Introduction to Economics Exam Solutions
Course Introduction
Introduction to Economics provides a foundational understanding of how societies allocate scarce resources to satisfy unlimited wants. The course covers fundamental concepts such as supply and demand, market equilibrium, opportunity cost, and the role of incentives in shaping human behavior. Students will explore both microeconomics, which focuses on the decisions of individuals and firms, and macroeconomics, which examines national income, inflation, unemployment, and government policies. By the end of the course, students will be able to analyze real-world economic issues, interpret economic data, and better understand the economic principles influencing daily life and public policy.
Recommended Textbook
Economics 11th Edition by Roger A. Arnold
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39 Chapters
5781 Verified Questions
5781 Flashcards
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Chapter 1: What Economics Is About
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168 Verified Questions
168 Flashcards
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Sample Questions
Q1) In an interview an economist states,"This problem should be of greater concern to the federal government." We can explicitly put this statement in the category of A) microeconomics.
B) macroeconomics.
C) positive economics.
D) normative economics.
Answer: D
Q2) The study of an economy's price level is explicitly a part of A) macroeconomics.
B) microeconomics.
C) positive economics.
D) normative economics.
Answer: A
Q3) Which of the following would NOT be considered a macroeconomic topic?
A) the reasons for a decline in the price of crude oil
B) the cause of a downturn in the economy
C) the effect of the government budget deficit on inflation
D) the causes of inflation and unemployment
Answer: A
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Page 3
Chapter 2: Production Possibilities Frontier Framework
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152 Flashcards
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Sample Questions
Q1) If there is always a three-for-one tradeoff between goods X and Y,then the PPF between X and Y is
A) a downward-sloping curve that is bowed outward.
B) a downward-sloping curve that is bowed inward.
C) a downward-sloping straight line.
D) an upward-sloping straight line.
Answer: C
Q2) A society is productive inefficient when
A) it produces at a point inside or below its PPF.
B) it does not produce the maximum output with its given resources and technology.
C) it can produce more of one good without giving up some of another good.
D) both a and b
E) all of the above
Answer: E
Q3) It is possible for one person to have a comparative advantage in the production of both goods being produced.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Supply and Demand: Theory
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227 Flashcards
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Sample Questions
Q1) Refer to Exhibit 3-4.A price of $6 in the market will result in a
A) shortage of 10 units.
B) surplus of 10 units.
C) surplus of 5 units.
D) shortage of 5 units.
Answer: B
Q2) Which of the following statements is false?
A) The shift factors for the supply curve are: income, preferences, prices of related goods, the number of buyers, and expectations of future price.
B) A change in (own) price changes the quantity supplied of a good.
C) A change in demand is graphically represented by a shift in the demand curve.
D) A change in quantity demanded is represented by a movement along a given demand curve.
Answer: A
Q3) A simultaneous decrease in the demand and the supply of good X always leads to a decrease in the price of good X.
A)True
B)False
Answer: False
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Chapter 4: Prices: Free, Controlled, and Relative
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Sample Questions
Q1) Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at P<sub>F</sub>. What is the size of the producers' surplus at P<sub>F</sub>?
A) area 2 + 3 + 4 + 5
B) area 2 + 3
C) area 4
D) area 6
Q2) A price floor set above the equilibrium price will
A) clear the market for the good.
B) result in a shortage of the good.
C) result in a surplus of the good.
D) force some firms in this industry to go out of business.
Q3) If the price of good X is $100 and the price of good Y is $40,it follows that the relative price of one unit of good Y is ___________ unit(s)of good X.
A) 0.40
B) 0.20
C) 2.50
D) 4.00
E) There is not enough information to answer the question.
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Page 6
Chapter 5: Supply, Demand, and Price: Applications
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Sample Questions
Q1) If the quantity demanded of medical care is higher at a zero price than at some positive price,then it follows that the demand for those specific items that make up health care will be higher (than it would be if the quantity demanded of health care were lower).
A)True
B)False
Q2) When the government _____________ mortgage lending standards,the indirect result is likely to be _____________ home prices.
