Economic Analysis
Test Bank
Course Introduction
Economic Analysis introduces the fundamental principles and methodologies used to evaluate the allocation of scarce resources in markets and organizations. The course covers key concepts such as supply and demand, market equilibrium, consumer and producer behavior, efficiency, and welfare economics. Students will learn to apply analytical tools to assess the impacts of policy decisions, market structures, and strategic interactions among agents. Through real-world examples and quantitative techniques, Economic Analysis equips students with the skills to interpret economic data, forecast trends, and make informed decisions in both private and public sector contexts.
Recommended Textbook
Economics 4th Edition by Paul Krugman
Available Study Resources on Quizplus
35 Chapters
7902 Verified Questions
7902 Flashcards
Source URL: https://quizplus.com/study-set/3897
Page 2
Chapter 1: First Principles
Available Study Resources on Quizplus for this Chatper
233 Verified Questions
233 Flashcards
Source URL: https://quizplus.com/quiz/77615
Sample Questions
Q1) The trade-off between equity and efficiency occurs because:
A) the efficient allocation of resources is bad for business and industry.
B) allocating resources fairly may cause inefficiency.
C) everyone must pay more tax to ensure equity.
D) efficiency is politically unpopular.
Answer: B
Q2) Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is:
A) zero-the tickets were free.
B) the price listed on the ticket.
C) whatever Khalil would have done had he not gone to the opera.
D) the price listed on the ticket and whatever Khalil would have done had he not gone to the opera.
Answer: C
Q3) Trade allows people to get more of what they want.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Economic Models- Trade-Offs and Trade
Available Study Resources on Quizplus for this Chatper
313 Verified Questions
313 Flashcards
Source URL: https://quizplus.com/quiz/77613
Sample Questions
Q1) The basis of the circular-flow diagram is that:
A) the best models avoid making assumptions.
B) goods and services flow in a circle in the factor market.
C) resources are sold along with goods and services in the resource market.
D) the flow of money into each market or sector is equal to the flow of money coming out of that market or sector.
Answer: D
Q2) Assume an economy is operating on its production possibility frontier, which shows the production of military and civilian goods. If the output of military goods is increased, the output of civilian goods:
A) will increase, too.
B) will not change.
C) must decrease.
D) may increase or decrease.
Answer: C
Q3) Economists disagree more over normative economics than positive economics.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Supply and Demand
Available Study Resources on Quizplus for this Chatper
290 Verified Questions
290 Flashcards
Source URL: https://quizplus.com/quiz/77612
Sample Questions
Q1) (Figure: The Demand and Supply of Wheat) Look at the figure The Demand and Supply of Wheat. If there is an increase in demand of 2,000 bushels at each price, the equilibrium price and quantity will be _____ and _____ bushels, respectively.
A) $5; 5,000
B) $6; 7,000
C) $7; 7,000
D) $8; 8,000
Q2) (Figure: The Demand and Supply of Wheat) Look at the figure The Demand and Supply of Wheat. If a price of $10 temporarily exists in this market, a _____ of _____ bushels will result.
A) shortage; 10,000
B) shortage; 8,000
C) surplus; 8,000
D) surplus; 4,000
Q3) When the price of armchairs increases, the:
A) quantity supplied increases.
B) supply increases.
C) quantity supplied decreases.
D) supply decreases.
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Consumer and Producer Surplus
Available Study Resources on Quizplus for this Chatper
224 Verified Questions
224 Flashcards
Source URL: https://quizplus.com/quiz/77611
Sample Questions
Q1) Well-functioning markets allow:
A) mutually beneficial trades to take place.
B) consumers to gain at the expense of producers.
C) producers to reap greater benefits, since they have greater power in the market.
D) property rights to be unnecessary components of effective distribution.
Q2) A consumer's willingness to pay depends on:
A) the cost of producing the good or service.
B) the expected additional benefit of consuming the good or service.
C) the size of the shortage of the good or service.
D) the size of the surplus of the good or service.
