WorksheetsECO fe
Total questions: 88
Worksheet time: 1hrs 6mins
=1 (2230) (17744) If the production possibilities frontier is bowed outward, then "?" could be
50.
75.
100.
125.
=2 (2216) (17750) Refer to Table 3-5. The opportunity cost of 1 unit of cheese for Spain is
1/2 unit of bread.
2 hours of labor.
2 units of bread.
4 hours of labor.
=3 (2217) (17753) Refer to Table 3-7. Korea should specialize in the production of
cars and import airplanes.
airplanes and import cars.
both goods and import neither good.
neither good and import both goods.
=4 (2222) (17725) Adam Smith
and David Ricardo both opposed free trade.
opposed free trade, but David Ricardo supported it.
supported free trade, but David Ricardo opposed it.
and David Ricardo both supported free trade.
=5 (2227) (17749) Refer to Table 3-4. The opportunity cost of 1 pound of potatoes for the farmer is
1/5 pound of meat.
2 hours of labor.
5 pounds of meat.
5 hours of labor.
=6 (2239) (17736) Refer to Table 3-2. At which of the following prices would both Aruba and Iceland gain from trade with each other?
2 radios for 4 coolers
2 radio for 6 coolers
2 radio for 10 coolers
Aruba and Iceland could not both gain from trade with each other at any price.
=7 (2238) (17761) Refer to Figure 3-7. The opportunity cost of 1 bowl for Juba is
1/4 cup.
2/3 cup.
3/2 cups.
4 cups.
=8 (2255) (17784) In the economy of Wrexington in 2008, consumption was 60% of GDP, government purchases were $212, imports were $67 and 67% of the value of exports, investment was one-half of the value of consumption. What was Wrexington's GDP in 2008?
$1450
$1790
$2450
$2790
=9 (2265) (17762) Macroeconomists study
a. the decisions of households and firms.
b. the interaction between households and firms.
c. economy-wide phenomena.
d. regulations on firms and unions.
=10 (2253) (17790) Net exports equal
exports plus imports.
exports minus imports.
imports minus exports.
GDP minus imports.
=11 (2280) (17808) In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20 sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost $5. The base year is 2006. If the inflation rate in 2007 was 16 percent, then how much did a magazine cost in 2007?
$1.87
$2.08
$2.32
$3.00
=12 (2287) (17798) The consumer price index tries to gauge how much incomes must rise to maintain
a. an increasing standard of living.
b. a constant standard of living.
c. a decreasing standard of living.
d. the highest standard of living possible.
=13 (2269) (17773) Quality Motors is a Japanese-owned company that produces automobiles, all of its automobiles are produced in American plants. In 2007, Quality Motors produced $20 million worth of automobiles, with $12 million in sales to Americans, $6 million in sales to Canadians, and $2 million worth of automobiles added to Quality Motors' inventory. The transactions just described contribute how much to U.S. GDP for 2007?
$12 million
$14 million
$20 million
$34 million
=14 (2284) (17804) The consumer price index is used to
a. convert nominal GDP into real GDP.
b. turn dollar figures into meaningful measures of purchasing power.
c. characterize the types of goods and services that consumers purchase.
d. measure the quantity of goods and services that the economy produces.
=15 (2283) (17819) Scenario 24-3
=15 (2283) (17819) Scenario 24-3
Grant Gant was a doctor in 1944 and earned $12,000 that year. His daughter, Gretta Gant, is a doctor today and she earned $210,000 in 2005. The price index was 17.6 in 1944 and 184 in 2005.
Refer to Scenario 24-3. Grant Gant's 1944 income in 2005 dollars is
a. $1,147.83.
b. $113,454.55.
c. $125,454.55.
d. $1,996,800.00.
=16 (2299) (17813) The price index was 120 in 2006 and 127.2 in 2007. What was the inflation rate?
a. 5.7 percent
b. 6.0 percent
c. 7.2 percent
d. 27.2 percent
=17 (2309) (17828) If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same,
a. (i) its output would stay the same and so would its labor productivity.
b. (ii) its output and labor productivity would increase, but less than double.
c. (iii) its output and labor productivity would increase by more than double.
d. None of (i), (ii), and (iii) is correct.