A) lowers; higher
B) increases; lower C) lowers; lower D) increases; higher
E) a and b
Q3) People who buy houses in good-weather locations receive this benefit absolutely for free.
A)True B)False
Q4) When the price of a good rises,the demand for its complements will tend to rise. A)True B)False
Page 7
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Chapter 6: Macroeconomic Measurements: Prices and Unemployment
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Sample Questions
Q1) If there are 10 job losers,12 job leavers,13 reentrants,and 12 new entrants,then there are __________ unemployed persons.
A) 35
B) 47
C) 25
D) 37
E) There is not enough information to answer the question.
Q2) Unemployment that arises as a result of the time it takes for unemployed people to locate a job utilizing their transferable skills is called __________ unemployment.
A) structural
B) cyclical
C) natural
D) frictional
Q3) The CPI in the base year is necessarily 100.
A)True
B)False
Q4) Discouraged workers are not counted as unemployed because they are working.
A)True
B)False
Page 8
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Chapter 7: Macroeconomic Measurements: GDP and Real GDP
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Sample Questions
Q1) What is the proper sequence of the phases of a business cycle?
A) peak, contraction, trough, expansion, recovery
B) peak, contraction, recovery, trough, expansion
C) peak, contraction, trough, recovery, expansion
D) contraction, peak, trough, recovery, expansion
E) recovery, trough, peak, expansion, contraction
Q2) Country A has a higher GDP than country B.What does this mean?
A) It means that on a per-capita basis the residents of country A are relatively better off (in terms of the goods and services they have available to them) than the residents of country B.
B) It means that on a per-capita basis the residents of country A are richer than the residents of country B.
C) It means that more goods and services were produced in country A than country B.
D) It means that the total market value of the final goods and services produced in country A is greater than the total market value of the final goods and services produced in country B.
E) a and d
Q3) List and explain the two different approaches used to measure GDP.
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Chapter 8: Aggregate Demand and Aggregate Supply
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Sample Questions
Q1) When wage rates rise the short-run aggregate supply curve shifts to the right.
A)True
B)False
Q2) Which of the following statements is false?
A) Some prices in an economy adjust faster than other prices.
B) Aggregate demand curves slope downward.
C) Firms may not adjust their prices immediately because they may be unable to figure out whether a decline in demand is temporary or permanent.
D) The absolute price of a good is the dollar or money price of the good.
E) none of the above
Q3) An appreciation of the U.S.dollar tends to __________ U.S.net exports and shift the U.S.AD curve to the __________.
A) raise; right
B) raise; left
C) lower; right
D) lower; left
Q4) Explain how aggregate demand and aggregate supply may affect your job prospects after you leave college.Support your answer with an appropriate example.
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Page 10
Chapter 9: Classical Macroeconomics and the Self Regulating Economy
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Sample Questions
Q1) Which of the following is consistent with the classical position on wages and prices?
A) Wages and prices are sticky in the downward direction.
B) Wages are sticky in the downward direction, but prices are flexible.
C) Wages and prices are flexible.
D) Prices are sticky in the downward direction, but wages are flexible.
Q2) If the economy is currently operating below its institutional production possibilities frontier (institutional PPF),it is
A) in long-run equilibrium.
B) in a recessionary gap.
C) in an inflationary gap.
D) definitely not self-regulating.
E) b and d
Q3) According to Say's law,there can be
A) neither a general overproduction nor a general underproduction of goods.
B) a general overproduction but not a general underproduction of goods.
C) a general underproduction but not a general overproduction of goods.
D) both a general overproduction and a general underproduction of goods.
Q4) Explain the policy implications of the classical economists' beliefs.
Page 11
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Chapter 10: Keynesian Macroeconomics and Economic
Instability: A Critique of the Self-Regulating Economy
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Sample Questions
Q1) In the simple Keynesian model,a rightward shift in the aggregate demand curve __________ result in a change in the price level when the economy is in the horizontal segment of the AS curve and ___________ result in a change in the price level if the economy is in the vertical segment of the AS curve.
A) will not; will B) will not; will not C) will; will not D) will; will
Q2) Refer to Exhibit 10-6.If investment increases,it follows that
A) the TE curve will shift upward, possibly passing through point 2.
