Economic Analysis
Final Test Solutions
Course Introduction
Economic Analysis provides students with a comprehensive understanding of how economic principles and quantitative methods are applied to real-world decision-making. The course covers topics such as supply and demand, market structures, cost analysis, consumer behavior, and the role of government in the economy. Emphasis is placed on using mathematical and graphical tools to analyze economic problems, evaluate policy impacts, and guide strategic decisions in both the private and public sectors. Through case studies and practical exercises, students develop the analytical skills necessary to assess economic outcomes and make informed recommendations.
Recommended Textbook Economics 1st Edition by Dean Karlan
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35 Chapters
4514 Verified Questions
4514 Flashcards
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Page 2
Chapter 1: Economics and Life
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) Which of the following questions would a macroeconomist most likely try to answer?
A)What stage of the business cycle is our economy currently in?
B)Why do broadway musicals and airlines have different price discrimination strategies?
C)How much would marijuana consumption change if the market became legal?
D)Should the 5-Hour Energy firm increase its distribution from nationally to internationally?
Answer: A
Q2) Which of the following statements best describes the study of economics?
A)Economics studies how the Federal Reserve handles fluctuation in business cycles.
B)Economics studies how individuals and groups manage resources.
C)Economics studies how people maximize returns in the stock market.
D)Economics studies how governments determine appropriate tax rates.
Answer: B
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3
Chapter 2: Specialization and Exchange
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Sample Questions
Q1) When two countries specialize and trade with one another:
A)total production remains unchanged,but consumption rises.
B)total production increases,but only if comparative advantage exists.
C)total production may increase,depending on trade relations.
D)total production and consumption remain unchanged.
Answer: B
Q2) Suppose that a worker in Econia can make either 10 iPods or 5 tablets each year.Econia has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.A bundle of goods that Country B could potentially make would be:
A)(400 iPods,2,000 tablets).
B)(200 iPods,1,500 tablets).
C)(300 iPods,450 tablets).
D)(400 iPods,1 tablet).
Answer: C
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4
Chapter 3: Markets
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Sample Questions
Q1) After getting a raise at work,Jasper now regularly buys steak instead of chicken.Which factor of demand has influenced Jasper's demand for steak?
A)Price of a substitute good
B)Price of a complementary good
C)Income
D)Preferences
Answer: C
Q2) Consider a market that is in equilibrium.If it experiences both a decrease in demand and a decrease in supply,what can be said of the new equilibrium?
A)The equilibrium price and quantity will both fall.
B)The equilibrium quantity will definitely fall,while the equilibrium price cannot be predicted.
C)The equilibrium price will definitely fall,while the equilibrium quantity cannot be predicted.
D)The equilibrium price and quantity will both rise.
Answer: B
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Chapter 4: Elasticity
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Sample Questions
Q1) Assuming elasticity is reported in absolute value,a measured elasticity of less than one implies:
A)the good is elastic.
B)the good is inelastic.
C)the good is unitary elastic.
D)Cannot be determined without more information.
Q2) Income elasticity will be positive for:
A)all normal goods.
B)all inferior goods.
C)only necessities.
D)only luxury goods with substitutes.
Q3) Which pair of goods is most likely to have a negative cross-price elasticity?
A)All cross-price elasticities are negative,but often reported in absolute value.
B)Peanut butter and jelly.
C)Butter and margarine.
D)Milk and filet mignon.
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Chapter 5: Efficiency
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Sample Questions
Q1) When a market is in equilibrium,
A)consumer surplus is minimized.
B)producer surplus is minimized.
C)total surplus is maximized.
D)All of these are true.
Q2) When a market is not in equilibrium:
A)total surplus can be increased by a change in market price.
B)the market is not efficient.
C)there are exchanges that can make some better off without someone becoming worse off.
D)All of these are true.
Q3) What consumer surplus is received by someone whose willingness to pay is $35 below the market price of a good?
