Economics for Non-Majors Test Bank
Course Introduction
Economics for Non-Majors introduces fundamental economic principles and their application to everyday life and current events. The course covers core topics such as supply and demand, market structures, the role of governments in economies, and the basics of macroeconomic indicators like inflation, unemployment, and economic growth. Through real-world examples and accessible explanations, students will learn how economic agents make decisions, how markets function, and how economic policies impact individuals and societies, equipping them with practical tools for informed decision-making in both personal and professional contexts.
Recommended Textbook
Issues in Economics Today 8th Edition by Robert Guell
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48 Chapters
3693 Verified Questions
3693 Flashcards
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Page 2
Chapter 1: Economics: the Study of Opportunity Cost
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) Generalized growth is typically the result of an increase in, or an increase in the ability of resources to
A)produce all goods
B)produce certain goods
C)produce exported goods
D)compete with imported goods
Answer: A
Q2) The fact that we cannot operate at a point outside a production possibilities frontier indicates there is
A)scarcity.
B)constant opportunity cost.
C)unemployment.
D)increasing opportunity cost.
Answer: A
Q3) A production possibilities frontier is a simple model of A)scarcity and allocation.
B)prices and output.
C)production and costs.
D)inputs and outputs.
Answer: A
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Chapter 2: Supply and Demand
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204 Flashcards
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Sample Questions
Q1) Of the collection of supply and demand diagrams in Figure 2.2, which one(s)could show the result of a decrease in income?
A)Figure 1
B)Figure 2
C)Figure 3
D)Figures 1 and 2
Answer: D
Q2) In a market served by vendors who sell both orange juice and bottled water from their carts, an increase in the price of bottled water will tend to
A)reduce the supply of bottled water.
B)increase the supply of bottled water.
C)reduce the supply of orange juice.
D)increase the supply of orange juice.
Answer: C
Q3) A market must be in a physical location
A)True
B)False
Answer: B
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Chapter 3: The Concept of Elasticity and Consumer and Producer Surplus
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173 Flashcards
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Sample Questions
Q1) The producer surplus
A)the area under the demand curve form the origin to the quantity purchased.
B)the area under the supply curve form the origin to the quantity produced.
C)the area under the demand curve but above the price line from the origin to the quantity purchased.
D)the area above the supply curve but below the price line from the origin to the quantity purchased.
Answer: D
Q2) If the percentage change in quantity supplied is 5% and the percentage change in price is 10% then the supply for the good is
A)elastic.
B)inelastic.
C)unit elastic.
D)perfectly inelastic.
Answer: B
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Page 5
Chapter 4: Firm Production, Cost, and Revenue
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Sample Questions
Q1) The Average Total Cost curve will be cut by the Marginal Cost curve from below as long as
A)fixed costs are rising.
B)marginal costs eventually increase.
C)average costs are decreasing.
D)marginal costs continually decrease.
Q2) In Figure 4.2, the reason that the increase in output from point B to C is much greater than the increase in output from point C to D is that
A)it always costs more money to increase output.
B)small levels of production are often inefficient and that significant increases in production can occur thereafter at only a small additional cost.
C)it is very difficult and very expensive to increase output once the capacity of the machinery has been reached.
D)there is waste.
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Chapter 5: Perfect Competition, Monopoly, and Economic
Versus Normal Profit
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Sample Questions
Q1) The first firm in an industry
A)will always make an economic profit.
B)may make an economic profit.
C)will make a loss but want to stay in business.
D)will make a loss so large that it wants to shutdown.
Q2) For a market to be characterized by monopoly, there must be
A)a large number of firms with no one able to influence price.
B)barriers to entry and exit.
C)indistinguishable products being sold.
D)good information about sales and costs.
Q3) In Figure 5.8, if the supply curve moves from S2 to S4
A)The firm will make a smaller economic profit than they used to
B)The firm will go from making an economic profit to a normal profit
C)The firm will go from making an economic profit to a loss but one that is not big enough to make it want to shutdown.
D)The firm will go from making an economic profit to a loss that is big enough to make it want to shutdown.
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Page 7
Chapter
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Sample Questions
Q1) A reason given why the CPI overstates the cost of living is it
A)only measures the effects of inflation on the poor.
B)makes no attempt to ascertain what average people buy.
C)makes no attempt to update the market basket.
D)makes no attempt to control for substitution to cheaper goods.
Q2) The political problems associated with fixing the CPI are that
A)personal income taxes would fall.
B)benefits to the poor would fall.
C)Social Security taxes would rise.
D)Social Security benefits would rise.
Q3) The annualized monthly CPI numbers are
A)more volatile than the Core CPI.
B)less volatile than the Core CPI.
C)different, but no more or less volatile than the Core CPI.
Q4) When estimating GDP using the income approach, aggregate income is adjusted by
A)adding net income earned abroad.