B) the TE curve will shift downward, possibly passing through point 3.
C) the TE curve will not change but the economy will move from point 1 to point 3.
D) the TE curve will not change but the economy will move from point 1 to point 2.
E) At the new equilibrium position, Real GDP will necessarily be Q1.
Q3) What is the general format of the consumption function? Explain what each term means and use the consumption function to explain the three different ways that consumption can increase.
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Page 12
Chapter 11: Fiscal Policy and the Federal Budget
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164 Flashcards
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Sample Questions
Q1) Some economists believe that permanently lower marginal income tax rates __________ the incentive to work and thus shift the __________.
A) increase; LRAS curve to the right
B) increase; AD curve to the right
C) increase; SRAS curve to the left
D) decrease; LRAS curve to the right E) decrease; AD curve to the left
Q2) Refer to Exhibit 11-5 which summarizes the situation prior to the value added tax (VAT). The value added by the farmer is ______________. If the government imposes a VAT rate of 10 percent,the farmer must pay ___________ in VAT tax and will need to raise the price he charges the miller to _______________.
A) $0.60; $0.06; $0.66
B) $0.80; $0.08; $0.88
C) $1.40; $0.14; $1.54
D) $0.60; $0.60; $1.20
Q3) A subsidy is the same thing as a tax deduction
A)True
B)False
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Chapter 12: Money, Banking,and the Financial System
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124 Flashcards
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Sample Questions
Q1) Because money __________________,people are _________________ likely to specialize in their work in a money economy.
A) is a store of value; less
B) eliminates the double coincidence of wants; more C) is a unit of account; more
D) eliminates the need for holdings of precious metals; more
Q2) Describe the differences between M1 and M2.
Q3) Consider the following data: currency (held outside banks)= $354 billion,checkable deposits = $250 billion,traveler's checks = $4 billion,small-denomination time deposits = $200 billion,savings deposits = $100 billion,retail money market mutual funds = $160 billion.M1 equals __________ billion and M2 equals __________ billion.
A) $608; $1,068
B) $708; $1,038
C) $708; $948
D) $694; $1,038
E) none of the above
Q4) Bank capital equals assets minus liabilities.
A)True
B)False
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Chapter 13: The Federal Reserve System
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Sample Questions
Q1) Refer to Exhibit 13-1. Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A. At the end of this process of money creation depicted in the exhibit,what is the total amount of new checkable deposits,blank (G)?
A) $1,000,000
B) $1,000
C) $10,000
D) $100,000
Q2) Which of the following will not increase the money supply in the United States?
A) lowering the required reserve ratio
B) Fed purchases of government securities on the open market
C) lowering the discount rate relative to the federal funds rate
D) Fed sales of government securities on the open market
E) none of the above
Q3) A Federal Reserve Bank is located in which of the following cities?
A) St. Louis, Missouri
B) Richmond, Virginia
C) Atlanta, Georgia
D) San Francisco, California
E) all of the above
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Chapter 14: Money and the Economy
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Sample Questions
Q1) The simple quantity theory of money predicts that if
A) the money supply rises by $200, then GDP falls by $200.
B) GDP rises by $400, then the money supply rises by $400.
C) the money supply rises by 10 percent, then the price level rises by 10 percent.
D) the money supply falls by $300, then GDP rises by $300.
Q2) If GDP is $9,000 billion and the money supply is $1,800 billion,velocity is approximately
A) 0.20.
B) 6.00.
C) 4.15.
D) 5.00.
E) There is not enough information provided to answer this question.
Q3) Real estate in San Francisco that sold for $16 before gold was discovered in California was valued at $4,500 eighteen months later,as a result of the gold rush.
A)True
B)False
Q4) Describe the difference between the simple quantity theory of money and the equation of exchange.
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Page 16
Chapter 15: Monetary Policy
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Sample Questions
Q1) There is an increase in the money supply and the interest rate does not change.This is what happens if
A) investment is interest-insensitive.
B) a liquidity trap exists.
C) activist monetary policy is used instead of nonactivist monetary policy.
D) wages and prices are flexible.
