Introductory Economics Question Bank
Course Introduction
Introductory Economics provides a foundational understanding of economic principles and concepts that shape individual, business, and government decision-making. The course explores microeconomic topics such as supply and demand, market structures, consumer behavior, and production costs, alongside macroeconomic issues like inflation, unemployment, economic growth, and monetary and fiscal policy. By analyzing real-world examples and quantitative data, students develop the tools to evaluate economic problems, interpret market trends, and understand the impact of economic policies on society and global markets.
Recommended Textbook
Principles of Economics 4th Edition by
N. Gregory Mankiw
Available Study Resources on Quizplus
36 Chapters
9199 Verified Questions
9199 Flashcards
Source URL: https://quizplus.com/study-set/1299
Page 2
Chapter 1: Ten Principles of Economics
Available Study Resources on Quizplus for this Chatper
237 Verified Questions
237 Flashcards
Source URL: https://quizplus.com/quiz/25800
Sample Questions
Q1) The government enforces property rights by
A)requiring property owners to pay property taxes.
B)providing police and courts.
C)forcing people to own property.
D)providing public parks and recreation facilities.
Answer: B
Q2) During which decade did the United States experience an inflationary episode similar to that experienced by Germany during the 1920s?
A)the 1880s
B)the 1930s
C)the 1970s
D)None of the above are correct.
Answer: D
Q3) Resources are
A)scarce for households but plentiful for economies.
B)plentiful for households but scarce for economies.
C)scarce for households and scarce for economies.
D)plentiful for households and plentiful for economies.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Thinking Like an Economist
Available Study Resources on Quizplus for this Chatper
267 Verified Questions
267 Flashcards
Source URL: https://quizplus.com/quiz/25801
Sample Questions
Q1) Suppose a nation is currently producing at a point inside its production possibilities frontier.We know that
A)the nation is producing beyond its capacity, and inflation will occur.
B)the nation is not using all available resources or is using inferior technology or both.
C)the nation is producing an efficient combination of goods.
D)there will be a large opportunity cost if the nation tries to increase production of any good.
Answer: B
Q2) The amount by which firms' sales revenue exceeds their payments to factors of production is called A)rent.
B)capital.
C)profit.
D)interest.
Answer: C
Q3) Two variables that are negatively related will move in opposite directions.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Interdependence and the Gains From Trade
Available Study Resources on Quizplus for this Chatper
217 Verified Questions
217 Flashcards
Source URL: https://quizplus.com/quiz/25802
Sample Questions
Q1) Refer to Table 3-5.The opportunity cost of 1 car for Japan is
A)5 airplanes.
B)4 airplanes.
C)1/4 airplane.
D)1/5 airplane.
Answer: D
Q2) Two individuals engage in the same two productive activities.In which of the following circumstances would neither individual have a comparative advantage in either activity?
A)One individual's production possibilities frontier is steeper than the other individual's production possibilities frontier.
B)One individual is faster at both activities than the other individual.
C)One individual's opportunity costs are the same as the other individual's opportunity costs.
D)None of the above is correct; one of the two individuals always will have a comparative advantage in at least one of the two activities.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: The Market Forces of Supply and Demand
Available Study Resources on Quizplus for this Chatper
303 Verified Questions
303 Flashcards
Source URL: https://quizplus.com/quiz/25803
Sample Questions
Q1) Music compact discs are normal goods.What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties,compact disc players become cheaper,more firms start producing music compact discs and music lovers experience an increase in income?
A)Price will fall and the effect on quantity is ambiguous.
B)Price will rise and the effect on quantity is ambiguous.
C)Quantity will fall and the effect on price is ambiguous.
D)Quantity will rise and the effect on price is ambiguous.
Q2) An increase in demand is represented by
A)a movement downward and to the right along a demand curve.
B)a movement upward and to the left along a demand curve.
C)a rightward shift of a demand curve.
D)a leftward shift of a demand curve.
Q3) If there is an improvement in the technology used to produce a good,the supply curve for that good will shift to the left.
A)True
B)False
Q4) The behavior of buyers and sellers drives markets toward equilibrium.
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Elasticity and Its Applications
Available Study Resources on Quizplus for this Chatper
282 Verified Questions
282 Flashcards
Source URL: https://quizplus.com/quiz/25804
Sample Questions
Q1) If demand is perfectly inelastic,the demand curve is vertical,and elasticity is equal to 0.
A)True
B)False
Q2) Refer to Figure 5-3.If price is originally within the C range of the demand curve and then it increases to a value within the A range of the demand curve,we can expect total revenue to
A)increase.