Q3) Property rights and the role of prices as economic signals are two features that make markets function effectively.
A)True
B)False
Q4) Policies designed to promote efficiency will never decrease equity; however, policies designed to promote equity will usually decrease efficiency.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Price Controls and Quotas- Meddling With Markets
Available Study Resources on Quizplus for this Chatper
201 Verified Questions
201 Flashcards
Source URL: https://quizplus.com/quiz/77610
Sample Questions
Q1) A quota is the minimum amount of some good that can be bought and sold.
A)True
B)False
Q2) The Atlanta Symphony wants to make sure that its concerts are affordable for all residents of Atlanta and therefore prices all of its tickets at $25. However, outside Symphony Hall, people can sell the same tickets for $75 or more. The true cost to the concertgoer of a ticket to the symphony is at least:
A) $25.
B) $50.
C) $75.
D) $100.
Q3) Which of the following is a quota?
A) rent controls in New York City
B) property taxes on beachfront property in Florida
C) limits on the number of bushels of clams that can be caught in New Jersey
D) the maximum reimbursement that insurance will pay for a medical procedure
Q4) A rent ceiling must be set above the equilibrium rent to be binding.
A)True
B)False
Q5) How does a price ceiling cause deadweight loss in the market?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Elasticity
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/77609
Sample Questions
Q1) If the percentage change in the quantity demanded of a good is greater than the percentage change in income and in the same direction, then this good will have an income elasticity _____1, and it is a(n) _____ good.
A) greater than; normal
B) less than; normal
C) equal to; normal
D) less than; inferior
Q2) If the price elasticity of demand for tobacco is 0.5 and the income elasticity of demand for tobacco is 0.4:
A) an increase in the price of tobacco will decrease total revenue from sales of tobacco.
B) a 20% increase in the price of tobacco will decrease the quantity demanded of tobacco by 8%.
C) tobacco is an inferior good.
D) a 50% increase in income will increase the quantity demanded of tobacco by 20%.
Q3) The price elasticity of the supply of paintings by Rembrandt is greater than 1.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Taxes
Available Study Resources on Quizplus for this Chatper
298 Verified Questions
298 Flashcards
Source URL: https://quizplus.com/quiz/77608
Sample Questions
Q1) A tax system achieves efficiency when:
A) the "right" people actually bear the burden of taxes.
B) it minimizes the costs to the economy of tax collection.
C) the tax is fair.
D) it is in equilibrium.
Q2) Suppose the government imposes a $10 excise tax on the sale of sweaters by charging suppliers $10 for each sweater sold. If the demand curve is downward-sloping and the supply curve is upward-sloping:
A) the price of sweaters will increase by $10.
B) consumers of sweaters will bear the entire burden of the tax.
C) the price of sweaters will increase by less than $10.
D) the price of sweaters will decrease by $10.
Q3) Income tax rates are such that Mr. R. Hood earns $35,000 per year and pays $7,000 in taxes, while Mr. G. Gisbourne earns $1 million per year and pays $200,000 in taxes. This tax is:
A) progressive.
B) regressive.
C) proportional.
D) a lump-sum tax.
Q4) Explain how an excise tax levied on suppliers affects the supply curve.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 9: The Rational Consumer
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/77603
Sample Questions
Q1) How much _____ Susan obtains from eating green beans is a measure of the utility of green beans for her.
A) efficiency
B) usefulness
C) cost
D) satisfaction
Q2) (Figure and Table: The Budget Line) Look at the figure and table The Budget Line. A decrease in income would:
A) rotate the budget line along the horizontal axis.
B) shift the budget line to the left.
C) rotate the budget line along the vertical axis.
D) shift the budget line to the right.
Q3) Suppose bad weather and pollution dramatically reduce the supply of crawfish in Louisiana next year. This would most likely lead to _____ in the marginal utility of crawfish consumption.
A) an increase
B) a decrease
C) no change
D) substitution and income effects
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 8: International Trade
Available Study Resources on Quizplus for this Chatper
268 Verified Questions
268 Flashcards
Source URL: https://quizplus.com/quiz/77607
Sample Questions
Q1) International trade based on comparative advantage allows a country to produce outside its production possibility frontier.