A)$0
B)$35
C)($35 x P*)
D)None of these is correct.
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Chapter 6: Government Intervention
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Sample Questions
Q1) Government attempts to lower,raise,or simply stabilize prices can:
A)backfire.
B)create unintended side effects.
C)decrease total surplus.
D)All of these are true.
Q2) A market failure is most likely to occur when:
A)a sole producer of a good faces no threat of competition.
B)several producers of a good compete for customers by having price wars.
C)several producers of a good search for the lowest-cost method of production.
D)many producers produce identical products,and only the consumers and producers are affected by the transactions.
Q3) A tax wedge:
A)refers to the difference in the price the buyer pays and the price the sellers keep.
B)only occurs in markets when the tax is placed on sellers.
C)only occurs in markets when the tax is placed on buyers.
D)only occurs in markets when taxes are placed on large corporations.
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Chapter 7: Consumer Behavior
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Sample Questions
Q1) Dave and Buster play two games of tennis,then decide to go have lunch.Using the concept of utility to explain their choices,we can conclude that:
A)they each won one game of tennis.
B)the marginal utility from playing a third game must be negative for them.
C)the marginal utility from playing a third game must be less than the utility from having lunch.
D)All of these must be true.
Q2) Betty is out on a first date with Barney.She decides to order the garden salad with dressing on the side in an effort to make a good first impression,even though she loves leg of lamb.Economic theory:
A)cannot explain why someone would choose a meal that brings her less utility than another.
B)would suggest that making a good impression with her choice will bring her more utility than ordering lamb and making a bad impression.
C)would suggest that she values what Barney thinks of her and will derive negative utility if she does not impress him.
D)cannot be used to explain matters of the heart.
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Page 9
Chapter 8: Behavioral Economics: A Closer Look at Decision Making
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Sample Questions
Q1) Behavioral economics creates economic tools and theories to explain the systematic patterns in how we behave that lead to consistently erroneous decisions.These patterns are called:
A)cognitive biases in the field of psychology.
B)cognitive dissonance in the field of psychology.
C)disruptive biases in the field of anthropology.
D)receptive biases in the field of anthropology.
Q2) After enjoying a perfectly delicious meal,Duane treats himself and orders a very expensive dessert.After one bite,Duane realizes he does not care for it at all.He chokes it down while thinking about the money he just wasted on it.Duane's decision to eat the entire dessert is an example of:
A)irrational behavior.
B)a cognitive bias,because he is focused on the money spent on the dessert.
C)considering a sunk cost instead of weighing marginal costs and benefits.
D)Duane's behavior exemplifies all of these.
Q3) The implicit cost of ownership:
A)is a cognitive bias.
B)is an unproven concept.
C)is the monetary opportunity cost that is often overlooked.
D)All of these are true.
Page 10
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Chapter 9: Game Theory and Strategic Thinking
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Sample Questions
Q1) Which of the following is a subtle way for a company to reassure their competitors that they are committed to a tit-for-tat strategy?
A)Price matching guarantees
B)Setting prices below cost
C)Collusion
D)Offering a commitment strategy
Q2) Game theory is:
A)the study of how people behave strategically under different circumstances.
B)used to predict the winners of only certain types of strategic games.
C)used to evaluate the microeconomic choices that involve probabilities of different behaviors.
D)the study of how people behave when playing a game involving odds,like horse racing.
Q3) The famous historical example of the commitment strategy used by Cortes against the Aztecs is sometimes referred to as:
A)"burning your boats."
B)"burning your bridges."
C)"friendly fire."
D)"putting all your eggs in one basket."
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Page 11
Chapter 10: Information
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131 Flashcards
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Sample Questions
Q1) The presence of adverse selection:
A)reduces the efficiency of markets.
B)increases the efficiency of markets.
C)does not affect the efficiency of markets.
D)makes the buyer less efficient and the seller more efficient.