B)decrease.
C)stay the same.
D)This determination cannot be made without further information.
Q3) If the demand for donuts is elastic,then a decrease in the price of donuts will
A)increase total revenue of donut sellers.
B)decrease total revenue of donut sellers.
C)not change total revenue of donut sellers.
D)There is not enough information to answer this question.
Q4) Normal goods have negative income elasticities of demand,while inferior goods have positive income elasticities of demand.
A)True
B)False
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Supply, demand, and Government Policies
Available Study Resources on Quizplus for this Chatper
252 Verified Questions
252 Flashcards
Source URL: https://quizplus.com/quiz/25805
Sample Questions
Q1) When,in a particular market,the law of demand and the law of supply both apply,the imposition of a binding price ceiling in that market causes quantity demanded to be
A)greater than quantity supplied.
B)less than quantity supplied.
C)equal to quantity supplied.
D)Any of the above is possible.
Q2) Refer to Figure 6-2.Which of the following statements is correct?
A)A price ceiling set at $12 would be binding, but a price ceiling set at $8 would not be binding.
B)A price floor set at $8 would be binding, but a price ceiling set at $8 would not be binding.
C)A price ceiling set at $9 would result in an excess supply.
D)A price floor set at $11 would result in a surplus.
Q3) Refer to Figure 6-13.The effective price that sellers receive after the tax is imposed is A)P .
B)P .
C)P .
D)impossible to determine.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Consumers, producers, and the Efficiency of Markets
Available Study Resources on Quizplus for this Chatper
248 Verified Questions
248 Flashcards
Source URL: https://quizplus.com/quiz/25806
Sample Questions
Q1) A demand curve reflects each of the following except the A)willingness to pay of all buyers in the market.
B)value each buyer in the market places on the good.
C)highest price buyers are willing to pay for each quantity.
D)ability of buyers to obtain the quantity they desire.
Q2) At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for
A)$6.50 each.
B)$7.50 each.
C)$9.50 each.
D)$10.50 each.
Q3) If the United States legally allowed for the existence of a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.
A)True
B)False
Q4) Producer surplus is the amount a seller is paid minus the cost of production.
A)True B)False
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Application: the Costs of Taxation
Available Study Resources on Quizplus for this Chatper
245 Verified Questions
245 Flashcards
Source URL: https://quizplus.com/quiz/25807
Sample Questions
Q1) A tax levied on the buyers of a good shifts the A)supply curve upward (or to the left).
B)supply curve downward (or to the right).
C)demand curve downward (or to the left).
D)demand curve upward (or to the right).
Q2) Refer to Figure 8-3.The tax results in a loss of consumer surplus that amounts to
A)$360.
B)$480.
C)$560.
D)$680.
Q3) In which of the following instances would the deadweight loss of the tax on airline tickets increase by a factor of 9?
A)The tax on airline tickets increases from $20 per ticket to $60 per ticket.
B)The tax on airline tickets increases from $20 per ticket to $90 per ticket.
C)The tax on airline tickets increases from $15 per ticket to $60 per ticket.
D)The tax on airline tickets increases from $15 per ticket to $135 per ticket.
Q4) A tax raises the price received by sellers and lowers the price paid by buyers.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Application: International Trade
Available Study Resources on Quizplus for this Chatper
245 Verified Questions
245 Flashcards
Source URL: https://quizplus.com/quiz/25808
Sample Questions
Q1) Refer to Figure 9-10.Consumer surplus in this market before trade is A)a.
B)B + C.
C)A + B + D.
D)C.
Q2) Refer to Figure 9-14.A result of the tariff is that,relative to the free-trade situation,the quantity of saddles imported decreases by
A)Q - Q .
B)Q - Q .
C)Q - Q .
D)Q - Q + Q - Q .
Q3) Refer to Figure 9-3.Consumer surplus in Jamaica without trade is A)$375.
B)$2,000.
C)$2,250.
D)$8,700.
Q4) Trade decisions are based on the principle of absolute advantage.
A)True
B)False
Q5) How does an import quota differ from an equivalent tariff?
Page 11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Externalities
Available Study Resources on Quizplus for this Chatper
288 Verified Questions
288 Flashcards
Source URL: https://quizplus.com/quiz/25809
Sample Questions
Q1) Refer to Figure 10-6.Which quantity represents the social optimum for this market?
A)Q .
B)Q .
C)Q .
D)Q .
Q2) One advantage market economies have over other types of economies is that market economies
A)provide an equal distribution of goods and services to consumers.