A)True
B)False
Q2) Exports increase producer surplus but decrease consumer surplus and total surplus.
A)True
B)False
Q3) Which of the following oversees international trade agreements?
A) NAFTA
B) the World Trade Organization
C) the European Union
D) the Federal Reserve Bank
Q4) On a production possibility frontier, opportunity cost is:
A) the decrease in the output of one good when the output of the other good is increased.
B) the rate at which people are willing to exchange goods as determined by demand and supply.
C) the dollar cost of the good given up to get another good.
D) independent of the slope of the curve.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Decision Making by Individuals and Firms
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/77606
Sample Questions
Q1) (Table: Marginal Benefit of Sweatshirts) Look at the table Marginal Benefit of Sweatshirts. The marginal benefit of producing the second sweatshirt is:
A) $31.
B) $16.
C) $15.
D) $14.
Q2) The _____ benefit is the amount by which an additional unit of an activity increases its total benefit.
A) average
B) net
C) marginal
D) top
Q3) Whenever marginal benefit is less than marginal cost, the decision maker should do _____ of the activity.
A) less
B) that exact amount
C) more
D) none
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Perfect Competition and the Supply Curve
Available Study Resources on Quizplus for this Chatper
355 Verified Questions
355 Flashcards
Source URL: https://quizplus.com/quiz/77602
Sample Questions
Q1) The short-run industry supply curve is the sum of the marginal cost curves above average variable cost for all of the firms in the industry, assuming that the number of firms is constant.
A)True
B)False
Q2) In the long run, when there are economic losses, firms leave the industry, which will decrease the market supply and increase price until economic losses are zero.
A)True
B)False
Q3) (Figure: Marginal Decision Rule) Look at the figure The Marginal Decision Rule. If P<sub>1</sub> is the market price and if this firm is maximizing profit, it should produce:
A) where MR > MC.
B) at quantity q<sub>2</sub>.
C) at quantity q<sub>1</sub>, where MR > MC.
D) a quantity greater than q<sub>1</sub> but less than q<sub>2</sub>.
Q4) A market that is in long-run equilibrium must also be in short-run equilibrium.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Monopoly
Available Study Resources on Quizplus for this Chatper
348 Verified Questions
348 Flashcards
Source URL: https://quizplus.com/quiz/77601
Sample Questions
Q1) When a monopolist practices price discrimination, compared to a single-price monopolist, monopoly profits will:
A) remain the same.
B) increase.
C) decrease.
D) increase initially, and then return to their original level.
Q2) Network externalities exist when a good's value to the consumer rises as:
A) the number of people who use the good increases.
B) the number of people who use the good decreases.
C) the number of people who use the good remains constant.
D) technology improves.
Q3) (Table: Demand and Total Cost) Look at the table Demand and Total Cost. Lenoia runs a natural monopoly producing electricity for a small mountain village. The accompanying table shows Lenoia's demand and total cost of producing electricity. The maximum profit Lenoia can make is:
A) $225.
B) $425.
C) $400.
D) $1,800.
Q4) Explain why the marginal revenue curve lies below the monopolist's demand curve.
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Oligopoly
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/77600
Sample Questions
Q1) A cartel is an example of:
A) price extortion.
B) price leadership.
C) overt collusion.
D) perfect competition.
Q2) (Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets with no marginal cost or fixed cost. If these two producers formed a cartel and acted to maximize total industry profits, total industry output would be _____ and the price would be _____.
A) 1,000; $10
B) 100; $9
C) 400; $6
D) 500; $5
Q3) The sum of the squared market shares of each firm in an industry is the:
A) concentration ratio.
B) employment rate.
C) Herfindahl-Hirschman index.