E) none of the above
Q2) Monetarists believe that changes in the supply of money
A) do not affect aggregate demand.
B) affect aggregate demand through the loanable funds market only.
C) affect only the investment component of aggregate demand.
D) affect aggregate demand directly.
Q3) The supply of bonds rises,ceteris paribus,and the price of bonds __________.This __________ the interest rate and __________ the quantity demanded of money.
A) rises; raises; lowers
B) falls; lowers; raises
C) rises; lowers; lowers
D) falls; raises; lowers
E) falls; lowers; lowers
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Page 17
Chapter 16: Expectations Theory and the Economy
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Sample Questions
Q1) The Friedman natural rate theory holds that there is an inverse relationship between inflation and unemployment in the long run,but not in the short run.
A)True
B)False
Q2) New Keynesian theory differs from new classical theory in that New Keynesian theory assumes that wages and prices are not completely flexible in the short-run,while fully flexible wages and prices are an assumption of new classical theory.
A)True
B)False
Q3) Refer to Exhibit 16-3.The economy is at point C.If a decrease in aggregate demand is correctly anticipated in the short run,new classical theory would predict
A) no movement from point C.
B) immediate movement to point C'.
C) immediate movement to point B.
D) immediate movement to point A.
Q4) If stagflation is present the short-run Phillips curve is vertical.
A)True
B)False
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18
Chapter 17: Economic Growth: Resources, Technology,
Ideas, and Institutions
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Sample Questions
Q1) "Absolute real economic growth" is defined as an increase in __________ from one period to the next.
A) GDP
B) Real GDP
C) Real GDP per person
D) the inflation rate
Q2) When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in labor ________________________,and a rise in capital __________________.
A) shifts the production function upward; also shifts the production function upward B) shifts the production function downward; shifts the production function upward
C) moves us up along a given production function; shifts the production function upward
D) shifts the production function upward; moves us up along a given production function
Q3) Describe new growth theory.Explain how it differs from neoclassical growth theory.
Q4) List and describe four factors that can contribute to economic growth.
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Chapter 18: The Financial Crisis of 2007-2009
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Sample Questions
Q1) Securitization is the process by which financial institutions
A) pool together a group of loans and then issue securities backed by the pool.
B) determine the composition of their assets that will yield the optimal amount of security for their financial health.
C) borrow funds from the Federal Reserve and then use those funds to make loans to their customers.
D) determine sub-prime mortgage rates.
Q2) The _______________________ (TARP)is an example of a government program created to help stabilize the financial sector during the financial crisis of 2007-2009.
A) Times Are Really Problematic
B) Tarnished Assets Recovery Program
C) Troubled Assessments Recovery Program
D) Troubled Assets Relief Program
Q3) When housing prices rise,homeowners gain equity in their homes.
A)True B)False
Q4) Describe the differences between traditional and nontraditional lending practices. Under which category do subprime loans belong?
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Chapter 19: Debates in Macroeconomics Over the Role and
Effects of Government
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Sample
Questions
Q1) Economist C says all of the following: Expansionary fiscal policy is needed to raise aggregate demand and remove the economy from a recessionary gap. The choice of fiscal policy measures is between ________________ government spending and a _______________ in taxes. Since I am in favor of bigger government,I choose a(n)_________________ in _________________.
A) less; decrease; increase; government spending
B) more; decrease; increase; government spending
C) less; rise; decrease; government spending
D) less; reduction; increase; taxes
E) b or d
Q2) A $100 billion increase in government spending increases Real GDP by $800 billion. Assuming a constant price level,what does the government spending multiplier equal?
A) 8
B) 900
C) 80
D) 700
E) 0.125
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21
Chapter 20: Elasticity
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Sample Questions
Q1) Refer to Exhibit 20-7.Which of the graphs shows a perfectly elastic demand curve?
A) (1)
B) (2)
C) (3) and (4)
D) none of the above
Q2) If the demand for a good is unit elastic,then
A) the percentage change in quantity demanded is greater than the percentage change in price.
B) the percentage change in quantity demanded is less than the percentage change in price.
C) the percentage change in quantity demanded is equal to the percentage change in price.