B)subtracting depreciation.
C)subtracting indirect business taxes.
D)adding indirect business taxes.
Page 8
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Chapter 7: Interest Rates and Present Value
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Sample Questions
Q1) The form of risk to the investor associated with the asset unexpectedly falling in price is called
A)market risk.
B)default risk.
C)overall risk.
D)complete risk.
Q2) If the interest rate is positive, the present value of $1000 to be received in ten years is
A)less than $1000.
B)greater than $1000.
C)equal to $1000.
D)either greater than $1000 or less than $1000, depending upon the interest rate
Q3) Using the Rule of 72, how long will it take something growing at 6% per year to double
A)100 years.
B)72 years.
C)12 years.
D)432 years.
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Chapter 8: Aggregate Demand and Aggregate Supply
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Sample Questions
Q1) A decrease in productivity will shift
A)aggregate demand to the right.
B)aggregate demand to the left.
C)aggregate supply to the right.
D)aggregate supply to the left.
Q2) The aggregate supply-aggregate demand diagram models
A)the behavior of individual consumers.
B)the behavior of individual firms.
C)the economy as a whole.
D)the interaction of producers and consumers for a particular good or service.
Q3) Use the Aggregate Supply - Aggregate Demand model to determine which of the following will lead to higher aggregate output
A)a tax increase.
B)a cut in interest rates.
C)a spike in world oil prices.
D)a cut in government spending.
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10
Chapter 9: Fiscal Policy
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Sample Questions
Q1) A political problem with discretionary fiscal policy is the A)contractionary bias.
B)expansionary bias.
C)big-state bias.
D)overreaction bias.
Q2) The Obama stimulus plan's requirement that projects be "shovel-ready" was designed to combat which of these
A)The operational lag.
B)The administrative lag.
C)The recognition lag.
D)The political business cycle.
Q3) A political leader suggesting that an economic downturn will be cushioned automatically is referring to the automatic actions resulting from
A)Tax policy and spending policy
B)A progressive income tax and a welfare state
C)Interest rates and the money supply
D)Interest rates and tax rates
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Chapter 10: Monetary Policy
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Sample Questions
Q1) M1 is the total amount of ________ in the economy.
A)coin
B)paper currency and coin
C)checking accounts, coin and paper currency
D)paper currency only
Q2) The traditional tools of monetary policy
A)seek to influence an "intermediate" target variable.
B)directly impact the economy.
C)can only be utilized after obtaining the approval of Congress.
D)rely heavily upon changes in individual income tax rates.
Q3) Which of the following would likely have the greatest effect on the banking system and their ability to loan money?
A)A change in the target for the federal funds rate by .25 percentage points.
B)A change in the discount rate by .25 percentage points.
C)The purchase of $1,000,000 of federal debt.
D)A change in the reserve ratio by 5 percentage points.
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Chapter 11: Federal Spending
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Sample Questions
Q1) Between 2009 and 2011, Federal Spending as a percentage of GDP ranged between
A)16% and 22%.
B)22% and 25%.
C)35% and 45%.
D)47% and 61%.
Q2) Foreign aid represents
A)less than a billion dollars in spending.
B)Just over 30 billion dollars.
C)is more than we spend on education loans, grants and work study combined.
D)no longer exists.
Q3) Crowding out is the idea that when
A)government spending is increased private spending must decrease.
B)government spending is increased in one area it must be decreased in another.
C)private spending is increased it must be decreased in another.
D)one entitlement recipient enters a program, another must leave.
Q4) The fiscal year for the Federal government begins
A)January 1.
B)July 1.
C)October 1.
D)December 1.
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Chapter 12: Federal Deficits, Surpluses, and the National Debt
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Sample Questions
Q1) When analyzing the impact of a budget deficit, an economist will focus on
A)strictly the amount borrowed.
B)strictly the inflation adjusted amount borrowed.
C)strictly the ratio of the deficit to GDP (it doesn't matter what is purchased with the borrowed money).
D)the ratio of the deficit to GDP and whether what is purchased with the borrowed money can be considered an investment.
Q2) The deficit that showed the biggest increase after the events of 2001 through 2004 (the first and second Bush tax cuts, the recession of 2001 and the war of terrorism)was the
A)on-budget side.
B)off-budget side.
C)must-budget side.
D)far side.
Q3) Which of the following programs is on-budget?
A)The post office.
B)Medicare.
C)Social Security.
D)Student loans.
Page 14
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Chapter 13: The Housing Bubble
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Sample Questions
Q1) Among the key ingredients of what a house is fundamentally worth would be
A)the opportunity cost of the land on which the house is located.
B)the quality of the school system in which the house is located.
C)"location, location, location"!
D)all of the options are correct.