D) market number.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Monopolistic Competition and Product
Differentiation
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/77599
Sample Questions
Q1) (Figure: The Market for Gas Stations) The figure Market for Gas Stations shows curves facing a typical gas station in a large town. The market is characterized by many firms, differentiated products, easy entry, and easy exit. If the gas station shown here were to raise its price above the profit-maximizing price, the outcome would be _____ in total revenue.
A) a reduction
B) an increase
C) no change
D) Not enough information is given to answer the question.
Q2) (Figure: Firms in Monopolistic Competition) Look at the figure Firms in Monopolistic Competition. Zero economic profit will be earned if the profit-maximizing price is _____ in panel _____.
A) F; (A)
B) G; (A)
C) H; (B)
D) I; (C)
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Externalities
Available Study Resources on Quizplus for this Chatper
140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/77598
Sample Questions
Q1) Pollution has _____ and _____.
A) no benefits; only costs
B) benefits; costs
C) no opposition; only advocates
D) short-term effects; very little long-term effect
Q2) The licenses that can be bought and sold by polluters and that enable the holder to pollute up to a specified amount during a given period are called:
A) emissions taxes.
B) Pigouvian taxes.
C) tradable emissions permits.
D) environmental standards.
Q3) With tradable emissions permits, the main problem is to determine the _____, while with emissions taxes the main problem is to determine the _____.
A) optimal quantity of pollution; optimal tax rate
B) optimal price of the permits; optimal level of pollution
C) optimal quantity of pollution; marginal social benefit of pollution
D) marginal social cost of pollution; optimal tax rate
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Public Goods and Common Resources
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/77597
Sample Questions
Q1) Which of the following are used to provide public goods? I. voluntary contributions
II) taxes
III) self-interested business firms
A) I only.
B) I and II.
C) II and III.
D) I, II, and III.
Q2) An inefficient allocation of resources will occur when:
A) decision makers are faced with the full costs and benefits of their actions.
B) there are clearly defined property rights.
C) no alternative would increase the welfare of society.
D) decision makers are not faced with the full benefits and costs of their choices.
Q3) The best example of a good whose consumption is NOT excludable is:
A) a yard.
B) a house.
C) a bicycle.
D) national defense.
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: The Economics of the Welfare State
Available Study Resources on Quizplus for this Chatper
91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/77596
Sample Questions
Q1) Becky works for a large grocery store that provides a health insurance program to all workers. This is an example of:
A) Medicaid.
B) employment-based health insurance.
C) government health insurance.
D) a single-payer health care system.
Q2) In the United States, the mobility between income groups is:
A) relatively high.
B) not important because less than 1% of the population lives below the poverty line.
C) difficult because of public assistance programs.
D) very rare.
Q3) Which of the following LACK(S) is (are) associated with poverty?
A) adequate employment
B) education
C) proficiency in English
D) adequate employment, education, and proficiency in English
Q4) People with more education have a lower poverty rate.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Factor Markets and the Distribution of Income
Available Study Resources on Quizplus for this Chatper
314 Verified Questions
314 Flashcards
Source URL: https://quizplus.com/quiz/77594
Sample Questions
Q1) Which of the following does NOT partially explain wage differentials?
A) different amounts of human capital
B) compensating differentials
C) differences in talent
D) differences in capital
Q2) Suppose the labor market for plumbers is in equilibrium. Which of the following might DECREASE the wage for plumbers?
A) An economic boom increases the demand for new homes.
B) The plumbers union establishes a rigorous certification test that is difficult for aspiring plumbers to pass.
C) Unemployed manufacturing workers attend technical schools to learn the plumbing trade.
D) A minimum wage is imposed in the market for plumbers.
Q3) A new teacher often makes less than a teacher with 20 years' experience because of:
A) discrimination.
B) differences in human capital.
C) efficiency wages.
D) differences in physical capital.
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Uncertainty, Risk, and Private Information
Available Study Resources on Quizplus for this Chatper
197 Verified Questions
197 Flashcards
Source URL: https://quizplus.com/quiz/77593
Sample Questions
Q1) Which of the following is TRUE if the insurance market is efficient?
