percent V alue Student Response Answer Choices a. more, better ualified ­q 1 00.0% b. f ewer , better ualified ­q c. more, lesser ualified ­q d. f ewer , lesser ualified ­q Score: 1 / 1 Question 9 (1 point) Margaret owns a small accounting fir m, and she needs to hire some additional help. The market wage f or accountants is $20 per hour . According to the efficiency wage theory , Margaret should Student response: Percent V alue Student Response Answer Choices a. pay new accountants $20 per hour in order to maximize economic efficiency . b. pay less than $20 per hour to her new accountants, so that she can avoid a situation of adverse selection. 1 00.0% c. pay more than $20 per hour in order to attract more highl y­skilled accountants. d. hire accountants to the point where marginal social benefit eq uals marginal social cost. Score: 1 / 1 Question 1 0 (1 point) A factory employs a team of 1 0 workers. Each of the 1 0 workers knows how much she can produce, but the factory has no way to measure the output of any individual worker , onl y the team as a whole. This is a situation invol ving Student response: Percent V alue Student Response Answer Choices a. adverse selection. 1 00.0% b. assymetric inf mation. or c. moral hazard. d. non­price selection. Score: 1 / 1 Question 1 1 (1 point) Economists would expect that unemployment insurance would increase the unemployment rate. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 12 (1 point) Mike buys homeowner's insurance, which protects him from the financial risk of having his possessions stolen. If, as a result of having this insurance, Mike becomes less diligent about locking doors and closing windows, economists would say this is a situation invol ving Student response: Percent V alue Student Response Answer Choices a. adverse selection. b. counter ­insurance behavior . c. asymmetric inf mation. or 1 00.0% d. moral hazard. Score: 1 / 1 Question 1 3 (1 point) If unemployment insurance were restricted to two weeks of benefits, workers who lost their jobs due to __________ unemployment would be liekl y to suff er the most. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. structural b. frictional c. voluntary d. contractionary Score: 1 / 1 Question 1 4 (1 point) According to the figure, the market clearing wage rate is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. We. b. Wm. c. We ­ Wm. d. Wm + We. Score: 1 / 1 Question 1 5 (1 point) According to the figure, if the government imposes a minimum wage eq ual to Wm, the eff ect will be Student response: Percent V alue Student Response Answer Choices 1 00.0% a. unemployment shown by the line segment AC. b. an decrease in unemployment Qe to Qd. c. a decrease in labor supplied, from C to E. d. an increase in labor supplied, from A to E. Score: 1 / 1 T otal score: 1 5 / 1 5 = 1 00.0% V iew Results Quiz 3.8 User ID: skim7 Attempt : 1 / 3 Out of: 1 5 Started: November 23, 200 4 6:1 0pm Finished: November 23, 200 4 6:12pm T ime spent : 2 min. 2 4 sec. Question 1 (1 point) The United States experienced a period of stagflation during the 1 70s that was 9 attributable to Student response: Percent V alue Student Response Answer Choices a. post­Watergate malaise. b. rising deficits due to the V ietnam War . 1 00.0% c. shar p increases in oil prices. d. the 1 7 T 9 3 reasury Department decision to print a substantial amount of additional money . Score: 1 / 1 Question 2 (1 point) People are most likel y to revert to barter in periods of Student response: Percent V alue Student Response Answer Choices a. stagflation. b. deflation. 1 00.0% c. hyperinflation. d. recession. Score: 1 / 1 Question 3 (1 point) In the 1 70s, the U 9 .S. experienced a period of inflation due to sudden increases in oil prices. This is an example of Student response: Percent V alue Student Response Answer Choices a. demand­pull inflation. b. the wage­price spiral. c. price destruction. 1 00.0% d. cost­push inflation. Score: 1 / 1 Question 4 (1 point) Which of the f ollowing is an accurate explanation of the wage­price spiral? Student response: Percent V alue Student Response Answer Choices a. When labor costs rise, it causes a self­per petuating f m of cost­push or inflation. 1 00.0% b. Higher prices cause workers to demand higher wages. The higher wages raise production costs, which must be passed along to the consumer in the f m of or further price increases. c. When one fir m pays the efficiency wage, it raises the opportunity cost f or all other workers in the industry , necessitating raises. d. Workers in periods of hyperinflation demand to be paid in the f m of goods, or rather than cash, which further devalues the currency . Score: 1 / 1 Question 5 (1 point) Increased production costs are associated with Student response: Percent V alue Student Response Answer Choices a. demand­pull inflation onl y . b. cost­push inflation onl y . c. neither demand­pull inflation nor cost­push inflation. 1 00.0% d. both demand­pull inflation and cost­push inflation. Score: 1 / 1 Question 6 (1 point) Which of the f ollowing factors would be most likel y to deter mine whether consumer spending increases or decreases during a period of inflation? Student response: Percent V alue Student Response Answer Choices a. the unemployment rate 1 00.0% b. consumers' expectations of the future rate of inflation c. the rate of inflation's impact on consumers' purchasing power d. the source of the inflation (cost­push or demand­pull) Score: 1 / 1 Question 7 (1 point) Which of the f ollowing f ms of payment would be included in the calculation of or the money suppl y? Student response: Percent V alue Student Response Answer Choices a. credit cards 1 00.0% b. checks c. durable goods d. stocks and bonds Score: 1 / 1 Question 8 (1 point) Imagine that the money suppl y's velocity is 8. Which of the f ollowing is an accurate statment? Student response: Percent V alue Student Response Answer Choices a. Any given dollar could not have been passed around more than 8 times during the year . b. One­eighth of the money suppl y changed hands during the year . c. Prices could not have risen by more than 800% during the year . 1 00.0% d. Currency changed hands an average of 8 times during the year . Score: 1 / 1 Question 9 (1 point) Assume that the velocity of the money suppl y is held constant. In the classical view of money , which of the f ollowing statements is true? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Changes in the money suppl y aff ect onl y prices. b. Changing the money suppl y influences both the price level and the q uantity of output. c. The money suppl y must remain fixed. d. A change in the price level must be matched with a reciprocal change in the money suppl y . Score: 1 / 1 Question 1 0 (1 point) Imagine that the money suppl doubles in an economy that produces onl vacuum y y cleaners, and assume that the velocity of the money suppl y is fixed. Bef ore the money suppl was expanded, the level of output was 20 vacuum cleaners and the y price was $1 00 per vacuum. According to the classical view of money , what will be the level of output and price after the money suppl y doubles? Student response: Percent V alue Student Response Answer Choices a. 40 vacuum cleaners; $1 00 b. 40 vacuum cleaners; $200 1 00.0% c. 20 vacuum cleaners; $200 d. 20 vacuum cleaners; $50 Score: 1 / 1 Question 1 1 (1 point) In a period of inflation, since paychecks inflate at the same rate as prices, economists would not expect a negative impact on the consumer . Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 12 (1 point) Inflation tends to redistribute wealth from Student response: Percent V alue Student Response Answer Choices a. borrowers to lenders. 1 00.0% b. lenders to borrowers. c. the government to consumers. d. consumers to the government. Score: 1 / 1 Question 1 3 (1 point) Which of the f ollowing is NOT a cost that can be attributed to inflation? Student response: Percent V alue Student Response Answer Choices a. higher interest rates b. confusion (and resulting inefficiency) about the relative value of investments 1 00.0% c. increased government debts d. wasted time because of consumers' decisions to hold less cash Score: 1 / 1 Question 1 4 (1 point) Suppose the GDP deflator rose from 1 .00 to 1 .06 from 1 995 to 2000. Which of the f ollowing statements is true? Student response: Percent V alue Student Response Answer Choices a. Prices decreased 6% in 5 years. 1 00.0% b. Purchasing power decreased 6% in 5 years. c. Prices increased 60% in 5 years. d. Purchasing power decreased 60% in 5 years. Score: 1 / 1 Question 1 5 (1 point) Suppose V al could earn 5.25% interest on her savings account, while inflation grew steadil y at 3%. She is most likel y to Student response: Percent V alue Student Response Answer Choices 1 00.0% a. put her money in the bank . b. spend her money q uickl y . c. withdraw her money from the bank . Score: 1 / 1 T otal score: 1 5 / 1 5 = 1 00.0% V iew Results Quiz 2. 1 User ID: skim7 Attempt : 3 / 3 Out of: 25 Started: November 8, 200 4 12:3 1pm Finished: November 8, 200 4 12:36pm T ime spent : 5 min. 6 sec. Question 1 (1 point) The demand curve f or a good Student response: Percent V alue Student Response Answer Choices a. connects points describing how much consumers actuall y bought at diff erent prices during a particular period. b. connects points describing how much consumers actuall y bought at diff erent prices in diff erent periods. 1 00.0% c. connects points describing how much consumers would have been willing and able to buy at diff erent prices during a particular period. d. connects points describing how much consumers would have been willing and able to buy at diff erent prices in diff erent periods. Score: 1 / 1 Question 2 (1 point) In an attempt to f orecast enrollment, a ma jor university hired an economist to give a "head count." One variable which she would probabl emphasize more than any y other in trying to f orecast is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. tuition (the price of attending). b. the employment opportunities that college opens up. c. survey results on public interest in education. d. her instinct about what the public wants. Score: 1 / 1 Question 3 (1 point) The price of labor is the wage rate. What happens to the q uantity of labor demanded if wages increase? Student response: Percent V alue Student Response Answer Choices a. It increases. 1 00.0% b. It decreases. c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 1 / 1 Question 4 (1 point) Demand and q uantity demanded are the same thing. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 5 (1 point) The demand curve depicts inf mation about the q uantities demanded as prices have or changed over several time periods. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 6 (1 point) Which of the f ollowing would cause an upward movement (to the left) along the demand curve f or European autos in the United States? Student response: Percent V alue Student Response Answer Choices a. an increase in the price of American autos b. a decrease in the price of American autos c. an increase in income in the United States 1 00.0% d. an increase in the price of European autos Score: 1 / 1 Question 7 (1 point) The demand curve f or a typical good has Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a negative slope because some consumers switch to other goods as the price of the good rises. b. a negative slope because consumer incomes fall as the price of the good rises. c. a negative slope because the good has less "snob appeal" as its price falls. d. None of the above is correct. Score: 1 / 1 Question 8 (1 point) The law of demand states that Student response: Percent V alue Student Response Answer Choices a. an increase in price will diminish the q uantity demanded onl if income y falls as well. 1 00.0% b. an increase in price will diminish the q uantity demanded if income remains constant. c. an increase in price can lead to an increase in the q uantity demanded onl y if income goes up. d. the eff ect of an increase in price depends on how income changes. Score: 1 / 1 Question 9 (1 point) Assume the demand curve f or cookies is downward sloping. If the price of cookies falls from $1 .50 to $1 .25 per dozen (be careful of ter minology!), Student response: Percent V alue Student Response Answer Choices a. the demand f or cookies will fall. b. the demand f or cookies will rise. 1 00.0% c. a larger q uantity of cookies will be demanded. d. a smaller q uantity of cookies will be demanded. Score: 1 / 1 Question 1 0 (1 point) A decrease in price Student response: Percent V alue Student Response Answer Choices 1 00.0% a. causes a downward movement (to the right) along the same demand curve. b. causes an upward movement (to the left) along the same demand curve. c. changes the demand curve. d. causes a downward movement (to the right) along the same demand curve if income decreases. Score: 1 / 1 Question 1 1 (1 point) A demand schedule shows Student response: Percent V alue Student Response Answer Choices a. the "market potential" f or a product. 1 00.0% b. how much consumers are willing and able to buy at diff erent prices. c. possible combinations of output under diff erent conditions. d. how much producers would like to sell at diff erent prices. Score: 1 / 1 Question 12 (1 point) A demand curve can be thought of as Student response: Percent V alue Student Response Answer Choices a. a graphical display of "market potential." 1 00.0% b. a graphical representation of the inf mation in a demand schedule. or c. showing how much people want to buy . d. a f orecasting tool. Score: 1 / 1 Question 1 3 (1 point) Fir ms often seek to borrow money to expand their capital stock , and the price they pay f or the money is the interest rate. What happens to q uantity of money demanded if the interest rate increases? Student response: Percent V alue Student Response Answer Choices a. It increases. 1 00.0% b. It decreases. c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 1 / 1 Question 1 4 (1 point) If the government has stated that it will buy any amount of good X off ered at $30, then which demand curve below is appropriate? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. b. c. d. Score: 1 / 1 Question 1 5 (1 point) A 1 985 Harvard study showed that the price of cigarettes does not aff ect how much an individual smokes but whether he smokes. If this is correct, which of the below graphs shows the typical individual's demand curve f or cigarettes? (This is a tough one!) Student response: Percent V alue Student Response Answer Choices a. b. 1 00.0% c. d. Score: 1 / 1 Question 1 6 (1 point) If the government has stated that it will pay whatever it must to obtain 1 ,000 units of good X, then which demand curve in the figure below is appropriate? Student response: Percent V alue Student Response Answer Choices a. 1 00.0% b. c. d. Score: 1 / 1 Question 1 (1 point) 7 Which of the f ollowing would cause a decrease in the demand f or Pepsi (i.e., a leftward shift of the Pepsi demand curve)? Student response: Percent V alue Student Response Answer Choices a. An increase in the price of Coke. 1 00.0% b. A decrease in the price of Coke. c. An increase in the price of Pepsi. d. A decrease in the price of Pepsi. Score: 1 / 1 Question 1 8 (1 point) The Wall Street Journal reports that "hard times aid poultry companies as people eat cheaper f owl." In the language of economists, this means Student response: Percent V alue Student Response Answer Choices 1 00.0% a. chicken is an inf erior good. b. chicken is a nor mal good. c. demand f or chicken does not obey the law of demand. d. people's tastes change during recessions. Score: 1 / 1 Question 1 9 (1 point) If VCRs and rental videos are complementary goods, then a decrease in the price of VCRs would increase the Student response: Percent V alue Student Response Answer Choices a. demand f or rental videos. b. q uantity of VCRs demanded. c. q uantity of rental videos demanded. 1 00.0% d. both demand f or rental videos and q uantity of VCRs demanded. Score: 1 / 1 Question 20 (1 point) If price rises, what happens to demand f or a product? Student response: Percent V alue Student Response Answer Choices a. It increases. b. It decreases. c. It does not change. 0.0% d. Uncertain. Economic theory has no answer to this q uestion. Score: 0 / 1 Question 2 1 (1 point) Which of the f ollowing will shift the demand curve f or good X? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a change in the income of buyers of good X b. a change in the price of good X c. a change in the suppl y of good X d. All of the above are correct. Score: 1 / 1 Question 22 (1 point) Market demand curves are f ound by Student response: Percent V alue Student Response Answer Choices a. verticall y summing individual demand curves. 1 00.0% b. horizontall y summing individual demand curves. c. summing individual demand curves in a parallel fashion. d. adding the slopes of individual demand curves. Score: 1 / 1 Question 23 (1 point) In the figure below , an increase in population (which will increase the number of buyers of the good) will change demand from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. D1 to D2 b. D2 to D1 c. D3 to D2 d. D3 to D1 Score: 1 / 1 Question 2 4 (1 point) Assume that the figure below shows demand f or orange juice. An increase in the price of soda (a substitute f or orange juice) will change demand from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. D1 to D2 b. D2 to D1 c. D3 to D2 d. D3 to D1 Score: 1 / 1 Question 25 (1 point) Assume that the figure below shows demand f new houses, a nor mal good. A or decrease in the income of buyers will change demand from Student response: Percent V alue Student Response Answer Choices a. D1 to D2 1 00.0% b. D2 to D1 c. D2 to D3 d. D1 to D3 Score: 1 / 1 T otal score: 2 4 / 25 = 96.0% Quiz 2.2 User ID: xefri Attempt : 2 / 3 Out of: 20 Started: Sep 20, 2003 20:1 5 Finished: Sep 20, 2003 20:1 ime spent 6 T : 1 min., 28 sec. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) The price f or labor is the wage rate. What happens to the suppl y of labor if wages increase? (Watch ter minology!) 1 . It increases. 2. It decreases. 1 00.0% 3. It does not change. 4. Uncertain. Economic theory has no answer to this q uestion. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (1 point) A severe freeze has once again damaged the Florida orange crop. (Although this wasn't mentioned specificall in the lesson, weather is an input in the y production of many goods.) The impact on the market f or oranges will be a leftward shift in 1 . the demand curve as consumers try to economize because of the shortage. 2. both the suppl y and demand curves. 1 00.0% 3. the suppl y curve. 4. the suppl curve and a rightward shift in the demand curve, which will y result in a higher price. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (1 point) The suppl curve may shift if any production­related variable changes EXCEPT a y change in the price of the good. 1 00.0% 1 rue . T 2. False Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (1 point) An increase in consumer income will shift both the suppl y and demand curves. 1 rue . T 1 00.0% 2. False Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (1 point) Assume that the figure below shows the suppl y of soda. An increase in the price of syrup used in the production of soda will shift suppl y from 1 . S1 to S2 1 00.0% 2. S2 to S1 3. S2 to S3 4. S1 to S3 Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (1 point) In the figure below an increase in the number of producers will shift market , suppl y from 1 00.0% 1 . S1 to S2 2. S2 to S1 3. S3 to S2 4. S3 to S1 Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (1 point) The suppl y of newspapers will decline if 1 00.0% 1 . newsprint (an input) becomes more expensive. 2. the printers' union makes wage concessions. 3. prices are reduced. 4. magazine prices rise (assuming magazines are a substitute f or newspapers). Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (1 point) Assume that the figure below shows the suppl y of new houses. An improvement in the technology f or building houses will shift suppl y from 1 00.0% 1 . S1 to S2 2. S2 to S1 3. S3 to S2 4. S3 to S1 Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (1 point) Assume that the figure below shows the suppl y of orange juice. A decrease in the wage rate paid to orange juice industry workers will shift suppl y from 1 00.0% 1 . S1 to S2 2. S2 to S1 3. S3 to S2 4. S3 to S1 Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (1 point) Suppose the numbers in parentheses represent two points on a line: (59 billion q uarts; $4) and (7 8 billion q uarts; $6). The line is likel y a 1 . production possibilities frontier f or milk . 1 00.0% 2. suppl y curve f or milk . 3. demand curve f or milk . 4. ray through the origin. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (1 point) Studies at Cornell University revealed that chickens grow 2 percent more weight when a red mitten is placed in their cage and V ivaldi is played in the coop. Resultant f eed savings are estimated at $60 million a year . In the chicken market, the 1 . demand curve shifts to the right. 1 00.0% 2. suppl y curve shifts to the right. 3. price will rise. 4. q uantity sold will fall. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (1 point) The suppl y curve shows 1 . the same basic inf mation as the demand curve. or 2. who will have an opportunity to produce or purchase an item. 1 00.0% 3. the q uantity sellers are willing and able to put on the market as a function of price. 4. what q uantities have been sold over the past f ew weeks or months. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (1 point) If price rises, what happens to suppl or the product? (Watch ter minology!) y f 1 . It increases. 2. It decreases. 1 00.0% 3. It does not change. 4. Uncertain. Economic theory has no answer to this q uestion. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (1 point) Why does q uantity supplied increase when price increases? 1 00.0% 1 . Producers find it more profitable to make the item. 2. People "drop out" of the market, so buyers find it more abundant. 3. As demand decreases with a high price, sur pluses appear . 4. All of the above. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (1 point) Along a suppl y curve, 1 . suppl y changes as price changes. 1 00.0% 2. q uantity supplied changes as price changes. 3. suppl y changes as technology changes. 4. q uantity supplied changes as technology changes. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 6 (1 point) An important assumption that is made when constructing a suppl y schedule is 1 . onl y price and q uantity matter in deter mining suppl y . 2. fir ms always want to sell a certain amount of a product. 3. suppl y is too important to be left to the free market. 1 00.0% 4. all other deter minants of suppl y are held constant. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) 7 Assuming that resources are specialized, the opportunity cost of an item increases as production of it rises. Theref ore, we expect that fir ms will produce more if 1 00.0% 1 . the price increases. 2. the price decreases. 3. the opportunity cost is greater than the price. 4. the government asks fir ms to produce more. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 8 (1 point) The price f labor is the wage rate. What happens to the q uantity of labor or supplied if wages increase? 1 00.0% 1 . It increases. 2. It decreases. 3. It does not change. 4. Uncertain. Economic theory has no answer to this q uestion. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 9 (1 point) Suppl y curves represent producers' 1 . inventories. 2. willingness to buy . 1 00.0% 3. willingness to sell. 4. total production. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 20 (1 point) A decrease in the market price of a product, ceteris paribus, results in 1 00.0% 1 . a movement down (to the left) along a given suppl y curve, decreasing q uantity supplied. 2. a movement up (to the right) along a given suppl y curve, increasing q uantity supplied. 3. an inward shift of the suppl y curve. 4. an outward shift of the suppl y curve. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 20 / 20 = 1 00.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Quiz 2.3 User ID: xefri Attempt : 3 / 3 Out of: 20 Started: Sep 2, 2003 1 4 Finished: Sep 2, 2003 1 5 T 1 9:1 1 9:1 ime spent : 1 min., 2 4 sec. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) A decrease in demand will have what eff ect on eq uilibrium price and q uantity? 1 . Price will increase, q uantity will decrease. 2. Price will decrease, q uantity will increase. 3. Both price and q uantity will increase. 1 00.0% 4. Both price and q uantity will decrease. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (1 point) Which of the f ollowing is the most likel explanation f why airlines tend to y or lower ticket prices in the winter? 1 . Suppl y is relativel y variable, and a drop in demand lowers eq uilibrium price. 2. Demand is relativel y variable, and a drop in suppl y lowers eq uilibrium price. 3. Airlines like to sur prise passengers with sales on ticket prices. 1 00.0% 4. Suppl is relativel fixed, and a drop in demand lowers eq uilibrium y y price. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (1 point) Last year ,000 cases of elixir were sold at $1 , 1 0; this year ,200 cases were sold , 1 at $12. The most probable inter pretation of these data is that the 1 . suppl y and demand curves are shifting to the right. 2. suppl y and demand curves are shifting to the left. 3. suppl y curve has shifted to the left, with no change in demand. 1 00.0% 4. demand curve has shifted to the right, with no change in suppl y . Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (1 point) Are markets always in eq uilibrium? 1 es, they are always at the eq uilibrium point, or very close to it. . Y 2. Y es, because so f ew things tend to alter suppl y and demand. 1 00.0% 3. No, but if there is no interf erence, they tend to move toward eq uilibrium. 4. No, they never "settle down" into a stable price and q uantity . Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (1 point) In January 2,500 q uarts of ice cream are sold in Boston at $2 a q uart. In , F ebruary , 3,000 q uarts are sold at $2.50 a q uart. This change in q uantity sold and price may have been caused by 1 . a reduction in wages in the Boston area. 2. the introduction of labor ­saving automated ice cream­packing machinery . 1 00.0% 3. the release of a medical study showing that ice cream consumption improves mental health. 4. the decision by Boston ice cream sellers to eliminate discount coupons. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (1 point) A decrease in suppl y will have what eff ect on eq uilibrium price and q uantity? 1 00.0% 1 . Price will increase, q uantity will decrease. 2. Price will decrease, q uantity will increase. 3. Both price and q uantity will increase. 4. Both price and q uantity will decrease. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (1 point) A decrease in the price of an input going into the production of a product will result in 1 . a decrease in eq uilibrium price and a decrease in eq uilibrium q uantity . 2. an increase in eq uilibrium price and an increase in eq uilibrium q uantity . 1 00.0% 3. a decrease in eq uilibrium price and an increase in eq uilibrium q uantity . 4. an increase in eq uilibrium price and no change in eq uilibrium q uantity . Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (1 point) The price of gasoline has risen and the q uantity sold has fallen. This was likel y caused by 1 00.0% 1 . a rise in the price of crude oil. 2. a seasonal rise in the demand f or gasoline. 3. use of a new public transit system. 4. a discovery of crude oil in New Jersey . Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (1 point) A study of the demand f or fresh fish f ound that meat and poultry prices had a positive impact on the price of fish. In other words, as the price of meat and poultry rose, so did the price of fish. This indicates that 1 . fish is a nor mal good. 1 00.0% 2. meat and poultry are substitutes f or fish. 3. meat and poultry are complements of fish. 4. fish is an inf erior good. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (1 point) The U .S. government banned cigarette advertising on radio and television after January 1 7, but magazine advertisements were still legal. Y would expect to 91 ou find that, after the ban took eff ect, 1 . the price of magazine ads f or all goods f ell. 2. the price of magazine ads f or onl y cigarettes f ell. 1 00.0% 3. the price of magazine ads f or all goods rose. 4. the price of magazine ads f or onl y cigarettes rose. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (1 point) In high schools, all teachers are paid the same based on years of service and regardless of specialization. Beginning in the 1 70s, a shortage of science and 9 math teachers developed as private industry paid more f or math and science skills than schools could off . At the same time, a decline in the number of school­age er children tended to reduce the demand f all other teachers, which led to a or sur plus. The economist's solution to this problem would be 1 . merit pay to reward the best teachers. 2. recognition that all teachers do comparable work and should be paid the same. 3. to raise the wages of all teachers. 1 00.0% 4. to raise the wages of teachers in fields that are in short suppl y and lower those of others. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (1 point) Some medical authorities announced in the late 1 980s that an acne medicine named Retin­A also had previousl y unknown wrinkle­reducing properties. (In other words, it made its users look younger!) An economist would expect to find that, after this announcement, the price of Retin­A _____ and the q uantity sold _____. 1 . rose; f ell 1 00.0% 2. rose; rose 3. f ell; f ell 4. f ell; rose Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (1 point) In the figure below , there would be a sur plus of T ­shirts if 1 00.0% 1 . the price were $1 0. 2. the price were $8. 3. the price were below $8. 4. the price were between $8 and $6. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (1 point) After the strike against the Financial News in London began, the number of copies of the Broad Street Journal sold in England increased dramaticall y , yet there has been no increase in price. Which suppl y and demand picture in the figures below represents the situation f or the Broad Street Journal bef ore the strike? 1 . 1 00.0% 2. 3. 4. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (1 point) The presence of scalpers (people selling tickets at a price above the q uoted price, P*) at a recent Super Bowl game suggests that the market f or stadium seats could be represented by which graph below? 1 . 2. 0.0% 3. 4. Score 0 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 6 (1 point) A shortage will tend to occur at which price in the f ollowing figure? 1 . P1 2. P2 1 00.0% 3. P3 4. None of the above. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) 7 At price P1 in the f ollowing figure, what will tend to happen? 1 . There will be a shortage, and the price will fall. 2. There will be a shortage and the price will rise. 3. There will be a sur plus, and the price will rise. 1 00.0% 4. There will be a sur plus, and the price will fall. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 8 (1 point) If the suppliers of a good will sell any amount at $30 but there are no sales, then the market can best be represented by which graph below? 1 . 2. 3. 1 00.0% 4. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 9 (1 point) Grapes can be used f or wine or f or raisins. Which of the f ollowing graphs best depicts the eff ects on the U .S. raisin market of an increase in imports of f oreign wines? (This one is reall y tough. Start by thinking about how the imported wines will aff ect the domestic wine industry What eff . ect will this have on the market f or raisins, since grapes can be used to produce wine or raisins?) 1 . 1 00.0% 2. 3. 4. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 20 (1 point) "Moonshine" is illegal home brew made by adding sugar to accelerate corn f mentation. T er en pounds of sugar are necessary to make a gallon of moonshine. In the mid­1 70s, the price of sugar tripled and the price of moonshine skyrocketed 9 from $6 to $1 5 a gallon. Which graph below best illustrates this? 1 . 2. 3. 1 00.0% 4. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 1 9 / 20 = 95.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Quiz 2.4 User ID: xefri Attempt : 2 / 3 Out of: 1 0 Started: Sep 26, 2003 12:06 Finished: Sep 26, 2003 12:0 ime spent 7 T : 53 sec. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (1 point) If the government sets a minimum wage above the eq uilibrium wage, then 1 . more people will have jobs than at the eq uilibrium wage. 2. the same number of people will have jobs as at the eq uilibrium wage. 3. f ewer people will be willing to work than at the eq uilibrium wage. 1 00.0% 4. fir ms will be willing to hire f ewer workers than at the eq uilibrium wage. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (1 point) If the government decides to increase the minimum wage rate paid to unskilled workers, which of the f ollowing would most likel y occur? 1 . Unemployment among unskilled workers would decrease. 1 00.0% 2. Unemployment among unskilled workers would increase. 3. There would be a shortage of unskilled labor . 4. Workers and their employers would ignore the minimum wage. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (1 point) Examine the graph. If the government imposes a minimum wage of $8.00 per hour , 1 . there will be a shortage of 20,000 units of labor . 1 00.0% 2. there will be a sur plus of 20,000 units of labor . 3. the labor market will be in eq uilibrium at a wage of $6.00 per hour and 20,000 units of labor . 4. the minimum wage will not aff ect the market. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (1 point) Examine the graph. If the government imposes a minimum wage of $4.00 per hour , 1 . there will be a shortage of 20,000 units of labor . 2. there will be a sur plus of 20,000 units of labor . 3. the labor market will be in eq uilibrium at a wage of $6.00 per hour and 20,000 units of labor . 1 00.0% 4. the minimum wage will not aff ect the market. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (1 point) The rising minimum wage allegedl y has reduced the q uantity demanded of teenage labor or example, restaurants and hotels automated their dishwashing systems in . F response to the law . However , demographics (the "baby bust") have reduced the suppl y of teenage labor . The U .S. Department of Labor reported that teenage unemployment, a problem in 1 79, was worse in 1 9 986. Which graph below is consistent with these facts? (This is a HARD one! Remember that the minimum wage may create a sur plus of labor . Look at the size of the sur plus in each year .) 1 . 2. 1 00.0% 3. 4. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (1 point) The eff ect of an excise tax imposed on a SELLER of a good is to 1 . shift the demand curve to the left. 1 00.0% 2. shift the suppl y curve to the left. 3. shift the demand curve to the right. 4. shift the suppl y curve to the right. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (1 point) Examine the graph. If the government imposes an excise tax of $2.00 per unit on a supplier , 1 00.0% 1 . the buyer's price increases to $4.00, the seller's price falls to $2.00, and the q uantity traded falls to 1 00 units. 2. the seller's price increases to $4.00, the buyer's price falls to $2.00, and the q uantity traded falls to 1 00 units. 3. the buyer's price increases to $4.00, the seller's price falls to $2.00, and the q uantity traded increases to 200 units. 4. the buyer's and seller's prices remain at $3.00, and the q uantity traded falls to 1 00 units. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (1 point) Examine the graph. If the government imposes an excise tax of $2.00 per unit, what will be the total tax revenue collected by the government? (The total tax revenue is the number of units sold times the per ­unit tax.) 1 . $400 1 00.0% 2. $200 3. $800 4. $600 Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (1 point) T o be eff ective, a price floor such as the minimum wage must be 1 00.0% 1 . above the eq uilibrium price. 2. at the eq uilibrium price. 3. below the eq uilibrium price. 4. anywhere on the graph. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (1 point) Government intervention in the marketplace 1 . always benefits society . 2. always har ms society . 1 00.0% 3. may cause both benefit and har m to society . 4. is rarel y influenced by political considerations. Score 1 / 1 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 1 0 / 1 0 = 1 00.0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ More Practice! User ID: xefri Attempt : 1 / Unlimited Out of: 0 Started: Sep 1 2003 1 8 Finished: Oct 05, 2003 2 7 , 0:1 1:30 T ime spent 4 hrs., 1 : 43 1 min., 3 7 sec. Return to Scores ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 (0 points) Suppose that beer and pretzels are complements and that the price of beer rises shar pl According to the material presented in this unit, what should happen to y . the eq uilibrium price and q uantity of pretzels? 1 . eq uilibrium price increase, eq uilibrium q uantity increase 1 00.0% 2. eq uilibrium price decrease, eq uilibrium q uantity decrease Correct. The increase in the price of beer will cause the demand f or pretzels to shift left. This will cause both P and Q f or pretzels to fall. 3. eq uilibrium price increase, eq uilibrium q uantity decrease 4. eq uilibrium price decrease, eq uilibrium q uantity increase Score 1 00% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 2 (0 points) The law of demand states that 1 . price and demand are inversel y related, ceteris paribus. 1 00.0% 2. Price and q uantity demanded are inversel y related, ceteris paribus. Correct. 3. Price and q uantity demanded are directl y related, ceteris paribus Score 1 00% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 3 (0 points) A change in the suppl y of wheat (shifting the suppl y curve) will take place 1 . when the price of wheat changes. 1 00.0% 2. when there is a technological improvement in wheat production. Correct. This is one of the other factors that will shift suppl It lowers costs y . of production, causing suppl y to shift to the right. 3. when the demand f or wheat changes. 4. when any of the above change. Score 1 00% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 4 (0points) A serious frost that damaged the coff ee crop in Brazil would probabl y 1 . shift the demand f or coff ee to the left. 2. shift the suppl y of coff ee to the right. 1 00.0% 3. cause the eq uilibrium price of coff ee to increase and the eq uilibrium q uantity to decrease. Correct. The frost would shift the coff suppl curve to the left. Draw the ee y initial suppl y and demand curves and show the eq uilibrium. Then shift the suppl y to the left. Y ou should see the eq uilibrium price go up and q uantity go down. 4. cause the both the eq uilibrium price and q uantity of coff ee to increase. Score 1 00% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 5 (0 points) Several new fir ms have begun producing personal computers in the last ten years. Based on this inf mation, which of the f or ollowing statements is true? 1 . The market suppl y of personal computers has decreased. 1 00.0% 2. The eq uilibrium price should decrease while the q uantity increases. Correct. Increasing the number of sellers shifts market suppl y to the right. This will cause P to fall and Q to increase. 3. Both the eq uilibrium price and q uantity should increase. Score 1 00% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 6 (0 points) If at a given price a market exhibits a shortage, as that market moves toward eq uilibrium it is expected that 1 00.0% 1 . price will rise and q uantity supplied will rise. Correct. 2. price will rise and q uantity demanded will rise. 3. suppl y will increase until eq uilibrium is reached. 4. demand will decrease until the eq uilibrium price is reached. Score 1 00% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 7 (0 points) Assuming a market is in eq uilibrium, an increase in the demand (shifting the demand to the right) f or the good usuall y will cause 1 . an increase in q uantity demanded. 2. an increase in q uantity supplied. 3. an increase in suppl y . 0.0% 4. a higher q uantity and a lower price. Incorrect. When demand shifts to the right, both the eq uilibrium price and q uantity will increase. General f eedback The best way to answer this q uestion is to draw the graph. Label the axes P and Q, draw the initial suppl y and demand curves, and indicate the initial eq uilibrium. Then shift demand to the right, and indicate the new eq uilibrium. Notice that both P and Q increase, and there was a movement along the suppl curve to the y right. Score 0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 8 (0 points) Given that a market is currentl y in eq uilibrium, an increase in suppl y will cause 1 . an increase in demand. 1 00.0% 2. an increase in q uantity demanded. Correct. As the suppl shifts right, there will be a movement along the same y demand curve. Most of the time we'll just say the eq uilibrium price and q uantity increase, but it can also be called an increase in the q uantity demanded since we moved along the same demand curve. 3. an increase in q uantity supplied. 4. a higher eq uilibrium price and a lower eq uilibrium q uantity . General f eedback The best way to answer this is to draw the graph. Start with the initial suppl y and demand curves with the initial eq uilibrium indicated. Then shift suppl to y the right. Y ou'll see the eq uilibrium price decrease and the eq uilibrium q uantity increase. This can also be called an increase in q uantity demanded because we moved along the same demand curve as suppl y shifted. Confusing, huh. Score 1 00% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 9 (0 points) Which of the f ollowing would decrease the demand f or root beer? 0.0% 1 . an increase in the price of root beer Incorrect. Increasing price will decrease QUANTITY demanded, but not shift demand. 2. a sale on Pepsi (a substitute f or root beer) 3. a decrease in the suppl y of root beer 4. All of the above. Score 0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 0 (0 points) A decrease in the demand f or beef could be caused by 0.0% 1 . an increase in the price of beef. Incorrect. Increasing the price of beef will decrease the QUANTITY demanded, but not shift the demand. 2. an increase in the price of chicken, a beef substitute. 3. an increase in the price of cattle f eed, an input. 4. an increase in the suppl y of beef. 5. none of the above. General f eedback This q uestion is just asking what factors will cause the demand f or beef to shift to the right. There is no need to draw a graph. Score 0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 1 (0 points) Suppose a sur plus (excess suppl y) exists in the market f or paintings of El vis on black vel vet. This situation could be expected to lead to 1 . an increase in the price of the paintings. 2. an increase in the demand f or the paintings. 1 00.0% 3. an increase in the q uantity demanded of the paintings. Correct. Natural market f orces will push the price down, which will lead to an increase in q uantity demanded, which is a movement along the same demand curve. (Note ­ the q uantity supplied would decrease as price f ell.) 4. a decrease in the suppl y of the paintings. 5. increased sightings of El vis at the local Burger King. Score 1 00% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 12 (0 points) Assume that generic toilet paper is an inf erior good. If income decreases, which of the f ollowing is likel y to occur in the market f or generic toilet paper? 1 . The demand will probabl y decrease. 1 00.0% 2. The eq uilibrium price and q uantity will increase. Correct. As demand shifts right, both price and q uantity will increase. 3. T eh eq uilibrium price and q uantity will decrease. 4. The eq uilibrium price will increase, but eq uilibrium q uantity will fall. 5. The eq uilibrium price will decrease, but eq uilibrium q uantity will increase. General f eedback Since this q uestion is about eq uilibrium, start by drawing the initial suppl y and demand curves and indicating the eq uilibrium. The "other factor" here is a decrease in income, which will cause the demand f an inf or erior good to shift right. Draw the shift and show the new eq uilibrium. Score 1 00% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 3 (0 points) Suppose a shortage exists (excess demand) in the market f grapefruit. This or situation could be expected to lead to 1 . a decrease in the price of grapefruit. 2. a decrease in the demand f or grapefruit. 1 00.0% 3. an increase in the q uantity supplied of grapefruit. Correct. A shortage is corrected by raising the price. As price increases, q uantity supplied will increase. (At the same time, q uantity demanded will fall.) 4. an increase in the suppl y of grapefruit. Score 1 00% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 4 (0 points) Assume that a serious frost in Brazil badl damages the coff y ee crop. This will cause an increase in the eq uilibrium price of coff ee. Which of the f ollowing is also likel y to occur? 1 . The price of tea, a coff ee substitute, will increase. 0.0% 2. The price of coff ee filters, a complement to coff ee, to increase. Incorrect. As the price of coff ee rises, people will buy less coff ee, so they will need f ewer coff filters (assuming they're complements). This will shift the ee demand f or coff ee filters to the left, causing both P and Q to fall. 3. Even if the price of coff ee rises, the q uantity demanded probabl y won't fall. Score 0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Question 1 5 (0 points) The number of personal computers sold annuall y in the United States has increased at a rapid rate. At the same time, the price of personal computers has fallen. The rise in sales due to the lower price is called 1 . an increase in q uantity demanded. 2. an increase in demand. 3. an increase in q uantity supplied. 0.0% 4. an increase in suppl y . In all likelihood, suppl y probabl y increased because of the new technologies, but this isn't part of this particular q uestion. (This is a tough one!) This q uestion onl y talks about the price falling, and a price decrease won't cause the suppl curve to shift. Remember that the phrase "an increase in suppl means y y" shifting the whole suppl y curve to the right. Score 0% ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ T otal score 0 / 0 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ V iew Results TEST 2 User ID: skim7 Attempt : 1 / 1 Out of: 1 00 Started: November 1, 200 1 4 2:1 pm Finished: November 1, 200 7 1 4 4:05pm T ime spent : 1 hr , 48 min., 1 4 sec. Student finished 2 hr 1 min., 46 sec. ahead of the 2 , 1 40min. time limit. Question 1 (2 points) The slope of a demand curve is almost always Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. positive, because when people buy more of a good, the cost of producing it will rise. 0.0% b. positive, because the more money a person has, the more of a particular good will be bought. 0.0% c. negative, because when people buy more of a good, the cost of producing it will fall. 1 00.0% d. negative, because with everything else eq ual, people will buy more of a good when its price is lower . Score: 2 / 2 Question 2 (2 points) A demand curve f or a nor mal good Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. slopes upward and to the right. 0.0% b. is constructed based on the assumption that income is rising. 0.0% c. is constructed based on the assumption that an inverse relationship exists between price and income. 1 00.0% d. shows the inverse relationship between price and q uantity demanded. Score: 2 / 2 Question 3 (2 points) All of the f ollowing will aff ect the position of the demand curve EXCEPT Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. prices of the resources used to produce the product. 0.0% b. income. 0.0% c. consumer tastes and pref erences. 0.0% d. buyers' expectations about future prices. Score: 2 / 2 Question 4 (2 points) If more buyers came into the market f or a good, we would expect to see the market demand curve Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. shift inward. 0.0% b. remain unchanged since none of the deter minants of individual demand changed. 1 00.0% c. shift outward. 0.0% d. reflect a positive relationship between price and q uantity demanded. Score: 2 / 2 Question 5 (2 points) A demand curve can shift due to anything that aff ects consumers' willingness and ability to purchase the good EXCEPT changing price. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 6 (2 points) A demand schedule relates prices of a particular good to q uantities demanded. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 7 (2 points) An increase in demand is shown graphicall y by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a shift of the demand curve to the left. 0.0% b. a movement to the right along the existing demand curve. 1 00.0% c. a shift of the whole demand curve to the right. 0.0% d. a movement up and to the left along the existing demand curve. Score: 2 / 2 Question 8 (2 points) An increase in the price of a good Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. will cause an increase in demand, because the good is now more valuable. 0.0% b. will cause a decrease in demand. 0.0% c. will cause an increase in the q uantity demanded, because the good is now more valuable. 1 00.0% d. will cause a decrease in the q uantity demanded. Score: 0 / 2 Question 9 (2 points) If incomes rise, most consumers will increase the q uantity demanded of an inf erior good. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 1 0 (2 points) Assume that orange juice and grapefruit juice are substitute goods. If orange juice prices double in 1 7 there will be a 99 , Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. rightward shift in the demand f or grapefruit juice. 0.0% b. rightward shift in the suppl y of grapefruit juice. 0.0% c. leftward shift in the suppl y of grapefruit juice. 0.0% d. leftward shift in the demand f or grapefruit juice. Score: 2 / 2 Question 1 1 (2 points) After the price of milk increases, David buys more juice and less cereal. F or David, Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. milk , juice, and cereal are all substitutes. 0.0% b. milk and juice are complements, and milk and cereal are substitutes. 0.0% c. milk , juice, and cereal are all complements. 1 00.0% d. milk and juice are substitutes, and milk and cereal are complements. Score: 2 / 2 Question 12 (2 points) Assume that the figure below shows demand f or cameras. An increase in the price of photographic film (a complement to cameras) changes demand from Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. D1 to D2 1 00.0% b. D2 to D1 0.0% c. D2 to D3 0.0% d. D1 to D3 Score: 2 / 2 Question 1 3 (2 points) An increase in the price of gasoline shifts the demand f or tires to the Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. left, because gasoline and tires are substitutes. 1 00.0% b. left, because gasoline and tires are nor mall y used together . 0.0% c. right, because gasoline and tires are substitutes. 0.0% d. right, because gasoline and tires are nor mall y used together . Score: 2 / 2 Question 1 4 (2 points) Assume the demand curve f or cookies is downward sloping. If the price of cookies falls from $1 .50 to $1 .25 per dozen (be careful of ter minology!), Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the demand f or cookies will fall. 0.0% b. the demand f or cookies will rise. 1 00.0% c. a larger q uantity of cookies will be demanded. 0.0% d. a smaller q uantity of cookies will be demanded. Score: 2 / 2 Question 1 5 (2 points) Which of the f ollowing would cause a decrease in the demand f or Pepsi (i.e., a leftward shift of the Pepsi demand curve)? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. An increase in the price of Coke. 1 00.0% b. A decrease in the price of Coke. 0.0% c. An increase in the price of Pepsi. 0.0% d. A decrease in the price of Pepsi. Score: 2 / 2 Question 1 6 (2 points) T o derive a market demand curve, add the q uantity demanded by each individual in the market at each price and construct a new demand schedule. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 1 (2 points) 7 A change in the price of a particular good will cause all of the f ollowing EXCEPT Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a movement along the same demand curve. 0.0% b. a change in the q uantity demanded. 1 00.0% c. a shift in the demand curve. Score: 2 / 2 Question 1 8 (2 points) The q uantity supplied of a particular good is the amount of the good that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. households are willing to consume at each particular price. 0.0% b. fir ms will actuall y end up buying at a particular price during a given time period. 1 00.0% c. fir ms are willing to sell at each price during a particular time period. 0.0% d. households want fir ms to sell at each price during a particular time period. Score: 2 / 2 Question 1 9 (2 points) An increase in the price of coff ee will Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. decrease the demand f or coff ee. 0.0% b. increase the demand f or coff ee. 1 00.0% c. increase the q uantity supplied of coff ee. 0.0% d. increase the suppl y of coff ee. Score: 2 / 2 Question 20 (2 points) All of the f ollowing will cause the suppl curve of good A to shift rightward y EXCEPT Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a reduction in the prices of inputs used to produce good A . 0.0% b. an increase in the number of fir ms in the industry producing good A . 0.0% c. an improvement in the technology used to produce good A . 1 00.0% d. an increase in the market price of good A . Score: 2 / 2 Question 2 1 (2 points) Which of the f ollowing will NOT aff ect the market suppl y curve f or a good? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. There is a new technology in producing the good. 1 00.0% b. The price of the good increases. 0.0% c. The number of sellers in the market increases. 0.0% d. There is an increase in the prices of the inputs used in production. Score: 2 / 2 Question 22 (2 points) Which of the f ollowing will shift the suppl y curve to the right? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. input prices rise 0.0% b. a new excise tax 1 00.0% c. prices are expected to be higher in the future 1 00.0% d. prices are expected to be lower in the future Score: 2 / 2 Question 23 (2 points) The suppl y of a good can be changed by : Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Costs of inputs. 0.0% b. Number of fir ms in the industry . 0.0% c. T echnology . 1 00.0% d. All of the above. Score: 2 / 2 Question 2 4 (2 points) All of the f ollowing will decrease the suppl y of airline flights EXCEPT Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. A rise in the price of jet fuel (an input). 0.0% b. A reduction in the number of airline companies off ering service. 1 00.0% c. A technological change that makes air planes saf and more fuel­ er efficient. 0.0% d. An increase in the salaries of pilots (an input). Score: 2 / 2 Question 25 (2 points) A decrease in the market price of a product, ceteris paribus, results in Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. a movement down (to the left) along a given suppl y curve, decreasing q uantity supplied. 0.0% b. a movement up (to the right) along a given suppl y curve, increasing q uantity supplied. 0.0% c. an inward shift of the suppl y curve. 0.0% d. an outward shift of the suppl y curve. Score: 2 / 2 Question 26 (2 points) Assume that the figure below shows the suppl y of soda. An increase in the price of syrup used in the production of soda will shift suppl y from Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. S1 to S2 1 00.0% b. S2 to S1 0.0% c. S2 to S3 0.0% d. S1 to S3 Score: 2 / 2 Question 2 7 (2 points) If a pretzel fir m expects the price of pretzels to rise next week , it will Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. sell f ewer pretzels this week and save the suppl or when the price y f increases. 0.0% b. sell more pretzels this week . 0.0% c. sell no pretzels next week . 0.0% d. do nothing. Score: 2 / 2 Question 28 (2 points) A suppl curve is a collection of points on a graph illustrating th y erelationshipo between the q uantity supplied f or a particular product and Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the q uantity demanded. 1 00.0% b. the product's price. 0.0% c. the price of the product's inputs. 0.0% d. the fir m's expectations about future prices. Score: 2 / 2 Question 29 (2 points) Eq uilibrium in a market occurs when Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the market price leads to a decrease in q uantity demanded. 1 00.0% b. q uantity supplied and q uantity demanded are eq ual at the market price. 0.0% c. demand and suppl y indicate a small sur plus of a good. 0.0% d. price is at its minimum. Score: 2 / 2 Question 30 (2 points) An increase in demand will have what eff ect on eq uilibrium price and q uantity? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Price will increase, q uantity will decrease. 0.0% b. Price will decrease, q uantity will increase. 1 00.0% c. Both price and q uantity will increase. 0.0% d. Both price and q uantity will decrease. Score: 2 / 2 Question 3 1 (2 points) Other things remaining eq ual, if the demand f or beef increases, Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. The eq uilibrium price and q uantity of beef will rise. 0.0% b. The eq uilibrium price and q uantity of beef will fall. 0.0% c. The eq uilibrium price of beef will fall and the eq uilibrium q uantity will rise. 0.0% d. The eq uilibrium price of beef will rise and the eq uilibrium q uantity will fall. Score: 2 / 2 Question 32 (2 points) If the price of a good decreases, which of the f ollowing will occur? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. The demand will increase. 1 00.0% b. The q uantity demanded will increase. 0.0% c. The suppl y will decrease. 0.0% d. The q uantity supplied will increase. Score: 2 / 2 Question 33 (2 points) Which of the f ollowing will shift the demand curve f or milk to the right? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. A decrease in the price of Nestle's Quick chocolate mix (a complement. 0.0% b. A decrease in the price of orange juice (a substitute). 0.0% c. A decrease in the price of milk . 0.0% d. A decrease in the price of cattle f eed (an input). Score: 2 / 2 Question 3 4 (2 points) The Red Jacket Mountain V iew Inn in New Hampshire charges $99 per room in the winter ski season and $94 during the summer months. The number of rooms and operating costs are constant year 'round. These prices indicate Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a rightward shift in the demand curve in the summer . 1 00.0% b. a rightward shift in the demand curve in the winter . 0.0% c. a leftward shift in the suppl y curve in the summer . 0.0% d. a leftward shift in the demand curve in the winter . Score: 0 / 2 Question 35 (2 points) This is a hard test, huh. (I think suppl y and demand, particularl y the specific ter minology , is the toughest thing we do all semester .) Theref ore, just pick the answer below that you think I'm looking f or! (Hint : Put option 1 . And if you miss it, I'll never let you f orget it!) Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Economics is a wonderful subject that everyone finds interesting. 0.0% b. Illinois highways are always well maintained. In fact, they're among the best in the country! 0.0% c. Spring break should be cancelled because students miss being in the classroom. Score: 2 / 2 Question 36 (2 points) Price per Quantity Demanded Quantity Supplied Constant­ of Constant­Quality of Constant­Quality Quality Unit Units per Y ear Units per Y ear ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ $1 .00 1 ,000 200 2.00 800 400 3.00 600 600 4.00 400 800 5.00 200 1 ,000 According the table, at a price of $2 per unit, which of the f ollowing would exist? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a shortage (excess demand) of 800 units 0.0% b. a sur plus (excess suppl y) of 800 units 0.0% c. a shortage (excess demand) of 200 units 1 00.0% d. a shortage (excess demand) of 400 units Score: 2 / 2 Question 3 7 (2 points) A sur plus will tend to occur at which price in the f ollowing figure? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. P1 0.0% b. P2 0.0% c. P3 0.0% d. None of the above. Score: 2 / 2 Question 38 (2 points) If there are empty seats at the university basketball game when the price per ticket is P*, then this situation can best be represented by which graph below? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 1 00.0% b. 0.0% c. 0.0% d. Score: 2 / 2 Question 39 (2 points) The demand and suppl curves f video rentals are given below All of the y or . f ollowing are true EXCEPT : Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. At P = $5, q uantity supplied exceeds q uantity demanded. 0.0% b. At P = $4, there is no excess suppl y nor excess demand. 0.0% c. The eq uilibrium price is $4 and the eq uilibrium q uantity is 8. 1 00.0% d. At P = $5, q uantity demanded exceeds q uantity supplied. Score: 2 / 2 Question 40 (2 points) In free markets, the result of a shortage is to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. reduce demand f or the good. 0.0% b. increase demand f or the good. 1 00.0% c. increase the price. 0.0% d. decrease the price. Score: 2 / 2 Question 4 1 (2 points) In January 2,500 q uarts of ice cream are sold in Boston at $2 a q uart. In , F ebruary , 3,000 q uarts are sold at $2.50 a q uart. This change in q uantity sold and price may have been caused by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a reduction in wages in the Boston area. 0.0% b. the introduction of labor ­saving automated ice cream­packing machinery . 1 00.0% c. the release of a medical study showing that ice cream consumption improves mental health. 0.0% d. the decision by Boston ice cream sellers to eliminate discount coupons. Score: 2 / 2 Question 42 (2 points) When there is excess demand f or sugar in the market, the bidding mechanism will Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. push down the price of sugar . 0.0% b. result in no change in the reservation prices of consumers. 0.0% c. have no eff ect on the price of sugar . 1 00.0% d. push up the price of sugar . Score: 2 / 2 Question 43 (2 points) An increase in the demand f or chocolate bars results in Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. a price increase and a q uantity increase. 0.0% b. a price decrease and a q uantity decrease. 0.0% c. a price increase and a q uantity decrease. 0.0% d. a price decrease and a q uantity increase. Score: 2 / 2 Question 4 4 (2 points) Examine the graph. If the government imposes a rent control on this market and sets the maximum apartment rental at $1 000 per month, the market will Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. have a shortage of 400 apartments. 0.0% b. have a sur plus of 400 apartments. 0.0% c. a shortage of 200 apartments. 1 00.0% d. be in eq uilibrium. Score: 2 / 2 Question 45 (2 points) An eff ective, well­intentioned minimum wage law can be expected to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. clear the market f or unskilled workers. 0.0% b. increase employment f or those covered under the law . 0.0% c. lower costs of production f or fir ms who pay workers the minimum wage. 1 00.0% d. reduce the hours worked f or some unskilled workers. Score: 0 / 2 Question 46 (2 points) If rent controls f or apartments were established below the market rental rates, we would expect Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. a shortage of apartments to develop. 0.0% b. a sur plus of apartments to develop. 0.0% c. eq uilibrium rents to fall below the rates set by rent control. 0.0% d. a building boom in apartments. Score: 2 / 2 Question 4 7 (2 points) If some transactions are blocked in a rent­controlled apartment market, potential buyers may try to rent the scarce apartments Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. by attempting to get more suppliers into the market. 1 00.0% b. by bribing landlords. 0.0% c. by building their own apartments. 0.0% d. by getting the landlords to raise the rents. Score: 2 / 2 Question 48 (2 points) If the government decides to increase the minimum wage rate paid to unskilled workers, which of the f ollowing would most likel y occur? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Unemployment among unskilled workers would decrease. 1 00.0% b. Unemployment among unskilled workers would increase. 0.0% c. There would be a shortage of unskilled labor . 0.0% d. Workers and their employers would ignore the minimum wage. Score: 2 / 2 Question 49 (2 points) The tax wedge can be identified as Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the consumer's demand price and the seller's price. 0.0% b. the diff erence between the eq uilibrium price and the costs of producer inputs. 0.0% c. the diff erence between total sur plus and consumer sur plus. 0.0% d. graphicall y the area beneath the demand curve and above the eq uilibrium price. Score: 0 / 2 Question 50 (2 points) If an excise tax is imposed on buyers, the market demand curve will shift inward. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 T otal score: 92 / 1 00 = 92.0% V iew Results TEST 3 User ID: skim7 Attempt : 1 / 1 Out of: 120 Started: December 8, 200 4 4:50pm Finished: December 8, 200 4 9:1 8pm T ime spent : 4 hr , 28 min., 46 sec. Student exceeded allotted time of 2 40 min. by 28 min. 46 sec.. Question 1 (2 points) Which of the f ollowing would NOT allow society to move to point h in the figure? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. an improvement in technology 1 00.0% b. more efficient use of current resources 0.0% c. an increase in q uantity of labor 0.0% d. an increase in q uantity of capital Score: 2 / 2 Question 2 (2 points) Scarcity is illustrated graphicall y by a production possibilities frontier . Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 3 (2 points) The production possibilities frontier illustrates Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the fundamental concept ofscarcity . 0.0% b. the opportunity cost of acq uiring more of one good. 0.0% c. an economy's maximum output utilizing all resources efficientl y . 1 00.0% d. All of the above are correct. Score: 2 / 2 Question 4 (2 points) The circular flow of income invol ves the principle that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. in every economic exchange one party takes advantage of the other party . 0.0% b. the seller of a good receives more than the buyer spends. 1 00.0% c. the seller of a good receives exactl y the same amount as the buyer spends. 0.0% d. the seller of a good receives less than the buyer spends. Score: 2 / 2 Question 5 (2 points) In the simple circular flow model the money received by a car maker when it sells a car goes to Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the owners of all of the resources used to make the car . 0.0% b. onl y the owners of the car maker . 0.0% c. the workers who helped build the car . 0.0% d. the owners of fir ms who sold materials to the car maker , and the rest stays with the fir m. Score: 0 / 2 Question 6 (2 points) Gross domestic product can be loosel y defined as Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the value of output produced by the economy in a given period (usuall y a year). 0.0% b. the income in the hands of individuals after deducting income taxes. 0.0% c. the value of goods and services purchased by all levels of government ­ f ederal, state, and local ­ in a given period. 0.0% d. the value of manufacturing output in a given period, but does not include the value of services. Score: 2 / 2 Question 7 (2 points) Real GDP is the value of final goods and services produced in an economy in , constant dollars (or adjusted f or inflation). Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 8 (2 points) T o deter mine how well an economy is doing, it is better to use Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. nominal GDP figures. 1 00.0% b. real GDP figures. 0.0% c. GDP figures measured by the expenditure approach. 0.0% d. GDP figures measured by the income approach. Score: 2 / 2 Question 9 (2 points) Nominal GDP measures output in ter ms of current prices. Theref ore, part of an increase in nominal GDP can be attributed to inflation. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue. 0.0% b. False. Score: 2 / 2 Question 1 0 (2 points) The gross domestic product is a good indication of the standard of living in a country . Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 0 / 2 Question 1 1 (2 points) There are many difficulties with using GDP as an indicator of social well­being. Which of the f ollowing is NOT one of the difficulties? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Household labor is not included in GDP 0.0% b. GDP cannot take account of changes in leisure time 0.0% c. GDP fails to account f or changes in air pollution or crime 1 00.0% d. Inter mediate products are not included in GDP Score: 2 / 2 Question 12 (2 points) Per capita real GDP eq uals Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. real GDP/investment capital. 0.0% b. real GDP/human capital. 0.0% c. real GDP in the nation's capital, Washington D.C. 1 00.0% d. real GDP/population. Score: 2 / 2 Question 1 3 (2 points) If nominal GDP is $7 million and the GDP deflator is 1 40, real GDP eq uals _________. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. $20,000 0.0% b. $50,000 0.0% c. $2,000,000 1 00.0% d. $5,000,000 Score: 2 / 2 Question 1 4 (2 points) Investment includes all of the f ollowing except Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. stocks 0.0% b. new machinery 0.0% c. new factories 0.0% d. changes in inventory levels Score: 2 / 2 Question 1 5 (2 points) Which of the f ollowing should be included in GDP? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Y ou spend $5 on lunch at Arby's. 0.0% b. Y ou borrow $20,000 from the bank . 0.0% c. Y our Aunt Lucy receives an unemployment compensation check . 0.0% d. Y ou buy a used computer from your friend. Score: 2 / 2 Question 1 6 (2 points) Which of the f ollowing spending components comprises the largest share of aggregate expenditures? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Consumer spending 0.0% b. Investment spending 0.0% c. Government spending 0.0% d. F oreign spending Score: 2 / 2 Question 1 (2 points) 7 Disposable income eq uals Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. personal income plus transf er payments. 1 00.0% b. personal income minus personal income taxes. 0.0% c. Social Security contributions minus personal income taxes. 0.0% d. Social Security contributions plus transf payments minus personal er income taxes. Score: 2 / 2 Question 1 8 (2 points) Which of the f ollowing is NOT considered a component of government spending in calculating GDP? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the cost of the f ederal prison system 0.0% b. the cost of building a new road 0.0% c. payments to plow public roads after a snowstor m 1 00.0% d. unemployment compensation payments Score: 2 / 2 Question 1 9 (2 points) If IBM finds that it has produced 1 00,000 more computers in a year than it sells in that year , the value of those computers Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. will be accounted f or as a loss because they cannot be counted as part of GDP . 0.0% b. will be included in GDP in the year in which they are sold. 0.0% c. will be counted in the current year's GDP as consumption. 1 00.0% d. will be counted in current GDP as inventory investment. Score: 2 / 2 Question 20 (2 points) Suppose in 1 7 the CPI= 1 98 00.00, in 1 988 the CPI = 10.00, and in 1 1 989 the CPI = 120.7 8. Then the inflation rate Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. was the same in 1 989 as it was in 1 988. 1 00.0% b. was lower in 1 989 than it was in 1 988. 0.0% c. was greater in 1 989 than it was in 1 988. 0.0% d. is impossible to deter mine from the CPI. Score: 2 / 2 Question 2 1 (2 points) Suppose the nominal interest rate on some asset is 5% and the inflation rate is 5%. Which of the f ollowing statements is true? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. The real interest rate is 5%. 0.0% b. The owner of this asset will gain purchasing power . 0.0% c. The real interest rate is 1 0%. 1 00.0% d. The real interest rate is 0%. Score: 2 / 2 Question 22 (2 points) Given the f ollowing inf mation, calculate the CPI f or or year 1 . Base year CPI = 1 00 T otal cost of goods in base year = $625, T otal cost of goods in year 1 = $7 50 Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 1 12.5 1 00.0% b. 120 0.0% c. 125 0.0% d. 83 Score: 2 / 2 Question 23 (2 points) Suppose a typical consumer buys 20 units of f ood and 1 0 units of clothes in the year 230 when the price per unit of f 7 , ood is 1 00 and the price per unit of clothes is 200. In 2308, when the typical consumer buys 20 units of f ood and 20 units of clothes, the price of f ood is 10, while the price per unit of clothes remains at 1 200. If the base year is 230 the inflation rate f 7 , or 2308 would be Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 55 percent. 0.0% b. 2 4 percent. 1 00.0% c. 5 percent. 0.0% d. 4 percent. Score: 2 / 2 Question 2 4 (2 points) Inflation ref ers to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the cost of buying all goods in the economy . 0.0% b. the cost of buying consumer goods in the economy . 0.0% c. the cost of replacing depreciated assets. 1 00.0% d. the rate at which the average price level in the economy is rising. Score: 2 / 2 Question 25 (2 points) What is the index of leading indicators? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. A composite index based on the CPI, the producer price index, and the GDP deflator . 1 00.0% b. A composite index based on 1 0 components, including the average number of hours worked and new orders by manufacturers. 0.0% c. A composite index based on the rate of inflation and the rate of unemployment. 0.0% d. An index based primaril y on consumer confidence in the economy . Score: 2 / 2 Question 26 (2 points) Which indexes can be used to measure inflation? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. The CPI, the GDP deflator , and the index of leading indicators 1 00.0% b. The CPI and the GDP deflator 0.0% c. Onl y the CPI 0.0% d. Onl y the GDP deflator Score: 2 / 2 Question 2 7 (2 points) The producer price index is considered a leading indicator of inflation because Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. it is produced monthl y . 0.0% b. it is measured in three categories: finished goods, inter mediate goods, and raw materials. 1 00.0% c. it measures prices at the earl y stages of production. 0.0% d. all of the above. Score: 0 / 2 Question 28 (2 points) If the CPI increases from 1 50 to 1 65, what is the rate of inflation? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 6% 0.0% b. 5.5% 1 00.0% c. 1 0% 0.0% d. 1 5% Score: 2 / 2 Question 29 (2 points) The market baset of goods from which the CPI is derived is composed of Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. natural resources that fir ms use to produce final goods. 0.0% b. total production in a year . 1 00.0% c. products that a typical consumer would buy . 0.0% d. household production such as child care and housework . Score: 0 / 2 Question 30 (2 points) A period of time in which real GDP is rising at a rapid rate is known as Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. inflation. 0.0% b. hyperinflation. 1 00.0% c. an expansion. 0.0% d. a downturn. Score: 2 / 2 Question 3 1 (2 points) The f our phases of business fluctuations are (in order) Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Expansion, peak , recession, trough 0.0% b. Expansion, plateau, recession, plateau 0.0% c. Expansion, trough, recession, peak 0.0% d. Plateau, expansion, plateau, recession Score: 2 / 2 Question 32 (2 points) If hovercrafts replaced automobiles as a f m of individual transportation, and or this transition caused significant fluctuations in the economy this would be , evidence f or which economist's theory of the business cycle? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. John Maynard Keynes 0.0% b. Karl Marx 1 00.0% c. Joseph Schumpeter 0.0% d. Adam Smith Score: 2 / 2 Question 33 (2 points) The ter m "business cycles" ref ers to Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. changes in overall business activity , as evidenced by changes in real GDP employment, and the price level. , 0.0% b. changes in the general price level from inflation to deflation, or vice versa. 0.0% c. changes in the full employment level. 0.0% d. changes in the value of the dollar . Score: 2 / 2 Question 3 4 (2 points) A recession may be defined as Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. a period during which the rate of growth of real GDP is very low or is negative. 0.0% b. an increase in real GDP from one period to the next. 0.0% c. no change in real GDP over a period of time. 0.0% d. no change in nominal GDP over a period of time. Score: 2 / 2 Question 35 (2 points) Who believed that fluctuations in the business cycle were the result of class conflicts between labor and capital? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Schumpeter 1 00.0% b. Marx 0.0% c. Rousseau 0.0% d. Keynes Score: 2 / 2 Question 36 (2 points) New classical economists believe that the economy cannot correct itself when it is in a recession and must be corrected with monetary or fiscal posicy or some combination of both. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 3 7 (2 points) If an auto worker gets laid off because a recession causes the demand f or autos to decrease, what type of unemployment is it? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. frictional 0.0% b. structural 1 00.0% c. cyclical Score: 2 / 2 Question 38 (2 points) The unemployment rate is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the percentage of people in the labor f orce with jobs. 1 00.0% b. the percentage of people in the labor f orce who want to work but who do not have jobs. 0.0% c. the percentage of people in the population who are retired. 0.0% d. the percentage of people in the labor f orce who are working but activel y seeking new jobs. Score: 2 / 2 Question 39 (2 points) During 1 990­1 1 real GDP f 99 ell. The increase in unemployment during that period is best attributed to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. frictional unemployment. 0.0% b. structural unemployment. 1 00.0% c. cyclical unemployment. 0.0% d. recessionary unemployment. Score: 2 / 2 Question 40 (2 points) The ________ rate of unemployment shifts around the natural rate of unemployment. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. frictional 0.0% b. structural 0.0% c. seasonal 1 00.0% d. cyclical Score: 0 / 2 Question 4 1 (2 points) During a recession, the unemployment rate increases because Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. there are more discouraged workers. 0.0% b. the labor f orce grows. 1 00.0% c. fir ms hire f ewer workers. 0.0% d. all of the above. Score: 2 / 2 Question 42 (2 points) In 1 998, __________________ were over eight times more likel y to be unemployed as white adult males. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. black f emales 1 00.0% b. black teenagers 0.0% c. white teenagers 0.0% d. f emale hispanics Score: 2 / 2 Question 43 (2 points) If a worker becomes unemployed because new technology eliminates the need f or his or her skills, which type of unemployment would it be called? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. frictional 1 00.0% b. structural 0.0% c. cyclical Score: 2 / 2 Question 4 4 (2 points) When output _________, unemployment is expected to ________. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. rises; rise. 1 00.0% b. rises; fall. 0.0% c. falls; remain constant. 0.0% d. remains constant ; fall. Score: 2 / 2 Question 45 (2 points) The Bureau of Economic Anal ysis (BEA) measures the unemployment rate. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 46 (2points) Opponents of minimum wage legislation argue that higher minimum wages serve to Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. increase unemployment, particularl y among unskilled workers. 0.0% b. increase unemployment, particularl y among high­income executives. 0.0% c. increase the q uantity of labor demanded. 0.0% d. decrease the q uantity of labor supplied. Score: 2 / 2 Question 4 7 (2 points) In the United States, the wage floor legislated by government below which it is generall y illegal to pay workers is known as Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the minimum wage. 0.0% b. the wage ceiling. 0.0% c. the employment gap. 0.0% d. the going wage. Score: 2 / 2 Question 48 (2 points) When minimum wage laws are passed, employers tend to hire more workers. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 49 (2 points) Which of the f ollowing proposals, if f easible, would provide unemployment insurance with the least risk of moral hazard? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. providing unemployment insurance onl y to workers activel y looking f or jobs 0.0% b. providing unemployment insurance f or onl y a restricted period of time, such a 3 months 0.0% c. having unemployment benefits decrease steadil over time until they y reach zero 0.0% d. adding free job training to the standard unemployment insurance benefits Score: 2 / 2 Question 50 (2 points) In figure A, which line in the graph represents a minimum wage above the market wage rate? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. line 1 0.0% b. line 2 0.0% c. line 3 0.0% d. line 4 Score: 0 / 2 Question 5 1 (2 points) According to the figure, the market clearing wage rate is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. We. 0.0% b. Wm. 0.0% c. We ­ Wm. 0.0% d. Wm + We. Score: 2 / 2 Question 52 (2 points) The efficiency wage influences the q uality of labor by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. motivating workers. 0.0% b. increasing worker morale and productivity . 0.0% c. attracting skilled workers. 1 00.0% d. all of the above. Score: 2 / 2 Question 53 (2 points) Which of the f ollowing is an accurate explanation of the wage­price spiral? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. When labor costs rise, it causes a self­per petuating f m of cost­push or inflation. 1 00.0% b. Higher prices cause workers to demand higher wages. The higher wages raise production costs, which must be passed along to the consumer in the f m of or further price increases. 0.0% c. When one fir m pays the efficiency wage, it raises the opportunity cost f or all other workers in the industry , necessitating raises. 0.0% d. Workers in periods of hyperinflation demand to be paid in the f m of or goods, rather than cash, which further devalues the currency . Score: 2 / 2 Question 5 4 (2 points) Which of the f ollowing f ms of payment would be included in the calculation of or the money suppl y? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. credit cards 1 00.0% b. checks 0.0% c. durable goods 0.0% d. stocks and bonds Score: 2 / 2 Question 55 (2 points) Increased production costs are associated with Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. demand­pull inflation onl y . 0.0% b. cost­push inflation onl y . 0.0% c. neither demand­pull inflation nor cost­push inflation. 1 00.0% d. both demand­pull inflation and cost­push inflation. Score: 2 / 2 Question 56 (2 points) The United States experienced a period of stagflation during the 1 70s that was 9 attributable to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. post­Watergate malaise. 0.0% b. rising deficits due to the V ietnam War . 1 00.0% c. shar p increases in oil prices. 0.0% d. the 1 7 reasury Department decision to print a substantial amount of 9 3 T additional money . Score: 2 / 2 Question 5 7 (2 points) Imagine that the money suppl doubles in an economy that produces onl vacuum y y cleaners, and assume that the velocity of the money suppl y is fixed. Bef ore the money suppl was expanded, the level of output was 20 vacuum cleaners and the y price was $1 00 per vacuum. According to the classical view of money , what will be the level of output and price after the money suppl y doubles? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 40 vacuum cleaners; $1 00 0.0% b. 40 vacuum cleaners; $200 1 00.0% c. 20 vacuum cleaners; $200 0.0% d. 20 vacuum cleaners; $50 Score: 2 / 2 Question 58 (2 points) Suppose V al could earn 5.25% interest on her savings account, while inflation grew steadil y at 3%. She is most likel y to Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. put her money in the bank . 0.0% b. spend her money q uickl y . 0.0% c. withdraw her money from the bank . Score: 2 / 2 Question 59 (2 points) During the Great Depression, prices Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. dropped 32%. 0.0% b. dropped 53%. 0.0% c. rose 2 1%. 0.0% d. rose 4 7%. Score: 2 / 2 Question 60 (2 points) When the government raises revenue by printing money , it is said to have imposed an inflation tax. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 T otal score: 1 08 / 120 = 90.0% V iew Results TEST 5 User ID: skim7 Attempt : 1 / 1 Out of: 1 00 Started: December 1 0, 200 4 3:1 4pm Finished: December 1 0, 200 4 3:4 4pm T ime spent : 29 min. 36 sec. Student finished 3 hr , 30 min., 2 4 sec. ahead of the 2 40 min. time limit. Question 1 (2 points) The aggregate demand curve is a graphical representation of Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. aggregate spending as a function of income. 1 00.0% b. aggregate spending as a function of the price level. 0.0% c. government spending as a function of total demand. 0.0% d. aggregate income as a function of the price level. Score: 2 / 2 Question 2 (2 points) When the government raises taxes, total output Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. falls, because consumers and businesses reduce their spending. 0.0% b. rises, because consumers and businesses reduce their spending. 0.0% c. rises, because the government is able to reduce its deficit. 0.0% d. rises, because the government has more money to spend. Score: 2 / 2 Question 3 (2 points) If government spending increases, aggregate demand Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. falls. 1 00.0% b. rises. 0.0% c. remains unchanged. 0.0% d. changes depending on how the money is spent. Score: 2 / 2 Question 4 (2 points) How would an decrease in consumer income aff ect total output? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Output would fall, because the aggregate demand curve would shift inward. 0.0% b. Output would fall, because the economy would move up and to the left along the same aggregate demand curve. 0.0% c. Output would rise, because the aggregate demand curve would shift outward. 0.0% d. Output would rise, because the economy would move down the aggregate demand curve. Score: 2 / 2 Question 5 (2 points) When domestic prices fall, net exports Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. rise, becaue exporters earn more f or the goods they sell. 0.0% b. fall, because exporters earn less f or the goods they sell. 1 00.0% c. rise, because f oreign countries purchase more domestic goods. 0.0% d. fall, because f oreign countries purchase f ewer domestic goods. Score: 0 / 2 Question 6 (2 points) How does an increase in the money suppl y aff ect total output? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Output increases, because interest rates fall. 0.0% b. Output increases, because interest rates rise. 0.0% c. Aggregate demand increases, but total output falls. 0.0% d. Aggregate demand falls, but total output rises. Score: 2 / 2 Question 7 (2 points) How would an increase in consumer income aff ect total output? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Output would fall, because the aggregate demand curve would shift inward. 0.0% b. Output would fall, because the economy would move up the aggregate demand curve. 1 00.0% c. Output would rise, because the aggregate demand curve would shift outward. 0.0% d. Output would rise, because the economy would move down the aggregate demand curve. Score: 2 / 2 Question 8 (2 points) If the government wants to decrease aggregate demand, it could Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. cut taxes. 1 00.0% b. cut government spending. 0.0% c. encourage the F ed to increase the money suppl y . 0.0% d. do any of the above. Score: 2 / 2 Question 9 (2 points) When prices rise, Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. real GDP increases. 0.0% b. f oreign demand increases. 1 00.0% c. the demand f or money increases. 0.0% d. investment spending increases. Score: 2 / 2 Question 1 0 (2 points) From the microeconomic perspective, the income eff ect occurs when Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. tax cuts provide more disposable income. 0.0% b. tax increases provide less disposable income. 1 00.0% c. rising prices decrease consumer wealth and demand. 0.0% d. increased production leads to an increase in an ecomony's level of income. Score: 2 / 2 Question 1 1 (2 points) The shape of the long­run aggregate suppl y curve is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. upward­sloping. 0.0% b. downward­sloping. 1 00.0% c. vertical. 0.0% d. horizontal. Score: 2 / 2 Question 12 (2 points) An improvement in techonolgy will Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. shift the long­run aggregate suppl y curve to the left. 1 00.0% b. shift the long­run aggregate suppl y curve to the right. 0.0% c. increase the slope of the long­run aggregate curve. 0.0% d. decrease the slope of the long­run aggregate suppl y curve. Score: 2 / 2 Question 1 3 (2 points) Real wages decline when Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. workers are paid less than they are worth. 0.0% b. fir ms cut back on production in response to a decline in aggregate demand. 1 00.0% c. the price level rises faster than the level of wages. 0.0% d. the level of wages rises faster than the level of prices. Score: 2 / 2 Question 1 4 (2 points) What is the main reason why wages might be fixed in the short run? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Workers are afraid they may be fired if they ask f or raises. 1 00.0% b. Unions are not constantl y renegotiating their wage contracts. 0.0% c. Unions are constantl y renegotiating their wage contracts. 