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Economics
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13 Dec 2019

1. In small economies, an increase in the import tariff will always

A Increase domestic consumption of the good

B Decrease domestic consumption of the good

C Decrease domestic output of the good

D Decrease the world price of the good

E Increase welfare

2. True or False : an export subsidy raises the price domestic consumers pay

A True

B False

3. True or False : Home’s tariffs on Foreign products increase the value of Home's currency

A True

B False

4. True or False : In the US, when asked, skilled workers are more likely than unskilled workers to espouse protectionist positions

A True

B False

5. More concentrated industries are more likely to get trade protections because

A Industry concentration plays a roll in national defence

B More concentrated industries are easier to organize for lobbying purposes

C Industries that are more concentrated are also more sensitive to trade shocks

D There is no connection between industry concentration and trade protection

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Lelia Lubowitz
Lelia LubowitzLv2
17 Dec 2019
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Related textbook solutions

Principles of Economics
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Related questions

1. Another term for an investment good is

A) interest
B) savings
C) capital
D) rent
E) production

2. The opportunity cost of producing capital is

A) decreased current production of consumption goods
B) increased future production of consumption goods
C) the amount of roundabout production
D) abundant capital accumulation
E) the decreased amount of future capital available

3.

A marginal revenue product curve shows the change in

A) total revenue caused by a one-unit change in output, other things constant
B) total revenue caused by a one-unit change in an input, other things constant
C) total product caused by a one-unit change in output, other things constant
D) total product caused by a one-unit change in an input, other things constant
E) total revenue product caused by a one-unit change in the price of the output, other things constant

4.

Marginal revenue product for a price taker equals

A) MP x P
B) MP/MRC
C) MP x MRC
D) MRC/MP
E) MP/P

5.

Interest provides an incentive for households to defer current consumption

A) True
B) False

6.

An increase in the interest rate tends to increase the demand for loanable funds.

A) True
B) False

7.

Generally, the longer the maturity on a bond, the lower the interest rate.

A) True
B) False

8.

Corporations can obtain investment funds by

A) buying government securities
B) selling stock
C) increasing dividends
D) purchasing more capital
E) buying back stock

9.

Vertical integration has no effect on the internal organization of a firm; it only affects the outside markets.

A) True
B) False

10.

One reason a computer manufacturer may produce its own microchips rather than buy them is that it can maintain control over production quality.

A) True
B) False

11.

When a firm is no longer able to reduce its long-run average cost by expanding, it has achieved its minimum efficient scale of production.

A) True
B) False

12.

If a firm experiences economies of scope, per unit production costs fall as it produces more than one kind of product.

A) True
B) False

13.

Publications such as Consumer Reports magazine

A) increase the optimal amount of information gathered
B) reduce the optimal amount of information gathered
C) reduce the amount of common knowledge
D) raise the marginal benefit of information curve
E) make consumers perfectly informed

14.

The winner's curse is more likely when the value of a good at auction is uncertain.

A) True
B) False

15.

When a seller knows more about the condition of a used car than the buyer does, the information is said to be asymmetric.

A) True
B) False

16.

The three kinds of government regulation designed to alter or control firm behavior are:

A) Antitrust policy, lobbying, and social regulation
B) Economic regulation, antitrust policy, and lobbying
C) Social regulation, lobbying, economic regulation
D) Social regulation, economic regulation, and antitrust policy
E) Social regulation, antitrust policy, fiscal policy

17.

A monopoly is likely to charge a higher price than an otherwise similar competitive industry would be.

A) True
B) False

18.

Public policy can help achieve more efficient use of an economy's resources by eliminating all monopolies.

A) True
B) False

19.

Government attempts to prohibit monopolization of a market are known as

A) antitrust regulation
B) economic regulation
C) social regulation
D) anticompetitive regulation
E) Herfindahl regulation

20.