Q2) Unlike the traditional mortgage amortization schedule, "negative-amortization" mortgages permit the
A)mortgage payments to exceed the accrued interest during the early years of the mortgage.
B)principal payments to grow at a constant rate during the early years of the mortgage.
C)value of the house to depreciate during the early years of the mortgage.
D)outstanding balance to increase over a part of the life of the mortgage.
Q3) Among the most important supply side factors explaining homes prices would be the
A)size of the metropolitan area.
B)size of the homebuyer's car.
C)cost of land
D)size of the metropolitan area and the cost of land.
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Chapter 14: The Recession of 2007-2009: Causes and Policy
Responses
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Sample Questions
Q1) The elements of the stimulus package adopted in 2009 that allowed states to pay $25 per week more than they had being paying in unemployment compensation should be considered
A)discretionary fiscal policy.
B)non-discretionary fiscal policy.
C)monetary policy.
D)neither discretionary nor non-discretionary fiscal policy programs.
Q2) One of the most, if not the most severe recession since World War II began in the A)fall of 2005.
B)summer of 1964.
C)summer of 1927.
D)fall of 2007.
Q3) Non-discretionary fiscal policies that increase aggregate demand tend to result in
A)lower Real GDP ("RGDP")and a higher price level ("PI").
B)higher Real GDP ("RGDP")and a higher price level ("PI").
C)lower Real GDP ("RGDP")and a lower price level ("PI").
D)higher Real GDP ("RGDP")and a lower price level ("PI").
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Page 16
Chapter 15: Is Economic Stagnation the New Normal
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Sample Questions
Q1) The aging of the US population growth after 2000
A)was a significant reason behind the slowing of economic growth during that period. B)was entirely countered by an opposite trend in immigration so growth was nearly zero. C)was more than countered by an opposite trend in immigration so growth was robust. D)should have been a source of growth but wasn't.
Q2) The percentage of the population in the two lower income classes (defined by Pew as having less than 67% of median family income)
A)declined from more than 60% in the 1970s to 50% in 2015
B)declined from more than 60% in the 1970s to 20% in 2015
C)remained constant at 60% from the 1970s to 2015
D)increased from the 1970s to 2015
Q3) The innovations that allowed from robust economic growth between 1950 and 2000
A)were unrepeatable.
B)were repeated in the period after 1980 but didn't have the same impact C)were never really that important D)were focused on entertainment
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Chapter 16: Is the Fiscalsky Falling: An Examination of
Unfunded Social Security, Medicare, and State and Local Pension Liabilities
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Sample Questions
Q1) When combined, in present value terms the underfunded nature of Social Security, Medicare, and State and local pensions adds to
A)$17 million
B)$17 billion.
C)$17 trillion.
D)$170 trillion.
Q2) The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because
A)interest rates may turn out to be higher in the future.
B)GDP grown may turn out to be higher than it is currently predicted to be.
C)unemployment rates may turn out to be higher than they are currently predicted to be.
D)taxable incomes may turn out to be lower than they are currently predicted to be.
Q3) Entitlements have a great deal in common with
A)defined benefit pension programs.
B)defined contribution programs.
C)Ponzi schemes.
D)private savings plans.
Page 18
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Chapter 17: International Trade: Does It Jeopardize
American Jobs
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Sample Questions
Q1) In Table 17.4 the Brazil has
A)an absolute advantage but not a comparative advantage in cars.
B)an absolute and comparative advantage in lumber.
C)an absolute and comparative advantage in both goods.
D)a comparative advantage in lumber but not an absolute advantage.
Q2) In 2015, the U.S. experienced a deficit in its balance of trade with A)China.
B)Mexico.
C)Canada.
D)all of the answers are correct.
Q3) A tariff will typically
A)increase the price paid by consumers.
B)increase the price, net of the tariff, that is received by sellers.
C)reduce the price paid by consumers.
D)have no effect on price.
Q4) In Table 17.2 the United States has
A)an absolute advantage but not a comparative advantage in apples.
B)an absolute and comparative advantage in coffee.
C)an absolute and comparative advantage in both goods.
D)an absolute advantage but not a comparative advantage in coffee.
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Chapter 18: International Finance and Exchange Rates
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Sample Questions
Q1) Between 2000 and mid-2005, the value of the U.S. dollar expressed in Chinese yuan
A)increased sharply.
B)decreased precipitously.
C)remained essentially constant.
D)was zero because it was illegal to sell yuan.
Q2) The major determinant of the current account is the A)balance of trade.
B)exports.
C)imports.
D)exchange rates.
Q3) Since 1970, U.S. investment in other countries has
A)increased by more than foreign investment in the U.S.
B)increased by less than foreign investment in the U.S.
C)necessarily increased by exactly the same as foreign investment in the U.S.
D)increased more than twenty-fold.
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Chapter 19: The European Debt Crisis
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Sample Questions
Q1) The threat of a Greek exit from the euro system
A)led to the exit of Spain from the euro.