Q2) When government mandates participation in a program to solve an information asymmetry problem,it is trying to prevent:
A)adverse selection.
B)moral hazard.
C)building a reputation.
D)illegal screening.
Q3) Generalizing using statistical discrimination is:
A)a rational response to being on the wrong end of an information asymmetry.
B)an irrational response and always leads to loss of surplus.
C)a rational response,although government always steps in to prevent it.
D)All of these statements are true.
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Chapter 11: Time and Uncertainty
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120 Flashcards
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Sample Questions
Q1) Present value is:
A)how much a certain amount of money that will be obtained in the future is worth today.
B)how much a certain amount of money that you have in the present will be worth in the future.
C)the process of accumulation of additional interest paid on interest that has already been earned.
D)needs to be discounted to be meaningful.
Q2) Buying insurance and then never making a claim:
A)is considered by economists to be irrational behavior.
B)means buying the insurance was a bad decision.
C)does not mean buying the insurance was a bad decision.
D)is a poor use of money.
Q3) If you want to own $1 million when you retire in 45 years,how much should you put into your retirement fund now,given the interest rate is 3 percent?
A)$265,439.
B)$250,005.
C)$436,770.
D)$275,389.
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Page 13
Chapter 12: The Costs of Production
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Sample Questions
Q1) Suppose Larry's Lariats produces lassos in a factory,and uses nine feet of rope to make each lasso.The rope is put into a machine that automatically cuts it to the right length,then seals the ends to prevent fraying.The rope is then hand tied,dipped,and wound before being placed in a packaging machine to prepare it for retail sale.Which of the following would be considered a variable cost for this company?
A)The cost of the factory
B)Employee wages
C)The rope-cutting machine
D)All of these expenses would be included in variable costs.
Q2) A college student is thinking about running an ice-cream truck over the summer.Which of the following would likely be included in the total cost of the business?
A)The cost of ice cream cones
B)The cost of the truck
C)The cost of gasoline
D)All of these would be included in total cost.
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Chapter 13: Perfect Competition
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Sample Questions
Q1) A firm in a perfectly competitive market can maximize its profits by:
A)producing the level of output where marginal cost equals marginal revenue.
B)producing any level below where marginal cost equals marginal revenue.
C)producing any level beyond where marginal cost equals marginal revenue.
D)producing at capacity.
Q2) In the short run,when a firm stops producing:
A)it avoids paying fixed costs.
B)it avoids paying variable costs.
C)it can avoid earning profits less than zero.
D)None of these is true.
Q3) If a firm in a perfectly competitive market is producing at a level of output where marginal costs exceed marginal revenue:
A)its profits must be negative.
B)its profits are maximized.
C)its profits will increase if they produce less.
D)None of these is true.
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15
Chapter 14: Monopoly
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Sample Questions
Q1) At any price the monopolist sets,it can sell:
A)as many as it wants.
B)as many as demanders are willing to buy.
C)more than a perfectly competitive market would sell.
D)less than quantity demanded to keep the item rare.
Q2) The presence of a monopoly:
A)hurts consumers.
B)hurts society overall.
C)helps producers.
D)All of these statements are true.
Q3) The most a monopolist can sell at any given price is:
A)the amount he alone can supply the market with.
B)the amount demanders are willing to buy at that price.
C)constrained by the availability of inputs.
D)less than if it were a perfectly competitive market.
Q4) The loss of the profit motive by a publicly owned natural monopoly could:
A)reduce the motivation to improve efficiency.
B)increase the motivation to improve efficiency.
C)increase the incentive to provide better service.
D)increase the incentive to lower costs.
Page 16
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Chapter 15: Monopolistic Competition and Oligopoly
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Sample Questions
Q1) In the short run,monopolistically competitive firms behave like ________________,but in the long run,the outcome is similar to that of the ________________.
A)monopolies;perfectly competitive firm
B)perfectly competitive firm;monopoly
C)monopoly;oligopoly
D)oligopoly;perfectly competitive firm
Q2) The long run outcome of the monopolistically competitive firm:
A)occurs where price equals marginal cost.