D) quantity demanded is extremely responsive to changes in price.
E) quantity demanded is not responsive to changes in price.
Q3) Provide an economic explanation for why many companies hire celebrities to advertise their products. Be sure to include a discussion of the possible impact of celebrity endorsements upon the price elasticity of demand and total revenue for the product being advertised.
Q4) Describe what cross elasticity of demand measures.Be specific in your response.
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Chapter 21: Consumer Choice: Maximizing Utility and Behavioral Economics
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Sample Questions
Q1) An indifference curve shows all the combinations of bundles of two goods a person can purchase given a fixed amount of income.
A)True
B)False
Q2) Refer to Exhibit 21-7.For graph (2),if the price of X is $60,what is the consumer's income?
A) $1,000
B) $2,000
C) $3,000
D) $6,000
E) This cannot be determined from the information provided.
Q3) Refer to Exhibit 21-8.A move of the budget constraint from 1 to 2 is caused by a
A) rise in the price of good X.
B) fall in the price of good X.
C) rise in the price of good Y.
D) fall in income.
Q4) It is possible for total utility to rise as marginal utility falls.
A)True
B)False
Q5) Describe the diamond-water paradox and its solution.
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Chapter 22: Production and Costs
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Sample Questions
Q1) Refer to Exhibit 22-2.What is the average variable cost of producing 90 units of output?
A) $1.00
B) $1.17
C) $1.59
D) $1.44
E) There is not enough information provided to answer the question.
Q2) There are 30 students in a class.The average grade for the first 29 students is 87.The grade of the remaining student is 84.Given this student's grade,the average grade of the 30-student class will be
A) 87.
B) higher than 87.
C) lower than 87.
D) 84.
Q3) If labor is the variable input,then marginal cost equals
A) MPP divided by the wage rate.
B) average variable (labor) costs divided by MPP.
C) average variable (labor) costs multiplied by MPP.
D) the wage rate divided by MPP.
E) the wage rate multiplied by MPP.
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Chapter 23: Perfect Competition
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Q1) A perfectly competitive market is initially in long-run competitive equilibrium.Then,market demand increases.As a result,
A) the marginal revenue curve for each firm shifts upward.
B) the demand curve for each firm shifts upward.
C) marginal cost for each firm falls.
D) average total cost for each firm rises.
E) a and b
Q2) Which of the following is inconsistent with long-run industry equilibrium?
A) upward-sloping marginal cost curves for all of the firms in the industry
B) zero economic profits
C) P = minimum ATC
D) SRATC = LRATC
E) none of the above
Q3) If MR > MC,then
A) profits will be at their maximum.
B) the firm is producing too much of the good to be maximizing profits.
C) the firm can increase its profits or minimize its losses by increasing output.
D) the firm is necessarily incurring losses.
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Chapter 24: Monopoly
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Q1) As long as the demand curve lies above the marginal revenue curve for a monopolist,it will charge a price for its product that is
A) above total cost.
B) below marginal cost.
C) above marginal cost.
D) above average total cost.
E) c and d
Q2) Which of the following statements is false?
A) The monopolist has the ability to control to some degree the price of the product it sells.
B) The monopolist faces a downward-sloping demand curve.
C) The monopolist is a price taker.
D) The monopoly firm is the industry.
Q3) Refer to Exhibit 24-8.The maximum profits earned by a single-price monopolist will be
A) $127.
B) $50.
C) $95.
D) $32.
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Page 26
Chapter 25: Monopolistic Competition, Oligopoly, and Game Theory
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Sample Questions
Q1) Compare and contrast the following market structures: monopolistic competition and monopoly.
Q2) In long run equilibrium,the monopolistic competitor will most likely
A) be earning zero economic profit.
B) be operating at the lowest point on its average total cost curve.
C) charge a price that is equal to marginal revenue.
D) charge a price that is equal to marginal cost.
E) c and d
Q3) Refer to Exhibit 25-7.A monopolistic competitive firm that seeks to maximize profits (producing at the level of output where MR = MC)will sell __________ units and charge a price of __________ .
