1 eco212 eco 212 final exam (2) latest

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1) The art in scientific thinking is A. Finding the right problem to study.

B. Deciding which assumptions to make.

C. Not something in which economists have to be skilled.

D. The ability to make an abstract subject easy to understand

2) When studying the effects of public policy changes, economists A. Always refrain from making assumptions.

B. Sometimes make different assumptions about the short run and the long run.

C. Consider only the short-run effects of those policy changes and not the long-run effects.

D. Consider only the direct effects of those policy changes and not the indirect effects.

3) Economists make use of assumptions, some of which are unrealistic, for the purpose of A. Developing models when the scientific method cannot be used.

B. Advancing their political agendas.

C. Focusing their thinking.

D. Teaching economics to people who have never before studied economics.

4) The forces that make market economies work are A. Regulation and restraint.

B. Demand and supply.

C. Taxes and government spending.

D. Work and leisure.

5) A competitive market is a market in which A. The forces of supply and demand do not apply.

B. There are only a few sellers.

C. No individual buyer or seller has any significant impact on the market price.

D. An auctioneer helps set prices and arranges sales.

6) A market is a A. Place where buyers and sellers come together to engage in trade.

B. Group of people with common economic characteristics.

C. Place where an auctioneer helps set prices and arrange sales.

D. Group of buyers and sellers of a particular good or service.

7) Economists in general A. Do not believe that people's tastes determine demand and therefore they ignore the subject of tastes.

B. Believe that they must be able to explain people's tastes in order to explain what happens when tastes change.

C. Incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.

D. Do not try to explain people's tastes, but they do try to explain what happens when tastes change.

8) Two goods are substitutes if a decrease in the price of one good A. Increases the demand for the other good.

B. Decreases the quantity demanded of the other good.

C. Increases the quantity demanded of the other good.

D. Decreases the demand for the other good.

9) If a decrease in income increases the demand for a good, then the good is A. A substitute good.

B. An inferior good.

C. A complement good.

D. A normal good.

10) If, at the current price, there is a shortage of a good, A. Sellers are producing more than buyers wish to buy.

B. Quantity demanded equals quantity supplied.

C. The market must be in equilibrium.

D. The price is below the equilibrium price.

11) A decrease in input costs to firms in a market will result in A. A decrease in equilibrium price and an increase in equilibrium quantity.

B. An increase in equilibrium price and an increase in equilibrium quantity.

C. A decrease in equilibrium price and a decrease in equilibrium quantity.

D. An increase in equilibrium price and no change in equilibrium quantity.

12) The unique point at which the supply and demand curves intersect is called A. Market harmony.

B. Equilibrium.

C. Coincidence.

D. Cohesion.

13) To an economist, the field of industrial organization answers which of the following questions?

A. Why are consumers subject to the law of demand?

B. Why do firms consider production costs when determining product supply?

C. Why do firms experience falling marginal product of labor?

D. How does the difference in the number of firms affect prices and the efficiency of market outcomes?

14) The marginal product of labor is equal to the A. incremental cost associated with a one unit increase in labor.

B. increase in output obtained from a one unit increase in labor.

C. incremental profit associated with a one unit increase in labor.

D. increase in labor necessary to generate a one unit increase in output.

15) On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

A. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.

B. The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers.

C. The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers.

D. All of these are correct.

16) Suppose that a new invention decreases the marginal productivity of labor, shifting labor demand to the left. Such an invention would be an example of A. Luddite technology.

B. labor-saving technology.

C. labor-augmenting technology.

D. supply-shifting technology.

17) A Luddite would be expected to fear A.supply-shifting technologies.

B.labor-saving technologies.

C.labor-augmenting technologies.

D.the Chairman of the Federal Reserve.

19) There are two types of imperfectly competitive markets: A.monopolistic competition and oligopoly.

B.monopoly and monopolistic competition.

C.monopoly and oligopoly.

D.monopolistic competition and cartels.

20) Firms in industries that have competitors but, at the same time, do not face so much competition that they are price takers, are operating in either a(n) A.oligopoly or monopolistically competitive market.

B.oligopoly or perfectly competitive market.

C.oligopoly or monopoly market.

D.monopoly or monopolistically competitive market.

21) Monopolistically competitive firms are typically characterized by A.a few firms selling products that are similar, but not identical.

B.many firms selling products that are similar, but not identical.

C.many firms selling identical products.

D.a few firms selling highly different products.

22) What do economists call a market structure in which there are many firms selling products that are similar but not identical?