B)establish government economic control.
C)solve the problem of scarcity.
D)are more efficient.
Q3) The term market failure refers to
A)a market that fails to allocate resources efficiently.
B)an unsuccessful advertising campaign which reduces demand.
C)ruthless competition among firms.
D)a firm that is forced out of business because of losses.
Q4) Even if possible,it would be inefficient to prohibit all polluting activity.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Public Goods and Common Resources
Available Study Resources on Quizplus for this Chatper
258 Verified Questions
258 Flashcards
Source URL: https://quizplus.com/quiz/25810
Sample Questions
Q1) Refer to Table 11-1.What is the value of the 33 unit of national defense in Happyville?
A)$0
B)$2
C)$4
D)$6
Q2) Too few resources are devoted to the creation of knowledge because profit-seeking firms
A)undervalue knowledge in their pursuit of revenues.
B)overuse their patents.
C)tend to free-ride on the knowledge that others have developed.
D)tend to rely on existing employee knowledge.
Q3) Respondents to cost-benefit surveys
A)are unable to evaluate the effect of the project on their personal satisfaction.
B)typically do not receive a direct benefit from government projects.
C)have a difficult time identifying explicit costs.
D)have little incentive to tell the truth.
Q4) Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: The Design of the Tax System
Available Study Resources on Quizplus for this Chatper
328 Verified Questions
328 Flashcards
Source URL: https://quizplus.com/quiz/25811
Sample Questions
Q1) Refer to Table 12-1.If Morgan has $29,050 in taxable income,her tax liability will be
A)$2,905.
B)$3,285.
C)$4,000.
D)$4,357.50.
Q2) Suppose that the government taxes income in the following fashion: 30 percent of the first $20,000,50 percent of the next $30,000,and 60 percent of all income over $50,000.George earns $40,000,and Elaine earns $60,000.Which of the following statements is correct?
A)George's marginal tax rate is 60 percent, and his average tax rate is 50 percent.
B)George's marginal tax rate is 50 percent, and his average tax rate is 40 percent.
C)Elaine's marginal tax rate is 50 percent, and her average tax rate is 45 percent.
D)Elaine's marginal tax rate is 60 percent, and her average tax rate is 40 percent.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: The Costs of Production
Available Study Resources on Quizplus for this Chatper
303 Verified Questions
303 Flashcards
Source URL: https://quizplus.com/quiz/25812
Sample Questions
Q1) The marginal product of labor is equal to the
A)incremental cost associated with a one unit increase in labor.
B)incremental profit associated with a one unit increase in labor.
C)increase in labor necessary to generate a one unit increase in output.
D)increase in output obtained from a one unit increase in labor.
Q2) In the long run,a firm that produces and sells computers gets to choose A)how many workers to hire.
B)the size of its factories.
C)which short-run average-total-cost curve to use.
D)All of the above are correct.
Q3) The average total cost when 5 units of output are produced is $30,and the marginal cost of the sixth unit of output is $60.What is the average total cost when six units are produced?
A)$10
B)$25
C)$30
D)$35
Q4) How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Firms in Competitive Markets
Available Study Resources on Quizplus for this Chatper
271 Verified Questions
271 Flashcards
Source URL: https://quizplus.com/quiz/25813
Sample Questions
Q1) When a profit-maximizing firm is earning profits,those profits can be identified by A)P × Q.
B)(MC - AVC) × Q.
C)(P - ATC) × Q.
D)(P - AVC) × Q.
Q2) When market conditions in a competitive industry are such that firms cannot cover their production costs,then
A)the firms will suffer long-run economic losses.
B)the firms will suffer short-run economic losses that will be exactly offset by long-run economic profits.
C)some firms will exit the market, causing prices to rise until the remaining firms can cover their production costs.
D)all firms will go out of business, since consumers will not pay prices that enable firms to cover their production costs.
Q3) Describe the difference between average revenue and marginal revenue.Why are both of these revenue measures important to a profit-maximizing firm?
Q4) List and describe the characteristics of a perfectly competitive market.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Monopoly
Available Study Resources on Quizplus for this Chatper
306 Verified Questions
306 Flashcards
Source URL: https://quizplus.com/quiz/25814
Sample Questions
Q1) The defining characteristic of a natural monopoly is
A)constant marginal cost over the relevant range of output.
B)economies of scale over the relevant range of output.
C)constant returns to scale over the relevant range of output.
D)diseconomies of scale over the relevant range of output.
Q2) Which of the following items is a primary source of barriers to entry?