B)maximizes total surplus.
C)creates welfare loss.
D)does not maximize profits.
Q3) Branding:
A)can be a barrier to entry.
B)guarantees high-quality products.
C)promises the differences in products are completely perceived and not real.
D)All of these statements are true.
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Chapter 16: The Factors of Production
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Sample Questions
Q1) Workers compete against those who have:
A)the same human capital.
B)similar human capital.
C)totally different human capital.
D)all workers,regardless of their human capital.
Q2) A profit-seeking firm will choose the combination of inputs that maximizes profit,based on the:
A)local price of each factor of production.
B)ratio of each factor of production.
C)substitutability of each factor of production.
D)All of these statements are true.
Q3) The supply of labor is determined by the:
A)number of workers.
B)opportunity cost of hiring labor.
C)marginal product of labor.
D)All of these statements are true.
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18
Chapter 17: International Trade
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Sample Questions
Q1) The World Trade Organization (WTO)is an international organization designed to:
A)monitor and enforce trade agreements,while also promoting free trade.
B)monitor and enforce world banking policies,and lending between nations.
C)provide a forum for all nations to have discussion on various international issues of concern.
D)The WTO does all of these.
Q2) The right decision about what to produce and who to trade with happens:
A)automatically.
B)when governments publish comparative advantage numbers.
C)only after firms research the cost of inputs such as labor and raw materials,and the sale prices of different goods you could produce,and calculate the most profitable option.
D)None of these is true.
Q3) If Colombia has a comparative advantage over Mexico in the production of coffee,it means:
A)Colombia probably sells coffee to Mexico.
B)Mexico is more productive at making coffee than Colombia.
C)Colombia has the ability to produce more coffee than Mexico with the same resources.
D)None of these is true.
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Chapter 18: Externalities
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Sample Questions
Q1) Private benefits are those benefits that accrue:
A)directly to the decision maker of a market exchange.
B)indirectly to the decision maker of a market exchange.
C)without compensation to someone other than the person who caused them.
D)to third parties without direct government intervention.
Q2) Knowing that the presence of externalities reduces surplus,it implies that:
A)there are mutually beneficial trades waiting to be exploited so private parties have an incentive to solve the externality problem themselves.
B)government needs to find them and correct the market.
C)there are mutually beneficial trades waiting to be exploited,so government has an incentive to force those parties to solve the problem themselves.
D)None of these statements is true.
Q3) When a positive externality is internalized,efficiency:
A)increases.
B)decreases.
C)is not affected.
D)drops to zero.
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Chapter 19: Public Goods and Common Resources
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Sample Questions
Q1) A type of good that is subject to market failure is:
A)a public good.
B)a private good.
C)an uncommon resource.
D)None of these goods is subject to market failure.
Q2) An example of a good that is rival in consumption is:
A)a sweater.
B)bottled water.
C)tap water.
D)All of these goods are rival in consumption.
Q3) The depletion of a common resource due to individually rational but collectively inefficient overconsumption is called:
A)the tragedy of the commons.
B)the free rider problem.
C)rival in consumption.
D)excludability.
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21
Chapter 20: Taxation and the Public Budget
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Sample Questions
Q1) The Laffer curve demonstrates that raising tax rates:
A)increases then decreases tax revenues.
B)always increases tax revenues.
C)always decreases tax revenues.
D)decreases then increases tax revenues.
Q2) When a government earns more than it spends in revenue,we say that it has a:
A)budget surplus.
B)budget deficit.
C)federal debt.
D)federal deficit.
Q3) A capital gains tax is a tax on:
A)the earnings of individuals and corporations.
B)income earned by buying assets and selling them at a higher price.
C)the wages paid to an employee.
D)the value of a good or service being purchased.
Q4) Deficits and surpluses are commonly calculated as:
A)a percentage of national GDP.
