KNOWLEDGE CHECK 1
Question 1
If macroeconomics looks at the economy as a whole, it
focuses on which of the following?
Question 2
In a discussion of economics, which of the following would
exert the most influence on an individual firm's decision to hire workers?
Question 3
What is the basic difference between macroeconomics and
microeconomics?
Question 4
What is the basic difference between macroeconomics and
microeconomics?
Question 5
Which of the following is most likely a topic of discussion
in macroeconomics?
Question 6
Attending college is a case where the ________________
exceeds the monetary cost.
Question 7
Most real-world choices aren't about getting all of one
thing or another; instead, most choices involve _________________, which
includes comparing the benefits and costs of choosing a little more or a little
less of a good.
Question 8
The law of ____________________________ explains why people
and societies rarely make all-or-nothing choices.
Question 9
Also called the opportunity set—a diagram which shows what
choices are possible—which of the following is the model that economists use to
illustrate the process of individual choice in a situation of scarcity?
Question 10
Scarcity implies that:
KNOWLEDGE CHECK 2
Question 1
Which of the following would reduce the supply of microcomputers?
Question 2
A supply curve is a graphical illustration of the
relationship between price, shown on the vertical axis, and ____________, shown
on the horizontal axis.
Question 3
The ____________ is the quantity where quantity demanded and
quantity supplied are equal at a certain price.
Question 4
Which of the following is the only price where quantity
demanded is equal to quantity supplied?
Question 5
If a firm faces ________________________, while the prices
for the output the firm produces remain unchanged, a firm's profits will
increase.
Question 6
If the price is below the equilibrium level, then the
quantity demanded will exceed the quantity supplied. What is this known as?
Question 7
What is enacted when discontented sellers, feeling that
prices are too low, appeal to legislators to keep prices from falling?
Question 8
The nature of demand indicates that as the price of a good
increases:
Question 9
A demand curve shows the relationship between price and
_________________ on a graph.
Question 10
What is the term economists use to refer to the relationship
that a higher price leads to a lower quantity demanded?
KNOWLEDGE CHECK 3
Question 1
"Constant returns to scale" describes a situation
where:
Question 2
In microeconomics, which of the following is synonymous with
economies of scale?
Question 3
Which term describes a situation where the quantity of
output rises, but the average cost of production falls?
Question 4
In order to determine the average variable cost, the firm's
variable costs are divided by _______________________.
Question 5
If a firm is experiencing _____________________, then as the
quantity of output rises, the average cost of production rises.
Question 6
In a free market economy, firms operating in a perfectly
competitive industry are said to have only one major choice to make. Which of
the following is that choice?
Question 7
In the ________, the perfectly competitive firm will react
to losses by __________________________.
Question 8
In the _________, the perfectly competitive firm will seek
out ________________________.
Question 9
Firms operating in a market situation that creates
___________________, sell their product in a market with other firms who
produce identical or extremely similar products.
Question 10
If a perfectly competitive firm is a price taker, then which
of the following is true?
KNOWLEDGE CHECK 4
Question 1
Which of the following will be least concerning to a firm
that has a monopoly over a particular industry?
Question 2
For a monopolistic firm, which of the following would be the
ideal conditions for barriers to entry?
Question 3
When the demand for a good or service limits the quantity
that can be sold to an output at which the firm experiences economies of scale,
Question 4
A firm that holds a monopoly position in the marketplace is:
Question 5
A monopolistically competitive firm may earn abnormally high
profits in the
Question 6
If a monopolistic competitor raises its price, it _________
customers than a perfectly competitive firm, but ________________ customers
compared to the number that a monopoly that raised its prices would.
Question 7
Shopping malls typically lease retail space to many clothing
stores. When these retailers compete to sell similar but not completely
identical products, they engage in which of the following?
Question 8
Which of the following poses a difficult challenge for U.S.
competition policy?
Question 9
Government policy-makers often must decide how to balance
the potential benefits of ______________ against the potential benefits of
_____________ .
Question 10
Splitting up a natural monopoly held by a public utility
that produces and provides electricity would
KNOWLEDGE CHECK 5
Question 1
Since Baltimore passed the first _______________ in 1994,
several dozen cities enacted similar laws in the late 1990s and into the 2000s.