A)The costs of production make a single firm more efficient than a large number of firms.
B)A single firm hires all the people who have the management skills that are important in the industry.
C)Contracts among firms prohibit them from competing with one another in the production and sale of certain products.
D)All of the above are correct.
Q3) When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to
A)reduce prices for all customers.
B)offer their customers a reward for reading the paper.
C)gain some pricing power over the other grocery stores in town.
D)price discriminate.
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Oligopoly
Available Study Resources on Quizplus for this Chatper
291 Verified Questions
291 Flashcards
Source URL: https://quizplus.com/quiz/25815
Sample Questions
Q1) The general term for market structures that fall somewhere in-between monopoly and perfect competition is
A)incomplete markets.
B)imperfectly competitive markets.
C)oligopoly markets.
D)monopolistically competitive markets.
Q2) Individual profit earned by Dave,the oligopolist,depends on which of the following? (i) The quantity of output that Dave produces (ii) The quantities of output that the other firms in the market produce (iii) The extent of collusion between Dave and the other firms in the market
A)(i) and (ii)
B)(ii) and (iii)
C)(iii) only
D)(i), (ii), and (iii)
Q3) As the number of firms in an oligopoly increases,the magnitude of the price effect rises.
A)True
B)False
Q4) Outline the purpose of antitrust laws.What do they accomplish?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Monopolistic Competition
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/25816
Sample Questions
Q1) The product-variety externality is associated with
A)the producer surplus that accrues to incumbent firms in a monopolistically competitive industry.
B)loss of consumer surplus from exposure to additional advertising.
C)the consumer surplus that is generated from the introduction of a new product.
D)the opportunity cost of firms exiting a monopolistically competitive industry.
Q2) If firms in a monopolistically competitive market are earning economic profits,which of the following scenarios would best describe the change existing firms would face as the market adjusts to the long-run equilibrium?
A)An increase in demand for each firm
B)A decrease in demand for each firm
C)A downward shift in the marginal cost curve for each firm
D)An upward shift in the marginal cost curve for each firm
Q3) Advertising during the Super Bowl is an example of information about quality contained primarily in the existence and expense of the advertising.
A)True
B)False
Q4) Why does a typical monopolistically competitive firm face a downward-sloping demand curve?
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: The Markets for the Factors of Production
Available Study Resources on Quizplus for this Chatper
284 Verified Questions
284 Flashcards
Source URL: https://quizplus.com/quiz/25817
Sample Questions
Q1) The marginal product of any factor of production depends on
A)the quantity of the factor used.
B)the price of the final good.
C)the demand for the final good.
D)All of the above are correct.
Q2) Among the people who are characterized below,who has the highest opportunity cost of leisure?
A)an attorney who earns $200 per hour and who plays golf during her leisure time
B)a medical doctor who earns $210 per hour and who sleeps during his leisure time
C)a retail clerk who earns $15 per hour and who watches TV during her leisure time
D)a waiter who earns $12 per hour and who reads poetry during his leisure time
Q3) If you purchase a share in the ownership of a firm you are said to be a A)profiteer.
B)renter.
C)bondholder.
D)stockholder.
Q4) Using the theory of wage determination,explain why wages in developing countries are typically quite low.
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Earnings and Discrimination
Available Study Resources on Quizplus for this Chatper
286 Verified Questions
286 Flashcards
Source URL: https://quizplus.com/quiz/25818
Sample Questions
Q1) Evidence from a 1960s study of the market for baseball players
A)indicated that sports with strong player associations are unlikely to experience wage discrimination.
B)suggested that government regulation had eliminated most evidence of wage discrimination.
C)found some evidence of consumer-driven wage discrimination.
D)found that measurement of marginal productivity was very difficult for baseball players.
Q2) Which of the following statements represents the idea behind signaling in education?
A)Education can turn an unproductive person into a productive person.
B)Education increases the marginal productivity of naturally productive workers.
C)The more naturally productive people are more inclined to educate themselves.
D)All of the above are correct.
Q3) A difference in wages between a highly-educated worker and a less-educated worker is
A)a compensating differential for the cost of becoming educated.
B)a signal that the market is indifferent to a worker's level of human capital.
C)considered unfair by economists.
D)considered unfair by everyone.
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Income Inequality and Poverty
Available Study Resources on Quizplus for this Chatper
247 Verified Questions
247 Flashcards
Source URL: https://quizplus.com/quiz/25819
Sample Questions
Q1) A libertarian is likely to argue that
A)outcomes always dominate processes.
B)only individual members of society can earn income.