If the electric company is allowed by regulators to earn only a normal profit, it will produce at the point where

A) MR = MC
B) P = MC
C) MC = quantity demanded
D) P = AC
E) MR = AC

Q1. The total resource cost of goods and services produced by the U. S. economy is known as
a. real GDP
b. personal income
c. national wealth
d. national income

Q2. The difference between GDP and final sales equals
a. depreciation
b. exports
c. imports
d. net inventory change

Q3. Current disposable income can be adjusted for price changes and population changes to yield real per capita disposable income.
a. true
b. false

Q4. If a lawn service mows your grass, it is included in the GDP.
a. true
b. false

Q5. In national income accounting, grain fed to a hog at a commercial hog farm is considered a(n)
a. final good
b. intermediate good
c. consumer good
d. capital consumption allowance

Q6. Imports constitute a minus figure in national income accounting.
a. true
b. false

Q7. The total value added in the production of a final good
a. exceeds the price of the final good
b. equals the price of the final good
c. exceeds the total payments made to owners of productive resources used in the production
d. both (b) and (c)

Q8. The GDP is reported on a monthly basis by the Department of Commerce.
a. true
b. false

Q9. Transfer payments are added to NI in the process of determining personal income.
a. true
b. false

Q10. U.S. gross domestic product is converted to U.S. gross national product by
a. adding the value of output produced by U.S.-owned resources in foreign countries
b. subtracting the value of output produced by U.S.-owned resources in foreign countries
c. subtracting the value of output produced in the United States by foreign-owned resources
d. both (a) and (c)

Q11. Final sales are always larger than the GDP.
a. true
b. false

Q12. Because of the value of things produced inside households, (building your own desk, mowing your own lawn, etc.)
a. the GDP value is automatically adjusted upward to reflect this
b. the GDP value is automatically adjusted downward to reflect this
c. Official GDP is surely smaller than true total output
d. Official GDP is surely larger than true total output

Q13. A government surplus may trigger a decline in the money supply.
a. true
b. false

Q14. Real wages are determined by multiplying money wages by the CPI.
a. true
b. false

Q15. The more volatile the inflation rate, the weaker the money supply as a standard of deferred payment.
a. true
b. false

Q16. An increase in the money supply always causes an increase in the price level.
a. true
b. false

Q17. Your nominal wages rose during the same period from $200 a week to $260. By how much did your real income rise?
a. 30 percent
b. 16.7 percent
c. 8.33 percent
d. 12 percent

Q18. In the past 10 years or so, average real wages of U.S. workers in nonagricultural industries have
a. increased about 40 percent
b. increased slightly
c. remained about the same
d. declined

Q19. If a new cash deposit creates excess reserves of $5,000 and the required reserve ratio is 10 percent, the banking system can increase the money supply by a maximum of
a. $50,000
b. $500
c. $5,000
d. $4,500

Q20. The effect of a change in the money supply on economic activity may be offset by a change in velocity.
a. true
b. false

Q21. The current base period for the CPI is
a. 1967
b. 1977
c. 1982–1984
d. 1990

Q22. In the circular flow, an increase in the money supply tends to result when
a. planned I equals planned S
b. planned I is less than planned S
c. planned I is greater than planned S
d. there is a surplus government budget

Q23. COLA is a form of indexation.
a. true
b. false

Q24. The total checkable deposits a bank may have can be determined by dividing its reserves by the reserve requirement.
a. true
b. false

Q25. The Financial Services Modernization Act
a. reinforced the Glass Steagall Act
b. prevented mergers of banks
c. eliminated barriers between banks, brokerage houses, and insurance companies
d. eliminated all banking regulations

Q26. Each Federal Reserve Bank has its own board of directors.
a. true
b. false

Q27. The most frequently used tool of U.S. monetary policy is
a. the discount rate
b. the reserve requirement
c. open-market operations
d. moral suasion

Q28. When the Fed conducts open-market operations, it primarily uses
a. Treasury bills
b. long-term U.S. government bonds
c. bonds of publicly traded corporations
d. overnight loans of major banks

Q29. The Board of Governors of the Federal Reserve System has
a. 6 members
b. 7 members
c. 1 member from each Federal Reserve Bank
d. 20 members

Q30. If the Fed desires to increase checkable deposits, it may lower the reserve requirement.
a. true
b. false