B)debt per taxpayer.
C)average debt per state.
D)All of these are common calculations.
Page 22
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Chapter 21: Poverty, Inequality, and Discrimination
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Sample Questions
Q1) If we compare income mobility in absolute terms,we would measure whether a person's income:
A)is higher than her parents' income.
B)places her higher up in the income distribution than her parents' income.
C)is higher at the end of her career compared to the beginning.
D)places her higher up in the income distribution over the course of her work-life.
Q2) If the population is split up into quintiles by income,the bottom quintile would include:
A)the poorest half of the population.
B)the poorest 60 percent of the population.
C)the richest half of the population.
D)the poorest 20 percent of the population.
Q3) Research suggests that about ______ percent of people living under the poverty line in any given year are chronically poor.
A)3
B)8
C)13
D)38
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23
Chapter 22: Political Choices
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Sample Questions
Q1) Many countries use a proportional-representation system,which means that:
A)if a party gains a certain percentage of the popular vote,then they are awarded the same percentage of representative seats in the government.
B)smaller parties can carve out niches and still have political influence.
C)everyone's preference gets represented proportionately with everyone else's.
D)All of these are true.
Q2) Political advocacy:
A)and political engagement can suffer from the free-rider problem.
B)is not affected by the free-rider problem,but political engagement is.
C)can suffer from the free-rider problem,but political engagement does not.
D)and political engagement are not affected by the free-rider problem.
Q3) In thinking about the criteria for an ideal voting system,unanimity means:
A)If everyone in the group prefers option X to option Y,then X beats Y.
B)If the median in the group prefers option X to option Y,then X beats Y.
C)If the majority of the group prefers option X to option Y,then X beats Y.
D)If no one in the group prefers option X to option Y,then it must still be possible for X to beat Y.
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Chapter 23: Public Policy and Choice Architecture
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Sample Questions
Q1) We're more likely to make mistakes with situations we face:
A)often,because we pay less attention.
B)often,because they involve low payoffs.
C)infrequently.
D)with little warning.
Q2) Informing people of social norms is:
A)likely to get more people to act that way,which is always positive.
B)likely to get more people to act that way,which can be a problem if policymakers are trying to change typical behavior.
C)likely to get more people to act that way,which is always negative.
D)None of these statements is true.
Q3) Disclosing information in more usable ways to decision-makers:
A)can nudge people toward making better decisions.
B)effectively eliminates certain choices from a person's options.
C)will never affect a person's decision.
D)increases instances of rational ignorance.
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Chapter 24: Measuring the Wealth of Nations
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Sample Questions
Q1) An example of a government purchase that would be included in GDP would be:
A)pencils for the employees of the FBI to use.
B)the salaries of those in the military.
C)replacement calculators for the Congressional Budget Office.
D)All of these are considered part of government purchases in GDP.
Q2) According to the circular flow model,expenditures by one person translate:
A)directly into income for someone else.
B)indirectly into the value of that person's time.
C)directly into his or her income.
D)indirectly into the household's budget.
Q3) An example of a final good is:
A)chocolate chips purchased by Nabisco to make Keebler chocolate chip cookies.
B)chocolate chips purchased by you to make chocolate chip cookies.
C)chocolate chips purchased by a restaurant to make a chocolate chip cookie pie to sell.
D)All of these are final goods.
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Chapter 25: The Cost of Living
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Sample Questions
Q1) In an attempt to separate the quality changes from price changes of a product over time,the BLS does a:
A)hedonic quality adjustment.
B)heterogenic quality adjustment.
C)qualitative price change.
D)qualitative market adjustment.
Q2) Cost-of-living adjustments are:
A)indexed payments.
B)not common in the U.S.
C)used to automatically keep the real value of salaries or other payments constant,without having to renegotiate contracts or pass new laws.
D)All of these statements are true.
Q3) Inflation:
A)doesn't necessarily harm purchasing power.