=18 (2317) (17842) Last year a country had 800 workers who worked an average of 8 hours and produced 12,800 units. This year the country had 1000 workers who worked an average of 8 hours and produced 14,000 units. This country's productivity was
a. higher this year than last year. A possible source of this change in productivity is a change in the size of the capital stock.
b. higher this year than last year. A change in the size of the capital stock does not affect productivity.
c. lower this year than last year. A possible source of this change in productivity is a change in the size of the capital stock.
d. lower this year than last year. A change in the size of the capital stock does not affect productivity.
=19 (2304) (17794) Scenario 24-1The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3.Refer to Scenario 24-1. The price of a 1975 tennis ball in 2005 dollars is
a. $0.03.
b. $0.27.
c. $0.37.
d. $1.00.
=20 (2303) (17792) When the consumer price index rises, the typical family
a. has to spend more dollars to maintain the same standard of living.
b. can spend fewer dollars to maintain the same standard of living.
c. finds that its standard of living is not affected.
d. can offset the effects of rising prices by saving more.
=21 (2349) (17855) If the government's expenditures exceeded its receipts, it would likely
a. lend money to a bank or other financial intermediary.
b. borrow money from a bank or other financial intermediary.
c. buy bonds directly from the public.
d. sell bonds directly to the public.
=22 (2343) (17861) World Wide Delivery Service Corporation develops a way to speed up its deliveries and reduce its costs. We would expect that this would
a. raise the demand for existing shares of the stock, causing the price to rise.
b. decrease the demand for existing shares of the stock, causing the price to fall.
c. raise the supply of the existing shares of stock, causing the price to rise.
d. raise the supply of the existing shares of stock, causing the price to fall.
=23 (2338) (17858) If the nominal interest rate is 6 percent and the real interest rate is 2 percent, then what is the inflation rate?
a. (i) 8 percent
b. (ii) 4 percent
c. (iii) 3 percent
d. None of (i), (ii), and (iii) is correct.
=24 (2348) (17849) Which of the following is not always correct for a closed economy?
a. National saving equals private saving plus public saving.
b. Net exports equal zero.
c. Real GDP measures both income and expenditures.
d. Private saving equals investment.
=25 (2352) (17856) In examining the national income accounts of the closed economy of Nepotocracy you see that this year it had taxes of $100 billion, government transfers of $40 billion, and government purchases of goods and services of $80 billion. You also notice that last year it had private saving of $50 billion and investment of $70 billion. In which year did Nepotocracy have a budget deficit of $20 billion?
a. this year and last year
b. this year but not last year
c. last year but not this year
d. neither this year nor last year
=26 (2369) (17879) Suppose some country had an adult population of about 50 million, a labor-force participation rate of 60 percent, and an unemployment rate of 5 percent. How many people were employed?
a. 1.5 million
b. 28.5 million
c. 30 million
d. 47.5 million
=27 (2373) (17873) Consumers decide to buy more computers and fewer typewriters. As a result, computer companies expand production while typewriter companies lay-off workers. This is an example of
a. frictional unemployment created by efficiency wages.
b. frictional unemployment created by sectoral shifts.
c. structural unemployment created by efficiency wages.
d. structural unemployment created by sectoral shifts.
=28 (2385) (17896) 1. If all workers and all jobs were the same such that all workers were equally well suited for all jobs, then there would be no
a. cyclical unemployment.
b. frictional unemployment.
c. natural rate of unemployment.
d. structural unemployment.
=29 (2381) (17874) Collective bargaining refers to
a. the process by which the government sets exemptions from the minimum wage law.
b. setting the same wage for all employees to prevent conflict among workers.
c. firms colluding to set the wages of employees in order to keep them below equilibrium.
d. the process by which unions and firms agree on the terms of employment.