B)increased the viability of the Greek exit.
C)spurred economic activity in Greece.
D)left Greek banks bankrupt.
Q2) The per capita GDP in Italy declined steadily between 2000 and 2010. One of the main causes of this crisis is that
A)Italy's national debt was relatively low prior to the crisis.
B)the birth rate in Italy plummeted during the period.
C)tax evasions by individuals and businesses were very pervasive during the period.
D)the pension system in Italy could not support the increasing number of retired workers during the period.
Q3) In which of the following countries did unemployment rate fall between 2009 and 2011?
A)Spain
B)Italy
C)Germany
D)Ireland
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Chapter 20: Economic Growth and Development
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Sample Questions
Q1) A country's real GDP can increase for brief periods of time
A)only if its aggregate demand increases.
B)only if its aggregate supply increases.
C)if either its aggregate demand or its aggregate supply increases.
D)only if both its aggregate demand and its aggregate supply increases.
Q2) Suppose a developing country is falling further behind the developed countries that it neighbors. As an economic consultant you are called to look at its policies to recommend changes. If you saw all of the following on your visit, which of them could be an explanation for the slow growth in the economy?
A)You see that new companies require few licenses to move their exports.
B)You see that the central bank does not pay attention to what the elected officials want.
C)You see that the roads, bridges, and ports are in terrible shape.
D)You see that literacy rates rival those of its developed neighbors
Q3) Investment in physical and human capital is typically encouraged by
A)lower taxes on interest income.
B)lower taxes on investment returns.
C)lower taxes on returns to education.
D)all of the options are correct.
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Chapter
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Sample Questions
Q1) Production of a catheter in the U.S. requires either one skilled worker-day or two unskilled worker-days, while production of the same device in Guatemala, because of its relative lack of transportation and communications infrastructure, requires either three skilled worker-days or four unskilled worker-days. Production of a hammock in the U.S. requires one-fourth skilled worker-day or one-third unskilled worker-day, while production of a hammock in Guatemala requires one-third skilled worker-day or one unskilled worker day. If two hundred unskilled worker-days are moved from producing hammocks to producing catheters in the U.S., while three hundred skilled worker-days are moved from producing catheters to producing hammocks in Guatemala, combined production of the two goods in the two countries will change by
A)five hundred additional catheters and one hundred fewer hammocks.
B)three hundred additional catheters and three hundred additional hammocks.
C)one hundred additional catheters and five hundred additional hammocks.
D)no net change in production of the two goods would occur.
Q2) One of the major issues in the Uruguay round of GATT was
A)domestic content provisions for movies and television.
B)the use of trade as a diplomatic weapon.
C)the question of the Euro's convertibility.
D)the placement of the WTO offices in Uruguay.
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Chapter 22: The Line Between Legal and Illegal Goods
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Sample Questions
Q1) Suppose the United States chose to legalize the production and use of marijuana and after doing so found that the price rose. This would
A)indicate that the demand-side effect was greater than the supply-side effect.
B)be shockingly counter-intuitive because there would be no supply-and-demand model that could explain it.
C)indicate that the demand-side effect was smaller than the supply-side effect.
D)suggest that the supply curve is vertical.
Q2) In Figure 22.1, which area represents total value to the drug addict?
A)0ACQ*
B)BP*C
C)0BCQ*
D)0P*CQ*
Q3) Which of the following reasons for making drug sales illegal do economists generally endorse?
A)The harm they do to people who knowingly take them.
B)The harm they do to innocent victims.
C)The risks associated with selling them.
D)The harm they do to people who knowingly take them and the risks associated with selling them.
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Page 24
Chapter 23: Natural Resources, the Environment, and Climate Change
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Sample Questions
Q1) Applying the concept of "clean enough" to clean air an economist means the A)perfectly clean water.
B)state of cleanliness where the average cost of cleaning more equals the average benefit of cleaning more.
C)state of cleanliness where the marginal cost of cleaning equals the marginal benefit of cleaning.
D)state of cleanliness where the total cost of cleaning equals the total benefit of cleaning.
Q2) Natural gas would be considered a
A)limited natural resource.
B)renewable natural resource.
C)sequestered natural resource.
D)sustainable natural resource.
Q3) The optimal resource use for a limited natural resource is
A)more front loaded with a higher discount rate.
B)more back loaded with a higher discount rate.
C)unrelated to the discount rate.
D)more likely to be u-shaped with a higher interest rate.
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Chapter 24: Health Care
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Sample Questions
Q1) The majority of people with private health insurance get it
A)individually.
B)in groups.
C)at the grocery store.
D)along with one other person.
Q2) HMO insurance
A)is less expensive than fee-for-service insurance.
B)has more meddlesome bureaucrats than fee-for service.