C)government has no role in the economy.
D)society is responsible for ensuring an equal distribution of income.
Q2) The political philosophy that views the redistribution of income as a form of social insurance is
A)utilitarianism.
B)liberalism.
C)libertarianism.
D)None of the above is correct.
Q3) People have their highest saving rates when they are A)retired.
B)middle-aged.
C)married with young children.
D)young and single.
Q4) The top 5 percent of U.S.annual family income in 2003 was $170,082 or more.
A)True
B)False
Q5) Explain the relationship between labor earnings and the distribution of income.
Page 22
To view all questions and flashcards with answers, click on the resource link above.
Chapter 21: The Theory of Consumer Choice
Available Study Resources on Quizplus for this Chatper
238 Verified Questions
238 Flashcards
Source URL: https://quizplus.com/quiz/25820
Sample Questions
Q1) Which of the following is a property of indifference curves?
A)Indifference curves cross to explain higher preferences.
B)Indifference curves have positive slopes.
C)Indifference curves are downward sloping and always linear.
D)Indifference curves are bowed in toward the origin.
Q2) A Giffen good is one in which the quantity demanded rises as the price rises because the income effect
A)reinforces the substitution effect.
B)reinforces and is greater than the substitution effect.
C)counteracts but is smaller than the substitution effect.
D)counteracts and is greater than the substitution effect.
Q3) An optimizing consumer will select a consumption bundle in which
A)income is maximized and prices are minimized.
B)utility is maximized and prices are minimized.
C)utility is maximized subject to budget constraints.
D)utility is maximized and indifference curves are linear.
Q4) Evaluate the following statement: "Giffen goods violate the 'law of demand,' therefore,the 'law of demand' can't really be considered a 'law.'"
Q5) List and briefly explain each of the four properties of indifference curves.
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Frontiers of Microeconomics
Available Study Resources on Quizplus for this Chatper
199 Verified Questions
199 Flashcards
Source URL: https://quizplus.com/quiz/25821
Sample Questions
Q1) Herbert Simon suggested that humans should be viewed not as rational maximizers but as
A)irrational maximizers.
B)rational minimizers.
C)irrational minimizers.
D)satisficers.
Q2) Refer to Scenario 22-3.Consider the public policy for dealing with the diseased trees.Using pairwise majority voting with A versus B,then the winner of that vote versus C,then the winner of that vote versus D,which policy wins?
A)A
B)B
C)C
D)D
Q3) An example of an information asymmetry is when a worker knows more than his employer about his work effort.
A)True
B)False
Q4) Explain the Condorcet paradox.To which type of voting system does it apply?
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Measuring a Nations Income
Available Study Resources on Quizplus for this Chatper
215 Verified Questions
215 Flashcards
Source URL: https://quizplus.com/quiz/25822
Sample Questions
Q1) In order to include many different goods and services in an aggregate measure,GDP is computed using,primarily,
A)values of goods and services based on surveys of consumers.
B)market prices.
C)consumer and producer surpluses.
D)costs of producing goods and services.
Q2) Refer to Table 23-3.Using 2007 as the base year,for 2006,
A)real GDP is $760 and the GDP deflator is 100.
B)real GDP is $760 and the GDP deflator is 125.
C)real GDP is $880 and the GDP deflator is 80.
D)real GDP is $950 and the GDP deflator is 80.
Q3) Expenditures by households on education services are included in the consumption component of GDP.
A)True
B)False
Q4) Which government entity prepares the U.S.national income accounts?
A)the Federal Reserve System
B)the Department of Treasury
C)the Department of Commerce
D)the Council of Economic Advisers
Page 25
To view all questions and flashcards with answers, click on the resource link above.
Chapter 24: Measuring the Cost of Living
Available Study Resources on Quizplus for this Chatper
208 Verified Questions
208 Flashcards
Source URL: https://quizplus.com/quiz/25823
Sample Questions
Q1) Suppose the nominal interest rate was 5 percent and the inflation rate was 3.5 percent.
A)The dollar value of savings increased at 1.5 percent, and the value of savings measured in goods increased at 3.5 percent.
B)The dollar value of savings increased at 3.5 percent, and the value of savings measured in goods increased at 1.5 percent.
C)The dollar value of savings increased at 3.5 percent, and the value of savings measured in goods increased at 5 percent.
D)The dollar value of savings increased at 5 percent, and the value of savings measured in goods increased at 1.5 percent.
Q2) Suppose that U.S.mining companies purchase German-made ore trucks at a reduced price.By itself,what effect will this purchase have on the GDP deflator and on the consumer price index?