0.0% d. Workers fail to recognize that prices have risen. Score: 2 / 2 Question 1 5 (2 points) The full­employment level of output is the level of output an economy can produce when Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. everyone is employed full time. 0.0% b. all economic activities are included in GDP . 0.0% c. excess capacity is minimized. 1 00.0% d. all resources are full y and efficientl y employed. Score: 2 / 2 Question 1 6 (2 points) Unemployment __________ when real GDP declines. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. rises 0.0% b. falls 0.0% c. is unaff ected 0.0% d. may either rise or fall Score: 2 / 2 Question 1 (2 points) 7 The short run aggregate suppl y (SRAS) curve slopes upward, because Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. there is an inverse relationship between prices and output. 0.0% b. fir ms cut back on production in the short run when prices increase. 0.0% c. when prices rise, the q uantity demanded decreases. 1 00.0% d. confusion, sticky wages, and sticky prices provide business with profit opportunities in the short run. Score: 2 / 2 Question 1 8 (2 points) When people in the economy make decisions about the future based on what has happened in the past, we say they are using Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. rational expectations. 0.0% b. Keynesian anal ysis. 1 00.0% c. adaptive expectations. 0.0% d. the best possible method of decision­making. Score: 2 / 2 Question 1 9 (2 points) A suppl y shock causes excess demand in the short run. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 20 (2 points) What is the short run eff ect of a tax increase on the eq uilibrium level of aggregate output and prices in the economy? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Both the level of output and the price level increase. 1 00.0% b. Both the level of output and the price level decrease. 0.0% c. The level of output decreases and the price level increases. 0.0% d. The level of output increases and the price level decreases. Score: 2 / 2 Question 2 1 (2 points) In the graph below Yf represents the __________, and P1 represents the , __________. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. long run eq uilibrium level of output ; short run level of prices 0.0% b. short run eq uilibrium level of output ; long run level of prices 0.0% c. long run eq uilibrium level of output ; long run level of prices 0.0% d. short run eq uilibrium level of output ; long run level of prices Score: 2 / 2 Question 22 (2 points) In the short run, suppl shocks cause prices to __________ and the output to y __________. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. increase;increase 1 00.0% b. increase;decrease 0.0% c. decrease;increase 0.0% d. decrease;decrease Score: 2 / 2 Question 23 (2 points) Examine the graph below . Increasing government spending will bring this economy back to full employment. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 2 4 (2 points) Suppose the macroeconomy is not at a long­run eq uilibrium position. How long will it take f the economy to adjust back to the full­employment level of or output? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Probabl y just a f ew weeks. 0.0% b. If people in the economy make decisions based on rational expectations, it may take a very long time. 1 00.0% c. If people in the economy make decisions based on adaptive expectations, it may take a very long time. 0.0% d. The economy will usuall y adjust q uickl y , regardless of the way people in the economy make decisions. Score: 2 / 2 Question 25 (2 points) Which of the f ollowing events would shift the short­run aggregate suppl y curve? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. A change in output 0.0% b. A change in aggregate demand 1 00.0% c. A change in technology 0.0% d. A change in the price level Score: 2 / 2 Question 26 (2 points) Rising production costs will shift the short­run aggregate suppl y curve inward. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 2 7 (2 points) Which of the f ollowing events will most likel y cause an inward shift of the short­ run aggregate suppl y curve? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Government increases spending. 1 00.0% b. The economy experiences a suppl y shock . 0.0% c. The F ed tightens the money suppl y . 0.0% d. Government increases taxes. Score: 0 / 2 Question 28 (2 points) Imagine that the economy is in a recession. Which one of the f ollowing tactics is a way to increase output by shifting aggregate demand outward? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Raising taxes to increase the government sur plus 1 00.0% b. Increasing government spending 0.0% c. Increase the req uired reserve ratio 0.0% d. Imposing tariffs on f oreign goods Score: 2 / 2 Question 29 (2 points) Good deflation is characterized by Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. an increase in suppl y at every price. 0.0% b. a decrease in suppl y at every price. 0.0% c. an increase in demand at every price. 0.0% d. a decrease in demand at every price. Score: 2 / 2 Question 30 (2 points) According to classical economists, if the economy is in a recession, what must the government do to increase output to the full­employment level? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Nothing 0.0% b. Reduce interest rates 0.0% c. Increase governmet spending 0.0% d. Provide a credit f or household savings Score: 0 / 2 Question 3 1 (2 points) In the short run, what happens to the level of output and the level of prices as a result of a technological improvement? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Prices fall and output rises. 0.0% b. Prices and output rise. 0.0% c. Prices and output fall. 0.0% d. None of the above. Score: 2 / 2 Question 32 (2 points) An example of fiscal policy is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. buying securities. 1 00.0% b. raising taxes. 0.0% c. raising the discount rate. 0.0% d. lowering the req uired reserve ratio. Score: 2 / 2 Question 33 (2 points) "Bad deflation" ref ers to the process in which Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. prices and output fall. 0.0% b. prices fall and output increases. 0.0% c. prices fall too rapidl y . 0.0% d. none of the above. Score: 2 / 2 Question 3 4 (2 points) What is the goal of automatic stabilizers? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T o reduce the volatility in the currency market 1 00.0% b. T o flatten the peaks and valleys in the business cycle 0.0% c. T enhance the multiplier eff o ect by increasing the eff ectiveness of fiscal policy 0.0% d. T o minimize unemployment Score: 2 / 2 Question 35 (2 points) During the mid 1 980s, the budget deficit __________ and the interest rate __________. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. increased;increased 0.0% b. increased;decreased 0.0% c. decreased;increased 0.0% d. decreased;decreased Score: 2 / 2 Question 36 (2 points) Which of the f ollowing is NOT a type of lag that can delay the desired eff ects of fiscal policy? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Recognition lag 1 00.0% b. Political lag 0.0% c. Administration lag 0.0% d. Operational lag Score: 2 / 2 Question 3 7 (2 points) If the government begins to buy back T reasury bills, which of the f ollowing can you inf er? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. G>T 0.0% b. G=T 1 00.0% c. T>G 0.0% d. NX>0 Score: 2 / 2 Question 38 (2 points) A flat­payment tax system, e.g., all taxpayers owe the government a flat f ee of $5000 regardless of income, would be an example of an automatic stabilizer . Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 39 (2 points) The goal of Keynesian fiscal policy during a recession is to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. do nothing ­ let the economy recover on its own. 1 00.0% b. move the economic eq uilibrium back to the full­employment level by increasing aggregate demand. 0.0% c. move the economic eq uilibrium back to the full­employment level by decreasing aggregate suppl y . 0.0% d. reduce long run aggregate suppl y so that the economy can reach full employment without a long period of adjustment. Score: 2 / 2 Question 40 (2 points) Which of the f ollowing does not represent a f m of expansionary fiscal policy? or Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. increasing government spending 0.0% b. reducing taxes 1 00.0% c. increasing the money suppl y 0.0% d. providing incentives to businesses and households to spend more Score: 2 / 2 Question 4 1 (2 points) The volatile fluctuations of the business cycle occur because of the multiplier eff ect. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 42 (2 points) This graph depicts a change in the macroeconomy caused by the F ederal Reserve lowering the req uired reserve ratio. After this F ed action, what is the short­run price level? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Po 1 00.0% b. P1 0.0% c. P2 0.0% d. Yf Score: 2 / 2 Question 43 (2 points) Which of the f ollowing is an example of monetary policy that accommodates expansionary fiscal policy? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. lowering the discount rate 0.0% b. raising the req uired reserve ratio 0.0% c. setting price controls on key inputs in the economy 0.0% d. lowering taxes to increase the flow of consumer funds Score: 2 / 2 Question 4 4 (2 points) The school of rational expectations holds that if consumers and businesses can adjust their behavior q uickl y in response to monetary policy , the policy becomes more eff ective. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 45 (2 points) Suppose the economy has experienced a suppl y shock and is currentl y at P1 on the graph below . If the F ed does nothing, Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. aggregate demand will eventuall y increase, bringing the economy back to full employment. 1 00.0% b. excess suppl y will cause prices and wages to fall, and SRAS will move downward toward the full­employment level of output. 0.0% c. excess demand will cause further increases in prices and wages, causing SRAS to shift upward. Score: 2 / 2 Question 46 (2 points) Most economists believe that, in the short run, an increase in money suppl y will Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. raise prices by the same proportional amount. 1 00.0% b. increase output. 0.0% c. decrease output. 0.0% d. decrease velocity . Score: 2 / 2 Question 4 7 (2 points) Accommodating monetary policy is intended to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. accelerate the crowding­out eff ect. 1 00.0% b. reduce the crowding­out eff ect. 0.0% c. accommodate suppl y shocks. 0.0% d. decrease the eff ects of suppl y shocks. Score: 2 / 2 Question 48 (2 points) As the graph illustrates, consumers are worried about the future and have begun saving more money If the F does not intervene in this situation, what will . ed happen to the price level in the long run? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Prices will increase. 0.0% b. Prices will stay the same. 1 00.0% c. Prices will decrease. 0.0% d. There is insufficient inf mation to answer the q uestion. or Score: 2 / 2 Question 49 (2 points) In the q uantity theory of money , velocity means Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the rate of the change in GDP . 0.0% b. the rate at which business inventories turn over in a year . 1 00.0% c. the rate at which the money suppl y turns over in a year . 0.0% d. the rate at which the F ed incrases the money suppl y . Score: 2 / 2 Question 50 (2 points) Which of the f ollowing best describes stagflation? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Prices fall and output increases. 0.0% b. Prices fall and output decreases. 0.0% c. Prices rise and output increases. 1 00.0% d. Prices rise and output decreases. Score: 2 / 2 T otal score: 94 / 1 00 = 94.0% V iew Results FINAL EXAM User ID: skim7 Attempt : 1 / 1 Out of: 1 00 Started: December 1 4, 200 4 8:3 7pm Finished: December 1 4, 200 1:32pm T 4 1 ime spent : 2 hr , 55 min., 1 5 sec. Student finished 4 min. 45 sec. ahead of the 1 80 min. time limit. Question 1 (2 points) The U .S. dollar is considered money because Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. it is convertible to gold or sil . ver 0.0% b. it is easil y portable. 1 00.0% c. it has been decreed by the U .S. government as legal tender . 0.0% d. all of the above. Score: 2 / 2 Question 2 (2 points) The definition of M2 includes which of the f ollowing types of money? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T ravelers' checks 0.0% b. Eurodollar deposits 0.0% c. Stocks 0.0% d. Repurchase agreements Score: 2 / 2 Question 3 (2 points) Money demand ref ers to the amount of money Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. individuals would like to have f or day­to­day transactions. 0.0% b. individuals need f or day­to­day transactions. 1 00.0% c. people are willing to hold at a given interest rate. 0.0% d. people are willing to hold at a given price level. Score: 0 / 2 Question 4 (2 points) An interest rate below the market eq uilibrium indicates Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. an excess suppl y of money . 1 00.0% b. an excess demand f or money . 0.0% c. a decrease in inflation. 0.0% d. an increase in inflation. Score: 2 / 2 Question 5 (2 points) Y our friend is planning f retirement. If she invests $500 today at 6% annual or interest, what will be the value of her investment in 40 years? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. $5, 1 43 0.0% b. $1 ,700 0.0% c. $2,200 1 0.0% d. $49 Score: 2 / 2 Question 6 (2 points) The graph below shows the demand f or money The initial interest rate is io. Which . graph correctl y depicts a rise in interest rates above the initial level io? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 1 00.0% b. 0.0% c. 0.0% d. Score: 2 / 2 Question 7 (2 points) The fundamental value of money is that it Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. minimizes the risk of inflation from non­standard currency . 0.0% b. does not degrade rapidl y . 0.0% c. can be divided up into smaller parts f or exchange. 1 00.0% d. lowers the cost of making trades in an economy . Score: 2 / 2 Question 8 (2 points) Financial inter mediation is best defined as the process by which Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. inflation is controlled. 0.0% b. cor porations issue new stock . 0.0% c. liabilities are liq uidated. 1 00.0% d. financial institutions accept savings from savers and make loans to investors. Score: 0 / 2 Question 9 (2 points) Bond coupon payments represent Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. dividends paid to owners. 1 00.0% b. interest on the amount borrowed. 0.0% c. capital gains f or tax pur poses. 0.0% d. payments to pref erred shareholders. Score: 2 / 2 Question 1 0 (2 points) Which of the f ollowing is NOT an example of a financial inter mediary? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. credit union 0.0% b. pension fund 1 00.0% c. Internal Revenue Service 0.0% d. insurance company Score: 0 / 2 Question 1 1 (2 points) All of the f ollowing are examples of financial inter mediaries except Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. insurance companies. 0.0% b. credit unions. 1 00.0% c. stock exchanges. 0.0% d. retirement funds. Score: 0 / 2 Question 12 (2 points) Fractional reserve banking means that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the f ederal banking system is decentralized, operating through 12 districts rather than one central bank . 1 00.0% b. banks are req uired to hold a fraction of their liabilities in the f m of cash in their vaults or as deposits with the F or ed. 0.0% c. banks must "synchronize" their customers' withdrawals and deposits so that there is a rough balance in liq uidity at any given time. 0.0% d. banks are legall y per mitted to give loans onl y up to the fractional rate, as deter mined by the F ed. Score: 2 / 2 Question 1 3 (2 points) Which of the f ollowing is NOT a tool of monetary policy used by the F ed? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. deter mining the discount rate 0.0% b. setting the reserve req uirement 1 00.0% c. adjusting the market interest rate 0.0% d. conducting open market operations Score: 2 / 2 Question 1 4 (2 points) The rate of interest that the F ed charges on loans to banks is called the Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. discount rate. 0.0% b. f ederal funds rate. 0.0% c. prime rate. 0.0% d. mortgage rate. Score: 2 / 2 Question 1 5 (2 points) Which of the f ollowing actions by the F ed would cause an increase in the money suppl y? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Decrease the discount rate. 0.0% b. Increase the reserve req uirement. 0.0% c. Sell securities (bonds). Score: 2 / 2 Question 1 6 (2 points) Which group has primary responsibility f or the F ederal Reserve System? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the Congress of the United States 1 00.0% b. the Board of Governors of the F ed 0.0% c. the twel ve regional F ederal Reserve banks 0.0% d. the chair man of the F ederal Reserve Score: 2 / 2 Question 1 (2 points) 7 Newl y issued securities are sold on the Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. eq uity market. 1 00.0% b. primary market. 0.0% c. black market. 0.0% d. secondary market. Score: 2 / 2 Question 1 8 (2 points) An interest rate above the market eq uilibrium indicates Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. an excess suppl y of money . 0.0% b. an excess demand f or money . 0.0% c. a shortage of bank deposits. 0.0% d. higher future interestrates. Score: 2 / 2 Question 1 9 (2 points) Which of the f ollowing is an example of "near money"? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. checking accounts 0.0% b. cash 1 00.0% c. savings accounts 0.0% d. bank's reserves Score: 2 / 2 Question 20 (2 points) Monetary policy is the action of the central bank that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. influences the issuing of coins and currency . 1 00.0% b. deter mines the availability and cost of money and credit. 0.0% c. sets the inflation rate. 0.0% d. all of the above. Score: 2 / 2 Question 2 1 (2 points) Money is created by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. onl y commercial banks. 0.0% b. onl y commercial banks and savings and loan associations. 0.0% c. onl y commercial banks and credit unions. 1 00.0% d. all financial inter mediaries. Score: 2 / 2 Question 22 (2 points) If a bank has deposits of $5000 and is loaned up when making loans of $4250, then the req uired reserve ratio is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 0. 1 7 6. 0.0% b. 0.85. 0.0% c. 0.425. 1 00.0% d. 0.5. 1 Score: 2 / 2 Question 23 (2 points) The suppl y curve of loanable funds is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. horizontal. 0.0% b. vertical. 1 00.0% c. upward sloping. 0.0% d. downward sloping. Score: 2 / 2 Question 2 4 (2 points) When there is excess suppl of loanable funds, interest rates will rise in y response. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 25 (2 points) Which of the f ollowing graphs correctl y depicts the change in eq uilibrium in the market f or loanable funds that would result from increased taxes on businesses? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 1 00.0% b. 0.0% c. 0.0% d. Score: 2 / 2 Question 26 (2 points) John takes out a loan that increases his purchasing power by 5% over one year . If inflation is 2%, what is the real interest rate? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 7% 0.0% b. 3% 1 00.0% c. 5% 0.0% d. ­3% Score: 2 / 2 Question 2 7 (2 points) Which of the f ollowing will NOT cause a shift in the investment demand curve? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a tax cut 0.0% b. an increase in real GDP 1 00.0% c. an increase in the interest rate 0.0% d. optimistic expectations Score: 2 / 2 Question 28 (2 points) Which of the f ollowing statements accuratel describes the eff y ect of a price increase on investment spending? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Investment spending falls, because interest rates rise. 0.0% b. Investment spending rises, because interest rates fall. 0.0% c. Investment spending rises, because business can now charge more f or the goods they sell. 0.0% d. Investment spending remains unchanged, because it is measured in real, not nominal, ter ms. Score: 0 / 2 Question 29 (2 points) When domestic prices fall, net exports Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. rise, becaue exporters earn more f or the goods they sell. 0.0% b. fall, because exporters earn less f or the goods they sell. 1 00.0% c. rise, because f oreign countries purchase more domestic goods. 0.0% d. fall, because f oreign countries purchase f ewer domestic goods. Score: 2 / 2 Question 30 (2 points) How would an decrease in consumer income aff ect total output? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Output would fall, because the aggregate demand curve would shift inward. 0.0% b. Output would fall, because the economy would move up and to the left along the same aggregate demand curve. 0.0% c. Output would rise, because the aggregate demand curve would shift outward. 0.0% d. Output would rise, because the economy would move down the aggregate demand curve. Score: 2 / 2 Question 3 1 (2 points) The demand curve f an individual product is downward sloping f the same or or reasons that the aggregate demand curve is downward sloping. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 32 (2 points) The shape of the long­run aggregate suppl y curve is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. upward­sloping. 0.0% b. downward­sloping. 1 00.0% c. vertical. 0.0% d. horizontal. Score: 2 / 2 Question 33 (2 points) When producers expect prices to fall, the short run aggregate suppl y curve Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. shifts downward. 0.0% b. shifts upward. 0.0% c. pivots upward. 0.0% d. pivots downward. Score: 2 / 2 Question 3 4 (2 points) Under what circumstances will the economy move to long­run eq uilibrium the fastest? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. If people make decisions using rational expectations 0.0% b. If people make decisions using adaptive expectations 0.0% c. The economy moves to eq uilibrium q uickl y regardless of the way people make decisions. Score: 2 / 2 Question 35 (2 points) A suppl y shock causes excess demand in the short run. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 36 (2 points) What is the short run eff ect of a tax increase on the eq uilibrium level of aggregate output and prices in the economy? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Both the level of output and the price level increase. 1 00.0% b. Both the level of output and the price level decrease. 0.0% c. The level of output decreases and the price level increases. 0.0% d. The level of output increases and the price level decreases. Score: 2 / 2 Question 3 7 (2 points) What is the long run eff ect of increasing output beyond the full­employment level? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Prices and wages rise, and the level of output falls. 1 00.0% b. Prices and wages rise, and the level of output remains unchanged. 0.0% c. Prices, wages, and the level of output increase. 0.0% d. Prices, wages, and the level of output decrease. Score: 2 / 2 Question 38 (2 points) Which of the f ollowing statements regarding output in the long run is correct? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. output depends on the money suppl y . 1 00.0% b. Output is deter mined by the q uantity and productivity of resources. 0.0% c. Output is deter mined by the level of interest rates. 0.0% d. Output depends on the price level. Score: 2 / 2 Question 39 (2 points) Which of the f ollowing events will most likel y cause an inward shift of the short­ run aggregate suppl y curve? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Government increases spending. 1 00.0% b. The economy experiences a suppl y shock . 0.0% c. The F ed tightens the money suppl y . 0.0% d. Government increases taxes. Score: 2 / 2 Question 40 (2 points) Imagine that the economy is in a recession. Which one of the f ollowing tactics is a way to increase output by shifting aggregate demand outward? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Raising taxes to increase the government sur plus 1 00.0% b. Increasing government spending 0.0% c. Increase the req uired reserve ratio 0.0% d. Imposing tariffs on f oreign goods Score: 2 / 2 Question 4 1 (2 points) Both monetary policy and fiscal policy can be eff ective in pulling an economy out of a recession. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 2 / 2 Question 42 (2 points) Increasing the money suppl y is an example of fiscal policy that can help stimulate demand. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 2 / 2 Question 43 (2 points) During the mid 1 980s, the budget deficit __________ and the interest rate __________. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. increased;increased 0.0% b. increased;decreased 0.0% c. decreased;increased 0.0% d. decreased;decreased Score: 2 / 2 Question 4 4 (2 points) Assume that the government increases its spending by $1 million to stimulate 00 demand. In the long run, the eff ect of this spending is to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. increase output by more than $1 00 million. 0.0% b. increase output by $1 00 million. 1 00.0% c. raise prices. 0.0% d. increase unemployment. Score: 2 / 2 Question 45 (2 points) Which of the f ollowing provides the best explanation f or the change depicted in the graph? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Oil prices suddenl y increased. 0.0% b. The government started spending significantl y more money on highways. 0.0% c. Consumers, worried about the future, began saving more money . 0.0% d. T echnological change improved the productivity of workers. Score: 2 / 2 Question 46 (2 points) The belief that money is neutral is most likel y to be endorsed by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Keynesian economists. 0.0% b. monetarists. 1 00.0% c. classical economists. Score: 2 / 2 Question 4 7 (2 points) The long­run eff ect of accommodating monetary policy is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. increased output. 0.0% b. lower interest rates. 1 00.0% c. inflation. 0.0% d. recession. Score: 2 / 2 Question 48 (2 points) Classical economists predict that if the money suppl y is expanded by 25%, prices will rise by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. less than 25%. 1 00.0% b. exactl y 25%. 0.0% c. more than 25% but less than 50%. 0.0% d. more than 50%. Score: 2 / 2 Question 49 (2 points) Which of the f ollowing factors can cause a decline in aggregate demand? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. an increase in government spending 1 00.0% b. a decrease in consumer spending 0.0% c. an increase in imports 0.0% d. a decrease in household saving Score: 2 / 2 Question 50 (2 points) Which of the f ollowing best describes stagflation? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. Prices fall and output increases. 0.0% b. Prices fall and output decreases. 0.0% c. Prices rise and output increases. 1 00.0% d. Prices rise and output decreases. Score: 2 / 2 T otal score: 90 / 1 00 = 90.0% V iew Results Quiz 1 . 1 User ID: skim7 Attempt : 4 / Unlimited Out of: 25 Started: F ebruary 2, 2005 1:1 1 1am Finished: F ebruary 2, 2005 1:1 1 3am T ime spent : 1 min. 2 4 sec. Question 1 (1 point) A friend recommends a movie and you go see it, expecting that you will like it. However you think it is the worst movie you have seen in years, and wish you , hadn't wasted your money on it. This situation Student response: Percent V alue Student Response Answer Choices a. shows the rationality assumption is false because you were worse off f or seeing the movie. b. shows that you behaved irrationall y because you didn't get enough inf mation or about the movie bef ore seeing it. 1 00.0% c. is consistent with rational behavior because you had thought that you were going to like the movie. Score: 1 / 1 Question 2 (1 point) Economics is the study of Student response: Percent V alue Student Response Answer Choices a. why people want certain goods and services rather than other goods and services. b. how people spend their income. 1 00.0% c. how people allocate their resources to satisfy their wants. d. how to get rich. Score: 1 / 1 Question 3 (1 point) Which of the f ollowing situations is the best example of scarcity? Student response: Percent V alue Student Response Answer Choices a. People in Haiti have f ewer goods and services than people in the U .S. b. Chinese incomes are rising, enabling consumers to buy more goods. c. Ugandans find that their incomes are decreasing and cannot buy as much as they had in the past. 1 00.0% d. Bolivian far mers wish to build more homes, sheds and barns but do not have enough lumber to construct all of these buildings. e. All of the above are situations that exhibit scarcity . Score: 1 / 1 Question 4 (1 point) Suppose you are studying economics. If you weren't studying economics, you would be studying literature, raising your grade in that class by a letter grade. If you weren't studying literature, you would be working, making $500. If you weren't working, you would be playing cards with friends. If you weren't playing cards with friends, you would be sleeping, which would improve your q uiz score at your earl y­morning accounting class in the morning by 3 points. The opportunity cost of studying economics is Student response: Percent V alue Student Response Answer Choices a. 3 points on the accounting q uiz. b. the enjoyment of playing cards with friends. c. $500. 1 00.0% d. a letter grade in literature. e. all of the other possible activities listed. Score: 1 / 1 Question 5 (1 point) Because of scarcity , every economic decision invol ves Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a trade­off. b. a free good. c. a trade­in. d. an increasing cost. Score: 1 / 1 Question 6 (1 point) The basic task that economists expect the market to resol ve is Student response: Percent V alue Student Response Answer Choices a. the desire f or meaning. 