A) The deductibles eliminate moral hazard.
B) Society as a whole engages in less risky behavior.
C) It transfers risk from those who most want to get rid of it to those least bothered by the risk.
D) Premiums are always kept to the level of a fair insurance policy.
Q2) A fair insurance policy is one whose premium is _____ the expected value of the claims.
A) equal to B) greater than C) less than D) unrelated to
Q3) (Table: Total Utility of Income After College Expenses) Look at the table Total Utility of Income After College Expenses. What certain income after tuition leaves Mr. and Mrs. Smith just as well off as their uncertain income after tuition?
A) $37,500
B) $38,000
C) $40,500
D) $42,500
To view all questions and flashcards with answers, click on the resource link above.
Page 21
Chapter 20: Macroeconomics- the Big Picture
Available Study Resources on Quizplus for this Chatper
168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/77592
Sample Questions
Q1) The point at which a recession ends and the expansion begins is called the: A) trough.
B) downturn.
C) peak.
D) lag.
Q2) Explain what is meant by the paradox of thrift.
Q3) Deflation:
A) raises the cost of making purchases.
B) can result in an increase in employment.
C) encourages people to hold cash rather than invest.
D) is caused by changes in interest rates.
Q4) Inflation:
A) raises the cost of making purchases.
B) can result in a decrease in barter transactions.
C) encourages people to hold cash.
D) is caused by changes in interest rates.
Q5) The United States imports coffee from Brazil and exports cars to Brazil. Is this a macroeconomic or microeconomic issue?
Q6) What is long-run economic growth, and why is it so important for a nation's economy?
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: Gdp and the Consumer Price Index
Available Study Resources on Quizplus for this Chatper
204 Verified Questions
204 Flashcards
Source URL: https://quizplus.com/quiz/77591
Sample Questions
Q1) Suppose that Mr. Green Jeans sells $5,000 of wheat to Big Ben Bakery. Big Ben uses the wheat to make flour and then hamburger buns, which it sells to Hamburger Heaven for $11,000. Hamburger Heaven also buys $20,000 of beef from a rancher. Hamburger Heaven uses the beef and buns to make 10,000 hamburgers, which are sold for $5 each. How much do these transactions add to GDP?
A) $86,000
B) $36,000
C) $31,000
D) $50,000
Q2) GDP is the total dollar value of all:
A) intermediate goods and services produced in the economy in a given period.
B) wages paid to producing workers in a given period.
C) final goods and services produced in the economy in a given period.
D) government production in a given period.
Q3) Disposable income in a particular period is:
A) total earned income.
B) earned income plus government transfer payments.
C) earned income plus government transfer payments less taxes.
D) earned income plus government transfer payments less taxes and savings.
To view all questions and flashcards with answers, click on the resource link above.
Page 23
Chapter 22: Unemployment and Inflation
Available Study Resources on Quizplus for this Chatper
351 Verified Questions
351 Flashcards
Source URL: https://quizplus.com/quiz/77590
Sample Questions
Q1) A wage offered by an employer as an incentive for more work effort and performance and that exceeds the equilibrium wage rate is known as a(n) _____ wage.
A) minimum
B) equilibrium
C) efficiency
D) union
Q2) Frictional unemployment is considered to be:
A) bad, because people are not getting a paycheck.
B) good, because people learn how other folks live.
C) good, since that means people may be seeking jobs that match their job skills.
D) bad, because people are out of work.
Q3) If Jenny's income is $120,000 and the price level is 4, then Jenny's real income is $30,000.
A)True
B)False
Q4) A jobless recovery occurs when GDP is decreasing and unemployment is rising.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Long-Run Economic Growth
Available Study Resources on Quizplus for this Chatper
313 Verified Questions
313 Flashcards
Source URL: https://quizplus.com/quiz/77589
Sample Questions
Q1) According to the text, productivity is driven by all of the following EXCEPT:
A) physical capital.
B) human capital.
C) technological progress.
D) natural resources.
Q2) If real GDP doubles in 35 years, its average annual growth rate is approximately:
A) 1%.