B)always decreases purchasing power.
C)always increases purchasing power.
D)should try to be avoided at all costs.
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Chapter 26: Economic Growth
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Sample Questions
Q1) Effective,stable leadership is essential to:
A)economic growth.
B)discourage foreign direct investment from taking hold in a country.
C)increasing human capital.
D)increasing population size.
Q2) If a country's income is rapidly increasing:
A)it must have a high level of growth.
B)it must have a high level of income.
C)it must have a lot of room to expand.
D)it must be well-endowed with natural resources.
Q3) A reduction in current consumption to pay for the investment in capital intended to increase future production is known as the:
A)consumption effect.
B)substitution effect.
C)investment trade-off.
D)income effect.
Q4) When a country continually adds more capital to its existing stock:
A)productivity will increase at a decreasing rate.
B)productivity will decrease at an increasing rate.
C)productivity will decrease at a decreasing rate.
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Chapter 27: Unemployment and the Demand for Labor
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Sample Questions
Q1) If GDP growth were to increase,it would cause the:
A)labor demand curve to shift left.
B)labor demand curve to shift right.
C)labor supply curve to shift left.
D)labor supply curve to shift right.
Q2) An economic boom predicts the new equilibrium wage would be:
A)lower because the labor demand curve shifts left.
B)higher because the labor demand curve shifts left.
C)lower because the labor demand curve shifts right.
D)higher because the labor demand curve shifts right.
Q3) Cyclical unemployment:
A)is unemployment caused by short-term economic fluctuations reflected in GDP growth.
B)is unemployment that results from a mismatch between the skills workers can offer and the skills that are in demand.
C)is unemployment caused by workers who are changing their location,job,or career.
D)is the effect of wages remaining persistently above the market-clearing level.
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Chapter 28: Aggregate Demand and Aggregate Supply
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Sample Questions
Q1) Sticky wages occur because:
A)employers must wait until the current contract ends to cut someone's pay.
B)unions often negotiate wages for several years in advance.
C)wages can only be changed at the end of contracts,as opposed to final good prices which can change anytime.
D)All of these are true.
Q2) Because the prices of final goods and services tend to increase more quickly than the prices of inputs,the short run aggregate supply curve is:
A)upward sloping.
B)downward sloping.
C)perfectly elastic.
D)perfectly inelastic.
Q3) In the long run:
A)aggregate demand is fixed.
B)aggregate supply is fixed.
C)aggregate demand tends to shift to the right.
D)aggregate supply tends to shift to the left.
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Chapter 29: Fiscal Policy
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Sample Questions
Q1) Fiscal policy affects aggregate demand:
A)through two channels.
B)directly and indirectly.
C)and can increase or decrease it.
D)All of these are true.
Q2) If the government were to reduce its spending,it would be enacting:
A)contractionary fiscal policy.
B)expansionary fiscal policy.
C)a budgetary crisis intervention.
D)expansionary budgetary policy.
Q3) If the government were to decrease its spending,it would expect:
A)aggregate demand to fall,and thus GDP to fall.
B)aggregate demand to rise,and thus GDP to fall.
C)aggregate demand to fall,and thus GDP to rise.
D)aggregate demand to rise,and thus GDP to rise.
Q4) If the government decreases the income tax rate,then:
A)GDP will decrease.
B)aggregate demand will shift left.
C)aggregate demand will shift right.
D)None of these will happen when income tax decreases.
Page 31
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Chapter 30: The Basics of Finance
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164 Flashcards
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Sample Questions
Q1) A bond is essentially:
A)a stock.
B)a loan.
C)an equity.
D)a derivative.
Q2) An asset whose value is based on the value of another asset is called:
A)a derivative.
B)a dividend.
C)a stock.
D)a bond.
Q3) The biggest difference between mutual funds and life insurance policies is:
A)when you can have access to your contributions.
B)one is a savings plan,and one allows you to reduce your risk.