C)restricts doctor choice to primary care physicians.
D)all of the options are correct.
Q3) According to the U.S. Census Bureau, physicians in the United Kingdom are mostly A)private fee for service professionals.
B)public employees.
C)private professionals charging government-imposed fees.
D)locally elected officials.
Q4) Part A of Medicare covers
A)prescriptions taken out of the hospital.
B)only charges incurred in a hospital.
C)doctor visits outside of a hospital.
D)all health care needs.
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Medicaid, Medicare, and the Child Health Insurance Program
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Sample Questions
Q1) Today, Medicare costs are shared between government and the insured
A)equally, on a 50-50 basis.
B)with government paying 25 % of the cost.
C)with government paying 75% of the cost.
D)with government paying 100% of the cost.
Q2) The recipients of Medicaid
A)are all children.
B)are all adults.
C)are both children and adults in roughly equal numbers.
D)are both children and adults but children vastly outnumber the adults.
Q3) Medicare, Part B is
A)voluntary at a low premium.
B)compulsory at a low premium.
C)compulsory at a high premium.
D)voluntary at a high premium.
Q4) In 2014, Medicaid and the Children's Health Insurance Program combined covered
A)only children and no adults.
B)44 million children and 27 million adults.
C)relatively wealthy families.
D)only families able to pay the high fees. Page 27
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Chapter 26: The Economics of Prescription Drugs
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Sample Questions
Q1) Patents grant the inventor the exclusive rights to sell goods made with the invention
A)for a limited duration.
B)as long as the inventor is alive.
C)forever.
D)as long as the inventor charges what are viewed as reasonable prices.
Q2) After a drug has been invented, monopoly (when compared to perfect competition)creates
A)more production.
B)lower profits to firms.
C)higher prices to consumers.
D)more production and higher prices to consumers.
Q3) Drug companies tend to attribute higher drug prices on
A)pharmacies charging too much for drugs.
B)high litigation costs on drugs that are ultimately shown to be dangerous.
C)doctors distributing too many free samples.
D)Pharmacies charging too much for drugs and high litigation costs on drugs that are ultimately shown to be dangerous.
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Sample Questions
Q1) A jury award that wildly overstates non-monetary losses can harm the economy primarily because it
A)takes from the rich and gives to the poor.
B)still fails to adequately compensate the injured party for all damages.
C)enriches greedy plaintiff's lawyers.
D)causes overly-cautious buyers and sellers to avoid mutually beneficial transactions.
Q2) The incentives to work that result from the existence of private property accrue to
A)only the strong.
B)only the weak.
C)both the weak and the strong.
D)neither the weak nor the strong.
Q3) The potential harm one person might do to another person through accidental, negligent or purposeful injury is
A)always reflected in equilibrium prices in perfectly competitive markets.
B)always neglected in equilibrium prices in perfectly competitive markets.
C)easily incorporated into private contracts between willing buyers and sellers.
D)always central to the concept of 'civil liability'.
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Chapter 28: The Economics of Crime
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Q1) An example of the type of crime that is contemplated by the rational criminal model is
A)prostitution.
B)spousal abuse.
C)rape.
D)school shooting.
Q2) Among the most difficult costs of crime to evaluate might be the A)costs of law enforcement activities undertaken because of the crime.
B)market value of material possessions stolen, damaged or destroyed.
C)deterioration in quality of life due to physical injury.
D)wages lost due to missed work days following an assault.
Q3) When blacks are murdered it is typically at the hands of A)whites.
B)other blacks.
C)an equal division of blacks and whites.
D)the races in rough proportion to their population.
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Chapter 29: Antitrust
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Q1) A natural monopoly occurs when
A)there are high fixed costs.
B)continuously decreasing average total costs.
C)continuously increasing marginal costs.
D)A and B
Q2) In Figure 29.1 the area that represents the value to the consumer under perfect competition is
A)OACQ<sub>PC</sub>
B)OABQ<sub>Monopoly</sub>
C)ABC
D)P<sub>PC</sub>AC
Q3) In the IBM case the company was accused of violating the law that prohibits
A)firms from using their monopoly in one market to increase market share in another.
B)firms from attempting to undercut competitors' prices.
C)firms from successfully achieving monopoly status.
D)charging prices that are unfairly too high.
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Chapter 30: The Economics of Race and Discrimination
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Q1) Many economists suggest that absent legal mechanisms of discrimination, the wage paid to men and women will converge because
A)if employers can hire men and women at the same wage they will hire equal numbers.
B)employers will feel guilty about hiring only men.
C)employers will feel guilty about paying men more when other firms pay equally.
D)it will be in the interest of profit minded employers to hire women, thus bidding up their wages.
Q2) Looking at differences in median income to find evidence of current employment discrimination overlooks the fact that
A)men work fewer hours per week on average.