B) 2%.
C) 3%.
D) 4%.
Q3) Economic growth in sub-Saharan Africa has been dismal. Which of the following is NOT a reason for Africa's problem?
A) stable governments
B) government corruption
C) a lack of property rights
D) a lack of infrastructure
Q4) (Figure: The Aggregate Production Function) Look at the figure The Aggregate Production Function. Does it exhibit diminishing returns to physical capital? Explain.
To view all questions and flashcards with answers, click on the resource link above. Page 25
Chapter 24: Savings, Investment Spending
Available Study Resources on Quizplus for this Chatper
398 Verified Questions
398 Flashcards
Source URL: https://quizplus.com/quiz/77588
Sample Questions
Q1) Suppose the federal government has a balanced budget, the economy is open, and there is a positive capital inflow from foreign citizens. Using the savings-investment spending identity, explain how this affects investment spending.
Q2) Given an annual interest rate of 2%, the present value of a future payment of $1,500 to be paid in one year is:
A) $1,250.55.
B) $1,470.59.
C) $1,530.
D) $1,500.
Q3) Most human capital is provided by government through public education.
A)True
B)False
Q4) Financial assets:
A) are paper claims that provide the buyer of the claim future income from the seller of the claim.
B) in the form of loans by an individual are an asset to the individual receiving the loan. C) are accompanied by high transaction costs.
D) have no financial risk.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 25: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
376 Verified Questions
376 Flashcards
Source URL: https://quizplus.com/quiz/77587
Sample Questions
Q1) Which of the following is NOT a government transfer payment?
A) the federal payroll
B) Social Security
C) Medicare
D) Medicaid
Q2) Suppose the marginal propensity to consume is 0.8. If the government cut taxes by $100 billion, then real GDP would increase by $400 billion.
A)True
B)False
Q3) Real GDP equals $400 billion, the government collects 25% of any increase in real GDP in the form of taxes, and the marginal propensity to consume is 0.8. If potential output equals $250 billion, the government could close the _____ gap by decreasing government spending by _____.
A) recessionary; $30 billion
B) recessionary; $150 billion
C) inflationary; $30 billion
D) inflationary; $60 billion
Q4) Explain why a constitutional amendment requiring the federal government to balance the budget annually is a bad idea.
To view all questions and flashcards with answers, click on the resource link above. Page 27
Chapter 26: Money, Banking, and the Federal Reserve System
Available Study Resources on Quizplus for this Chatper
464 Verified Questions
464 Flashcards
Source URL: https://quizplus.com/quiz/77586
Sample Questions
Q1) (Scenario: Monetary Base and Money Supply) Look at the scenario Monetary Base and Money Supply. How much is M1?
A) $325 billion
B) $330 billion
C) $380 billion
D) $480 billion
Q2) The purpose of the bank holiday declared by Franklin Roosevelt in 1933 was to:
A) close all banks until regulators could determine how to solve the banking crisis.
B) give overworked bank employees a rest.
C) exempt banks from taxes until the Depression was over.
D) encourage people to use cash instead of checks.
Q3) Suppose you find a $50 bill that you put in a coat pocket last winter. If you deposit it in your checking account:
A) M1 increases by $50.
B) M2 increases by $50.
C) M1 and M2 both increase by $50.
D) there is no change in M1 or M2.
Q4) Explain the role of the housing market in the 2008 financial crisis.
Q5) Explain how an increase in the discount rate affects the economy.
To view all questions and flashcards with answers, click on the resource link above. Page 28
Chapter 27: Monetary Policy
Available Study Resources on Quizplus for this Chatper
359 Verified Questions
359 Flashcards
Source URL: https://quizplus.com/quiz/77585
Sample Questions
Q1) (Figure: Short-Run Determination of the Interest Rate) Look at the figure Short-Run Determination of the Interest Rate. If the money supply is at MS<sub>1</sub> and the Fed conducts expansionary monetary policy, in the short run the interest rate drops to r<sub>2</sub>. In the long run prices will _____ the demand for money.