A) 10; $10
B) 40; $7
C) 20; $9
D) 60; $5
E) 70; $7
Q4) Cartels are easy to form and to maintain.
A)True
B)False
Page 27
Q5) List and describe the three assumptions upon which oligopoly behavior are based.
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Chapter 26: Government and Product Markets: Antitrust and Regulation
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Q1) The Robinson-Patman Act of 1936 prohibited
A) large retailers from selling at prices below those prices charged by small retailers.
B) large retailers from engaging in false and deceptive acts and practices.
C) suppliers from offering price discounts to large retailers unless they also offered discounts to all other retailers.
D) customers from seeking out the lowest-priced good from different retailers.
E) all of the above
Q2) The antitrust legislation that empowers the Federal Trade Commission to deal with false and deceptive acts or practices (such as false and deceptive advertising)is
A) the Clayton Act.
B) the Wheeler-Lea Act.
C) the Celler-Kefauver Antimerger Act.
D) the Robinson-Patman Act.
E) none of the above
Q3) Natural monopolies can be regulated based on price,profit,or output.
A)True
B)False
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Chapter 27: Factor Markets: With Emphasis on the Labor Market
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Q1) Which of the following does not affect wages?
A) number of persons who can do a particular job
B) degree of effort employees exert while on the job
C) own abilities and skills
D) product price
E) none of the above; i.e., all of the factors affect wages
Q2) The market supply curve of labor
A) slopes downward, indicating that as the wage rate falls, the quantity supplied of labor rises.
B) slopes upward, indicating that as the wage rate rises, the quantity supplied of labor rises.
C) is vertical, indicating that the quantity supplied of labor is independent of the wage rate.
D) slopes upward, indicating that as the wage rate falls, the quantity supplied of labor rises.
Q3) Labor supply is a reflection of the number of persons who can actually do a job.
A)True
B)False
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Chapter 28: Wages,Unions,and Labor
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Source URL: https://quizplus.com/quiz/11434
Sample Questions
Q1) In a monopsony model of the labor market,as more labor is hired,the marginal factor cost of labor
A) decreases.
B) becomes zero.
C) remains constant.
D) increases.
E) becomes identical to the wage rate.
Q2) Among the stated objectives of the National Collegiate Athletic Association (NCAA)regulations is to
A) maintain the amateur standing of college athletes.
B) prevent schools with more money from getting all of the good players.
C) enhance the competitiveness of college sports.
D) all of the above
Q3) A monopsonist's wage rate is
A) the same as marginal factor cost.
B) greater than marginal factor cost.
C) less than marginal factor cost.
D) the same as marginal revenue product.
E) a and d
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Page 30
Chapter 29: The Distribution of Income and Poverty
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Sample Questions
Q1) A factor that does not contribute to income inequality includes
A) innate abilities and attributes.
B) the amount of work a person chooses to do.
C) education and training.
D) luck.
E) none of the above; that is, all factors contribute to income inequality.
Q2) In 2009,the top fifth of households in the U.S.received approximately 50 percent of the total money income.
A)True
B)False
Q3) In relative terms,poverty will always exist
A) regardless of how high the average absolute standard of living is.
B) given an unequal income distribution.
C) unless there is absolute income equality.
D) b and c
E) all of the above
Q4) Maria and Lourdes work for the same company.If Maria earns more than Lourdes,is this evidence of wage discrimination? Explain your answer.
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31
Chapter 30: Interest, Rent, and Profit
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Sample Questions
Q1) The present value of $5,000 one year in the future at a 5 percent interest rate is approximately
A) $4,762.
B) $5,005.
C) $5,250.
D) $10,500.
Q2) The interest rate will be higher,
A) the longer the term of the loan.
B) the less risk associated with the loan.
C) the lower the processing costs of the loan.
D) the lower the administrative costs of the loan.
E) none of the above
Q3) If the demand for investment loans rises,this could be the result of
A) the discovery of new and better roundabout methods of production.
B) a lower rate of time preference in society.
C) a lower interest rate.
D) a higher interest rate.
E) a and c
Q4) Describe the two major ways that entrepreneurs increase trade. Give your own unique example of each to help support your answer.
