1) Which of the following issues is an application of using macroeconomics to make a real world decision?
A. Whether a company should increase its worker benefits
B. Whether this year's enrollment will increase for University of Phoenix.
C. Whether the growth rate of the Chinese economy will exceed 10% in 2010
D. Whether workers should choose to remain in a factory
2) The forces that make market economies work are
A. work and leisure
B. demand and supply
C. regulation and restraint
D. taxes and government spending
3) A market is a
A. group of buyers and sellers of a particular good or service
B. group of people with common economic characteristics
C. place where buyers and sellers come together to engage in trade
D. place where an auctioneer helps set prices and arrange sales
4) If a decrease in income increases the demand for a good, then the good is
A. a substitute good
B. a complement good
C. a normal good
D. an inferior good
5) Two goods are substitutes if a decrease in the price of one good
A. decreases the demand for the other good
B. decreases the quantity demanded of the other good
C. increases the demand for the other good
D. increases the quantity demanded of the other good
6) A likely example of substitute goods for most people would be
A. peanut butter and jelly
B. tennis balls and tennis rackets
C. televisions and subscriptions to cable television services
D. pencils and pens
7) Another term for equilibrium price is
A. dynamic price
B. market-clearing price
C. quantity-defining price
D. satisfactory price
8) If, at the current price, there is a shortage of a good,
A. sellers are producing more than buyers wish to buy
B. the market must be in equilibrium
C. the price is below the equilibrium price
D. quantity demanded equals quantity supplied
9) If there is suddenly an increase in population in North Carolina, then the average wage for North Carolina will
A. decrease because the supply of labor increases
B. increase because the supply of labor increases
C. decrease because the demand of labor increases
D. increase because the demand of labor increases
10) 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
11) When we focus on the firm as a supplier of a good or a service, we assume that the firm is a profit maximizer. When we focus on the firm as a demander of labor, we assume that the firm's objective is to
A. minimize wages
B. minimize variable costs
C. maximize the number of workers hired
D. maximize profit
12) What are the two types of imperfectly competitive markets?
A. Monopoly and monopolistic competition
B. Monopoly and oligopoly
C. Monopolistic competition and oligopoly
D. Monopolistic competition and cartels
13) Monopolistically competitive firms are typically characterized by
A. many firms selling products that are similar, but not identical
B. many firms selling identical products
C. a few firms selling products that are similar, but not identical
D. a few firms selling highly different products
14) The commercial jetliner industry, consisting of Boeing and Airbus, would best be described as a (an)
A. perfectly competitive market
B. monopolistically competitive market
C. oligopoly
D. monopoly
15) Imperfectly competitive firms are characterized by
A. horizontal demand curves
B. standardized products
C. a large number of small firms
D. price making ability
16) Gross domestic product serves as a measure of two things:
A. the total spending of everyone in the economy and the total saving of everyone in the economy
B. the total income of everyone in the economy and the total expenditure on the nation's output of goods and services
C. the value of the nation's output of goods and services for domestic citizens and the value of the nation's output of goods and services for the rest of the world
D. the nation's saving and the nation's investment
17) Which of the following newspaper headlines would be more closely related to what microeconomists study than to what macroeconomists study?
A. Unemployment rate rises from 5 percent to 5.5 percent.
B. Real GDP grows by 3.1 percent in the third quarter.
C. Retail sales at stores show large gains.
D. The price of oranges rises after an early frost
18) A fiscal policy can be
A. an increase of federal government spending financed by the treasury
B. a sale of bonds in an open market operation by the treasury
C. a rise of reserve ratios by the Fed
D. that the Fed prints money
19) Stagflation exists when prices
A. and output rise
B. rise and output falls
C. fall and output rises
D. and output fall
20) An expansionary fiscal policy will
A. reduce unemployment and increase GDP
B. reduce unemployment and decrease GDP
C. increase unemployment and increase GDP
D. increase unemployment and decrease GDP
21) If money is used as a mechanism to hold purchasing power for a period of time, it is functioning as a
A. medium of exchange
B. store of value
C. unit of account
D. standard of value
22) Inflation can be measured by the
A. change in the consumer price index
B. percentage change in the consumer price index
C. percentage change in the price of a specific commodity
D. change in the price of a specific commodity
23) Given the following information about AAA bank:
Bank Deposits $100,000
Loans $50,000
Required Reserves $20,000
Excess Reserves $30,000
What is the reserve ratio set by the Federal Reserve Bank?
A. 10 percent
B. 20 percent
C. 30 percent
D. 50 percent
24) Sally sells 40 bags of lettuce for a total of $80 at the farmers’ market.
A. The $80 is a real variable. The quantity of lettuce is a nominal variable.
B. The $80 is a nominal variable. The quantity of lettuce is a real variable.
C. Both the $80 and the quantity of lettuce are nominal variables.
D. Both the $80 and the quantity of lettuce are real variables.
25) Monetary neutrality implies that an increase in the quantity of money will
A. increase employment
B. increase the price level
C. increase the incentive to save
D. not increase any of the above
26) For any country, if the world price of computers is higher than the domestic price of computers without trade, that country should
A. export computers, since that country has a comparative advantage in computers
B. import computers, since that country has a comparative advantage in computers
C. neither export nor import computers, since that country cannot gain from trade
D. neither export nor import computers, since that country already produces computers at a low cost compared to other countries
27) Outflow represents the quantity of dollars
A. supplied for the purpose of selling assets domestically
B. supplied for the purpose of buying assets abroad
C. demanded for the purpose of buying U.S. net exports of goods and services
D. demanded for the purpose of importing foreign goods and services
28) In the open economy macroeconomic model, net capital outflow is equal to the quantity of
A. dollars supplied in the foreign exchange market
B. dollars demand in the foreign exchange market
C. funds supplied in the loanable funds market
D. funds demanded in the loanable funds market
29) A tariff on a product
A. enhances the economic well-being of the domestic economy
B. increases the domestic quantity supplied
C. increases the domestic quantity demanded
D. results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus
30) Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Aquilonia are better off as a result of the new free-trade policy?
A. Producers of incense and consumers of steel
B. Consumers of all three goods
C. Consumers of incense and producers of rugs
D. Producers of steel and consumers of incense