Macroeconomics Chapter 1

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that:

• the United Kingdom has a better education system than Turkey.

• the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey.

• workers in Turkey are more productive than workers in the United Kingdom.

• there are more instances of market power in Turkey than in the United Kingdom.

For a number of years country A had inflation of 3 percent but for the last five years has had inflation of 6 percent. Country B had inflation of 4 percent for many years, but very recently inflation unexpectedly rose to 9 percent. Other things the same, in which of the countries would the higher inflation rate be more likely to reduce unemployment?

• both country A and country B

• neither country A nor country B

• country A but not country B

• country B but not country A

Suppose the cost of flying a 350-seat plane for an airline is $350,000 and there are 10 empty seats on a flight. The marginal cost of flying a passenger is:

• $350.

• $3,500.

• $350,000.

• This cannot be determined from the information given.

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

• The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise.

• The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise

• Only half of the cost of the parking permit is part of the opportunity cost of attending college.

• The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances.

Resources are

• scarce for households but plentiful for economies.

• plentiful for households but scarce for economies.

• scarce for households and scarce for economies.

• plentiful for households and plentiful for economies.

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events could prompt you to reverse this decision?

• The marginal benefit of going to Spain increases.

• The marginal cost of going to Spain increases.

• The marginal benefit of going to Ireland increases.

• The marginal cost of going to Ireland decreases.

You are considering staying in college another semester so that you can complete a major in finance. In deciding whether or not to stay you should compare the total cost of your education to the benefits of staying one more semester.

• compare the total cost of your education to the total benefits of your education.

• compare the total cost of your education to the benefits of staying one more semester.

• compare the cost of staying one more semester to the benefits of staying one more semester.

• compare the total benefits of your education to the cost of staying one more semester.

Which of the following firms is likely to have the greatest market power?

• A utility company

• A farmer

• A grocery store

• A local electronics retailer

Both the production of goods and services and the unemployment rate are used to measure: the business cycle, productivity, the interest rate, inflation.

• the business cycle

• productivity

• the interest rate

• inflation

Laws that enforce chemical hazard control are examples of government intervention that is intended to reduce:

• efficiency.

• equality.

• externalities. (Correct)

• productivity.