B)men work more hours per week on average.
C)woman have less unearned income.
D)men work fewer hours per week on average and woman have less unearned income.
Q3) Of the following, which can be legal in hiring
A)rational discrimination.
B)disparate treatment discrimination.
C)adverse impact discrimination.
D)statistical discrimination.
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Chapter 31: Income and Wealth Inequality
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Q1) Which of the following is true of the capital gain tax rate in the U.S from 1968 to 2007?
A)It reached a peak of 40% in the 1970s.
B)It was at an all-time low level of 15% during the 1980s.
C)It averaged around 30% from 2003-2007.
D)It remained constant at 10% in the 1990s.
Q2) Which of the following statements is true of the trends in wealth inequality?
A)The share of the bottom 90 percent, which was 67% in 1989, grew to 75.3% by 2013.
B)The wealth shares of the bottom 90 percent and top 10 percent have increased by 30% from 1989 to 2013.
C)The share of the top 10 percent, which was 67% in 1989, grew to 75.3% by 2013.
D)The wealth shares of the bottom 90 percent and top 10 percent have decreased by 30% from 1989 to 2013.
Q3) Which period saw the biggest increase in systemic income inequality measured conventionally?
A)1980s and 1990s
B)2000s
C)1960s and 1970s
D)1950s
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Chapter 32: Farm Policy
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Q1) In 2007 and 2008, the prices of both corn and soybeans increased sharply because
A)all agricultural grain prices always rise and fall together.
B)corn and soybeans are "alternative outputs."
C)an unseasonably warm spring in the "grain belt" states of Indiana, Illinois and Iowa.
D)unprecedented expansion in all federal government price support programs.
Q2) If you want to compare the price of a good through time you need to
A)just graph its price.
B)compare it to how other prices changed using price indexes.
C)see if it is higher than the overall CPI.
D)see if it is lower than the overall CPI.
Q3) Between 2006 and 2013 prices for food commodities
A)rose far faster than inflation.
B)rose far slower than inflation.
C)rose at about the overall rate of inflation.
D)remained largely constant even in nominal terms.
Q4) Economists are general supporters of farm price support programs as being economically efficiency enhancing.
A)True
B)False
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Chapter 33: Minimum Wage
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Q1) Those that lose from an increase in the minimum wage are A)all workers.
B)those workers who keep their jobs.
C)workers that are laid off.
D)consumers who pay lower prices for goods.
Q2) At $5.15 per hour the 2007 inflation adjusted minimum wage was
A)nearing a 50-year low.
B)at an all-time high.
C)slightly above the historical average.
D)statutorily constant.
Q3) To get to its inflation adjusted all-time high, the minimum wage in 2016 would have to be at least
A)$5.50.
B)$11.00.
C)$14.00.
D)$20.00.
Q4) It is impossible to raise the minimum wage so high to hurt workers generally.
A)True
B)False
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Chapter 34: Ticket Brokers and Ticket Scalping
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Q1) If scalpers were to charge exactly face value for tickets to a sold-out event, there would be
A)more tickets sold in the market for scalped tickets than buyers there want to buy.
B)exactly as many tickets sold in the market for scalped tickets as buyers there want to buy.
C)fewer tickets sold in the market for scalped tickets than buyers there want to buy.
D)a scalped ticket available for every seat in the stadium.
Q2) In Figure 34.5, the effect of a well-enforced anti-scalping law is to
A)reduce the welfare of consumers and scalpers by GFB.
B)increase the welfare of consumers by ABC.
C)decrease the welfare of scalpers by AFGC.
D)increase the welfare of consumers and decrease the welfare of scalpers.
Q3) The marginal cost curve used to model promoter sold tickets to an event is A)u-shaped.
B)check-shaped.
C)L-shaped.
D)backward L-shaped.
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Page 37
Chapter 35: Rent Control
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Q1) When renters are faced with higher rent demands by landlords they A)must simply pay the higher rent, having no alternatives.
B)can move costlessly, thereby escaping the higher rent.
C)can move, but such a move costs renters time and money.
D)must ask permission of their landlord to leave.
Q2) The argument that demand for apartments is inelastic in the short run is based on the idea that
A)it is costly to move to a different location.
B)it takes time to build new apartments.
C)people will change apartments quickly when there are small changes in rent.
D)landlords will fix up many new apartments when there are small changes in rent.
Q3) Those that lose from the imposition of rent control are A)all tenants.
B)taxpayers.
C)those tenants who lose their apartments.
D)tenants who pay lower rent.
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Chapter 36: Economics of K-12 Education
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Q1) From 1960 to 2010 the amount of money spent on K-12 education has _______ in dollar terms, ______ in real terms and _______ in real dollars per student terms.
A)increased; decreased; decreased.
B)decreased; increased; decreased
C)increased; decreased; increased.