=30 (2375) (17897) Suppose that because of the popularity of the low-carb diet, bakeries need fewer workers and steak houses need more workers. This is an example of
a. frictional unemployment created by efficiency wages.
b. frictional unemployment created by sectoral shifts.
c. structural unemployment created by efficiency wages.
d. structural unemployment created by sectoral shifts.
=31 (2371) (17882) Suppose that efficiency wages become more common in the economy. Economists would predict that this would
a. increase the quantity demanded and decrease the quantity supplied of labor, thereby decreasing the natural rate of unemployment.
b. decrease the quantity demanded and increase the quantity supplied of labor, thereby increasing the natural rate of unemployment.
c. increase the quantity demanded and decrease the quantity supplied of labor, thereby increasing the natural rate of unemployment.
d. decrease the quantity demanded and increase the quantity supplied of labor, thereby decreasing the natural rate of unemployment.
=32 (2415) (17928) During a bank run, depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits
a. Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply increase.
b. Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply decrease.
c. The decision to hold relatively more currency would make the money supply increase. The decision to hold relatively more excess reserves would make the money supply decrease.
d. The decision to hold relatively more currency would make the money supply decrease. The decision to hold relatively more excess reserves would make the money supply increase.
=33 (2398) (17910) Credit cards
a. defer payments.
b. are a store of value.
c. have led to wider use of currency.
d. are part of the money supply.
=34 (2394) (17921) In a 100-percent-reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then
a. M1 would increase.
b. M1 would decrease.
c. M1 would not change.
d. M1 might rise or fall.
=35 (2443) (17932) Refer to Figure 30-3. What quantity is measured along the vertical axis?
a. the price level
b. the velocity of money
c. the value of money
d. the quantity of money
=36 (2429) (17934) In order to maintain stable prices, a central bank must
a. maintain low interest rates.
b. keep unemployment low.
c. tightly control the money supply.
d. sell indexed bonds.
=37 (2434) (17947) Refer to Figure 30-2. At the end of 2007 the relevant money-demand curve was the one labeled MD2. At the end of 2008 the relevant money-demand curve was the one labeled MD1. Assuming the economy is always in equilibrium, what was the economy's approximate inflation rate for 2008?
a. -43 percent
b. -57 percent
c. 57 percent
d. 75 percent
=38 (2432) (17955) Refer to Figure 30-1. If the money supply is MS2 and the value of money is 2, then
a. the value of money is lower than its equilibrium level.
b. the price level is higher than its equilibrium level.
c. the quantity of money demanded is greater than the quantity of money supplied.
d. the quantity of money supplied is greater than the quantity of money demanded.
=39 (2420) (17940) According to the classical dichotomy, which of the following is affected by monetary factors?
a. (i) nominal wages
b. (ii) the price level
c. (iii) nominal GDP
d. All of (i), (ii), and (iii) are correct.
=40 (2425) (17953) High and unexpected inflation has a greater cost
a. for those who save than for those who borrow.
b. for those who hold a little money than for those who hold a lot of money.
c. for those whose wages increase by as much as inflation, than those who are paid a fixed nominal wage.
d. for savers in low income tax brackets than for savers in high income tax brackets.
=41 (2448) (17974) If a country has negative net capital outflows, then its net exports are
a. positive and its saving is larger than its domestic investment.
b. positive and its saving is smaller than its domestic investment.
c. negative and its saving is larger than its domestic investment.
d. negative and its saving is smaller than its domestic investment.
=42 (2449) (17970) If the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the foreign price is P*, then the real exchange rate is defined as
a. e(P*/P).
b. e(P/P*).
c. e + P/P.
d. e - P/P*.
=43 (2472) (17987) Which of the following is an example of U.S. foreign portfolio investment?
a. Disney builds a new amusement park near Barcelona, Spain.
b. A U.S. citizen buys bonds issued by the British government.
c. A Dutch hotel chain opens a new hotel in the United States.
d. A citizen of Singapore buys a bond issued by a U.S. corporation.