A)The consumer price index will fall, and the GDP deflator will fall.
B)The consumer price index and the GDP deflator will be unaffected.
C)The consumer price index will fall, and the GDP deflator will be unaffected.
D)The consumer price index will be unaffected, and the GDP deflator will fall.
Q3) Why does the GDP deflator give a different rate of inflation than does the CPI?
To view all questions and flashcards with answers, click on the resource link above.
26
Chapter 25: Production and Growth
Available Study Resources on Quizplus for this Chatper
240 Verified Questions
240 Flashcards
Source URL: https://quizplus.com/quiz/25824
Sample Questions
Q1) A leading environmental group recently published a report contending that humans are running a "resource deficit" because we are using natural resources faster than they can be regenerated.The group claims that this means that economic growth will eventually stop,and will even be reversed.An economist would
A)agree with the report, and would point to rising natural resource prices as evidence.
B)agree with the report, but wouldn't think it was important because growth will not slow down for several centuries.
C)disagree with the report, in part because it ignores the mitigating effects of technological change.
D)disagree with the report because labor and capital are the primary determinants of growth, and since they are plentiful, growth will not slow down.
Q2) Why does a nation's standard of living depend on property rights?
Q3) If a country's saving rate increases,then in the long run
A)productivity is higher but real GDP per person is not higher.
B)real GDP per person is higher but productivity is not higher.
C)productivity and real GDP per person are both higher.
D)neither productivity nor real GDP per person are higher.
To view all questions and flashcards with answers, click on the resource link above.
Page 27
Chapter 26: Saving, investment, and the Financial System
Available Study Resources on Quizplus for this Chatper
282 Verified Questions
282 Flashcards
Source URL: https://quizplus.com/quiz/25825
Sample Questions
Q1) Other things the same corporate bonds generally have higher interest rates than U.S.government bonds.
A)True
B)False
Q2) Thomas Publishing has a price of $20 a share,outstanding shares of 2.5 million,retained earnings of $1 million dollars,and a dividend yield of 1 percent.It has a price to earnings ratio which is
A)high, perhaps indicating that people expect future earnings to rise.
B)high, perhaps indicating that people expect future earnings to fall.
C)low, perhaps indicating that people expect future earnings to rise.
D)low, perhaps indicating that people expect future earnings to fall.
Q3) Stock in Precision Instruments is selling at $25 per share.It had earnings of $5 a share and a dividend yield of 5 percent.What is the dividend and the price-earnings ratio?
A)$.25, 5
B)$.25, 6.7
C)$1.25, 5
D)$1.25, 6.7
Q4) Draw and label a graph showing equilibrium in the market for loanable funds.
Q5) What are the basic differences between bonds and stocks?
To view all questions and flashcards with answers, click on the resource link above. Page 28
Chapter 27: The Basic Tools of Finance
Available Study Resources on Quizplus for this Chatper
249 Verified Questions
249 Flashcards
Source URL: https://quizplus.com/quiz/25826
Sample Questions
Q1) As the interest rate increases,the present value of future sums decrease,so firms will find fewer investment projects profitable.
A)True
B)False
Q2) Fundamental analysis shows that stock in FaceIt! Cosmetics Corporation has a present value that is higher than its price.
A)This stock is overvalued; you should consider adding it to your portfolio.
B)This stock is overvalued; you shouldn't consider adding it to your portfolio.
C)This stock is undervalued; you should consider adding it to your portfolio.
D)This stock is undervalued; you shouldn't consider adding it to your portfolio.
Q3) At which interest rate is the present value of $79.50 one year from today equal to $75 today?
A)4 percent
B)5 percent
C)6 percent
D)7 percent
Q4) The future value of $1 saved today is $1/(1 + r).
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 29
Chapter 28: Unemployment
Available Study Resources on Quizplus for this Chatper
242 Verified Questions
242 Flashcards
Source URL: https://quizplus.com/quiz/25827
Sample Questions
Q1) In the BLS statistics,discouraged workers
A)are included in the numerator of U-3 (the official unemployment rate).
B)are not also counted as marginally attached workers.
C)includes people working part time for economic reasons.
D)have a job market reason for not looking for work.
Q2) The legislation that granted unions the legal right to organize workers and bargain collectively with employers was the
A)Norris-LaGuardia Act.
B)Wagner Act.
C)Taft-Hartley Act.
D)Sherman Act.
Q3) Jenna is searching for a job that suits her tastes about where to live and the people she works with.Mary is looking for a job that makes best use of her skills.