1 00.0% b. the problem of scarcity . c. the f ear of want. d. the tendency of the economy to stagnate. Score: 1 / 1 Question 7 (1 point) If you intentionall did something to make yourself worse off, you would be y violating the: Student response: Percent V alue Student Response Answer Choices a. Ceteris Paribus assumption. b. time consistency assumption. 1 00.0% c. rationality assumption. d. the nor mative assumption. Score: 1 / 1 Question 8 (1 point) There are not enough of f our goods to satisfy the wants of people. F or good A, this is true when the price is $1 0. This is true f or good B at a price of $1 or , f good C at a price of 25 cents, and f or good D at a price of zero. Which situation reflects scarcity rather than shortage? Student response: Percent V alue Student Response Answer Choices a. A b. C 1 00.0% c. D d. B Score: 1 / 1 Question 9 (1 point) Economics is a social science rather than a "hard" science like physics because Student response: Percent V alue Student Response Answer Choices a. economists abstract from reality in creating their theories. b. economics is easier to study than physics. c. economists must explain their theories to policy makers who lack f mal or mathematical training. 1 00.0% d. economists study human behavior , which is aff ected by an unpredictable and vast range of influences. Score: 1 / 1 Question 1 0 (1 point) An economist studying macroeconomics compared data on unemployment, inflation and economic growth from past years to the current year , and used the comparison to predict future unemployment. This is an example of Student response: Percent V alue Student Response Answer Choices a. developing economic theories. 1 00.0% b. building economic models. c. making economic policy . d. nor mative economics. Score: 1 / 1 Question 1 1 (1 point) Economists make assumptions because Student response: Percent V alue Student Response Answer Choices a. they need to incor porate value judgments into their models. 1 00.0% b. anal ysis without assumptions would be impossibl y complex. c. they always have perf ect inf mation about the assumptions. or d. assumptions are the final product of careful economic anal ysis. Score: 1 / 1 Question 12 (1 point) Economic models: Student response: Percent V alue Student Response Answer Choices a. are developed in order to explain an individual's thinking. 1 00.0% b. should be judged by how well they predict real­world phenomena. c. should be rejected if they are not completel y realistic. d. are developed in order to explain what an individual might say . Score: 1 / 1 Question 1 3 (1 point) Y our friend wonders why traffic during her evening commute is always worse on Fridays. She is not considering: Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the Ceteris P aribus assumption. b. the incentives assumption. c. the rationality assumption. d. none of the above. Score: 1 / 1 Question 1 4 (1 point) Which of the f ollowing is a nor mative statement? Student response: Percent V alue Student Response Answer Choices a. Inflation in 1 963 was 2.9% f or the year . b. Unemployment will increase in the coming year . c. Increased sales taxes will shrink employment. 1 00.0% d. T axes should be raised to finance street repairs. Score: 1 / 1 Question 1 5 (1 point) Which of the f ollowing is a positive statement? Student response: Percent V alue Student Response Answer Choices a. Strawberry ice cream is better than chocolate ice cream b. Workers with families should be paid at least the minimum wage. 1 00.0% c. An increase in the price of gasoline will cause a reduction in the amount purchased. d. Corrupt politicians ought to be voted out of office. Score: 1 / 1 Question 1 6 (1 point) The statement "Raising the sales tax is the best way to increase state revenue." is Student response: Percent V alue Student Response Answer Choices a. a positive statement, because it is in favor of a tax increase. b. a positive statement, because it is either true or false. 1 00.0% c. a nor mative statement, because it states an opinion rather than a fact. d. neither positive nor nor mative. Score: 1 / 1 Question 1 (1 point) 7 The impact of the national debt on the economy's unemployment is an example of: Student response: Percent V alue Student Response Answer Choices a. microeconomics. 1 00.0% b. macroeconomics. c. irrational economics. d. either microeconomics or macroeconomics. Score: 1 / 1 Question 1 8 (1 point) The impact of a tax increase on household spending patterns is an example of: Student response: Percent V alue Student Response Answer Choices 1 00.0% a. microeconomics. b. macroeconomics. c. irrational economics. d. either microeconomics or macroeconomics. Score: 1 / 1 Question 1 9 (1 point) Which of the f ollowing is true about the importance of money in economics? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Money is very important in both macroeconomics and microeconomics. b. Money is more important in microeconomics than it is in macroeconomics. c. Money is not very important in either micro or macroeconomics. d. Money is more important in macroeconomics than it is in microeconomics. Score: 1 / 1 Question 20 (1 point) Which of the f ollowing statements is correct? Student response: Percent V alue Student Response Answer Choices a. China is a pure command economy . b. Singapore is a pure market economy . c. The United States is a pure market economy . 1 00.0% d. All economies in the world are a mixture of command and market elements. Score: 1 / 1 Question 2 1 (1 point) If the government takes a laissez­faire approach to the economy , its most likel y response to entering a recession will be to Student response: Percent V alue Student Response Answer Choices a. increase government spending. b. increase the money suppl y . 1 00.0% c. do nothing. Score: 1 / 1 Question 22 (1 point) The nation listed below whose economy comes closest to a centrall y planned economy is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. People's Republic of China. b. Japan. c. United Kingdom. d. United States. Score: 1 / 1 Question 23 (1 point) In a market economy , goods are allocated to Student response: Percent V alue Student Response Answer Choices a. all potential uses. b. all citizens on an eq ual basis. c. citizens with political power . 1 00.0% d. citizens with both the desire and the willingness to pay f or the goods. Score: 1 / 1 Question 2 4 (1 point) The father of modern economics is Student response: Percent V alue Student Response Answer Choices a. Thomas Hobbes. 1 00.0% b. Adam Smith c. John Maynard Keynes. d. Alan Greenspan. Score: 1 / 1 Question 25 (1 point) Adam Smith believed that Student response: Percent V alue Student Response Answer Choices a. people were hard­wired to be selfish. b. the government should manage most aspects of the economy . 1 00.0% c. allowing individuals to pursue their own self­interest is the most eff ective way to make a country wealthy . d. the division of labor should be managed by the government. Score: 1 / 1 T otal score: 25 / 25 = 1 00.0% V iew Results Quiz 1 .2 User ID: skim7 Attempt : 2 / 3 Out of: 25 Started: F ebruary 2, 2005 2:26am Finished: F 1 ebruary 2, 2005 2:28am T 1 ime spent : 1 min. 5 1 sec. Question 1 (1 point) A nonlinear function exhibits a relationship between two variables that Student response: Percent V alue Student Response Answer Choices a. is constant over its entire range. 1 00.0% b. changes over the entire range. c. is random. d. is negative. Score: 1 / 1 Question 2 (1 point) The algebraic f mula f or or a straight line is Student response: Percent V alue Student Response Answer Choices a. a = y + bx 1 00.0% b. y = a + bx c. b = a + yx d. x = a + by Score: 1 / 1 Question 3 (1 point) The f ollowing table gives data relating a variable X (measured on the horizontal axis) to a variable Y (vertical axis). The slope of the line described by this relationship is X 1 3 5 Y 6 1 4 22 Student response: Percent V alue Student Response Answer Choices a. two. 1 00.0% b. f . our c. eight. d. diff erent at diff erent points along the line. Score: 1 / 1 Question 4 (1 point) Graphs are useful because of the way they Student response: Percent V alue Student Response Answer Choices a. facilitate inter pretation and anal ysis of data. b. convey an idea that might otherwise take many words. c. per mit a person to easil y see relationships. 1 00.0% d. All of the above are correct. Score: 1 / 1 Question 5 (1 point) A downward­sloping, straight line has a decreasing slope. Student response: Percent V alue Student Response Answer Choices a. T rue. 1 00.0% b. False. Score: 1 / 1 Question 6 (1 point) The tangent at point A on a curve has a positive slope. Theref ore, Student response: Percent V alue Student Response Answer Choices a. the curve has a positive slope at all points. 1 00.0% b. the curve has a positive slope at point A . c. the curve has a negative slope at all points. d. the curve has a negative slope at point A . Score: 1 / 1 Question 7 (1 point) X Y 2 8 4 2 6 0 8 2 1 0 8 Given the data above, if you were to plot the points you would see a(n): Student response: Percent V alue Student Response Answer Choices a. downward sloping straight line b. upward sloping straight line c. upward sloping non­linear curve d. downward sloping non­linear curve 1 00.0% e. non­linear curve that switches from an inverse to a direct relationship Score: 1 / 1 Question 8 (1 point) The slope of the line in the graph is eq ual to: Student response: Percent V alue Student Response Answer Choices 1 00.0% a. ?3/4 b. ?4/3 c. 3/4 d. 5/6 e. 1 Score: 1 / 1 Question 9 (1 point) Which of the f ollowing pair of variables is most likel to exhibit a direct y relationship? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the amount of sales (in $) and the number of hours that a business is open b. the amount of cloud cover and the amount of sunshine c. the price of bananas and the number of bananas purchased d. the number of acres of soybeans planted and the number of acres of potatoes planted on a single far m Score: 1 / 1 Question 1 0 (1 point) Why is the choice of units important in constructing a graph? Student response: Percent V alue Student Response Answer Choices a. It aff ects whether a variable rises or falls. 1 00.0% b. It aff ects the apparent rate of change of one variable relative to the other . c. It aff ects which time periods can be considered. d. All of the above. Score: 1 / 1 Question 1 1 (1 point) When variable A rises by 1 0 units, variable B rises by 1 5 units. The slope of the line describing this relationship is Student response: Percent V alue Student Response Answer Choices a. always 2/3. 1 00.0% b. either 2/3 or 1 .5, depending on which variable goes on which axis of the graph. c. either 1 .5 or ­1 .5, depending on which variable goes on which axis of the graph. d. always ­1 .5. Score: 1 / 1 Question 12 (1 point) The lower left­hand corner of a graph where the two axes meet is called the graph's origin. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 1 3 (1 point) The slope of a horizontal line is zero. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue. b. False. Score: 1 / 1 Question 1 4 (1 point) The relationship between two variables is given by the eq uation Y = 5 + 2X. The relationship can be drawn as a line on a graph with Y on the vertical axis and X on the horizontal axis. Which of the f ollowing statements is true? Student response: Percent V alue Student Response Answer Choices a. When X exactl y doubles, Y exactl y doubles. b. Multipl ying both sides of the eq uation by 2 doubles the slope of the line. 1 00.0% c. Subtracting 2 from the right side of the eq uation shifts the line down by 2 units at every level of X. d. The line is twice as steep as the line given by the eq uation Y = 2.5 + 2X. Score: 1 / 1 Question 1 5 (1 point) A straight line tangent to a curved line at a point Student response: Percent V alue Student Response Answer Choices a. crosses the curved line at that point. b. crosses the curved line at many points. 1 00.0% c. has the same slope as the curved line at that point. d. has the same slope as the curved line at all points. Score: 1 / 1 Question 1 6 (1 point) The data used to construct a graph can show a steep line or a flat line depending on how the axes are measured. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 1 (1 point) 7 Suppose a curve has a slope eq ual to zero at some point A o the right of A, the . T curve may Student response: Percent V alue Student Response Answer Choices a. have a positive slope. b. have a negative slope. c. be a straight line. 1 00.0% d. All of the above are correct. Score: 1 / 1 Question 1 8 (1 point) The slope of a curved line diff ers from that of a straight line in that Student response: Percent V alue Student Response Answer Choices a. the numerical value of the slope of a straight line is diff erent at every point, but is the same at every point f or a curved line. b. the numerical value of the slope of a straight line is always higher than the numerical value of the slope of a curved line. 1 00.0% c. the numerical value of the slope of a curved line is diff erent at every point, but is the same at every point f or a straight line. d. straight lines are more realistic, but curved lines are not descriptivel y accurate f or the real world. Score: 1 / 1 Question 1 9 (1 point) A straight line through the origin always has a slope of one. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 20 (1 point) In the f ollowing figure, Student response: Percent V alue Student Response Answer Choices 1 00.0% a. at all points, the slope of S1 > the slope of S2. b. at all points, the slope of S1 < the slope of S2. c. at points to the left of A, the slope of S1 > the slope of S2; at points to the right of A, the slope of S1 < the slope of S2. d. at points to the left of A,the slope of S1 < the slope of S2; at points to the right of A, the slope of S1 > the slope of S2. Score: 1 / 1 Question 2 1 (1 point) Graphicall y , how would an increase in income aff ect the demand f or hamburgers? Student response: Percent V alue Student Response Answer Choices a. The slope of the demand cur ve would increase. b. The slope of the demand cur ve would decrease. 1 00.0% c. The demand curve would shift outward, parallel to the original demand curve. d. The demand curve would shift inward, parallel to the original demand curve. Score: 1 / 1 Question 22 (1 point) Given the eq uation P = $6.00 ­ $.40Q, where P is the price of the good and Q is the q uantity of the good demanded, how many units will this consumer demand if the price is $3.60? Student response: Percent V alue Student Response Answer Choices a. 1 4 units .4 b. 3 units c. 3.6 units 1 00.0% d. 6 units Score: 1 / 1 Question 23 (1 point) Suppse V increases her consumption of candy bars by 3 bars f every $.60 al or decrease in the price. The slope of V al's demand curve is Student response: Percent V alue Student Response Answer Choices a. ­$5.00. b. ­$1 .80. 1 00.0% c. ­$.20. d. unable to be deter mined. Score: 1 / 1 Question 2 4 (1 point) Suppose the eq uation f or T ed's demand curve is P = $2.00 ­ $.50Q. If T ed's income increased by $1 00 every week , how might we rewrite the eq uation? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. P = $3.00 ­ $.50Q b. P = $2.00 ­ $1 .50Q c. P = $1 .00 ­ $.50Q d. P = $2.00 ­ $.25Q Score: 1 / 1 Question 25 (1 point) T o find the slope of a nonlinear function between any two points, you must use the "rise over run" f mula that you use f or or a linear function. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 T otal score: 25 / 25 = 1 00.0% V iew Results Quiz 1 .4 User ID: skim7 Attempt : 1 / 3 Out of: 20 Started: F ebruary 2, 2005 2:29am Finished: F 1 ebruary 2, 2005 3:00am T 1 ime spent : 30 min. 49 sec. Question 1 (1 point) The graphical device which illustrates the concept of scarce resources being efficientl y utilized in the economy is Student response: Percent V alue Student Response Answer Choices a. a budget line. b. a time­series graph. 1 00.0% c. a production possibilities frontier . d. a consumption possibilities line. Score: 1 / 1 Question 2 (1 point) Which of the points in the graph are efficient? Student response: Percent V alue Student Response Answer Choices a. C and F onl y b. C, D and F onl y c. A, C, D, F and G onl , y 1 00.0% d. A, C, F and G onl , y Score: 1 / 1 Question 3 (1 point) The opportunity cost of more capital goods today is Student response: Percent V alue Student Response Answer Choices a. f ewer capital goods in the future. b. f ewer consumer goods in the future. 1 00.0% c. f ewer consumer goods today . d. more unemployed resources in the future. Score: 1 / 1 Question 4 (1 point) Which of the f ollowing would NOT allow society to move to point h in the figure? Student response: Percent V alue Student Response Answer Choices a. an improvement in technology 1 00.0% b. more efficient use of current resources c. an increase in q uantity of labor d. an increase in q uantity of capital Score: 1 / 1 Question 5 (1 point) If all resources are eq uall productive in producing all goods, the production y possibilities curve will be Student response: Percent V alue Student Response Answer Choices a. convex to the origin. b. concave to the origin. 1 00.0% c. linear . d. expanding over time. Score: 1 / 1 Question 6 (1 point) The shape of the production possibilities curve in the figure indicates that Student response: Percent V alue Student Response Answer Choices a. production of corn is characterized by increasing costs while the production of cloth is characterized by decreasing costs. b. production of both corn and cloth is characterized by increasing costs. 1 00.0% c. production of both corn and cloth is characterized by constant costs. d. production of corn is characterized by constant costs and the production of cloth is characterized by increasing costs. Score: 1 / 1 Question 7 (1 point) Suppose an acre of land yields 1 00 bushels of corn and that one bushel of corn provides enough seed f or one­q uarter of an acre of land. The opportunity cost of consuming another bushel of corn today is Student response: Percent V alue Student Response Answer Choices a. 1 00 bushels of corn next year . 1 00.0% b. 25 bushels of corn next year . c. 1 0 bushels of corn next year . d. 2.5 bushels of corn next year . Score: 1 / 1 Question 8 (1 point) If a country's production possibilities curve gets more bowed out over time, it is an indication that Student response: Percent V alue Student Response Answer Choices a. technological change has taken place. b. society is learning to use its resources more efficientl y . c. the q uantity of labor and capital have increased. 1 00.0% d. resources have become more highl y specialized. Score: 1 / 1 Question 9 (1 point) In the figure, how many units of corn are produced at point a? Student response: Percent V alue Student Response Answer Choices a. 2000 1 00.0% b. 2500 c. 3000 d. We can't tell without more inf mation. or Score: 1 / 1 Question 1 0 (1 point) The production possibilities frontier illustrates Student response: Percent V alue Student Response Answer Choices a. the fundamental concept of scarcity . b. the opportunity cost of acq uiring more of one good. c. an economy's maximum output utilizing all resources efficientl y . 1 00.0% d. All of the above are correct. Score: 1 / 1 Question 1 1 (1 point) Any point outside the boundary of a production possibilities frontier is Student response: Percent V alue Student Response Answer Choices a. efficient. b. inefficient. 1 00.0% c. unattainable. d. attainable. Score: 1 / 1 Question 12 (1 point) Which of the f ollowing statements is FALSE? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. As society increases its wealth, the problem of scarcity disappears. b. The factors of production are used to produce outputs that help society satisfy its wants. c. Even though a society faces the problem of scarcity , it does not necessaril y suff er from poverty . d. Land and labor are both factors of production. Score: 1 / 1 Question 1 3 (1 point) The law of increasing costs is due to Student response: Percent V alue Student Response Answer Choices a. taxes. b. scarcity . c. the fact that it is more difficult to use resources efficientl the more y society produces. 1 00.0% d. the fact that resources are not perf ectl y adaptable f or alternative uses. Score: 1 / 1 Question 1 4 (1 point) Resources are also known as Student response: Percent V alue Student Response Answer Choices a. factories. b. minerals. c. stocks, bonds, and other financial instruments. 1 00.0% d. factors of production. Score: 1 / 1 Question 1 5 (1 point) The opportunity cost f or this economy to move from point B to point A is Student response: Percent V alue Student Response Answer Choices a. 1 5 bushels of wheat. b. 90 bushels of wheat. c. 7 5 pounds of beef. 1 00.0% d. 25 pounds of beef. Score: 1 / 1 Question 1 6 (1 point) In one day , Joe can produce 2 4 bushels of wheat (W) or 8 pounds of rice (R). Joe's opportunity cost of 1 bushel of wheat is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. 1/3 pound of rice. b. 3 pounds of rice. c. 1/8 pound of rice. d. 8 pounds of rice. Score: 1 / 1 Question 1 (1 point) 7 Moving from one point to another along a given production possibilities frontier , producing more of one good req uires that Student response: Percent V alue Student Response Answer Choices 1 00.0% a. less of the other good be produced. b. the production of the other good be held constant. c. more of the other good be produced. d. a better technology be employed. Score: 1 / 1 Question 1 8 (1 point) The economy pictured produces onl y wheat and beef. If the economy is producing 60 bushels of wheat and 50 pounds of beef, they are producing at a point that is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. attainable, but inefficient. b. unattainable, given its resources. c. producing too much wheat. d. producing too much beef. Score: 1 / 1 Question 1 9 (1 point) The point at which a PPF intersects the X axis is Student response: Percent V alue Student Response Answer Choices a. unattainable. b. attainable but inefficient. 1 00.0% c. attainable and efficient. d. unattainable and inefficient. Score: 1 / 1 Question 20 (1 point) Assume this economy produces wheat in the f ertile middle of the country and produces rice in the southern wetlands. What could explain th eshcnge in the country's PPF from PPF1 to PPF2? Student response: Percent V alue Student Response Answer Choices a. a drought in the southern wetlands 1 00.0% b. a drought in the middle part of the country c. development of improved varieties of rice d. development of improved varieties of wheat Score: 1 / 1 T otal score: 20 / 20 = 1 00.0% V iew Results Quiz 1 .5 User ID: skim7 Attempt : 2 / 3 Out of: 25 Started: F ebruary 2, 2005 3:08am Finished: F 1 ebruary 2, 2005 3:1 1 0am T ime spent : 2 min. 3 4 sec. Question 1 (1 point) Division of labor ref ers to Student response: Percent V alue Student Response Answer Choices a. dividing tasks up into several subtasks and having one person perf m these or subtasks in a certain order . b. the separation of hourl y workers from salaried workers. 1 00.0% c. assigning diff erent workers to diff erent tasks. d. separating union workers from nonunion workers. Score: 1 / 1 Question 2 (1 point) The f ollowing graphs show the potential production f or coats and books in Utopia and T ransyvania. Both countries have eq ual amounts of resources available f l or production of coats or books. Which country has the comparative advantage in producing coats and books? Student response: Percent V alue Student Response Answer Choices a. Utopia has the comparative advantage in producing both goods. 1 00.0% b. Utopia has the comparative advantage in producing coats; T ransyvania l has the comparative advantage in producing books. c. Utopia has the comparative advantage in producing books; T ransyvania has the l comparative advantage in producing coats. d. Neither country has a comparative advantage with either good because opportunity costs are eq ual. Score: 1 / 1 Question 3 (1 point) T rade between nations means that Student response: Percent V alue Student Response Answer Choices a. one country is richer than the other . b. one country becomes richer while the other becomes poorer . 1 00.0% c. both trading nations show some gains. d. both trading nations will gain eq uall y from the trade. Score: 1 / 1 Question 4 (1 point) The f ollowing graphs show the potential production f or coats and books in Utopia and T ransyvania. Both countries have eq ual amounts of resources available f l or production of coats or books. Which country has the absolute advantage in producing coats and books? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Utopia has the absolute advantage in producing both goods. b. Utopia has the absolute advantage in producing coats; T ransyvania has the l absolute advantage in producing books. c. Utopia has the absolute advantage in producing books; T ransyvania has the l absolute advantage in producing coats. d. T ransyvania can produce f l ewer goods with the same resources; theref ore it has the absolute as well as comparative advantage. Score: 1 / 1 Question 5 (1 point) John takes 1 0 minutes to iron a shirt and 20 minutes to type a paper . Harry takes 1 0 minutes to iron a shirt and 30 minutes to type a paper . Which of the f ollowing statements is correct? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Harry has a comparative advantage in ironing. b. Harry has a comparative advantage in typing. c. Harry has an absolute advantage in typing. d. Harry has an absolute advantage in ironing. e. Neither can gain from specialization and trade. Score: 1 / 1 Question 6 (1 point) The f ollowing table illustrates the production possibilities f or John and Mary if they spend all of their time producing bread and cheese. Bread Cheese John 4 8 Mary 8 1 4 Which of the f ollowing is true f or John and Mary? Student response: Percent V alue Student Response Answer Choices a. Mary has an absolute advantage in producing cheese. b. John has a comparative advantage in producing cheese. c. Mary has a comparative advantage in producing bread. 1 00.0% d. All of the above are true. Score: 1 / 1 Question 7 (1 point) Using graphs to illustrate the concepts, Student response: Percent V alue Student Response Answer Choices a. absolute advantage is shown with diff erences in the slope of the production possibilities frontiers, and comparative advantage is shown with a lower curve. 1 00.0% b. absolute advantage is shown with a higher production possibilities frontier , and comparative advantage is shown with diff erences in the slope of the frontiers. c. absolute advantage in one good req uires that the slope of the production possibilities frontier be steeper f or that good. d. absolute advantage cannot be shown with a graph, but comparative advantage can be shown with the position of the curve. Score: 1 / 1 Question 8 (1 point) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 labor hours to produce one computer The 5 . opportunity cost of one bushel of wheat in France is Student response: Percent V alue Student Response Answer Choices a. 4 computers. b. 25 labor hours. c. 3 computers. 1 00.0% d. 1/3 computer . Score: 1 / 1 Question 9 (1 point) The person who can perf m a task in the f or ewest hours Student response: Percent V alue Student Response Answer Choices 1 00.0% a. has an absolute advantage in perf ming the task or . b. has a comparative advantage in perf ming the task or . c. has both an absolute advantage and a comparative advantage in perf ming the or task . d. has an absolute advantage in perf ming the task but a comparative or disadvantage in perf ming the task or . Score: 1 / 1 Question 1 0 (1 point) Fred has an absolute advantage in painting and Barney has an absolute advantage in washing down walls. Assuming that the population consists onl y of Fred and Barney , we know that Student response: Percent V alue Student Response Answer Choices a. neither has a comparative advantage in either task . 1 00.0% b. Fred has a comparative advantage in painting and Barney has a comparative advantage in washing down walls. c. Fred has a comparative advantage in washing down walls and Barney has a comparative advantage in painting. d. we can't tell who has a comparative advantage in painting or in washing down walls. Score: 1 / 1 Question 1 1 (1 point) Look at the f ollowing production possibilities table f or drill presses and corn. The table shows the maximum combination of drills and bushels of corn that can be produced when all resources are full y employed. Drill Presses 1 0 20 30 40 50 Corn (bushels) 1 50 1 40 120 90 500 Based on the above inf mation, or Student response: Percent V alue Student Response Answer Choices a. there is a constant trade­off between corn and drill presses. b. the opportunity cost of producing 30 drill presses instead of 20 drills is 120 bushels of corn. 1 00.0% c. the opportunity cost of producing 40 drill presses instead of 30 drills is 30 bushels of corn. d. the production possibilities curve f drill presses and corn will be a or straight line. Score: 1 / 1 Question 12 (1 point) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 5 labor hours to produce one computer . The U .S. and France could benefit from trade if the U .S. specializes in _____________ and France specializes in ______________. Student response: Percent V alue Student Response Answer Choices a. computers; computers. b. computers; wheat. 1 00.0% c. wheat ; computers. d. wheat ; wheat. Score: 1 / 1 Question 1 3 (1 point) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 5 labor hours to produce one computer . If the U .S. and France trade based on their comparative advantages, the U .S. will import ______ and France will import ________. Student response: Percent V alue Student Response Answer Choices a. wheat ; wheat. b. computers; computers. c. wheat ; computers. 1 00.0% d. computers; wheat. Score: 1 / 1 Question 1 4 (1 point) Assuming that onl y two goods are produced in the world, which of the f ollowing is true? Student response: Percent V alue Student Response Answer Choices a. It is impossible f or a country to have an absolute advantage in producing both goods. b. It is possible f or a country to have a comparative advantage in producing both goods. c. If trade exists and a country has an absolute advantage in producing one of the goods, that country will specialize in producing that good. 1 00.0% d. If trade exists, and a country has a comparative advantage in producing one of the goods, that country will specialize in producing that good. Score: 1 / 1 Question 1 5 (1 point) In the f ollowing figure, the opportunity cost of a unit of wheat in ter ms of cotton is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. 