=44 (2502) (18009) If at a given real interest rate desired national saving would be $50 billion, domestic investment would be $40 billion, and net capital outflow would be $20 billion, then at that real interest rate in the loanable funds market there would be a
a. surplus. The real interest rate would rise.
b. surplus. The real interest rate would fall.
c. shortage. The real interest rate would rise.
d. shortage. The real interest rate would fall.
=45 (2505) (18022) The aggregate demand and aggregate supply graph has
a. the price level on the horizontal axis. The price level can be measured by the GDP deflator.
b. the price level on the horizontal axis. The price level can be measured by real GDP.
c. the price level on the vertical axis. The price level can be measured by the GDP deflator.
d. the price level on the vertical axis. The price level can be measured by GDP.
=46 (2514) (18040) Refer to Figure 33-1. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from
a. A to B.
b. C to D.
c. B to A.
d. D to C.
=47 (2525) (18034) The long-run aggregate supply curve would shift right if immigration from abroad
a. increased or Congress made a substantial increase in the minimum wage.
b. decreased or Congress abolished the minimum wage.
c. increased or Congress abolished the minimum wage.
d. decreased or Congress made a substantial increase in the minimum wage.
=48 (2528) (18042) The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if
a. the price level is higher than expected making production more profitable.
b. the price level is higher than expected making production less profitable.
c. the price level is lower than expected making production more profitable.
d. the price level is lower than expected making production less profitable.
=49 (2538) (18051) According to liquidity preference theory, the opportunity cost of holding money is
a. the interest rate on bonds.
b. the inflation rate.
c. the cost of converting bonds to a medium of exchange.
d. the difference between the inflation rate and the interest rate on bonds.
=50 (2552) (18068) According to liquidity preference theory, equilibrium in the money market is achieved by adjustments in
a. the price level.
b. the interest rate.
c. the exchange rate.
d. real wealth.
=1 (2228) (17743) When can two countries gain from trading two goods?
a. (i) when the first country can only produce the first good and the second country can only produce the second good
b. (ii) when the first country can produce both goods, but can only produce the second good at great cost, and the second country can produce both goods, but can only produce the first good at great cost
c. (iii) when the first country is better at producing both goods and the second country is worse at producing both goods
d. Two countries could gain from trading two goods under all of the conditions in (i), (ii), and (iii).
=2 (2206) (17758) Refer to Figure 3-3. Enid has an absolute advantage in the production of
a. burritos and a comparative advantage in the production of tacos.
b. burritos and a comparative advantage in the production of burritos.
c. neither good and a comparative advantage in the production of tacos.
d. neither good and a comparative advantage in the production of burritos.
=3 (2232) (17748) Refer to Table 3-3. Assume that Zimbabwe and Portugal each has 180 machine minutes available. If each country divides its time equally between the production of toothbrushes and hairbrushes, then total production is
a. 24 toothbrushes and 12 hairbrushes.
b. 48 toothbrushes and 24 hairbrushes.
c. 96 toothbrushes and 48 hairbrushes.
d. 720 toothbrushes and 1440 hairbrushes.
=4 (2225) (17724) Two people can benefit from specialization and trade by obtaining a good at a price that is
a. lower than his or her opportunity cost of that good.
b. the same as his or her opportunity cost of that good.
c. higher than his or her opportunity cost of that good.
d. different than his or her opportunity cost of that good.
=5 (2227) (17749) Refer to Table 3-4. The opportunity cost of 1 pound of potatoes for the farmer is
a. 1/5 pound of meat.
b. 2 hours of labor.
c. 5 pounds of meat.
d. 5 hours of labor.
=6 (2241) (17757) Refer to Figure 3-3. If Enid must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work?
a. 40 hours
b. 100 hours
c. 400 hours
d. 1600 hours
=7 (2237) (17752) Refer to Table 3-5. Spain should export
a. cheese and import bread.
b. bread and import cheese.
c. both goods and import neither good.
d. neither good and import both goods.