Q31. The interest rate at which banks borrow excess reserves from each other is known as the
a. prime rate
b. federal funds rate
c. discount rate
d. T-bill rate

Q32. If member banks need to borrow reserves, they must do so through the discount window.
a. true
b. false

Q33. The Fed Chairman appears before Congress semi-annually to present the Monetary Policy Report.
a. true
b. false

Q34. In terms of the total number of payments, which of the following comprises the largest share?
a. cash
b. personal checks
c. debit cards
d. credit cards

Q35. By buying government securities, the Federal Open Market Committee adds to member banks' reserves.
a. true
b. false

Q36. More than 50 percent of commercial banks in the United States belong to the Federal Reserve System.
a. true
b. false

Q37. The Federal Reserve System is built around
a. 4 regional banks
b. 6 regional banks
c. 12 district banks
d. 1 bank with several branches

Q38. The time lags lead monetarists to contend that monetary policy is counterproductive.
a. true
b. false

Q39. The marginal propensity to consume is
a. the fraction of an increase in income that would be spent on consumer goods
b. the additional desire people have for consumer goods
c. the fraction of a person's total income normally spent for consumer goods
d. the change in consumption resulting from a $1 change in the price level

Q40. The consumption function shows
a. how fast the economy is consuming its capital
b. that the amount of national income determines the rate at which the economy consumes its resources
c. that households' incomes determine how much the households will spend for consumer goods
d. the rate at which people actually use up their consumer goods

Q41. In the simple Keynesian model, if output exceeds aggregate expenditures,
a. there will be no response from businesses
b. inventories will decrease and businesses will increase output
c. inventories will increase and businesses will increase output
d. inventories will increase and businesses will decrease output

Q42. If planned construction investment increases by $30 billion and the MPC is two-thirds, total output will increase by
a. $30 billion
b. $20 billion
c. $45 billion
d. $90 billion

Q43. "A given change in business investment will cause a larger change in equilibrium output." This statement describes an important Keynesian concept called the
a. multiplier effect
b. marginal propensity to consume
c. marginal propensity to invest
d. consumption function

Q44. In the multiplier formula, 1/MPS equals the multiplier.
a. true
b. false

Q45. The classical economists held that chronic unemployment was likely.
a. true
b. false

Q46. As income increases, the absolute level of planned consumption will increase.
a. true
b. false

Q47. The new classical school contends that government fiscal policy is better than monetary policy in controlling inflation.
a. true
b. false

Q48. Higher price levels are associated with lower aggregate expenditure at every level of income.
a. true
b. false

Q49. Any time that planned leakages exceed planned injections, the economy will expand.
a. true
b. false

Q50. According to the Keynesian model, increased foreign spending for U.S. goods is likely to
a. reduce total employment in the United States
b. increase total employment in the foreign country
c. reduce total output in the United States
d. increase total output in the United States

Question 1 If it was impossible to have a comparative advantage, there would be no gains from trade. True False 4 points

Question 2 If the price of Good X is $10 and price of Good Y is $15, the slope of the budget constraint is 1.5. True False 4 points

Question 3 If the demand and supply curves have equal slopes in absolute value, the burden of a commodity tax will be split equally regardless of on whom the tax is placed. True False 4 points

Question 4 Suppose that supply is fixed at 100 units and demand is Q = 500 P. A price ceiling of $100 creates a shortage of 400 units. True False 4 points

Question 5 Housing shortages caused by rent controls are larger in the long run because the supply of housing is more elastic in the long run. True False 4 points

Question 6 Firms should exit the industry if average costs are greater than marginal costs. True False 4 points

Question 7 If a 3.67 percent increase in price causes a 1.97 percent decrease in quantity demanded, then total revenue must fall following an increase in price. True False 4 points

Question 8 Which of the following choices best illustrates the concept of Adam Smith's invisible hand ? A Vietnamese farmer grows rice; an exporter ships it to the United States, and a grocer in New York sells it to a customer. A fishery's stock of fish becomes depleted due to overfishing as boats from around the world converge. A government regulates a firm to clean up the pollutants it has released as part of its production process. An apartment building is built, which provides much needed housing, on the site of the only playground for children in that town. 4 points