1 f or the U .S. and 5 f or Egypt. b. 20 f or the U .S. and 2 f or Egypt. c. 1 f or the U .S. and 2 f or Egypt. d. 20 f or the U .S. and 1 or Egypt. 0 f Score: 1 / 1 Question 1 6 (1 point) The average worker in the United States can produce 20 tons of coal or 1 0 tons of iron per hour . The average worker in Canada can produce 1 0 tons of coal or 1 0 tons of iron per hour . The United States has a comparative advantage in the production of Student response: Percent V alue Student Response Answer Choices a. iron. 1 00.0% b. coal. c. both iron and coal. d. neither iron nor coal. Score: 1 / 1 Question 1 (1 point) 7 If T aiwanese workers can produce everything more cheapl than American workers, y then Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Americans can still gain by trading with T aiwan. b. Americans can onl y lose if they import from T aiwan. c. T aiwan can onl y lose if it trades with America. d. There are no gains from trade that are possible in this case. Score: 1 / 1 Question 1 8 (1 point) T rade between two countries Student response: Percent V alue Student Response Answer Choices a. makes both countries worse off. b. can benefit one country but not both. 1 00.0% c. enables a country to move beyond (to a point outside) its production possibilities frontier . d. can onl y occur if one country is larger . Score: 1 / 1 Question 1 9 (1 point) Jim, Bill and Bob are washing cars and cutting lawns f Ray's Neighborhood y , or Services, Inc. In one day , Jim can wash f our cars or cut two lawns; Bill y can wash three cars or cut one lawn; Bob can wash one car or cut one lawn. Who has the comparative advantage in washing cars? Student response: Percent V alue Student Response Answer Choices a. Jim 1 00.0% b. Bill y c. Bob d. Bill y and Bob have an eq ual comparative advantage. Score: 1 / 1 Question 20 (1 point) Is it possible f or a country to have an absolute disadvantage and a comparative advantage? Student response: Percent V alue Student Response Answer Choices a. No, these are incompatible on theoretical grounds. b. No, theory prevents it, but some economists claim it could occur . 1 00.0% c. Y es, this situation can occur . d. Y es, in theory , although not in reality . Score: 1 / 1 Question 2 1 (1 point) Division of labor increases the output of society by Student response: Percent V alue Student Response Answer Choices a. eliminating scarcity . b. reducing the choices people have to make to a more manageable number . c. ensuring that people are happier in perf ming their work or . 1 00.0% d. allowing resources to specialize in the tasks f which they have a or comparative advantage. Score: 1 / 1 Question 22 (1 point) Assume that Economy A and Economy B have the same resources, but that individuals in Economy A have specialized whereas individuals in Economy B have not. Given this inf mation, you can deter mine that or Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Economy A will have a higher output than Economy B. b. Economy A will have a lower output than Economy B. c. Economy A and Economy B will have identical outputs. d. Individuals in Economy A will have lower incomes than individuals in Economy B. Score: 1 / 1 Question 23 (1 point) When nations specialize in their areas of comparative advantage and then trade with the rest of the world, the result is that Student response: Percent V alue Student Response Answer Choices a. the average standard of living in the world will go down. 1 00.0% b. the average standard of living in the world will go up. c. the world will move from a point on the production possibilities curve to a point inside the curve. d. worldwide economic efficiency will decrease. Score: 1 / 1 Question 2 4 (1 point) Which of the f ollowing statements is FALSE? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. As society increases its wealth, the problem of scarcity disappears. b. The factors of production are used to produce outputs that help society satisfy its wants. c. Even though a society faces the problem of scarcity , it does not necessaril y suff er from poverty . d. Land and labor are both factors of production. Score: 1 / 1 Question 25 (1 point) Comparative advantage is always a(n) ______ concept. Student response: Percent V alue Student Response Answer Choices a. absolute b. efficiency 1 00.0% c. relative d. monetary Score: 1 / 1 T otal score: 25 / 25 = 1 00.0% 11 . 1 . (1) QID: 1286 7 The opportunity cost of any particular choice is the least expensive alternative to the choice. the best alternative to the choice. the price that one pays f or the choice. the most expensive alternative to the choice. (2) QID: 128 79 If you wait in line one hour to buy a concert ticket f or $30, the opportunity cost of that ticket is the best alternative use of the $30. the best alternative to the one hour it took to buy the ticket. the best alternative to both the $30 and the one hour . not measurable because there is no opportunity cost to consumption. (3) QID: 12880 Scarcity is a problem onl y during a recession or depression. is a problem onl y in developing countries. is a problem onl y among poor people. req uires people to make choices. (4) QID: 12883 The study of economics is primaril concerned with deter mining the most y eq uitable distribution of income in the economy . choices which have to be made concerning the use of scarce resources. demonstrating the superior nature of capitalist economies. keeping businesses from losing money . (5) QID: 1 7 399 Which of the f ollowing is a correct statement? During a depression or recession, economic principles are not neccessaril y valid. Economics laws are important because they allow us to predict and possibl y control economic events. Economics laws are as precise as laws in physics or chemistry . Economics laws are concerned with judging outcomes and theref ore are not scientific. (6) QID: 1 43 52 The opportunity cost of a college education is the cost of books and tuition. the time you spend studying f or tests. the salary that you made at a part­time job last year . the highest salary that you could make if you worked full time instead of going to school. (7) QID: 1 4 524 Which of the f ollowing is not a scarce good? Air Space Water Garbage (8) QID: 1 45 52 A good is not scarce if everybody can have all they want of it. if someone can buy all he/she wants of the good. if people who make enough money can buy all they want of the good. if there is a limited amount of it available. (9) QID: 1 4 527 Scarcity is defined as the unlimited availability of goods and services. the imbalance between rational choice and irrational choice. the imbalance between what is wanted and what is freel y available. none of the above. (1 0) QID: 1 48 52 Rational choice req uires the undertaking of costs­benefits anal ysis. is impossible under conditions of scarcity . is defined as self­interested decision­making. both A and C. (1 1) QID: 1 49 52 Which of the f ollowing best illustrates the concept of opportunity costs? The choice of a pizza purchased today versus a hot dog purchased last month The choice of immediatel y studying an additional two hours or immediatel y going to sleep Eating both bacon and eggs f or breakfast this morning All of the above illustrate the concept of opportunity costs. (12) QID: 1 5250 If everyone made rational choices, then everyone would make identical choices. there would be no tradeoffs in any choice. resources would exceed material wants. individuals diff in their choices because their inf mation and constraints er or are diff erent. (1 3) QID: 1 5252 The opportunity cost of attending college does not include the income you could have earned while in classes. the travel expenses that you incur while traveling to classes. the money spent on books and tuition. money spent on meals while at school. (1 4) QID: 1 5253 Which of the f ollowing choices invol ves giving up something? Buying a new house Studying f or a test Watching television All of the above invol ve giving up something. (1 5) QID: 1 5254 A rational person makes a choice if the choice makes money . the benefits outweigh the costs. the costs outweigh the benefits. the choice is ethical. BCDBB DDACD BDDDB 1 . 1 .2 (1) QID: 1288 4 Economics addresses such issues as how goods will be produced. what goods to produce. who will get the goods that are produced. All the above are correct. (2) QID: 1288 7 Economists use economic models to maintain real­world complexity . to appear as precise as physical scientists. to understand how the real world works. to include every detail in their anal yses. (3) QID: 12888 Economics is the study of how businesses generate profits. how society allocates scarce resources. how to more eq uitabl y distribute income. how money is used in our culture. (4) QID: 12890 The main reason that testing theories is more difficult in economics than in the physical sciences is the difficulty in perf ming an experiment on an economic or system. the difficulty in devising an experiment. the difficulty in evaluating the results of an experiment. the difficulty in developing a theory of the economy . (5) QID: 1289 1 Nor mative statements make statements about how the world is. make statements about the nor mal conditions in the economy . make statements about how much production the economy could have. make statements about how the world ought to be. (6) QID: 12892 Which of the f ollowing is an example of how economists may diff in their er scientific judgments? A disagreement about whether a reduction in inflation is more important than a reduction in unemployment. A disagreement on the eff ects of a change in tax laws on consumer behavior . A disagreement on the fairness of income distribution. A disagreement on whether the minimum wage should be increased. (7) QID: 12893 In economics the ter m "ceteris paribus" means central variable hold all other variables constant in the "unlikel y event that. . ." none of the above (8) QID: 12895 Positive statements are evaluated on the basis of evidence while nor mative statements are evaluated on the basis of an individual's judgment. T rue False (9) QID: 12900 Economic value is created when the benefits of a trade exceed the costs of the trade. a customer gets a product f or less than the cost of producing it. a store can sell an inf erior product f or full price. the costs of a trade are exactl y eq ual to the benefits of the trade. (1 0) QID: 1 3995 Economics is mainl y concerned with the study of money . scarcity . profits. unemployment. DCBAD BBAAB 1 . 1 .3 (1) QID: 12903 An example of a topic that macroeconomists study is consumer demand f or automobiles. the change in the nation's unemployment rate. the market structure of the electric power industry . the shortage of labor in high­tech industries. (2) QID: 12905 An example of a real variable is the change in the number of cars produced from one year to the next. the change in the price of cars from one year to the next. the change in a person's salary from one year to the next. the increase in the minimum wage. (3) QID: 1290 7 An example of a topic that microeconomists study is F ord Motor Company's market share. the change in the unemployment rate. the change in inflation. the change in real GDP . (4) QID: 12909 Microeconomics is the study of individual fir ms, households, and markets. T rue False (5) QID: 1290 1 Which of the f ollowing is not a macroeconomic variable? Real GDP The unemployment rate The rate of inflation The price of pizzas (6) QID: 129 3 1 Macroeconomics approaches the study of economics from the viewpoint of specific product and factor markets. government. consumers. the entire economy . (7) QID: 1 7 3 26 An economist believes that theory is used to ignore reality . support one's opinions. describe a situation. explain the reasons behind real­world phenomena. (8) QID: 1 77 32 Macroeconomics and microeconomics rel on the same set of tools, which are y national legislation and government contracts. antitrust laws. suppl y and demand anal ysis. the theories of John Maynard Keynes. (9) QID: 1 7 3 28 The defining diff erence between macroeconomics and microeconomics is that macroeconomics f ocuses on economic aggregates, and microeconomics f ocuses on individual choices. microeconomics f ocuses on economic aggregates, and macroeconomics f ocuses on individual choices. microeconomics uses suppl y and demand anal ysis, while macroeconomics is interested in government action. microeconomics is interested in profit anal ysis, while macroeconomics is interested in developing countries. (1 0) QID: 1 3996 Which of the f ollowing activities is associated with macroeconomics? An investigation into the relationship between price level and unemployment since World War II An examination of cattle prices over the last decade A study of pricing in the automobile industry An examination of market structure in the software industry BAAAD DDCAA 1 . 1 .4 (1) QID: 1294 1 Which of the f ollowing is not a concern of an economic system? The allocation of scarce resources The distribution of the economy's output The mix of goods and services that an economy produces The fair distribution of income among all citizens (2) QID: 1296 1 Planned economic systems encourage entrepreneurship and innovation under the direction of a central planning authority T . rue False (3) QID: 129 1 7 In a market economy , there is no room f or individual initiative. a great amount of central planning. a great concentration of economic power in the hands of a f ew cor porations. reliance on the price system to allocate resources. (4) QID: 1292 1 T o decide how to allocate scarce resources, a laissez­faire economic system relies on central planning. prices. barter . a mix of planning and markets. (5) QID: 12923 Which of the f ollowing is the least serious problem f or laissez­faire economies? Unemployment Consumer sovereignty Providing public goods Income distribution (6) QID: 1292 4 In a mixed economy , the role of the government is to regulate the balance of laissez­faire and planned economic systems. discourage self­interest. move a laissez­faire economy toward a planned economy . move a planed economy toward a laissez­faire economy . (7) QID: 12926 The American economy is called a mixed system because the answers to economic problems are partiall deter mined by the government and partiall deter mined by y y private interests. the products of private enter prise are often purchased by government. the capital of most private enter prises comes from government loans. a ma jority of private enter prises are jointl y owned by the government and private enter prise. (8) QID: 12928 One of the main f eatures of a laissez­faire economic system is central economic planning. limits on the right to own property . a limited role f or government. extensive government control of the market. (9) QID: 12929 One of the characteristics of a planned economy is the pursuit of self­ interest with no central direction. consumer sovereignty . well­developed markets. extensive government control of the market. (1 0) QID: 12933 In the real world, all economic systems are mixed systems. A mixed system means that governments may be used to improve economic outcomes. extensive consumer choices exist even in an economy that has government regulation. markets exist side­by­side with government­controlled enter prises. All of the above are correct. (1 1) QID: 12934 Which of the f ollowing situations would not demand that governments get invol ved in the economy? Resource allocation is efficient. Income distribution may be unfair . Market systems may fail to produce some goods that society values. Periods of unemployment and inflation may cause instability in the system. (12) QID: 12936 Many examples of both laissez­faire systems and purel y planned systems exist in the world. T rue False (1 3) QID: 1293 7 Consumers generall express their self­interest by attempting to find the y lowest price f or a product. maximizing profits. finding jobs with the highest wages. minimizing their economic losses. (1 4) QID: 12939 Both market systems and planned systems must find a method to centralize all decision making in a government agency . promote production efficiency but ignore the distribution of income. promote fairness in income distribution but ignore production efficiency . communicate and coordinate the individual choices of consumers, producers, and resource suppliers. DBDBB AACDD ABAD 11 .2. (1) QID: 1 5259 Economists notice specific relationships between data points. T rue False (2) QID: 1 5260 Which of the f ollowing examples represents a method of presenting data in ter ms of the relative size of vertical columns? A pie chart A bar graph A scatter plot A line graph (3) QID: 1 5262 Each point on a two­dimensional graph consists of combinations of f our pieces of inf mation. or numbers that do not represent inf mation. or combinations of variables that represent two pieces of inf mation. or no variables. (4) QID: 1 5264 Each coordinate of a graph is written as the vertical axis y and the horizontal axis x (y ,x). the horizontal axis x and the vertical axis y (x,y). a point not representing an axis. the vertical axis x and the horizontal axis y (y ,x). (5) QID: 1 5265 A scatter plot is inf mation arrayed in a two­dimensional space to represent or two variables f or each data point. a line graph that connects coordinates of a graph. inf mation arrayed in a two­dimensional space to represent three variables f or or each data point. used when drawing a bar graph. (6) QID: 1 5266 If two variables, consumption and income, are directl related we can say that y a change in consumption will change income but not vice versa. if income increases, then consumption increases. if income increases, then consumption will change but it is impossible to say in which direction it will change. if income increases, then consumption will decrease. BBCBAB 1 .2.2 (1) QID: 129 2 7 The slope of a line on a graph is defined as the change in the x­axis variable divided by the change in the y­axis variable. the change in the y­axis variable divided by the change in the x­axis variable. "rise over run." B and C. (2) QID: 1294 7 Which statement about slopes is accurate? A horizontal line has a slope of 2, and a vertical line has a slope of ­2. A horizontal line has an infinite slope, and a vertical line has a slope of zero. A horizontal line has a zero slope, and a vertical line has an infinite slope. The slopes f or horizontal and vertical lines cannot be calculated. (3) QID: 129 7 7 If the price of a soft drink changes from $1 .00 to $2.00, then the demand curve shifts inward. there is a decrease in the q uantity demanded. the demand curve shifts outward. there is an increase in the q uantity demanded. (4) QID: 1 7 52 1 The slope of a demand curve describes consumer behavior by showing that the consumers increase their consumption of a good when price goes down. that suppliers provide more of the good as price goes up. that consumers increase their q uantity demanded as price goes up. that consumers do not care about price. (5) QID: 1 7 522 The slope of a demand curve is the change in the x­axis variable divided by the change in the y­axis variable. T rue False (6) QID: 1 7 523 The slope of the line is defined by the coefficient of Q in the demand f mula P = $12 ­ .50Q. or the vertical intercept. the change in y divided by the change in x. A and C. (7) QID: 1 7 525 The vertical intercept in the demand eq uation is the constant number . T rue False (8) QID: 1 7 526 Given the demand f mula f or or frisbees of P = $8.30 ­ 1 .23Q, what is the proper inter pretation of the value of $8.30? $8.30 represents the highest price the consumer would pay f or one frisbee. $8.30 represents the price that would cause the purchases of frisbees to drop to zero. $8.30 represents the slope of the demand f mula. or Onl y B and C are correct. (9) QID: 1 7 52 7 A graph of the demand curve measures the horizontal axis using price and the vertical axis using q uantity . the relationship of suppl yin a market. the inverse relationship between the price of a product and the q uantity demanded. the diff erence between suppl y and demand. (1 0) QID: 1 7 528 At what price will eight pizzas be demanded? $12.00 $1.00 1 $1 0.00 $8.00 (1 1) QID: 1 79 52 If the price drops from $12 to $6, how many more pizzas will be demanded? Five Three Eight Six DCBAB DABCD C 1 .2.3 (1) QID: 12983 Given the eq uation f or a linear function, y = a + bx, which ter m represents the intercept? b x bx a (2) QID: 1298 4 Given the eq uation f or a linear function, y = 20 + .67x, what is the value of y when x is zero? 20 .67 1 3.4 zero (3) QID: 12988 In the consumption function C = $1 000 + .3Y , C is consumption and Y is income. How much is consumption when income is zero? zero $1 000 $300 The answer is indeter minate. (4) QID: 12989 If one variable increases when another one increases, then we say that the two variables are inversel y related. directl y related. nonlinear . negativel y related. (5) QID: 1 5292 A decrease in a consumer's income causes his demand curve to shift outward. shift inward. change slope. remain the same. (6) QID: 1 467 5 When the demand curve shifts, the intercept remains the same. T rue False (7) QID: 1 468 5 When a demand curve shifts, the slope of the curve remains the same. T rue False (8) QID: 1 469 5 A shift in the demand curve is caused by a change in price. a change in q uantity demanded. an exogenous variable. an endogenous variable. (9) QID: 1 4 570 Exogenous variables on a demand curve are changes in consumer income. changes in the price of other goods. changes in consumer expectations. all of the above. (1 0) QID: 1 42 57 A shift in the demand curve illustrates a change from one point on the demand curve to another point. can onl y shift f orward. can onl y shift backward. shifts the whole demand curve inward or outward. (1 1) QID: 1 43 57 A negative relationship between variables exists when there is no relationship. one variable increases while the other variable decreases. there is a direct relationship. there is a positive relationship. (12) QID: 1 46 57 On a demand curve, an increase in the price of a good will cause a shift in the demand curve. cause an increase in the q uantity demanded. cause a decrease in the q uantity demanded. cause no change. (1 3) QID: 1 47 57 Consider the eq uation of linear function y = ­4 + 7x. If it were graphed, the intercept would be 7 . 4. ­4. ­7 . DABBB BACDD BCC 1 .2.4 (1) QID: 1 4 1 54 Suppose a line shows that every time a famil y's income increases by $1 .00, the famil y's spending increases by $.90. If income increases by $300.00, spending must increase by $500.00. $2 70.00. $333.33. an indeter minate amount. (2) QID: 1 4 5 42 A relativel y flat demand curve indicates that the demand f or a product is very sensitive to a change in price. T rue False (3) QID: 1 4 5 43 Economists pref elasticities f all of the f er or ollowing reasons except that they do not depend on units of measurement. they are based on total changes in units. they are based on percentage changes. they depict a relationship independent of how the variables are measured. (4) QID: 1 4 5 46 The slope of the demand curve is measured by the change in q uantity demanded divided by the change in price. the change in the price of one good plus the change in q uantity demanded of that good. the change in price divided by the change in the q uantity demanded. price divided by q uantity . (5) QID: 1 47 54 A steepl y­sloping demand curve shows that the change in q uantity demanded is very sensitive to a change in price. that the change in one variable is not aff ected by a change in another variable. that the price and q uantity demanded have a direct relationship. that the change in q uantity demanded is not very sensitive to a change in price. (6) QID: 1 4 5 49 The slope of a linear function depends on the units of measurement. T rue False (7) QID: 1 450 5 Consider the eq uation of linear function y = ­4 + 7x. If it were graphed, the slope would be 7 . 4. ­4. ­7 . BABCD AA 11 .3. (1) QID: 1249 4 T o calculate the slope of the total product curve, take the change in y divided by the change in x. find the slope of a line tangent to the TP curve. subtract the change in y from the change in x. subtract the change in x from the change in y . (2) QID: 12 450 All of the f ollowing are true of the tangent line except the tangent line just touches total production curve. the slope of the tangent line is eq ual to the slope of the TP curve at a specific point. the tangent line is used to find the slope of the TP curve. the tangent line cannot be used to find the slope of the TP curve. (3) QID: 12 1 45 The slope of the production function is flatter near the bottom of the curve. T rue False (4) QID: 12 452 On an exponentiall y increasing curve, the slope is not constant. the slope is constant. there is no slope. the slope eq uals zero. (5) QID: 12 453 The total product curve is the curve of the production function. is not linear . has a varying slope. all of the above. BDAAD 11 .4. (1) QID: 1222 7 Which point on the graph is not attainable? A D C All points are attainable. (2) QID: 12228 When increasing opportunity costs exist, resources are not perf ectl y substitutable f or each other . T rue False (3) QID: 1223 1 The production possibilities frontier (PPF) represents a collection of points indicating a minimum amount of one good produced f or a given q uantity of another good produced. all the possibilities of an economy , including ones that are not attainable. a collection of points indicating a maximum amount of one good produced f or a given q uantity of another good produced. an inefficient use of resources. (4) QID: 12232 The idea of opportunity costs indicates that if the production of one good is increased, the production of another good must decrease. you can produce whatever you have the opportunity to. you can produce anything if you can cover your costs. all of the above. (5) QID: 12233 Any combination of two goods l ying outside the production possibilities frontier represents the most efficient use of resources. req uires f ewer resources than are presentl y available. represents an unattainable combination of goods. represents an inefficient combination of goods. (6) QID: 1223 4 The PPF is a tool in economics to illustrate the study of scarcity in situations of rational choice. the study of rational choice in situations of scarcity . the study of suppl y and demand. none of the above. (7) QID: 1 7 348 Ref erring to the graph, if this economy moves from point A to point B, it must give up f ood to get more military eq uipment. it must give up military eq uipment to get more f ood. it has to give up both military eq uipment and f ood. it gains both military eq uipment and f ood. (8) QID: 1 7 349 In this production possibilities frontier , if the consumer moves from A to B, the consumer is choosing more leisure and less income. the consumer is choosing more income and less leisure. the consumer is choosing more of both leisure and income. the consumer is choosing less of both leisure and income. (9) QID: 1 71 35 In the production possibilities frontier , points A, B, and C represent f easible outcomes f or this society . T rue False (1 0) QID: 1 7 353 According to the graph, the society has to give up _______ pounds of f ood to build one car . 