Page 32
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Chapter 31: Market Failure: Externalities, Public Goods, and
Asymmetric
Information
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Sample Questions
Q1) Refer to Exhibit 31-5.If a positive externality exists,then the external benefits associated with the positive externality equal the distance between points __________,and the market output is __________.
A) A and C; Q<sub>2</sub>
B) B and D; Q<sub>1</sub>
C) C and A; Q<sub>1</sub>
D) B and C; Q<sub>1</sub>
E) b and c
Q2) Under an emission tax,polluters ________ what price they have to pay to pollute,__________________________ how much pollution will be generated.
A) know; and government knows
B) don't know; and government doesn't know
C) know; but government doesn't know
D) don't know; but government knows
Q3) Marginal social benefits are equal to
A) marginal private benefits + marginal internal benefits.
B) marginal private benefits - marginal internal benefits.
C) marginal private benefits + marginal external benefits.
D) marginal private benefits - marginal external benefits.
Page 33
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Chapter 32: Public Choice and Special-Interest-Group
Politics
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Source URL: https://quizplus.com/quiz/11438
Sample Questions
Q1) Public choice refers to
A) the decisions and decision-making processes that individuals go through to solve public problems.
B) political decisions made in the interest of the public at large.
C) the application of economic principles and tools to public-sector decision making.
D) the process that individuals undergo to decide what goods and services they will purchase and consume.
E) the process that individuals undergo to decide whether or not they will pursue a career government service.
Q2) Refer to Exhibit 32-2-(a).Two candidates are competing for an electorate consisting of 9 voters labeled A-I shown positioned with respect to their ideological stands on issues.The median voter theory would predict that candidates will assume the ideological position(s)
A) of voter A.
B) halfway between that of voter G and that of voter A.
C) of voter C.
D) of voter B.
E) of voter G and voter I, respectively.
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Chapter 33: Building Theories to Explain Everyday Life: From
Observations to Questions to Theories to Predictions
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Sample Questions
Q1) Which of the following is not a prediction of the theory on baseball caps and cheating?
A) More people will wear baseball caps on test days than on lecture days.
B) More people will wear baseball caps for multiple choice tests than for essay tests.
C) More people will wear baseball caps when students sit close to each other in class and are taking a test than when students sit far apart from each other and are taking a test.
D) b and c
E) none of the above
Q2) Adrian reads about two theories,A and B. Theory A seems wrong to Adrian and theory B seems correct to Adrian. It follows that
A) theory B is correct, and theory A is not.
B) both theories may be correct.
C) both theories may be incorrect.
D) theory A is trying to explain something completely different than theory B.
E) b and c
Q3) Identify and describe each step of the five-step process outlined in the text for building and testing theories.
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Chapter 34: International Trade
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Sample Questions
Q1) Refer to Exhibit 34-2.The U.S.demand and supply for a good are shown.Under a policy of free trade,the world price is PW.If there is a policy change such that imports are prohibited,the price becomes P<sub>N</sub>.U.S.producers are better off if imports are __________; specifically,their producers' surplus changes by area __________.
A) permitted; P<sub>W</sub>DE
B) permitted; P<sub>N</sub> BDP<sub>W</sub>
C) prohibited; BDC
D) prohibited; P<sub>N</sub>BDP<sub>W</sub>
Q2) Refer to Exhibit 34-7. Assume that the current price of X is $25 (which includes a $10 tariff on imports of product X). Americans purchase ______ units of X from U.S.producers and import _______ units of X from abroad.
A) 0; 50
B) 20; 25
C) 10; 30
D) 10; 40
Q3) List and describe three arguments that help to explain why nations sometimes restrict trade.Does everyone agree with these arguments?
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Page 36
Chapter 35: International Finance
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Sample Questions
Q1) Describe the type of international monetary system that is currently in use.What advantages do proponents of this type of system cite in support of its use? What disadvantages do its opponents cite?
Q2) Suppose the current exchange rate between the U.S.dollar and the Mexican peso is $0.12 = 1 peso.Furthermore,suppose the price level in the United States rises 25 percent at a time when the Mexican price level is stable.According to the purchasing power parity theory,what will be the new equilibrium exchange rate?