D)increased; increased; increased.
Q2) Most public school systems operate in a
A)purely private, monopolistic environment.
B)purely public, monopolistic environment.
C)purely private, perfectly competitive environment.
D)purely public, perfectly competitive environment.
Q3) Economists Lochner and Moretti have identified external benefits to education in the form of
A)improved melodies produced by better-educated musicians.
B)the higher quality of elected officials chosen by better-educated voters.
C)higher salaries earned by better-educated engineers.
D)education-related crime reductions.
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Chapter 37: Economics of College and University Education
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Sample Questions
Q1) A physical book that sells new for $200 will typically sell as an e-book for around A)$50.
B)$100.
C)$150.
D)$200.
Q2) A book that sells new for $125 will typically be sold back to the bookstore "used" for A)$26.50.
B)$48.75.
C)$62.50.
D)$100.
Q3) Since 1960 the percentage of the population with a college degree has increased from __ to __.
A)less than 10%; near 35%
B)around 20%; near 85%
C)less than 2%; near 50%
D)near 40%; near 50%
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Chapter 38: Poverty and Welfare
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Sample Questions
Q1) Which of the following racial/ethnic populations make up the greatest numbers of those in poverty?
A)Whites (non-Hispanic).
B)Blacks (non-Hispanic).
C)Hispanics.
D)Asians.
Q2) In cash transfers differ from in-kind transfers in that
A)the former offers greater control over spending by the poor on inappropriate things.
B)the former is more cost-effective and less bureaucratic.
C)the former is more certain to target children effectively.
D)none of these, the two are identical.
Q3) The incentives built into nearly all welfare programs
A)encourage work.
B)encourage family planning.
C)discourage marriage.
D)encourage savings.
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Chapter 39: Head Start
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Q1) In order for the money spent on children to be viewed as a good investment, economists would look at the ______ of the costs and compare that to the _____ of the benefits.
A)present value; present value
B)present value; future value
C)future value; present value
D)future value; future value
Q2) Economists and the Congressional Budget Office find that
A)there are many national studies of Head Start effectiveness and nearly all show it to be effective.
B)there are no national studies of Head Start that show its effectiveness.
C)there are national studies that generally, but not conclusively, suggest the program is effective.
D)there has been no study on the subject of Head Start effectiveness.
Q3) The percentage of Head Start enrollees in homes headed by single men is A)50%.
B)35%.
C)10%.
D)1%.
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Page 42
Chapter 40: Social Security
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Q1) Using rate-of-return analysis to determine who benefits and who does not benefit from the current structure of Social Security is
A)embraced by all.
B)embraced not only by financial planners, but also by most economists.
C)rejected by everyone.
D)rejected by those that view the program as social insurance, rather than as an investment.
Q2) Current calculations make it clear that for the vast majority of young workers, the rate of return on Social Security taxes and benefits will be
A)lower than what would have been generated in private stock-market investments.
B)roughly equal to what would have been generated in private stock-market investments.
C)greater than what would have been generated in private stock-market investments. D)taxed more heavily than what would have been generated in private stock market investments.
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Chapter 41: Personal Income Taxes
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Sample Questions
Q1) If a person were given the choice of a $500 credit or a $500 deduction
A)he would take the deduction every time.
B)he would take the credit every time.
C)he would take the deduction if he were rich the credit if he were poor.
D)he would take the deduction if he were poor credit if he were rich.
Q2) One of the key income tax topics debated during the 2010 mid-term elections was whether the
A)2003 tax cuts should be allowed to expire in 2011.
B)1986 tax increases should be finally repealed in 2011.
C)national sales tax should be abolished and replaced with a single income tax rate of 21%.
D)Iraqi oil revenues should be taxed by the U.S. to provide care for disabled Iraqi War veterans.
Q3) Which of the following elements of the federal income tax code are not indexed for inflation?
A)The brackets
B)The standard deduction
C)The personal exemption
D)All of these elements are indexed.
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Page 44
Chapter 42: Energy Prices
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Sample Questions
Q1) World oil consumption runs approximately
A)96 barrels a day.
B)96 thousand barrels a day.
C)96 million barrels a day.
D)96 billion barrels a day.
Q2) A main factor determining gasoline demand between 2002 and 2008 was
A)Americans' increased use of more fuel-efficient vehicles.
B)shrinking demand in both India and China.
C)Americans' increased use of less fuel efficient vehicles.
D)a significant decrease in miles driven by the typical American.
Q3) Under the cartel the price is
A)P<sub>1</sub>.
B)P<sub>2</sub>.
C)P<sub>3</sub>.
D)0.
Q4) OPEC stands for
A)Oil and Petroleum Exporting Companies.
B)Organization of Petrol Exploiting Companies.
C)Organization of Petroleum Exporting Countries.
D)Oil Producing and Exploiting Countries.