=8 (2254) (17769) Refer to Table 23-5. In 2008, Batterland's real GDP was
a. $100.
b. $390.
c. $400.
d. $540.
=9 (2263) (17767) Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture. With each $1,000 of leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for $3,000. Neither firm had any inventory at the beginning of 2009. During that year, Cowhide produced enough leather for 20 couches. Couches, Inc. bought 80% of that leather for $16,000 and promised to buy the remaining 20% for $4,000 in 2010. What was the economy's GDP for the 2009?
a. $48,000
b. $52,000
c. $64,000
d. $68,000
=10 (2259) (17783) Which of the following items is counted as part of government purchases?
a. (i) The federal government pays the salary of a Navy officer.
b. (ii) The state of Nevada pays a private firm to repair a Nevada state highway.
c. (iii) The city of Las Vegas, Nevada pays a private firm to collect garbage in that city.
d. All (i), (ii), and (iii) are correct.
=11 (2290) (17809) The GDP deflator reflects the
a. level of prices in the base year relative to the current level of prices.
b. current level of prices relative to the level of prices in the base year.
c. level of real output in the base year relative to the current level of real output.
d. current level of real output relative to the level of real output in the base year.
=12 (2273) (17779) Spots, Inc. produces ink and sells it to Write on Target, which makes pens. The ink produced by Spots, Inc. is called
a. an inventory good.
b. a transitory good.
c. a preliminary good.
d. an intermediate good.
=13 (2267) (17771) A transfer payment is
a. a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location.
b. a payment that is automatically transferred from your bank account to pay a bill or some other obligation.
c. a form of government spending that is not made in exchange for a currently produced good or service.
d. the benefit that a person receives from an expenditure by government minus the taxes that were collected by government to fund that expenditure.
=14 (2278) (17770) Refer to Table 23-5. In 2007, Batterland's nominal GDP was
a. $300.
b. $390.
c. $400.
d. $540.
=15 (2291) (17795) The real interest rate tells you
a. how fast the number of dollars in your bank account rises over time.
b. how fast the purchasing power of your bank account rises over time.
c. the number of dollars in your bank account today.
d. the purchasing power of your bank account today.
=16 (2306) (17810) Indexation refers to
a. a process of adjusting the nominal interest rate so that it is equal to the real interest rate.
b. using a law or contract to automatically correct a dollar amount for the effects of inflation.
c. using a price index to deflate dollar values.
d. an adjustment made by the Bureau of Labor Statistics to the CPI so that the index is in line with the GDP deflator.
=17 (2310) (17825) If a production function has constant returns to scale, output can be doubled if
a. (i) labor alone doubles.
b. (ii) all inputs but labor double.
c. (iii) all of the inputs double.
d. None of (i), (ii), and (iii) is correct.
=18 (2303) (17792) When the consumer price index rises, the typical family
a. has to spend more dollars to maintain the same standard of living.
b. can spend fewer dollars to maintain the same standard of living.
c. finds that its standard of living is not affected.
d. can offset the effects of rising prices by saving more.
=19 (2318) (17827) If there are diminishing returns to capital, then
a. capital produces fewer goods as it ages.
b. old ideas are not as useful as new ones.
c. increases in the capital stock eventually decrease output.
d. increases in the capital stock increase output by ever smaller amounts.
=20 (2307) (17811) The consumer price index is used to
a. monitor changes in the level of wholesale prices in the economy.
b. monitor changes in the cost of living over time.
c. monitor changes in the level of real GDP over time.
d. monitor changes in the stock market.
=21 (2327) (17829) Which of the following is a determinant of productivity?
a. (i) human capital per worker
b. (ii) physical capital per worker
c. (iii) natural resources per worker
d. All of (i), (ii), and (iii) are correct.
=22 (2335) (17822) Perry accumulated a lot of mathematical skills while in high school, college, and graduate school. Economists include these skills as part of Perry's
a. standard of learning.
b. technological knowledge.
c. physical capital.
d. human capital.