C)one is considered savings,and the other is an investment.
D)None of these is true.
Q4) Net capital outflow measures:
A)how many capital goods are exported from a country.
B)how many capital goods are exported minus how many are imported to a country.
C)how many capital goods are imported from a country.
D)None of these is true.
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Chapter 31: Money and the Monetary System
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146 Flashcards
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Sample
Questions
Q1) We know how many dollars banks create using the:
A)money multiplier.
B)federal funds.
C)demand deposits.
D)interest rate.
Q2) The discount rate is typically:
A)higher than other interest rates.
B)lower than other interest rates.
C)about the same as other interest rates.
D)determined by the government,and does not correlate with other interest rates.
Q3) The most used tool of the Fed is:
A)open market operations.
B)the reserve requirement.
C)the discount window.
D)These are all used with equal frequency.
Q4) Your checking account balance would be counted in which measure of money?
A)M1
B)M2
C)Hard money
D)It would be counted in both M1 and M2
Page 33
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Chapter 32: Inflation
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Sample Questions
Q1) When an economy is experiencing a negative output gap,it means that the:
A)actual output is less than their potential output.
B)actual output is more than their potential output.
C)price level is rising.
D)price level is falling.
Q2) According to the quantity theory of money,changes in the price level are primarily the result of changes in the:
A)quantity of money.
B)unemployment rate.
C)rate of spending.
D)total output.
Q3) A sustained fall in the aggregate price level is called: A)deflation.
B)inflation.
C)economic growth.
D)economic decline.
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Chapter 33: Financial Crisis
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Sample Questions
Q1) The level of household debt incurred over the two decades leading up to the 2008 crisis was only sustainable if interest rates:
A)remained low and housing prices remained high.
B)and housing prices both remained high.
C)and housing prices both remained low.
D)remained high and housing prices remained low.
Q2) The overall drop in stock prices that began in 1929 and continued through 1932 was due to:
A)dropping stock prices causing a rational sale of certain stocks.
B)a panicked massive sale of stocks which caused the stock prices to plummet.
C)the exuberant confidence in the rising value of the stock market in general.
D)Black Thursday.
Q3) From 1929 to 1932,the total value of the stock market:
A)decreased by nearly 50 percent.
B)more than tripled.
C)more than quadrupled.
D)decreased by nearly 90 percent.
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Chapter 34: Open-Market Macroeconomics
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Sample Questions
Q1) People in an open economy who wish to invest can either:
A)invest at home or abroad.
B)buy stocks or bonds.
C)buy financial assets or durable goods.
D)invest in private companies or public companies.
Q2) In general,the accounting of trade in goods and capital is known as the:
A)balance of trade.
B)net capital outflow.
C)balance of payments.
D)trade surplus.
Q3) When interest rates in the U.S.decline,we can expect:
A)capital inflows and capital outflows to decrease.
B)capital inflows and capital outflows to increase.
C)capital inflow to decrease,and capital outflow to increase.
D)capital outflow to decrease,and capital inflow to increase.
Q4) The sale of each iPhone in the U.S.counts as:
A)an import,because they are assembled in China.
B)an import,because they are assembled in Mexico.
C)an export,because they are assembled in China.
D)an export,because they are produced in the U.S.
Page 36
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Chapter 35: Development Economics
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Sample Questions
Q1) According to the Gallup World Values Survey,40 percent of those living in the poorest quartile of countries would like to:
A)get more education.
B)receive more aid.
C)trade freely.
D)emigrate.
Q2) Over the past 50 years,the amount given in aid has __________ in dollar terms,___________ in terms of aid as a share of GDP.
A)increased;but has steadily fallen B)increased;as well as increased C)decreased;but has increased D)decreased;and has steadily fallen
Q3) Economic growth _____________ improved health conditions in a nation. A)is always needed for B)is not necessarily needed for C)is only loosely correlated with D)None of these statements is true.
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