A) decrease, decreasing B) decrease, increasing C) increase, decreasing D) increase, increasing
Q2) U.S. banks did not offer interest on checking accounts until the beginning of the 1980s. Then banking regulations changed, allowing banks to pay interest on checking account funds. As a result, the _____ money _____ and shifted the money demand curve to the _____.
A) supply of; fell; left B) demand for; fell; left C) demand for; rose; right D) supply of; rose; right
Q3) A contractionary monetary policy is appropriate during a recession.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 29
Chapter 28: Inflation, Disinflation, and Deflation
Available Study Resources on Quizplus for this Chatper
240 Verified Questions
240 Flashcards
Source URL: https://quizplus.com/quiz/77584
Sample Questions
Q1) Suppose that the unemployment rate rises as the inflation rate declines. This situation is consistent with a movement along the _____ Phillips curve.
A) vertical
B) horizontal
C) positively sloped
D) negatively sloped
Q2) A supply shock caused by an increase in the price of gasoline causes a(n) _____ in output and a(n) _____ in prices.
A) decrease; decrease
B) decrease; increase
C) increase; increase
D) increase; decrease
Q3) According to the classical model of the price level, an increase in the money supply will cause _____ and _____ increase in real GDP.
A) inflation; no long-run
B) inflation; a long-run
C) no inflation; a long-run
D) deflation; no long-run
To view all questions and flashcards with answers, click on the resource link above.
30
Chapter 29: Crises and Consequences
Available Study Resources on Quizplus for this Chatper
214 Verified Questions
214 Flashcards
Source URL: https://quizplus.com/quiz/77583
Sample Questions
Q1) The Dodd-Frank bill established the Consumer Financial Protection Bureau to help consumers understand the financial impact of Social Security.
A)True
B)False
Q2) Expansionary fiscal measures, such as more government spending and tax cuts designed to reduce unemployment, are called:
A) fiscal austerity.
B) fiscal stimulus.
C) automatic stabilizers.
D) maturity transformation.
Q3) When borrowers don't respond to short-term interest rates of zero, the economy is in:
A) a liquidity trap.
B) hyperinflation.
C) an asset bubble.
D) maturity transformation.
Q4) The 2008 financial crisis made it clear that banks were overregulated.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 31
Chapter 30: Macroeconomics- Events and Ideas
Available Study Resources on Quizplus for this Chatper
320 Verified Questions
320 Flashcards
Source URL: https://quizplus.com/quiz/77582
Sample Questions
Q1) If the money supply is growing at a constant rate of 2% and the economy undergoes a negative demand shock, the theory of monetarism recommends:
A) coordinating a monetary expansion with a fiscal expansion to increase aggregate demand.
B) raising the growth rate of money supply to 3% to lower the interest rate.
C) lowering the growth rate of money supply to 1% to increase saving.
D) maintaining the growth rate of money supply at 2% and letting the aggregate price level fall.
Q2) The claim that reducing deficits in an economy with high rates of unemployment will help even in the short run by improving confidence is called:
A) quantitative easing.
B) fiscal stimulus.
C) expansionary austerity.
D) a credit crunch.
Q3) Under rational expectations, government policy can be effective:
A) if it is rationally thought out before implementation.
B) if it is anticipated, so people can make realistic preparations.
C) if it surprises people.
D) whenever the economy reacts rationally to the decision.
To view all questions and flashcards with answers, click on the resource link above.
Page 32
Chapter 31: Open-Economy Macroeconomics
Available Study Resources on Quizplus for this Chatper
466 Verified Questions
466 Flashcards
Source URL: https://quizplus.com/quiz/77581
Sample Questions
Q1) If the exchange rate for the yen is $0.009784, $1 exchanges for ¥9.784.
A)True
B)False
Q2) Toyota's factory in San Antonio is an example of direct foreign investment.
A)True
B)False
Q3) Foreign exchange controls decrease the costs of red tape and corruption surrounding international trade.
