Consumers, Producers, and the Efficiency of Markets
1. Welfare economics is the study of
a. the well-being of less fortunate people.
b. welfare programs in the United States.
c. the effect of income redistribution on work effort.
The Costs of Production
1. According to the law of supply,
a. firms production levels are not correlated with the price of a good.
b. the supply curve will slope downward when demand decreases.
c. firms are willing to produce a
Application: The Costs of Taxation
1. In 1776, the American Revolution was sparked by anger over
a. the extravagant lifestyle of British royalty.
b. the crimes of British soldiers stationed in the American colonies.
c. British ta
A Macroeconomic Theory of the Open Economy
1. Over the past two decades, the United States has
a. generally had, or been very near to a trade balance.
b. had trade deficits in about as many years as it has trade surpluses.
The Design of the Tax System
1. Today the typical American pays what percent of her income in taxes, including property taxes, personal income
taxes, corporate income taxes, payroll taxes, and sales taxes?
a. 5 percent
b. 18 per
Saving, Investment, and the Financial System
1. When opening a restaurant you may need to buy ovens, freezers, tables, and cash registers. Economists call these
a. capital investment.
b. investment in human capital.
The Markets for the Factors of Production
1. Most of the total income earned in the U.S. economy is ultimately paid to households in the form of
Public Goods and Common Resources
1. For most goods in an economy, the signal that guides the decisions of buyers and sellers is
b. consumer surplus.
TOP: Private g
The Basic Tools of Finance
1. The field of finance primarily studies
a. how society manages its scarce resources.
b. the implications of time and risk for allocating resources over time.
c. firms decisions concerning how much to
The Influence of Monetary and Fiscal Policy on Aggregate Demand
1. Fiscal policy affects the economy
a. only in the short run.
b. only in the long run.
c. in both the short and long run.
d. in neither the short nor long run.
The Monetary System
a. is more efficient than barter.
b. makes trades easier.
c. allows greater specialization.
d. All of the above are correct.
2. When we say
The Short-Run Trade-off between Inflation and Unemployment
1. Closely watched indicators such as the inflation rate and unemployment are released each month by the
a. Bureau of the Budget.
b. Bureau of Labor Statistics.
Supply, Demand, and Government Policies
1. Price controls are usually enacted
a. as a means of raising revenue for public purposes.
b. when policymakers believe that the market price of a good or service is unfair to buyers or se
Thinking Like an Economist
1. Which of the following terms are most closely associated with the study of economics?
a. force and acceleration
b. torts and venues
c. ego and cognitive dissonance
d. comparative advantage and deadwe
1. The natural rate of unemployment is the
a. unemployment rate that would prevail with zero inflation.
b. rate associated with the highest possible level of GDP.
c. difference between the long-run and short-run une
The Market Forces of Supply and Demand
1. The forces that make market economies work are
a. work and leisure.
b. demand and supply.
c. regulation and restraint.
d. taxes and government spending.
The Theory of Consumer Choice
1. The theory of consumer choice provides the foundation for understanding
a. the structure of a firm.
b. the profitability of a firm.
c. a firms product demand.
d. a firms product supply.
1. An oligopoly is a market in which
a. there are only a few sellers, each offering a product similar or identical to the products offered by other firms in
b. firms are price takers.
c. the actions of one
Ten Principles of Economics
1. The word that comes from the Greek word for "one who manages a household" is
TOP: Economy MSC: Definitional
2. The word econom
Aggregate Demand and Aggregate Supply
1. Which of the following explains why production rises in most years?
a. increases in the labor force
b. increases in the capital stock
c. advances in technological knowledge
d. All of the
Measuring the Cost of Living
1. Babe Ruth, the famous baseball player, earned $80,000 in 1931. Today, the best baseball players can earn more
than 300 times as much as Babe Ruth earned in 1931. However, prices also have risen si
Five Debates Over Macroeconomic Policy
1. Fluctuations in employment and output result from changes in
a. aggregate demand only.
b. aggregate supply only.
c. aggregate demand and aggregate supply.
d. neither aggregate demand nor
Frontiers of Microeconomics
1. In economics, a difference in access to relevant knowledge is called a(n)
a. behavioral gap.
b. frontier gap.
c. information asymmetry.
d. access imperfection.
Money Growth and Inflation
1. Inflation can be measured by the
a. change in the consumer price index.
b. percentage change in the consumer price index.
c. percentage change in the price of a specific commodity.
d. change in the
Interdependence and the Gains from Trade
1. People who provide you with goods and services
a. are acting out of generosity.
b. do so because they have no other choice.
c. do so because they get something in return.
d. are require
Firms in Competitive Markets
1. A market is competitive if
(i) firms have the flexibility to price their own product.
(ii) each buyer is small compared to the market.
(iii)each seller is small compared to the market.
a. (i) and
Measuring a Nations Income
1. Macroeconomists study
a. decisions of households and firms.
b. the interaction of households and firms.
c. economy-wide phenomena.
d. regulations on firms and unions.
Elasticity and Its Applications
1. In general, elasticity is a measure of
a. the extent to which advances in technology are adopted by producers.
b. the extent to which a market is competitive.
c. how fast the price of a good res
Income Inequality and Poverty
1. A governments policy of redistributing income makes the income distribution more equitable,
a. distorts incentives, and makes the allocation of resources more efficient.
b. alters behavior, and m
Open-Economy Macroeconomics: Basic Concepts
1. International trade
a. raises the standard of living in all trading countries.
b. lowers the standard of living in all trading countries.
c. leaves the standard of living unchanged.