Question 9 Figure: Labor Supply and Welfare Refer to the figure. The budget constraint is: ABC. BD. ABDC. ABD. 4 points Question 10 The price of coffee has increased, yet evidence suggests the demand for coffee has been stable. A possible explanation is that: there has been no change in the supply of coffee. there has been increased use of subsidies in coffee production. wages of workers in coffee production might have decreased. wages of workers in coffee production might have increased. 4 points Question 11 Which of the following statements is TRUE regarding profit maximization in competitive markets? I. When all firms pursue profits, none of them achieve profits. II. When all firms pursue profits, only the most innovative will achieve profits. III. Production is divided in such a way that total costs of production are minimized. I only II only I and III only II and III only 4 points Question 12 Suppose France can produce four phones or three computers with one unit of labor, and Sweden can produce one phone or two computers with one unit of labor. If France can trade only with Sweden, then the theory of comparative advantage suggests that: France should specialize in producing phones and import computers from Sweden. France should specialize in producing computers and import phones from Sweden. France should produce both phones and computers, and import nothing from Sweden. France should import both phones and computers from Sweden. 4 points Question 13 Potato chips and popcorn are substitutes. A subsidy for potato chips will ______the demand for popcorn and the quantity of popcorn sold will ______. (Table: Barrels of Oil) Refer to the table. What is the total amount of producer surplus (per barrel of oil) earned by all four producers if the market price per barrel of oil is $51? Table: Barrels of Oil Minimum willingness to sell Country a single barrel of oil Country A $32.00 Country B 16.00 Country C 17.25 Country D 56.99 increase; increase increase; decrease decrease; decrease decrease; increase 4 points Question 14 In the market for Good X a necessity good without any good substitutes the workers and capital in the industry can easily find work producing other goods. The burden of the tax is likely to fall: more heavily on buyers, given that demand is more inelastic than supply. evenly between buyers and sellers. more heavily on sellers, given that supply is more inelastic than demand. more heavily on buyers, given that demand is more elastic than supply. 4 points Question 15 A U.S. manufacturer arranges to purchase parts from a German supplier for 500,000 euros in six months. The U.S. manufacturer is concerned that the dollar will depreciate against the euro, meaning the dollar cost of the 500,000 euros will rise. What should the U.S. manufacturer do? lobby the Fed to lower interest rates on six-month T-bills buy a futures contract that fixes the dollar cost of 500,000 euros in six months buy an exchange rate contract that pegs the interest rate to the discount rate on interbank loans sell a naked option to cover the output spread 4 points Question 16 Which of the following scenarios would cause a speculator to buy low and sell high ? Farmers expect to have a bumper harvest of corn next year. Imports of corn begin to flood the country. The government is expected to pass legislation making it mandatory for all vehicles to use corn-based fuels within one year. The government is expected to subsidize corn production for farmers. 4 points Question 17 In a market with a price ceiling which of the following is TRUE? Buyers and sellers experience unexploited gains from trade. Resources are allocated to their most efficient uses. The supply of goods is sold by the sellers with the lowest costs. The supply of goods is bought by the buyers with the highest willingness to pay. 4 points Question 18 Consider the following statements: I. Relative to a no-trade situation, if the United States exported wheat, the U.S. domestic wheat price would rise and domestic production of wheat would expand. II. Relative to a no-trade situation, international trade causes prices of all goods to rise. I is true; II is false. I is false; II is true. Both I and II are true. Both I and II are false. 4 points Question 19 As the price of a good fluctuates, a profit-maximizing firm will expand or contract production along its: average cost curve. average product curve. marginal cost curve. marginal product curve. 4 points Question 20 An increase in demand and a decrease in supply occur in a market. What happens to the equilibrium price and quantity? The equilibrium price decreases; the change in the equilibrium quantity is ambiguous. The equilibrium price decreases; the equilibrium quantity increases. The equilibrium price increases; the change in the equilibrium quantity is ambiguous. The equilibrium price increases; the equilibrium quantity decreases.

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