A)True
B)False
Q4) Many of China's trading partners feel that the yuan is undervalued.
A)True
B)False
Q5) Foreign exchange controls are the same thing as floating exchange rates.
A)True
B)False
Q6) A revaluation will make exports less expensive and imports more expensive.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 33
Q7) What are the advantages and disadvantages of fixed and floating exchange rates?
Chapter 32: Graphs in Economics
Available Study Resources on Quizplus for this Chatper
64 Verified Questions
64 Flashcards
Source URL: https://quizplus.com/quiz/77614
Sample Questions
Q1) (Table: Price, Quantity Demanded, and Quantity Supplied) Look at the table Price, Quantity Demanded, and Quantity Supplied. A straight line represents the relation between:
A) price and quantity demanded.
B) price and quantity supplied.
C) price and quantity demanded minus quantity supplied.
D) quantity demanded and quantity supplied.
Q2) The fact that two variables always move together over time:
A) does not prove that one of the variables is dependent on the other.
B) proves that one of the variables is dependent on the other.
C) proves that changes in one variable cause changes in the other.
D) is often illustrated or depicted using either a pie chart or a bar chart.
Q3) Your boss asks you to graph company profits for the past 10 years. The best way to show this information is with:
A) a scatter diagram.
B) a pie chart.
C) a time-series graph.
D) an independent graph.
To view all questions and flashcards with answers, click on the resource link above.
34
Chapter 33: Toward a Fuller Understanding
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/77605
Sample Questions
Q1) If a friend offers to pay you $1 five years from now, when the prevailing annual interest rate is 5%, what is the net present value of that $1 today?
A) $0.95
B) $1.05
C) $0.78
D) $1.50
Q2) If a firm finds that the net present value of a project is _____ for a given interest rate, it will _____ the project.
A) positive; undertake B) positive; not undertake C) negative; undertake D) positive or negative; undertake
Answer Key
Q3) The present value of a future payment _____if the _____. A) increases; wait period increases.
B) decreases; future payment increases. C) increases; interest rate decreases. D) decreases; stock market rises.
To view all questions and flashcards with answers, click on the resource link above.
35
Chapter 34: Consumer Preferences and Consumer Choice
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/77604
Sample Questions
Q1) Joseph chooses a combination of apples and oranges along his budget line. The marginal rate of substitution of apples for oranges is 2, the price of an apple is $0.50, and the price of an orange is $0.50. Joseph:
A) is maximizing total utility.
B) should consume more apples and fewer oranges to maximize total utility.
C) should consume fewer apples and more oranges to maximize total utility.
D) may or may not be maximizing total utility.
Q2) (Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. If Owen consumes 1.5 pizzas and 100 sodas, which of the following describes the relationship between his marginal rate of substitution of pizza for soda and the price of pizza in terms of soda?
A) The marginal rate of substitution equals the relative price.
B) The marginal rate of substitution is greater than the relative price.
C) The marginal rate of substitution is less than the relative price.
D) It is impossible to determine, given the information available.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 35: Indifference Curve Analysis of Labor Supply
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/77595
Sample Questions
Q1) (Figure: Income and Leisure Opportunities) The figure Income and Leisure Opportunities refers to Keisha when she has 100 hours per week for working or leisure. There are two time allocation lines, one for a $10 hourly wage rate and one for a $20 hourly wage rate. Keisha's optimal choice is point A when the wage is $10, and her optimal choice is point C when the wage is $20. As the amount she earns increases from $10 per hour to $20 per hour, Keisha will work _____ hours because of the income effect. A) 10 fewer B) 15 more C) 25 fewer
D) 50 more
Q2) (Figure: Joanna's Time Allocation Budget Line) Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours. If Joanna's wage rate increases and she ends up working more hours, for her: A) the substitution effect dominates. B) the income effect dominates.
C) the substitution and income effects cancel each other out. D) the substitution effect becomes ineffective.
Answer Key
To view all questions and flashcards with answers, click on the resource link above.
Page 37