A)Jenna and Mary are both frictionally unemployed.
B)Jenna and Mary are both structurally unemployed.
C)Jenna is frictionally unemployed, and Mary is structurally unemployed.
D)Jenna is structurally unemployed, and Mary is frictionally unemployed.
Q4) What is the theory of efficiency wages? Provide two reasons that employers might pay efficiency wages.
To view all questions and flashcards with answers, click on the resource link above. Page 30
Chapter 29: The Monetary System
Available Study Resources on Quizplus for this Chatper
277 Verified Questions
277 Flashcards
Source URL: https://quizplus.com/quiz/25828
Sample Questions
Q1) M2 is both larger and more liquid than M1.
A)True
B)False
Q2) In a 100-percent-reserve banking system,
A)banks can create money by issuing currency.
B)banks can create money by lending out reserves.
C)the Fed can increase the money supply with open-market sales.
D)banks hold as many reserves as they hold deposits.
Q3) Which of the following lists two things that both increase the money supply?
A)make open market purchases, raise the reserve requirement ratio
B)make open market purchases, lower the reserve requirement ratio
C)make open market sales, raise the reserve requirement ratio
D)make open market sales, lower the reserve requirement ratio
Q4) In recent years the Federal Open Market Committee has focused on a target for A)M1 growth.
B)the federal funds rate.
C)the number of Treasury Securities issued by the federal government.
D)total reserves of banks.
Q5) Compare the Board of Governors and the Federal Open Market Committee.
Page 31
Q6) What is the difference between money and wealth?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 30: Money Growth and Inflation
Available Study Resources on Quizplus for this Chatper
224 Verified Questions
224 Flashcards
Source URL: https://quizplus.com/quiz/25829
Sample Questions
Q1) Suppose that monetary neutrality and the Fisher effect both hold.An increase in the money supply growth rate raises.
A)the inflation rate and growth of real GDP.
B)the inflation rate but not the growth rate of real GDP.
C)the growth rate of real GDP, but not the inflation rate.
D)neither the inflation rate nor the growth rate of real GDP.
Q2) When the money market is drawn with the value of money on the vertical axis,an increase in the price level causes a
A)shift to the right of the money demand curve.
B)shift to the left of the money demand curve.
C)movement to the left along the money demand curve.
D)movement to the right along the money demand curve.
Q3) Economists agree that increases in the money supply growth rate increase inflation and that inflation is undesirable.So why have there been hyperinflations and how have they been ended?
Q4) In the 1990s,U.S.prices rose at about the same rate as in the 1970s.
A)True
B)False
Q5) List and define any two of the costs of high inflation.
To view all questions and flashcards with answers, click on the resource link above. Page 32
Chapter 31: Open-Economy Macroeconomics: Basic Concepts
Available Study Resources on Quizplus for this Chatper
256 Verified Questions
256 Flashcards
Source URL: https://quizplus.com/quiz/25830
Sample Questions
Q1) A country has $100 million of net exports and $170 million of saving.Net capital outflow is
A)$70 million and domestic investment is $170 million.
B)$70 million and domestic investment is $270 million.
C)$100 million and domestic investment is $70 million.
D)None of the above is correct.
Q2) Net capital outflow
A)is always greater than net exports.
B)is always less than net exports.
C)is always equal to net exports.
D)could be any of the above.
Q3) A country has $50 million of domestic investment and net capital outflow of $15 million.What is saving?
A)$65 million.
B)-$65 million.
C)$35 million.
D)-$35 million.
Q4) Suppose that a country has $120 billion of national savings,and $80 billion of domestic investment.Is this possible? Where did the other $40 billion of national savings go?
To view all questions and flashcards with answers, click on the resource link above. Page 33
Chapter 32: A Macroeconomic Theory of the Open Economy
Available Study Resources on Quizplus for this Chatper
217 Verified Questions
217 Flashcards
Source URL: https://quizplus.com/quiz/25831
Sample Questions
Q1) If Argentina suffers from capital flight,Argentinean domestic investment will fall and Argentinean net exports will increase.
A)True
B)False
Q2) In the open-economy macroeconomic model,the market for loanable funds identity can be written as
A)S = I
B)S = NCO
C)S = I + NCO
D)S + I = NCO
Q3) An increase in the U.S.government budget deficit shifts the A)demand for loanable funds right and decreases investment spending.
B)supply of loanable funds right and increases investment spending.
C)supply of loanable funds left and decreases investment spending.
D)None of the above is correct.