1 0 1 00 1/1 0 1 000 (1 1) QID: 1 7 4 35 According to the graph, the society has to give up _______ cars to produce another pound of f ood. 1/1 0 1 00 1 0 1 000 (12) QID: 1 7 355 Points on the production possibilities frontier are the onl y efficient production points. T rue False CACAC BBABC CA 1 .4.2 (1) QID: 12238 Mandatory retirement at age 55 will cause an inward shift in the PPF . T rue False (2) QID: 12239 When a production possibilities frontier shifts outward, society experiences falling production. economic growth. an allocation of resources from rich people to poor people. a change in the income distribution. (3) QID: 122 40 An inward shift in the PPF could be caused by the destruction of resources in a war . consumers' pref erences to save more than they consume. a decrease in government spending. unemployment. (4) QID: 1221 4 In a far ming economy of wheat and rice, a war ming trend occurs. This trend increases the production of both goods. However , the rice production is aff ected more than the wheat. The production possibilities frontier will shift outward f or both goods, but the wheat axis will shift further . shift inward f or both goods, but the rice axis will have a greater decrease. shift outward f or both goods, but the wheat axis will have a greater decrease. shift outward f or both goods, but the rice axis will shift further . (5) QID: 122 42 The production possibilities frontier illustrates the suppl y side of an economy because it makes an engineering statement on efficiency . it tells nothing about consumer pref erences. both A and B. none of the above. (6) QID: 122 43 An inward shift in the production possibilities frontier (PPF) could be the result of a decline in the general level of education. T rue False (7) QID: 1224 4 A shift in the production possibilities frontier curve will occur as a result of all of the f ollowing except a change in the endowment of resources. a change in technology . a change in the production of one good relative to another good. a change in land, labor , or capital. (8) QID: 122 45 A choice to produce more of one good and less of another results in a movement along the PPF curve. a shift in the PPF curve. expansion of the economy . none of the above. (9) QID: 122 46 In a far ming economy that produces barley and flax, a new f ertilizer is invented. The f ertilzer onl works on barley The production possibilities frontier will y . onl y shift outward from the barley axis. onl y shift inward from the barley axis. shift outward from both axes. shift inward from both axes. (1 0) QID: 1 48 58 A PPF has computers on the horizontal axis and services on the vertical axis. Since 1 985, that PPF has become flatter . T rue False (1 1) QID: 1 49 58 If a country's PPF shows capital goods on one axis and consumer goods on the other axis, the country's PPF will shift out faster if it spends more on consumer goods in the current time period. T rue False (12) QID: 1 5850 Suppose a PPF has capital goods on the vertical axis and consumption goods on the horizontal axis. The PPF has a constant slope with a vertical intercept of 80 and a horizontal intercept of 1 60. Last year 60 units of consumption goods were , 1 produced, so the economy produced __________ units of capital goods. zero 80 1 60 2 40 (1 3) QID: 1 5852 In an economy , assume that labor is the onl y factor of production. One worker can produce either twel pounds of f ve ood a year or six rifles. The slope of the country's PPF is ­2 if rifles are on the horizontal axis. T rue False (1 4) QID: 1 4 864 Examine the accompanying graph of a society's PPF . The most likel y cause of the shift from PPF1 to PPF2 is a decrease in society's pref erence f or f ood. a decrease in society's pref erence f or the military . destruction of resources because of a war . A and B. (1 5) QID: 1 8649 Examine the accompanying graph of a PPF f an agricultural society The most or . likel y cause of the shift of the PPF is discovery of a new f ertilizer that works onl y on rice. a drought in wheat­producing states. a general decrease in agricultural technology . a shift in society's pref erence f or wheat relative to rice. ABADC ACAAA BAACB 1 .4.3 (1) QID: 1227 4 200 pounds of coff ee 40 pounds of coff ee 1 60 pounds of coff ee 1 pound of coff ee (2) QID: 122 49 3 less units of Good A 1 less unit of Good A 2 more units of Good B There are no opportunity costs associated with the increase in production of Good B. (3) QID: 12250 T rue False (4) QID: 1225 1 coff ee = 90 + 40 (tea) coff ee = 200 ­ 1 (tea) coff ee = 1 60 + 3 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ 4 (tea) coff ee = 1 60 ­ 2 ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ 5 (tea) (5) QID: 12252 Bobby can vacuum two rooms in ten minutes or dust two rooms in twenty minutes. The opportunity cost of dusting one more room is vacuuming one room. vacuuming two rooms. that he will not give up vacuuming any rooms. none of the above. (6) QID: 12253 The production possibilities frontier is a straight line when the opportunity cost is zero. the opportunity cost is constant. the opportunity cost is increasing. the opportunity cost is decreasing. (7) QID: 1225 4 The most output that can be simultaneousl y produced is nine units of Good A and f our units of Good B. The optimal combination is six units of Good A and three units of Good B. If the economy produces eight units of Good A, it can simultaneousl y produce onl y two units of Good B. If the production of Good B increases from zero units to two units, the production of Good A falls by three units. (8) QID: 12255 Bobby can vacuum two rooms in ten minutes or dust two rooms in twenty minutes. Using his unit labor req uirement, Bobby's potential f or vacuuming is twel ve rooms per hour or dusting is f our rooms per hour . six rooms per hour or dusting is six rooms per hour . twel ve rooms per hour or dusting is six rooms per hour . ten rooms per hour or dusting is six rooms per hour . (9) QID: 12256 Bobby can vacuum two rooms in ten minutes or dust two rooms in twenty minutes. Bobby's schedule of possibilities indicates that he can dust two rooms and vacuum six rooms in one hour . he can dust f our rooms and vacuum eight rooms in one hour . he can dust three rooms and vacuum six rooms in one hour . all of the above. (1 0) QID: 1225 7 Bobby can vacuum two rooms in ten minutes or dust two rooms in twenty minutes. Assuming that dusting is on the vertical axis, the slope of Bobby's production possibilities frontier is 2. ­ 4. 4. ­ 1/2. DBBBB BCCCD 11 .5. (1) QID: 1 1 59 3 If there is an agricultural economy in which land can be used either as pasture f or cattle or as crop land f or wheat, the opportunity cost of converting one acre from pasture to wheat production is the profits from the extra wheat production. the pounds of beef that are lost. the number of bushels of wheat produced on an acre. the total number of pounds of beef produced. (2) QID: 1 1 595 F or country A to have a comparative advantage in the production of agricultural products means that, relative to country B, with the same resources, country A is better at producing agricultural products than industrial products. country A is better at producing both agricultural products and industrial products. country A can produce f ewer industrial products than country B. country A can produce more agricultural products than country B can produce. (3) QID: 1 6060 Suppose Canada produces onl y beer and oil. One unit of labor can produce, in a one hour period, either 1 00 barrels of beer or 1 0 barrels of oil. Examine the PPF f or Canada. What is Canada's opportunity cost f or one barrel of oil? 1 0 barrels of beer 1 00 barrels of beer 1 0 hours of labor 1/1 0 of a barrel of beer (4) QID: 1 6067 Suppose Canada produces onl y beer and oil. One unit of labor can produce, in a one hour period, either 1 00 barrels of beer or 1 0 barrels of oil. Examine the PPF f or Canada. What is Canada's opportunity cost f or one barrel of beer? 1 0 barrels of oil 1/1 0 of a barrel of oil 1 labor hour 1 00 barrels of beer BAAB 1 .5.2 (1) QID: 1 1 59 7 The economic ter m "specialization" ref ers to the behavior of trading partners when each partner produces goods, the resources f or which are scarce. produces onl y those goods f or which it has a comparative advantage produces onl y those goods f or which it has an absolute advantage produces goods, the resources f or which are abundant. (2) QID: 1 1 599 The ter m "comparative disadvantage" means one party in a trade has a lower opportunity cost than its trading partner . has a higher opportunity cost than its trading partner . has an absolute advantage in the goods that it is trading. has no basis f or trade with a trading partner . (3) QID: 1 1 592 When each trading partner specializes in the production of a good f or which it has a comparative advantage, each partner can gain from trade, but total production remains unchanged. T rue False (4) QID: 1 5922 In any trade between two trading partners and two goods, it is possible f or one of the partners to have a comparative advantage in both goods. T rue False (5) QID: 1 5923 In a two­person, two­good trading model, the individual with a flatter production possibilities frontier has a comparative advantage in neither good. both goods. the good on the horizontal axis. the good on the vertical axis. (6) QID: 1 5925 Suppose a person can produce either two bushels of wheat per hour or six bushels of corn per hour This person's opportunity cost of one bushel of corn is . three bushels of wheat. one­third of a bushel of wheat. two bushels of wheat. six bushels of wheat. (7) QID: 1 5926 Suppose a person can produce either two bushels of wheat per hour or six bushels of corn per hour This person's opportunity cost of one bushel of wheat is . three bushels of corn. one­third of a bushel of corn. two bushels of corn. six bushels of corn. (8) QID: 1 7 592 When two people divide their labor according to their comparative advantages, one person will have to work harder than the other person does to complete a given task . more work can be completed in a given period of time. less work can be completed in a given period of time. the same amount of work can be completed as when they divide the labor by absolute advantage. (9) QID: 1 5928 T wo producers can gain from trade if the trade is based on absolute advantage. comparative advantage. the relative resource endowments the two partners have. the relative size of each partner's total output. (1 0) QID: 1 5930 From the graphs below , who has a comparative advantage in mopping, Nick or Carl? Carl Nick Cannot be deter mined from the given inf mation or BBBBC BABBA 1 .5.3 (1) QID: 12267 A country that has an absolute advantage in a good should restrict imports of that good. can produce the good at a lower opportunity cost than its trading partner . should specialize in the production of that good. can produce the good using f ewer resources than its trading partner . (2) QID: 12268 Russia can produce a bushel of corn with f our workers and a bushel of rice with three workers. China can produce a bushel of corn with three workers and a bushel of rice with two workers. Which country has a comparative advantage in the production of corn and which has a comparative advantage in rice? Russia has a comparative advantage in the production of corn, and China has a comparative advantage f or the production of rice. Russia has a comparative advantage in the production of rice, and China has a comparative advantage f or the production of corn. Russia has a comparative advantage in the production of rice. Neither country has a comparative advantage f or corn. China has a comparative advantage in the production of rice. Neither country has a comparative advantage f or corn. (3) QID: 1224 7 Russia can produce a bushel of corn with f our workers and a bushel of rice with three workers. China can produce a bushel of corn with three workers and a bushel of rice with two workers. Which country has an absolute advantage f or either good? Russia has an absolute advantage f or both goods. China has an absolute advantage f or rice. China has an absolute advantage f or both goods. Russia has an absolute advantage f or corn. (4) QID: 122 1 7 If trade benefits one country , it will make the other country worse off. T rue False (5) QID: 1222 7 Russia can produce a bushel of corn with f our workers and a bushel of rice with three workers. China can produce a bushel of corn with three workers and a bushel of rice with two workers. The opportunity cost f or Russia to produce one bushel of corn is one bushel of rice. two bushels of rice. one and one­third bushels of rice. f our bushels of rice. (6) QID: 1223 7 Russia can produce a bushel of corn with f our workers and a bushel of rice with three workers. China can produce a bushel of corn with three workers and a bushel of rice with two workers. The opportunity cost f or China to produce one bushel of corn is one bushel of rice. one and a half bushels of rice. two bushels of rice. three bushels of corn. (7) QID: 12269 Russia can produce a bushel of corn with f our workers and a bushel of rice with three workers. China can produce a bushel of corn with three workers and a bushel of rice with two workers. How would these countries specialize? China would produce corn, and Russia would produce rice. China would produce rice, and Russia would produce corn. China would produce all the rice and all the corn because it has an absolute advantage. None of the above DACBC BB V iew Results TEST 1 User ID: skim7 Attempt : 1 / 1 Out of: 200 Started: F ebruary 2, 2005 3:12am Finished: F 1 ebruary 2, 2005 4:32am T 1 ime spent : 1 hr 9 min., 25 sec. , 1 Student finished 1 hr , 40 min., 35 sec. ahead of the 1 80 min. time limit. Question 1 (4 points) Macroeconomics looks at Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the behavior of fir ms. 0.0% b. the behavior of households. 0.0% c. how price and q uantity of each good is deter mined. 1 00.0% d. none of the above. Score: 0 / 4 Question 2 (4 points) A theory can best be defined as Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. an untested assertion or statement of untested fact. 0.0% b. a testable statement which can be proven to be true or false. 0.0% c. an opinion of a reliable person who studies a subject or discipline. 1 00.0% d. a deliberate simplification of factual relationships that attempts to explain how those relationships work . Score: 4 / 4 Question 3 (4 points) Economics is generall y concerned with Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the operation of banks in the stock market. 0.0% b. business management. 1 00.0% c. how resources are allocated among alternative goals. 0.0% d. the right time to start a business. Score: 4 / 4 Question 4 (4 points) Eliminating important details in economic anal ysis is necessary to understand the complexity of the economy . Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 4 / 4 Question 5 (4 points) Nor mative economics: Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. A) deals with "what is." 0.0% b. B) deals with "what ought to be." 0.0% c. C) deals with value judgements. 1 00.0% d. D) both B and C. Score: 0 / 4 Question 6 (4 points) Positive economics: Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. A) deals with "what is." 0.0% b. B) deals with "what ought to be." 0.0% c. C) deals with value judgements. 0.0% d. D) both B and C. Score: 0 / 4 Question 7 (4 points) Economics: Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. assumes individuals are rational and respond to diff erent incentives. 0.0% b. assumes government invol vement in the economy is always beneficial. 0.0% c. assumes individuals reall have no choices other than what society y imposes on them. 0.0% d. assumes irrationality if people are paid enough. Score: 4 / 4 Question 8 (4 points) The problem of economic scarcity applies Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. onl y in industriall y developed countries because resources are scarce. 0.0% b. onl in underdeveloped countries because there are no productive y resources. 0.0% c. onl in economic systems that are just beginning to develop because y specialized resources are scarce. 1 00.0% d. to all economic systems, regardless of their level of development. Score: 4 / 4 Question 9 (4 points) The real cost of a decision is the opportunity cost measured in the commodities f orgone. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 0 / 4 Question 1 0 (4 points) According to Adam Smith, which of the f ollowing statements is true? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. People pursuing their own self­interest can lead to poor outcomes, such as pollution. 0.0% b. T oo much monopol y power can become a problem when people are allowed to pursue their own self­interest. 0.0% c. A market system may not do a good job of providing f or the poor . 1 00.0% d. All of the above are true. Score: 4 / 4 Question 1 1 (4 points) The government has a dominant role in a market economy such as the U .S. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 4 / 4 Question 12 (4 points) An economist might be hired to answer which of the f ollowing q uestions? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. What will the price of oil be next year? 0.0% b. Why is the median income of women about half the median income of men? 0.0% c. How much will interest rates change as the government deficit decreases? 1 00.0% d. All of the above. Score: 4 / 4 Question 1 3 (4 points) Which of the f ollowing is NOT likel y to occur in a planned economy? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. The government decides what goods and services are produced. 1 00.0% b. Product prices are deter mined by the interaction of suppl y and demand. 0.0% c. The government sets production goals. 0.0% d. The government deter mines how goods and services are allocated among the consumers. Score: 4 / 4 Question 1 4 (4 points) Consumers generall y express their self­interest by Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. attempting to find the lowest price f or a product. 0.0% b. maximizing profits. 0.0% c. finding jobs with the highest wages. 0.0% d. minimizing their economic losses. Score: 4 / 4 Question 1 5 (4 points) An example of a real variable is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the change in the number of cars produced from one year to the next. 0.0% b. the change in the price of cars from one year to the next. 0.0% c. the change in a person's salary from one year to the next. 0.0% d. the increase in the minimum wage. Score: 4 / 4 Question 1 6 (4 points) "The hotter it gets, the more water people drink ." This statement implies that the relationship between temperature and water consumption must have Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a negative slope. 1 00.0% b. a positive slope. 0.0% c. a slope always eq ual to one. 0.0% d. a slope always eq ual to 45 degrees. Score: 4 / 4 Question 1 (4 points) 7 The slope of a straight line Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. is the rise over the run. 0.0% b. is constant along the whole curve. 0.0% c. will be negative if there is an inverse relationship between the variables. 1 00.0% d. All of the above are true. Score: 4 / 4 Question 1 8 (4 points) X Y 2 8 4 12 6 1 6 8 20 1 4 0 2 Given the above data, X and Y exhibit : Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. A direct relationship 0.0% b. An inverse relationship 0.0% c. No mathematical relationship Score: 4 / 4 Question 1 9 (4 points) The origin of a graph is the point at which Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. a demand curve starts. 0.0% b. both variables have positive values. 1 00.0% c. both variables have values eq ual to zero. 0.0% d. any two curves on the graph intersect. Score: 4 / 4 Question 20 (4 points) Graphs are valuable because they facilitate inter pretation of data. Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. T rue 0.0% b. False Score: 4 / 4 Question 2 1 (4 points) A tangent is: Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. A straight line that shares a single point with another curve 0.0% b. A straight line that bisects a non­linear curve 0.0% c. The slope of the line segment between 2 points of a non­linear curve 0.0% d. A non­linear curve that gets close to, but never touches, the X or Y axis Score: 4 / 4 Question 22 (4 points) The f ollowing table gives data relating a variable X (measured on the horizontal axis) to a variable Y (vertical axis). The slope of the line described by this relationship is X 1 3 5 Y 6 1 4 22 Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. two. 1 00.0% b. f . our 0.0% c. eight. 0.0% d. diff erent at diff erent points along the line. Score: 4 / 4 Question 23 (4 points) X Y 2 8 4 2 6 0 8 2 1 0 8 Given the data above, if you were to plot the points you would see a(n): Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. downward sloping straight line 0.0% b. upward sloping straight line 0.0% c. upward sloping non­linear curve 0.0% d. downward sloping non­linear curve 1 00.0% e. non­linear curve that switches from an inverse to a direct relationship Score: 4 / 4 Question 2 4 (4 points) Which statement about slopes is accurate? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. A horizontal line has a slope of 2, and a vertical line has a slope of ­2. 0.0% b. A horizontal line has an infinite slope, and a vertical line has a slope of zero. 1 00.0% c. A horizontal line has a zero slope, and a vertical line has an infinite slope. 0.0% d. The slopes f or horizontal and vertical lines cannot be calculated. Score: 4 / 4 Question 25 (4 points) Suppose a line shows that every time a famil y's income increases by $1 .00, the famil y's spending increases by $0.90. If income increases by $300.00, spending must increase by Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. $500.00. 1 00.0% b. $2 70.00. 0.0% c. $333.33. 0.0% d. an indeter minate amount. Score: 4 / 4 Question 26 (4 points) Whenever a society f orgoes current consumption to invest in capital goods, the Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. less thesociety can consume next year . 0.0% b. easier it will be f or the society to consume less in the future because people will become accustomed to less. 1 00.0% c. more the society can produce and consume in the future. 0.0% d. less capital the society can produce in the future. Score: 4 / 4 Question 2 7 (4 points) The graph shows a production possibilities curve f or a student who spends 8 hours a week studying. How could the student get a B in both classes? Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. The student could spend 5 hours on economics and 3 on marketing. 0.0% b. The student could spend 5 hours on marketing and 3 on marketing. 1 00.0% c. The student could increase the total amount of time studying on economics and marketing. 0.0% d. The student cannot get a B in both classes. Score: 4 / 4 Question 28 (4 points) When shifting from point A to point B, the opportunity cost of 1 ,000 additional tractors is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. one tractor . 0.0% b. 7 5 tons of butter . 1 00.0% c. 0.7 5 million tons of butter . 0.0% d. 4.7 5 million tons of butter . Score: 4 / 4 Question 29 (4 points) If the far mer is producing 5000 bushels of soybeans at point b in the figure, we know that Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the far mer is not using his resources efficientl y . 0.0% b. the far mer is using his land to produce a crop other than soybeans or corn. 0.0% c. the far mer must be using more land than was used in constructing the production possibilities curve. 0.0% d. the far mer is using his resources efficientl y . Score: 4 / 4 Question 30 (4 points) A PPF will be bowed outward if Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. there is scarcity . 0.0% b. increased production of one good means less production of the other good. 0.0% c. the suppl y of resources is fixed. 1 00.0% d. resources are not eq uall y well­suited to the production of both goods. Score: 4 / 4 Question 3 1 (4 points) A point outside a production possibilities curve indicates Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. that resources are not being used efficientl y . 1 00.0% b. an output combination that society cannot attain given its current level of resources and technology . 0.0% c. that resources are being used very efficientl y . 0.0% d. that both goods are characterized by increasing costs. Score: 4 / 4 Question 32 (4 points) Any point inside the production possibilities frontier is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. efficient. 1 00.0% b. inefficient. 0.0% c. unattainable. 0.0% d. irrelevant. Score: 4 / 4 Question 33 (4 points) The reason that most PPFs are bowed outward (concave) rather than a straight line is that most resources used in production are Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. eq uall y suited f or the production of all goods. 1 00.0% b. better suited f or some goods than others. 0.0% c. used efficientl y in production. 0.0% d. relativel y more expensive at low levels of production. Score: 4 / 4 Question 3 4 (4 points) The shape of this PPF indicates that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the opportunity cost of producing beef is the same as the opportunity cost of producing wheat. 1 00.0% b. as beef production increases, its opportunity cost increases. 0.0% c. as beef production increases, its opportunity cost decreases. 0.0% d. as beef production increases, its opportunity cost is constant. Score: 4 / 4 Question 35 (4 points) Which of the f ollowing statements is FALSE? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. As society increases its wealth, the problem of scarcity disappears. 0.0% b. The factors of production are used to produce outputs that help society satisfy its wants. 0.0% c. Even though a society faces the problem of scarcity it does not , necessaril y suff er from poverty . 0.0% d. Land and labor are both factors of production. Score: 4 / 4 Question 36 (4 points) In one day , Joe can produce 2 4 bushels of wheat (W) or 8 pounds of rice (R). Joe's opportunity cost of 1 bushel of wheat is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. 1/3 pound of rice. 0.0% b. 3 pounds of rice. 0.0% c. 1/8 pound of rice. 0.0% d. 8 pounds of rice. Score: 4 / 4 Question 3 7 (4 points) Any combination of two goods l ying outside the production possibilities frontier Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. represents the most efficient use of resources. 0.0% b. req uires f ewer resources than are presentl y available. 1 00.0% c. represents an unattainable combination of goods. 0.0% d. represents an inefficient combination of goods. Score: 4 / 4 Question 38 (4 points) When the demand curve shifts, the intercept remains the same. Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. T rue 1 00.0% b. False Score: 4 / 4 Question 39 (4 points) In the U .S., it req uires 20 labor hours to produce one bushel of wheat and 80 labor hours to produce one computer In France, it req uires 25 labor hours to . produce one bushel of wheat and 7 labor hours to produce one computer The 5 . opportunity cost of one bushel of wheat in the U .S. is Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. 3 computers. 0.0% b. 1/3 computer . 0.0% c. 20 labor hours. 1 00.0% d. 1/4 computer . Score: 4 / 4 Question 40 (4 points) A person has a comparative advantage in an activity whenever she Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. has an absolute advantage in the activity . 1 00.0% b. can perf m the activity at a lower opportunity cost than can another or person. 0.0% c. can do the activity in less time than anyone else. 0.0% d. can do everything better than anyone else. Score: 4 / 4 Question 4 1 (4 points) A country has a comparative advantage over another in the production of gadgets if Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. it can produce more gadgets than can the other country . 0.0% b. it can produce more gadgets than can any other country . 0.0% c. it can produce gadgets more efficientl y than it can produce any other good. 1 00.0% d. it can produce gadgets at a lower opportunity cost than can the other country . Score: 4 / 4 Question 42 (4 points) The United States produces both automobiles and computers more efficientl than y Mexico. Nevertheless, it is possible that both nations would benefit from trade in these items. The reason f or this is Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. the concept of comparative advantage. 0.0% b. the idea of redistribution of income. 0.0% c. externalities. 0.0% d. the concept of absolute advantage. Score: 4 / 4 Question 43 (4 points) A country has an absolute advantage over another in the production of widgets if Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. it can produce widgets using smaller q uantities of resources than can the other country . 0.0% b. it can produce more widgets than can the other country . 0.0% c. it can produce more widgets in a year than can the other country . 0.0% d. it can produce widgets at a lower opportunity cost than can the other country . Score: 4 / 4 Question 4 4 (4 points) If one person has an absolute advantage in the production of both goods, then Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. that person must also have the comparative advantage in both goods. 0.0% b. that person cannot benefit from trade. 1 00.0% c. that person will have the comparative advantage in onl y one good. 0.0% d. it is in that person's interest to specialize in the production of both goods. Score: 4 / 4 Question 45 (4 points) In Japan the opportunity cost of producing 1 VCR is 1 computer In the United . States the opportunity cost of producing 1 VCR is 2 computers. Japan has a comparative advantage in producing Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. VCRs. 0.0% b. computers. 0.0% c. both goods. 0.0% d. neither good. Score: 4 / 4 Question 46 (4 points) The f ollowing is a schedule comparing output per worker f or wheat and oil in Alpha and Omega. Wheat (in bushels) Oil (in barrels) ALPHA 500 40 OMEGA 1 00 80 Which country has the absolute advantage in wheat production, and which country has the absolute advantage in oil production? Student response: Percent V alue Correct Response Student Response Answer Choices 1 00.0% a. Alpha has the absolute advantage in wheat Omega has the absolute ; advantage in oil. 0.0% b. Omega has the absolute advantage in wheat Alpha has the absolute ; advantage in oil. 0.0% c. Alpha has the absolute advantage in both goods. 0.0% d. Omega has the absolute advantage in both goods. Score: 4 / 4 Question 4 7 (4 points) When nations specialize in their areas of comparative advantage and then trade with the rest of the world, the result is that Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. the average standard of living in the world will go down. 1 00.0% b. the average standard of living in the world will go up. 0.0% c. the world will move from a point on the production possibilities curve to a point inside the curve. 0.0% d. worldwide economic efficiency will decrease. Score: 4 / 4 Question 48 (4 points) Division of labor ref ers to Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. dividing tasks up into several subtasks and having one person perf m or these subtasks in a certain order . 0.0% b. the separation of hourl y workers from salaried workers. 1 00.0% c. assigning diff erent workers to diff erent tasks. 0.0% d. separating union workers from nonunion workers. Score: 4 / 4 Question 49 (4 points) The ter m "comparative disadvantage" means one party in a trade Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. has a lower opportunity cost than its trading partner . 1 00.0% b. has a higher opportunity cost than its trading partner . 0.0% c. has an absolute advantage in the goods that it is trading. 0.0% d. has no basis f or trade with a trading partner . Score: 4 / 4 Question 50 (4 points) In a two­person, two­good trading model, the individual with a flatter production possibilities frontier has a comparative advantage in Student response: Percent V alue Correct Response Student Response Answer Choices 0.0% a. neither good. 0.0% b. both goods. 1 00.0% c. the good on the horizontal axis. 0.0% d. the good on the vertical axis. Score: 4 / 4 T otal score: 1 4 / 200 = 92.0% 8 V iew Results Quiz 2. 1 User ID: skim7 Attempt : 3 / 3 Out of: 25 Started: F ebruary 2 2005 1 7 , 0:32am Finished: F ebruary 2 2005 1 7 , 0:33am T ime spent : 1 min. 4 sec. Question 1 (1 point) The price of labor is the wage rate. What happens to the q uantity of labor demanded if wages increase? Student response: Percent V alue Student Response Answer Choices a. It increases. 1 00.0% b. It decreases. c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 1 / 1 Question 2 (1 point) The demand curve f or a good Student response: Percent V alue Student Response Answer Choices a. connects points describing how much consumers actuall y bought at diff erent prices during a particular period. b. connects points describing how much consumers actuall y bought at diff erent prices in diff erent periods. 