A) $0.15 = 1 peso
B) $0.09 = 1 peso
C) $0.13 = 1 peso
D) $0.08 = 1 peso
Q3) Refer to Exhibit 35-5. Based on the information provided in this table,between Monday and Tuesday,the U.S.dollar ____________ against the Thai baht and the baht _____________ against the U.S.dollar.
A) appreciated; appreciated
B) depreciated; appreciated
C) appreciated; depreciated
D) depreciated; depreciated
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Chapter 36: Globalization and International Impacts on the Economy
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Sample Questions
Q1) In a two-country world,an increase in the real interest rate in the domestic economy (relative to the real interest rate in the foreign economy)shifts
A) the domestic AD curve leftward and the domestic SRAS curve rightward.
B) the domestic AD curve rightward and the domestic SRAS curve leftward.
C) both the domestic AD curve and the domestic SRAS curve rightward.
D) both the domestic AD curve and the domestic SRAS curve leftward.
E) the domestic AD curve leftward and does not affect the domestic SRAS curve.
Q2) Globalization
A) is the growing integration of the national economies of the world to such an extent that a single worldwide economy may be emerging.
B) is any type of foreign trade.
C) is specifically foreign trade between countries that have entered into a formal free trade agreement.
D) will necessarily lead to higher unemployment rates in the United States.
Q3) When real interest rates in the United States rise relative to real interest rates in Japan,what is the impact on the U.S.price level? Explain your answer using AD-SRAS analysis.
Q4) Describe three factors that have led to the recent push toward globalization.
Page 38
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Chapter 37: The Economic Case For and Against
Government: Five Topics Considered
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Sample Questions
Q1) When a good is nonexcludable,then individuals
A) will purchase the good for more than what it cost to produce the good.
B) can obtain the benefits of the good without paying for it.
C) have an incentive to become free riders.
D) will purchase more than the optimum amount.
E) b and c
Q2) Why might special interest groups be more likely to push for transfers instead of economic growth? The answer is because it usually takes a much __________________ percentage _______________ in growth to equal what they can get from the transfer.
A) smaller; decrease
B) larger; increase
C) larger; decrease
D) smaller; increase
E) none of the above
Q3) A divisive society is one in which members of society work together for the common good.
A)True
B)False
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Chapter 38: Stocks, Bonds, Futures, and Options
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Sample Questions
Q1) Refer to Exhibit 38-1.The coupon rate for bond D is
A) 7 percent.
B) 6.3 percent.
C) 3 percent.
D) 0.07 percent.
E) none of the above
Q2) Bonds that are rated in the D category are of higher quality than bonds that are rated in the A category.
A)True
B)False
Q3) Which of the following is false?
A) A corporate bond typically has face value of $1,000.
B) Corporate bonds typically sell for a price that is equal to the bond's face value.
C) The interest that corporate bonds pay is fully taxable.
D) State and local governments issue municipal bonds.
Q4) The issuer of a bond is a lender.
A)True
B)False
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Chapter 39: Agriculture: Problems, Policies, and Unintended Effects
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Sample Questions
Q1) Refer to Exhibit 39-1.At a support price of P<sub>T</sub>,private sector spending on this good equals
A) P<sub>T</sub> x Q<sub>3</sub>.
B) P<sub>T</sub> x Q<sub>2</sub>.
C) P<sub>1</sub> x Q<sub>3</sub>.
D) P<sub>1</sub> x Q<sub>2</sub>.
Q2) Which of the following is not an effect of an agricultural price support?
A) a surplus
B) fewer exchanges
C) higher prices paid by consumers
D) government purchase and storage of surplus
E) higher-quality products
Q3) Refer to Exhibit 39-2.If P<sub>1</sub> is a price support,the quantity of wheat purchased by the market would be equal to
A) Q<sub>2</sub>.
B) Q<sub>0</sub>.
C) Q<sub>1</sub>.
D) Q<sub>2</sub> - Q<sub>1</sub>.
E) Q<sub>1 </sub>- Q<sub>0</sub>.
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Q4) Explain how nonrecourse loans operate and how they help to support crop prices.