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Chapter
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Sample Questions
Q1) Under a reserve clause structure the wage paid to a professional athlete is likely to be close to his
A)reservation wage.
B)marginal revenue product.
C)average compensation.
D)deadweight loss.
Q2) The positive externality argument in favor of a city seeking a professional sports franchise is
A)the jobs created in the area will make it worth the investment.
B)there are people in the city that will be happier when the team is in the city and they will be the one who buy tickets.
C)there are people in the city that will be happier when the team is in the city even if they do not buy tickets.
D)that the benefits occur at a different time as the costs.
Q3) The era of free agency dawned in major sports in A)1946.
B)1977.
C)1985.
D)1998.
46
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Chapter 44: The Stock Market Crashes
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Q1) Most cases of corporate bankruptcy are part of the Chapter _____ variety.
A)7
B)11
C)13
D)15
Q2) The stock index that includes the stock prices of a disproportionate number of technology companies (sometimes referred to as "tech-heavy" or "tech-laden")is the
A)Dow Jones Industrial Average.
B)Standard and Poor's 500.
C)NASDAQ.
D)Russell 2000.
Q3) Which of the following is by considered economists as a fundamental determinant of stock prices?
A)Earnings projections
B)CEO desires
C)Board of Directors' mandates on stock prices
D)Securities and Exchange Commission officers
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Chapter 45: Unions
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Q1) In Figure 45.5, where one union is bargaining against one employer, the wage paid to workers will be
A)W*.
B)W<sub>1</sub><sub>.</sub>
C)W<sub>2</sub><sub>.</sub>
D)an undetermined point between W<sub>1</sub> and W<sub>2</sub><sub>.</sub>
Q2) To the degree that the Plumbers and Steamfitters union conducts costly training and apprentice requirements for prospective electricians, it is
A)shifting the supply of plumbers to the left.
B)shifting the supply of plumbers to the right.
C)shifting the demand for plumbers to the left.
D)kinking the supply of plumbers to make it vertical at the level of the constraint.
Q3) In Figure 45.3, the fact that workers become more valuable to employers because of the training required for certification is shown by
A)the kinked shape of the new supply curve.
B)the shift in old supply curve.
C)the slope of the old demand curve.
D)the increase in the demand curve.
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Q1) When a new Walmart comes to a city, ________ percent of sales at the Walmart would not have occurred in the city.
A)one to two
B)five to ten
C)twenty to thirty
D)forty to fifty
Q2) One non-academic source has suggested that Walmart's efficiencies actually tend to
A)increase total employment locally.
B)be offset by its inefficiencies, so that total employment is unchanged locally.
C)reduce total employment locally.
D)be matched by price increases to its customers, explaining the company's spectacular profitability.
Q3) Walmart's prices are _________ national grocery averages.
A)above
B)50% lower than
C)15-22% lower than D)3-7% lower than
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Chapter 47: The Economic Impact of Casino Gambling
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Q1) Economists generally do not agree to limit the private and voluntary actions of people, but in the case of gambling, economists will admit that gambling
A)is fun.
B)teaches people about statistics.
C)has external costs, so regulation could be justified for that reason.
D)is immoral, so it must be prohibited.
Q2) Unregulated competitive markets for services with negative externalities, such as gambling, tend to
A)produce too little of the service to be efficient.
B)produce too much of the service to be efficient.
C)produce the efficient quantity of the service.
D)produce too little of the service to satisfy the confirmed addict.
Q3) The operating profitability of casinos comes primarily from the fact that
A)they typically charge an enormous amount for alcohol.
B)they typically have a significant cover charge.
C)the expected value of any gamble (to the gambler)is negative.
D)the expected value of any gamble (to the casino)is negative.
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Chapter 48: The Economics of Terrorism
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Q1) Hurricanes Katrina and Sandy disrupted the reinsurance market because some saw them as
A)acts of God.
B)totally unpredictable events.
C)possible evidence of global warming.
D)interference with the tourist trade.
Q2) The Bali, Indonesia bombing by Al-Qaeda, which struck a U.S. target that was lightly defended, was an example of the "rational terrorist's" A)diversion technique.
B)marginalist technique.
C)compression effect.
D)substitution effect.
Q3) Using Figure 48.1, modeling the attacks of September 11, 2001 you would
A)use Panel 1 only with a shift from AD<sub>A</sub> to AD<sub>B</sub>.
B)use Panel 1 only with a shift from AD<sub>B</sub> to AD<sub>A</sub>.
C)use Panel 2 only with a shift from AS<sub>A</sub> to AS<sub>B</sub>.
D)use Panel 1 to model the aggregate demand shock (AD<sub>B</sub> to AD<sub>A</sub>)and Panel 2 to model the aggregate supply shock (AS<sub>B</sub> to AS<sub>A</sub>).
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Page 51