1 00.0% c. connects points describing how much consumers would have been willing and able to buy at diff erent prices during a particular period. d. connects points describing how much consumers would have been willing and able to buy at diff erent prices in diff erent periods. Score: 1 / 1 Question 3 (1 point) In an attempt to f orecast enrollment, a ma jor university hired an economist to give a "head count." One variable which she would probabl emphasize more than any y other in trying to f orecast is Student response: Percent V alue Student Response Answer Choices 1 00.0% a. tuition (the price of attending). b. the employment opportunities that college opens up. c. survey results on public interest in education. d. her instinct about what the public wants. Score: 1 / 1 Question 4 (1 point) If the government has stated that it will buy any amount of good X off ered at $30, then which demand curve below is appropriate? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. b. c. d. Score: 1 / 1 Question 5 (1 point) Demand and q uantity demanded are the same thing. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 6 (1 point) A demand schedule shows Student response: Percent V alue Student Response Answer Choices a. the "market potential" f or a product. 1 00.0% b. how much consumers are willing and able to buy at diff erent prices. c. possible combinations of output under diff erent conditions. d. how much producers would like to sell at diff erent prices. Score: 1 / 1 Question 7 (1 point) A 1 985 Harvard study showed that the price of cigarettes does not aff ect how much an individual smokes but whether he smokes. If this is correct, which of the below graphs shows the typical individual's demand curve f or cigarettes? (This is a tough one!) Student response: Percent V alue Student Response Answer Choices a. b. 1 00.0% c. d. Score: 1 / 1 Question 8 (1 point) The demand curve depicts inf mation about the q uantities demanded as prices have or changed over several time periods. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 9 (1 point) A demand curve can be thought of as Student response: Percent V alue Student Response Answer Choices a. a graphical display of "market potential." 1 00.0% b. a graphical representation of the inf mation in a demand schedule. or c. showing how much people want to buy . d. a f orecasting tool. Score: 1 / 1 Question 1 0 (1 point) Fir ms often seek to borrow money to expand their capital stock , and the price they pay f or the money is the interest rate. What happens to q uantity of money demanded if the interest rate increases? Student response: Percent V alue Student Response Answer Choices a. It increases. 1 00.0% b. It decreases. c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 1 / 1 Question 1 1 (1 point) Which of the f ollowing would cause an upward movement (to the left) along the demand curve f or European autos in the United States? Student response: Percent V alue Student Response Answer Choices a. an increase in the price of American autos b. a decrease in the price of American autos c. an increase in income in the United States 1 00.0% d. an increase in the price of European autos Score: 1 / 1 Question 12 (1 point) The demand curve f or a typical good has Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a negative slope because some consumers switch to other goods as the price of the good rises. b. a negative slope because consumer incomes fall as the price of the good rises. c. a negative slope because the good has less "snob appeal" as its price falls. d. None of the above is correct. Score: 1 / 1 Question 1 3 (1 point) The law of demand states that Student response: Percent V alue Student Response Answer Choices a. an increase in price will diminish the q uantity demanded onl if income y falls as well. 1 00.0% b. an increase in price will diminish the q uantity demanded if income remains constant. c. an increase in price can lead to an increase in the q uantity demanded onl y if income goes up. d. the eff ect of an increase in price depends on how income changes. Score: 1 / 1 Question 1 4 (1 point) Assume the demand curve f or cookies is downward sloping. If the price of cookies falls from $1 .50 to $1 .25 per dozen (be careful of ter minology!), Student response: Percent V alue Student Response Answer Choices a. the demand f or cookies will fall. b. the demand f or cookies will rise. 1 00.0% c. a larger q uantity of cookies will be demanded. d. a smaller q uantity of cookies will be demanded. Score: 1 / 1 Question 1 5 (1 point) A decrease in price Student response: Percent V alue Student Response Answer Choices 1 00.0% a. causes a downward movement (to the right) along the same demand curve. b. causes an upward movement (to the left) along the same demand curve. c. changes the demand curve. d. causes a downward movement (to the right) along the same demand curve if income decreases. Score: 1 / 1 Question 1 6 (1 point) If the government has stated that it will pay whatever it must to obtain 1 ,000 units of good X, then which demand curve in the figure below is appropriate? Student response: Percent V alue Student Response Answer Choices a. 1 00.0% b. c. d. Score: 1 / 1 Question 1 (1 point) 7 Assume that the figure below shows demand f new houses, a nor mal good. A or decrease in the income of buyers will change demand from Student response: Percent V alue Student Response Answer Choices a. D1 to D2 1 00.0% b. D2 to D1 c. D2 to D3 d. D1 to D3 Score: 1 / 1 Question 1 8 (1 point) Market demand curves are f ound by Student response: Percent V alue Student Response Answer Choices a. verticall y summing individual demand curves. 1 00.0% b. horizontall y summing individual demand curves. c. summing individual demand curves in a parallel fashion. d. adding the slopes of individual demand curves. Score: 1 / 1 Question 1 9 (1 point) Which of the f ollowing would cause a decrease in the demand f or Pepsi (i.e., a leftward shift of the Pepsi demand curve)? Student response: Percent V alue Student Response Answer Choices a. An increase in the price of Coke. 1 00.0% b. A decrease in the price of Coke. c. An increase in the price of Pepsi. d. A decrease in the price of Pepsi. Score: 1 / 1 Question 20 (1 point) The Wall Street Journal reports that "hard times aid poultry companies as people eat cheaper f owl." In the language of economists, this means Student response: Percent V alue Student Response Answer Choices 1 00.0% a. chicken is an inf erior good. b. chicken is a nor mal good. c. demand f or chicken does not obey the law of demand. d. people's tastes change during recessions. Score: 1 / 1 Question 2 1 (1 point) If VCRs and rental videos are complementary goods, then a decrease in the price of VCRs would increase the Student response: Percent V alue Student Response Answer Choices a. demand f or rental videos. b. q uantity of VCRs demanded. c. q uantity of rental videos demanded. 1 00.0% d. both demand f or rental videos and q uantity of VCRs demanded. Score: 1 / 1 Question 22 (1 point) In the figure below , an increase in population (which will increase the number of buyers of the good) will change demand from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. D1 to D2 b. D2 to D1 c. D3 to D2 d. D3 to D1 Score: 1 / 1 Question 23 (1 point) Assume that the figure below shows demand f or orange juice. An increase in the price of soda (a substitute f or orange juice) will change demand from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. D1 to D2 b. D2 to D1 c. D3 to D2 d. D3 to D1 Score: 1 / 1 Question 2 4 (1 point) If price rises, what happens to demand f or a product? Student response: Percent V alue Student Response Answer Choices a. It increases. b. It decreases. 1 00.0% c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 1 / 1 Question 25 (1 point) Which of the f ollowing will shift the demand curve f or good X? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a change in the income of buyers of good X b. a change in the price of good X c. a change in the suppl y of good X d. All of the above are correct. Score: 1 / 1 T otal score: 25 / 25 = 1 00.0% V iew Results Quiz 2.2 User ID: skim7 Attempt : 1 / 3 Out of: 20 Started: F ebruary 2 2005 1 7 , 0:35am Finished: F ebruary 2 2005 1 7 , 0:40am T ime spent : 4 min. 53 sec. Question 1 (1 point) Suppose the numbers in parentheses represent two points on a line: (59 billion q uarts; $4) and (7 8 billion q uarts; $6). The line is likel y a Student response: Percent V alue Student Response Answer Choices a. production possibilities frontier f or milk . 1 00.0% b. suppl y curve f or milk . c. demand curve f or milk . d. ray through the origin. Score: 1 / 1 Question 2 (1 point) Studies at Cornell University revealed that chickens grow 2 percent more weight when a red mitten is placed in their cage and V ivaldi is played in the coop. Resultant f eed savings are estimated at $60 million a year . In the chicken market, the Student response: Percent V alue Student Response Answer Choices a. demand curve shifts to the right. 1 00.0% b. suppl y curve shifts to the right. c. price will rise. d. q uantity sold will fall. Score: 1 / 1 Question 3 (1 point) The suppl y curve shows Student response: Percent V alue Student Response Answer Choices a. the same basic inf mation as the demand curve. or b. who will have an opportunity to produce or purchase an item. 1 00.0% c. the q uantity sellers are willing and able to put on the market as a function of price. d. what q uantities have been sold over the past f ew weeks or months. Score: 1 / 1 Question 4 (1 point) If price rises, what happens to suppl or the product? (Watch ter minology!) y f Student response: Percent V alue Student Response Answer Choices a. It increases. b. It decreases. 1 00.0% c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 1 / 1 Question 5 (1 point) The price f or labor is the wage rate. What happens to the suppl y of labor if wages increase? (Watch ter minology!) Student response: Percent V alue Student Response Answer Choices a. It increases. b. It decreases. 1 00.0% c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 1 / 1 Question 6 (1 point) Why does q uantity supplied increase when price increases? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Producers find it more profitable to make the item. b. People "drop out" of the market, so buyers find it more abundant. c. As demand decreases with a high price, sur pluses appear . d. All of the above. Score: 1 / 1 Question 7 (1 point) A severe freeze has once again damaged the Florida orange crop. (Although this wasn't mentioned specificall in the lesson, weather is an input in the y production of many goods.) The impact on the market f or oranges will be a leftward shift in Student response: Percent V alue Student Response Answer Choices a. the demand curve as consumers try to economize because of the shortage. b. both the suppl y and demand curves. 1 00.0% c. the suppl y curve. d. the suppl curve and a rightward shift in the demand curve, which will y result in a higher price. Score: 1 / 1 Question 8 (1 point) The suppl curve may shift if any production­related variable changes EXCEPT a y change in the price of the good. Student response: Percent V alue Student Response Answer Choices 1 00.0% a. T rue b. False Score: 1 / 1 Question 9 (1 point) The suppl y of newspapers will decline if Student response: Percent V alue Student Response Answer Choices 1 00.0% a. newsprint (an input) becomes more expensive. b. the printers' union makes wage concessions. c. prices are reduced. d. magazine prices rise (assuming magazines are a substitute f or newspapers). Score: 1 / 1 Question 1 0 (1 point) Along a suppl y curve, Student response: Percent V alue Student Response Answer Choices a. suppl y changes as price changes. 1 00.0% b. q uantity supplied changes as price changes. c. suppl y changes as technology changes. d. q uantity supplied changes as technology changes. Score: 1 / 1 Question 1 1 (1 point) An important assumption that is made when constructing a suppl y schedule is Student response: Percent V alue Student Response Answer Choices a. onl y price and q uantity matter in deter mining suppl y . b. fir ms always want to sell a certain amount of a product. c. suppl y is too important to be left to the free market. 1 00.0% d. all other deter minants of suppl y are held constant. Score: 1 / 1 Question 12 (1 point) An increase in consumer income will shift both the suppl y and demand curves. Student response: Percent V alue Student Response Answer Choices a. T rue 1 00.0% b. False Score: 1 / 1 Question 1 3 (1 point) Assume that the figure below shows the suppl y of soda. An increase in the price of syrup used in the production of soda will shift suppl y from Student response: Percent V alue Student Response Answer Choices a. S1 to S2 1 00.0% b. S2 to S1 c. S2 to S3 d. S1 to S3 Score: 1 / 1 Question 1 4 (1 point) Assuming that resources are specialized, the opportunity cost of an item increases as production of it rises. Theref ore, we expect that fir ms will produce more if Student response: Percent V alue Student Response Answer Choices 1 00.0% a. the price increases. b. the price decreases. c. the opportunity cost is greater than the price. d. the government asks fir ms to produce more. Score: 1 / 1 Question 1 5 (1 point) The price f labor is the wage rate. What happens to the q uantity of labor or supplied if wages increase? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. It increases. b. It decreases. c. It does not change. d. Uncertain. Economic theory has no answer to this q uestion. Score: 1 / 1 Question 1 6 (1 point) In the figure below an increase in the number of producers will shift market , suppl y from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. S1 to S2 b. S2 to S1 c. S3 to S2 d. S3 to S1 Score: 1 / 1 Question 1 (1 point) 7 Assume that the figure below shows the suppl y of new houses. An improvement in the technology f or building houses will shift suppl y from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. S1 to S2 b. S2 to S1 c. S3 to S2 d. S3 to S1 Score: 1 / 1 Question 1 8 (1 point) Suppl y curves represent producers' Student response: Percent V alue Student Response Answer Choices a. inventories. b. willingness to buy . 1 00.0% c. willingness to sell. d. total production. Score: 1 / 1 Question 1 9 (1 point) A decrease in the market price of a product, ceteris paribus, results in Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a movement down (to the left) along a given suppl y curve, decreasing q uantity supplied. b. a movement up (to the right) along a given suppl y curve, increasing q uantity supplied. c. an inward shift of the suppl y curve. d. an outward shift of the suppl y curve. Score: 1 / 1 Question 20 (1 point) Assume that the figure below shows the suppl y of orange juice. A decrease in the wage rate paid to orange juice industry workers will shift suppl y from Student response: Percent V alue Student Response Answer Choices 1 00.0% a. S1 to S2 b. S2 to S1 c. S3 to S2 d. S3 to S1 Score: 1 / 1 T otal score: 20 / 20 = 1 00.0% V iew Results Quiz 2.3 User ID: skim7 Attempt : 3 / 3 Out of: 20 Started: F ebruary 2 2005 1 7 , 0:56am Finished: F ebruary 2 2005 1 7am T 7 , 0:5 ime spent : 0 min. 5 1 sec. Question 1 (1 point) A decrease in the price of an input going into the production of a product will result in Student response: Percent V alue Student Response Answer Choices a. a decrease in eq uilibrium price and a decrease in eq uilibrium q uantity . b. an increase in eq uilibrium price and an increase in eq uilibrium q uantity . 1 00.0% c. a decrease in eq uilibrium price and an increase in eq uilibrium q uantity . d. an increase in eq uilibrium price and no change in eq uilibrium q uantity . Score: 1 / 1 Question 2 (1 point) A shortage will tend to occur at which price in the f ollowing figure? Student response: Percent V alue Student Response Answer Choices a. P1 b. P2 1 00.0% c. P3 d. None of the above. Score: 1 / 1 Question 3 (1 point) Some medical authorities announced in the late 1 980s that an acne medicine named Retin­A also had previousl y unknown wrinkle­reducing properties. (In other words, it made its users look younger!) An economist would expect to find that, after this announcement, the price of Retin­A _____ and the q uantity sold _____. Student response: Percent V alue Student Response Answer Choices a. rose; f ell 1 00.0% b. rose; rose c. f ell; f ell d. f ell; rose Score: 1 / 1 Question 4 (1 point) At price P1 in the f ollowing figure, what will tend to happen? Student response: Percent V alue Student Response Answer Choices a. There will be a shortage, and the price will fall. b. There will be a shortage and the price will rise. c. There will be a sur plus, and the price will rise. 1 00.0% d. There will be a sur plus, and the price will fall. Score: 1 / 1 Question 5 (1 point) A decrease in demand will have what eff ect on eq uilibrium price and q uantity? Student response: Percent V alue Student Response Answer Choices a. Price will increase, q uantity will decrease. b. Price will decrease, q uantity will increase. c. Both price and q uantity will increase. 1 00.0% d. Both price and q uantity will decrease. Score: 1 / 1 Question 6 (1 point) Which of the f ollowing is the most likel explanation f why airlines tend to y or lower ticket prices in the winter? Student response: Percent V alue Student Response Answer Choices a. Suppl y is relativel y variable, and a drop in demand lowers eq uilibrium price. b. Demand is relativel y variable, and a drop in suppl y lowers eq uilibrium price. c. Airlines like to sur prise passengers with sales on ticket prices. 1 00.0% d. Suppl is relativel fixed, and a drop in demand lowers eq uilibrium y y price. Score: 1 / 1 Question 7 (1 point) The presence of scalpers (people selling tickets at a price above the q uoted price, P*) at a recent Super Bowl game suggests that the market f or stadium seats could be represented by which graph below? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. b. c. d. Score: 1 / 1 Question 8 (1 point) Last year ,000 cases of elixir were sold at $1 , 1 0; this year ,200 cases were sold , 1 at $12. The most probable inter pretation of these data is that the Student response: Percent V alue Student Response Answer Choices a. suppl y and demand curves are shifting to the right. b. suppl y and demand curves are shifting to the left. c. suppl y curve has shifted to the left, with no change in demand. 1 00.0% d. demand curve has shifted to the right, with no change in suppl y . Score: 1 / 1 Question 9 (1 point) Are markets always in eq uilibrium? Student response: Percent V alue Student Response Answer Choices a. Y es, they are always at the eq uilibrium point, or very close to it. b. Y es, because so f ew things tend to alter suppl y and demand. 1 00.0% c. No, but if there is no interf erence, they tend to move toward eq uilibrium. d. No, they never "settle down" into a stable price and q uantity . Score: 1 / 1 Question 1 0 (1 point) After the strike against the Financial News in London began, the number of copies of the Broad Street Journal sold in England increased dramaticall y , yet there has been no increase in price. Which suppl y and demand picture in the figures below represents the situation f or the Broad Street Journal bef ore the strike? Student response: Percent V alue Student Response Answer Choices a. 1 00.0% b. c. d. Score: 1 / 1 Question 1 1 (1 point) In high schools, all teachers are paid the same based on years of service and regardless of specialization. Beginning in the 1 70s, a shortage of science and 9 math teachers developed as private industry paid more f or math and science skills than schools could off . At the same time, a decline in the number of school­age er children tended to reduce the demand f all other teachers, which led to a or sur plus. The economist's solution to this problem would be Student response: Percent V alue Student Response Answer Choices a. merit pay to reward the best teachers. b. recognition that all teachers do comparable work and should be paid the same. c. to raise the wages of all teachers. 1 00.0% d. to raise the wages of teachers in fields that are in short suppl y and lower those of others. Score: 1 / 1 Question 12 (1 point) The U .S. government banned cigarette advertising on radio and television after January 1 7, but magazine advertisements were still legal. Y would expect to 91 ou find that, after the ban took eff ect, Student response: Percent V alue Student Response Answer Choices a. the price of magazine ads f or all goods f ell. b. the price of magazine ads f or onl y cigarettes f ell. 1 00.0% c. the price of magazine ads f or all goods rose. d. the price of magazine ads f or onl y cigarettes rose. Score: 1 / 1 Question 1 3 (1 point) In the figure below , if the price is fixed at 30, there will be a Student response: Percent V alue Student Response Answer Choices a. shortage of 2,000. 1 00.0% b. sur plus of 2,000. c. shortage of 1 ,000. d. sur plus of 1 ,000. Score: 1 / 1 Question 1 4 (1 point) The price of gasoline has risen and the q uantity sold has fallen. This was likel y caused by Student response: Percent V alue Student Response Answer Choices 1 00.0% a. a rise in the price of crude oil. b. a seasonal rise in the demand f or gasoline. c. use of a new public transit system. d. a discovery of crude oil in New Jersey . Score: 1 / 1 Question 1 5 (1 point) If the suppliers of a good will sell any amount at $30 but there are no sales, then the market can best be represented by which graph below? Student response: Percent V alue Student Response Answer Choices a. b. c. 1 00.0% d. Score: 1 / 1 Question 1 6 (1 point) Grapes can be used f or wine or f or raisins. Which of the f ollowing graphs best depicts the eff ects on the U .S. raisin market of an increase in imports of f oreign wines? (This one is reall y tough. Start by thinking about how the imported wines will aff ect thedomestic wine industry What eff . ect will this have on the market f or raisins, since grapes can be used to produce wine or raisins?) Student response: Percent V alue Student Response Answer Choices a. 1 00.0% b. c. d. Score: 1 / 1 Question 1 (1 point) 7 In January 2,500 q uarts of ice cream are sold in Boston at $2 a q uart. In , F ebruary , 3,000 q uarts are sold at $2.50 a q uart. This change in q uantity sold and price may have been caused by Student response: Percent V alue Student Response Answer Choices a. a reduction in wages in the Boston area. b. the introduction of labor ­saving automated ice cream­packing machinery . 1 00.0% c. the release of a medical study showing that ice cream consumption improves mental health. d. the decision by Boston ice cream sellers to eliminate discount coupons. Score: 1 / 1 Question 1 8 (1 point) A study of the demand f or fresh fish f ound that meat and poultry prices had a positive impact on the price of fish. In other words, as the price of meat and poultry rose, so did the price of fish. This indicates that Student response: Percent V alue Student Response Answer Choices a. fish is a nor mal good. 1 00.0% b. meat and poultry are substitutes f or fish. c. meat and poultry are complements of fish. d. fish is an inf erior good. Score: 1 / 1 Question 1 9 (1 point) A decrease in suppl y will have what eff ect on eq uilibrium price and q uantity? Student response: Percent V alue Student Response Answer Choices 1 00.0% a. Price will increase, q uantity will decrease. b. Price will decrease, q uantity will increase. c. Both price and q uantity will increase. d. Both price and q uantity will decrease. Score: 1 / 1 Question 20 (1 point) "Moonshine" is illegal home brew made by adding sugar to accelerate corn f mentation. T er en pounds of sugar are necessary to make a gallon of moonshine. In the mid­1 70s, the price of sugar tripled and the price of moonshine skyrocketed 9 from $6 to $1 5 a gallon. Which graph below best illustrates this? Student response: Percent V alue Student Response Answer Choices a. b. c. 1 00.0% d. Score: 1 / 1 T otal score: 20 / 20 = 1 00.0% 2. 1 . 1 (1) QID: 60 12 F or most goods, if a consumer's income increases, his/her demand f or the goods will decrease. increase. remain unchanged. none of the above. (2) QID: 603 1 If you expect to get a large salary increase next month, your demand f most or goods will decrease. increase. remain the same. none of the above. (3) QID: 60 1 4 Besides the price of substitutes and complements, other deter minants of demand are the price of inputs and natural resources. technology and the number of sellers. the price of the product, income, and consumers' tastes. A and C. (4) QID: 605 1 T o economists, the Latin phrase ceteris paribus means "all other things eq ual." T rue False (5) QID: 60 1 7 Demand is defined by the behavior of producers. the behavior of consumers or households. the behavior of producers and consumers or households. none of the above. (6) QID: 608 1 When the price of a substitute f good X rises, the demand f good X or or increases. decreases. stays constant. will increase at first but decreases over time. (7) QID: 609 1 When the price of a complement f good X rises, the demand f good X or or increases. decreases. stays constant. will decrease at first but increases over time. (8) QID: 602 1 If a type of clothing suddenl y becomes fashionable, there will be a movement down this good’ demand curve. s movement up this good’ demand curve. s shift outward in the good’ demand curve. s shift inward of the good's demand curve. (9) QID: 6022 Which of the f ollowing is not a deter minant of an individual’ demand f s or a good? Income The price of substitutes and complements The price of the good The number of buyers (1 0) QID: 6023 The law of demand states, all other things being eq ual, that goods will be supplied to just eq ual consumer demand. that consumer demand will deter mine the level of fir m suppl y . that consumers will buy more of a good if the price rises. that consumers will buy more of a good if the price falls. (1 1) QID: 602 4 An increase in the price of F ords will have what likel y eff ect in the market f or Chevrolets? It will have no eff ect. The demand f or Chevrolets will decrease. The demand f or Chevrolets will increase. The suppl y of Chevrolets will increase. (12) QID: 606 1 A demand function is a mathematical f mula that specifies the relationship or between the demand f or a good or service and the variables that influence that demand. T rue False BBCAB ABCDD CA 2. 1 .2 (1) QID: 1228 4 A demand schedule shows the relationship between demand and suppl y . the relationship between the price of a good and the q uantity demanded of the good. the amount of a good purchased at diff erent points in time. the change in demand when a consumer's income changes. (2) QID: 12285 When the price of a good rises, consumers will stop buying the more expensive goods and switch to substitutes. This behavior is explained by the income eff ect. the substitution eff ect. both the income and substitution eff ects. none of the above. (3) QID: 12286 The income eff ect says that when the price of a good increases, consumers buy less of the good because their purchasing power is shrinking in ter ms of that particular good. T rue False (4) QID: 1228 7 Assuming that hamburgers and mustard are complements, a decrease in the price of hamburgers would increase the demand f or mustard. T rue False (5) QID: 12288 The demand curve shows the relationship between the price of a good and the q uantity that the consumer is willing and able to purchase in a given period of time, holding all other factors that influence consumer behavior constant. shows the relationship between the price of a good and the q uantity that the producer is willing and able to suppl in a given period of time, holding all y other factors that influence producer behavior constant. shows the relationship between the price of a good and the q uantity that the consumer is willing and able to purchase in a given period of time, without holding all other factors that influence consumer behavior constant. none of the above. (6) QID: 12289 A change in price of a particular good indicates all of the f ollowing except a change on the demand curve. a change in the q uantity demanded. a shift in the demand curve. demand has moved to a new point on the demand curve. (7) QID: 12290 The demand curve is downward­sloping because as the price of the good rises, the q uantity demanded falls. the law of demand states that as price increases, consumers are willing and able to purchase less. none of the above. A and B. (8) QID: 1 7 366 On a demand curve, a consumer’ income and the good’ price are held constant. s s onl y the price is held constant. all deter minants are held constant. all nonprice deter minants are held constant. (9) QID: 1 7 368 The law of demand states, all other things eq ual, that goods will be supplied to just eq ual consumer demand. that consumer’ demand will deter mine the level of fir m suppl s y . that consumers will buy more of a good if price rises. that consumers will buy more of a good if price falls. BBAAA CDDD 2. 1 .3 (1) QID: 1229 1 If a household's income decreases, the demand f or nor mal goods will decrease, and the demand curve will shift outward. the demand f nor mal goods will decrease, and the demand curve will shift or inward. the suppl y of nor mal goods will decrease, and the suppl y curve will shift inward. the suppl of nor mal goods will decrease, and the suppl curve will shift y y outward. (2) QID: 12293 If the price of bread falls from $3 per loaf to $1 .50 per loaf, the demand curve f or bread will shift inward. the demand curve f or bread will shift outward. the demand curve's slope changes. households will demand a diff erent q uantity of bread. (3) QID: 12294 A decrease in income will cause the demand curve f a particular good to or shift outward. shift inward. remain constant. none of the above. (4) QID: 12295 A movement along the demand curve f a particular good is a response to the or change in price of a particular good. T rue False (5) QID: 12296 A shift in the demand curve is caused by a change in one of the variables that aff ects the demand curve and is called a change in the q