A.Oligopoly B.Monopoly C.Perfect competition D.Monopolistic competition

23) The commercial jetliner industry, consisting of Boeing and Airbus, would best be described as a (an) A.monopoly.

B.monopolistically competitive market.

C.perfectly competitive market.

D.oligopoly.

24) Imperfectly competitive firms are characterized by A.price making ability.

B.standardized products.

C.horizontal demand curves.

D.a large number of small firms.

25) Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

A.the percentage of the labor force that is out of work, and differences in average income from country to country B.the price of beef, wage differences between genders, and antitrust laws

C.the effect of taxes on the prices of airline tickets, the profitability of automobilemanufacturing firms, and employment trends in the food-service industry D.how consumers maximize utility, and how prices are established in markets for agricultural products

26) For an economy as a whole, A.GDP measures income more precisely than it measures expenditure.

B.expenditure is greater than income.

C.income is greater than expenditure.

D.income is equal to expenditure.

27) Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

A.How rapidly is GDP currently increasing?

B.Why do wages differ across industries?

C.Why do prices in general rise by more in some countries than in others?

D.Why do production and income increase in some periods and not in others?

28) Stagflation exists when prices A.and output fall.

B.rise and output falls.

C.and output rise.

D.fall and output rises.

29) Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, then we would expect that in the short-run, A.the price level will fall, and real GDP might rise, fall, or stay the same.

B.real GDP will fall and the price level might rise, fall, or stay the same.

C.real GDP will rise and the price level might rise, fall, or stay the same.

D.the price level will rise, and real GDP might rise, fall, or stay the same.

31) One determinant of the long-run average unemployment rate is the A.existence of efficiency wages, while the inflation rate depends primarily upon the extent to which firms are competitive.

B.minimum wage, while the inflation rate depends primarily upon the money supply growth rate.

C.market power of unions, while the inflation rate depends primarily upon government spending.

D.rate of growth of the money supply, while the inflation rate depends primarily upon the market power of unions.

32) There is a A.short-run tradeoff between the actual unemployment rate and the natural rate of unemployment.

B.long-run tradeoff between the actual unemployment rate and the natural rate of unemployment.

C.long-run tradeoff between inflation and unemployment.

D.short-run tradeoff between inflation and unemployment.

33) If policymakers increase aggregate demand, the price level A.and unemployment fall.

B.rises, but unemployment falls.

C.and unemployment rise.

D.falls, but unemployment rises.

34) As the price level decreases, the value of money A.increases, so people want to hold less of it.

B.decreases, so people want to hold less of it.

C.decreases, so people want to hold more of it.

D.increases, so people want to hold more of it.

35) Which of the following statements about U.S. inflation is NOT correct?

A.There were long periods in the nineteenth century during which prices fell.

B.The U.S. inflation rate has varied over time, but international data shows even more variation.

C.The U.S. public has viewed inflation of even 7 percent as a major economic problem.

D.Low inflation was viewed as a triumph of President Carter's economic policy.

36) Deflation A.increases the ability to pay debts and lowers the value of money.

B.reduces the ability to pay debts and lowers the value of money.

C.reduces the ability to pay debts and raises the value of money.

D.increases the ability to pay debts and raises the value of money.

37) Nominal GDP measures A.the dollar value of the economy's output of final goods and services.

B.None of these are correct.

C.the total income received from producing final goods and services measured in constant dollars.

D.the total quantity of final goods and services produced.

38) Sally sells 40 bags of lettuce for a total of $80 at the farmers’ market.

A.Both the $80 and the quantity of lettuce are real variables.

B.The $80 is a real variable. The quantity of lettuce is a nominal variable.

C.Both the $80 and the quantity of lettuce are nominal variables.

D.The $80 is a nominal variable. The quantity of lettuce is a real variable.

39) According to the classical dichotomy, which of the following is influenced by monetary factors?

A.All of these are correct.

B.real GDP C.nominal interest rates D.unemployment

40) Changes in nominal variables are determined mostly by the quantity of money and the monetary system according to A.both the classical dichotomy and the quantity theory of money.

B.neither the classical dichotomy nor the quantity theory of money.

C.the quantity theory of money, but not the classical dichotomy.

D.the classical dichotomy, but not the quantity theory of money.

41) According to the classical dichotomy, which of the following is NOT influenced by monetary factors?

A.nominal GDP and nominal interest rates B.real wages and real GDP C.the price level and nominal GDP D.None of these are correct.