Q4) U.S.-imposed trade quotas would
A)increase neither net exports, nor net capital outflow.
B)increase net exports, but not net capital outflow.
C)increase net capital outflow, but not net exports.
D)increase net exports and net capital outflow.
To view all questions and flashcards with answers, click on the resource link above. Page 34
Chapter 33: Aggregate Demand and Aggregate Supply
Available Study Resources on Quizplus for this Chatper
302 Verified Questions
302 Flashcards
Source URL: https://quizplus.com/quiz/25832
Sample Questions
Q1) The position of the long-run aggregate supply curve
A)is determined by the things that determine output in the classical model.
B)is at the point where unemployment is zero.
C)shifts to the right when the price level increases.
D)is at the point where the economy would cease to grow.
Q2) An increase in which of the following,other things the same,shifts aggregate demand to the right?
A)consumption
B)investment
C)government expenditures
D)All of the above are correct.
Q3) The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected,then some firms believe that the relative price of what they produce has
A)decreased, so they increase production.
B)decreased, so they decrease production.
C)increased, so they increase production.
D)increased, so they decrease production.
Q4) Make a list of things that would shift the aggregate demand curve to the right.
Q5) Discuss what economists believe is different about the long and short run.
Page 35
To view all questions and flashcards with answers, click on the resource link above.
Chapter 34: The Influence of Monetary and Fiscal Policy on Aggregate Demand
Available Study Resources on Quizplus for this Chatper
249 Verified Questions
249 Flashcards
Source URL: https://quizplus.com/quiz/25833
Sample Questions
Q1) The short-run effects on the interest rate are
A)shown equally well using either liquidity preference theory or classical theory.
B)best shown using classical theory.
C)best shown using liquidity preference theory.
D)not shown well by either liquidity preference theory or classical theory.
Q2) According to liquidity preference theory,the money supply curve is A)upward sloping.
B)downward sloping.
C)vertical.
D)horizontal.
Q3) Assume the multiplier is 5 and that the total crowding-out effect is $20 billion.An increase in government purchases of $10 billion when the multiplier is 5 will shift the aggregate demand curve
A)right $150 billion.
B)right $70 billion.
C)right $30 billion.
D)None of the above is correct.
Q4) Explain how unemployment insurance acts as an automatic stabilizer.
Q5) What is the difference between monetary policy and fiscal policy?
To view all questions and flashcards with answers, click on the resource link above. Page 36
Chapter 35: The Short Run Trade Off Between Inflation and Unemployment
Available Study Resources on Quizplus for this Chatper
246 Verified Questions
246 Flashcards
Source URL: https://quizplus.com/quiz/25834
Sample Questions
Q1) As an economist working for a U.S.government agency you determine that a particular country has a sacrifice ratio of 7.Policy-makers in that country are thinking of lowering the inflation rate from 10% to 5%.Is this sacrifice ratio higher or lower than the typical estimate? From your numbers,what is the amount of output that will be lost for this country to reduce its inflation rate?
A)The sacrifice ratio is higher than the typical estimate.It will cost 70% of annual output to reach the new inflation target.
B)The sacrifice ratio is higher than the typical estimate.It will cost 35% of annual output to reach the new inflation target.
C)The sacrifice ratio is lower than the typical estimate.It will cost 70% of annual output to reach the new inflation target.
D)The sacrifice ratio is lower than the typical estimate.It will cost 35% of annual output to reach the new inflation target.
Q2) A decrease in the growth rate of the money supply eventually causes the short-run Phillips curve to shift right.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 37
Chapter 36: Five Debates Over Macroeconomic Policy
Available Study Resources on Quizplus for this Chatper
140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/25835
Sample Questions
Q1) Advocates of stabilization policy argue that when there is a recession,the government should increase the money supply and increase government expenditures.
A)True
B)False
Q2) Opponents of using policy to stabilize the economy generally believe that
A)neither fiscal nor monetary policy have much impact on aggregate demand.
B)attempts to stabilize the economy can increase the magnitude of economic fluctuations.
C)unemployment and inflation are not cause for much concern.
D)All of the above are correct.
Q3) Which of the following is not an argument against requiring the government to balance its budget?
A)Some economists believe that rules are better than discretion.
B)Per-capita debt is small relative to lifetime income.
C)The effect of deficit spending on future generations depends in part on what the government buys.
D)Other government policies also redistribute income across generations.
Q4) Describe three costs of inflation.
Q5) Identify three government policies that discourage saving.
To view all questions and flashcards with answers, click on the resource link above. Page 38