=23 (2351) (17854) Two of the economy's most important financial intermediaries are
a. suppliers of funds and demanders of funds.
b. banks and the bond market.
c. the stock market and the bond market.
d. banks and mutual funds.
=24 (2347) (17857) Refer to Table 26-1. What was Hershey's earnings per share?
a. $38
b. $1.64
c. $1.31
d. $0.61
=25 (2349) (17855) If the government's expenditures exceeded its receipts, it would likely
a. lend money to a bank or other financial intermediary.
b. borrow money from a bank or other financial intermediary.
c. buy bonds directly from the public.
d. sell bonds directly to the public.
=26 (2367) (17884) Workers searching for jobs that best suit them is most closely associated with
a. cyclical unemployment.
b. frictional unemployment.
c. seasonal unemployment.
d. structural unemployment.
=27 (2370) (17891) The amount of unemployment that an economy normally experiences is called the
a. average rate of unemployment.
b. natural rate of unemployment.
c. cyclical rate of unemployment.
d. typical rate of unemployment.
=28 (2361) (17886) The natural rate of unemployment
a. (i) arises from a single problem that has a single solution.
b. (ii) is easy for policymakers to reduce.
c. (iii) Both (i) and (ii) are correct.
d. None of (i), (ii), and (iii) is correct.
=29 (2373) (17873) Consumers decide to buy more computers and fewer typewriters. As a result, computer companies expand production while typewriter companies lay-off workers. This is an example of
a. frictional unemployment created by efficiency wages
b. frictional unemployment created by sectoral shifts.
c. structural unemployment created by efficiency wages.
d. structural unemployment created by sectoral shifts.
=30 (2360) (17888) The efficiency-wage theory of worker health is
a. more relevant for explaining unemployment in less developed countries than in rich countries.
b. more relevant for explaining unemployment in rich countries than in less developed countries.
c. equally relevant for explaining unemployment in less developed countries and in rich countries.
d. not relevant for explaining unemployment.
=31 (2372) (17889) Unemployment that results because the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one is called
a. the natural rate of unemployment.
b. cyclical unemployment.
c. structural unemployment.
d. frictional unemployment.
=32 (2388) (17908) An increase in the money supply might indicate that the Fed had
a. purchased bonds in an attempt to increase the federal funds rate.
b. purchased bonds in an attempt to reduce the federal funds rate.
c. sold bonds in an attempt to increase the federal funds rate.
d. sold bonds in an attempt to reduce the federal funds rate.
=33 (2398) (17910) Credit cards
a. defer payments.
b. are a store of value.
c. have led to wider use of currency.
d. are part of the money supply.
=34 (2410) (17913) Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the
a. money supply to fall. To reduce the impact of this the Fed could lower the discount rate.
b. money supply to fall. To reduce the impact of this the Fed could raise the discount rate.
c. money supply to rise. To reduce the impact of this the Fed could lower the discount rate.
d. money supply to rise. To reduce the impact of this the Fed could raise the discount rate.
=35 (2420) (17940) According to the classical dichotomy, which of the following is affected by monetary factors?
a. (i) nominal wages
b. (ii) the price level
c. (iii) nominal GDP
d. All of (i), (ii), and (iii) are correct.
=36 (2421) (17952) You bought some shares of stock and, over the next year, the price per share increased by 5 percent and the price level increased by 8 percent. Before taxes, you experienced
a. both a nominal gain and a real gain, and you paid taxes on the nominal gain.
b. both a nominal gain and a real gain, and you paid taxes only on the real gain.
c. a nominal gain and a real loss, and you paid taxes on the nominal gain.
d. a nominal gain and a real loss, and you paid no taxes on the transaction.
=37 (2444) (17930) When the money market is drawn with the value of money on the vertical axis, a decrease in the price level causes a
a. movement to the right along the money demand curve.
b. movement to the left along the money demand curve.
c. shift to the right of the money supply curve.
d. shift to the left of the money supply curve.
=38 (2416) (17938) If M = 3,000, P = 2, and Y = 12,000, what is velocity?
a. 1/2
b. 2
c. 4
d. 8