Question 2
As the __________ substitute for low-skill labor becomes
available, the demand curve for low-skill labor will shift to the left.
Question 3
Improvements in the productivity of labor will tend to:
Question 4
Whenever there is a shortage at a particular price, the
quantity sold at that price will equal:
Question 5
If the demand for software engineers __________ slower than
does supply, then wages of software engineers will __________.
Question 6
When consumers and businesses have greater confidence that
they will be able to repay in the future, _______________________.
Question 7
Many economists believe that the trend toward greater wage inequality
across the U.S. economy was primarily caused by _____________.
Question 8
In contrast to goods and services markets, _____________ are
rare in labor markets, because rules that prevent people from earning income
are not politically popular.
Question 9
The "law of supply" functions in labor markets;
that is, a higher __________ for labor leads to a higher quantity of labor
supplied.
Question 10
Are markets always in equilibrium?
KNOWLEDGE CHECK 6
Question 1
Which of the following is included in the calculated Gross
Domestic Product?
Question 2
Economists would most likely classify which of the following
as consumer durable goods?
Question 3
The nominal value of any economic statistic refers to the
number that is actually announced at that time, while the ________________
refers to the statistic after it has been adjusted for inflation.
Question 4
_______________, which can be estimated by the growth of
GDP, ultimately determines the prevailing standard of living in a country.
Question 5
___________ is about two-thirds of the demand side of GDP,
but it moves relatively little over time.
Question 6
For most high-income countries of the world, GDP
_________________ over time.
Question 7
On the demand side of GDP, consumption by _____________ is
the largest component of GDP, accounting for about two-thirds of the GDP in any
year.
Question 8
Which of the following is included in GDP calculations?
Question 9
Which is the best description GDP?
Question 10
Which of the following statements is true?
KNOWLEDGE CHECK 7
Question 1
Reginald looked for work for six months but could not find a
job to his liking. He now spends his time at the beach. For purposes of
employment he is considered:
Question 2
A college student who is enrolled in school full time and
not seeking employment is considered:
Question 3
The rise in unemployment that occurs because of a recession
is known as cyclical unemployment, because it is closely tied to the
______________.
Question 4
The definition of market equilibrium states that at the
_______________, the quantity of labor demanded by employers will equal the
quantity supplied.
Question 5
If a nation's labor force receives a significant influx of
young workers:
Question 6
What name is given to the index based on the prices of
exported or imported merchandise?
Question 7
Inflation can be calculated in terms of how the overall cost
of ___________________ changes over time.
Question 8
Inflation implies that the level of all prices
_____________________.
Question 9
The situation where the buying power of money in terms of
goods and services increases is called:
Question 10
While one occasionally sees references to inflation over
short time periods, the term typically implies a(n) _____________ in prices.
KNOWLEDGE CHECK 8
Question 1
Which term describes circumstances where a country's exports
exceed its imports?
Question 2
What is the name for goods and services produced in one
country that are then sold in other countries?
Question 3
If exports and imports:
Question 4
The term _____________ describes circumstances where a
country's imports exceed its exports.
Question 5
Trade surpluses and trade deficits can be __________________
for an economy in certain circumstances.
Question 6
The idea behind comparative advantage reflects the
possibility that one party:
other party.
Question 7
The idea behind comparative advantage reflects the
possibility that one party:
Question 8
Colombia produces coffee with less labor and land than any
other country; it therefore necessarily has:
Question 9
Which of the following is true?
Question 10
Jeremy has a(n) __________________ in all aspects of
camping: he is faster at setting up tents, gathering firewood, paddling a
canoe, cooking meals, and washing up.
KNOWLEDGE CHECK 9
Question 1
A(n) ________________________________ is calculated as a
flat percentage of income earned, regardless of level of income.
progressive tax
regressive tax
proportional tax
estate and gift tax
Question 2
Which of the following terms is used to describe the set of
policies that relate to government spending, taxation, and borrowing?
financial policies
monetary policies
fiscal policies
economic policies
Question 3
A(n) __________________________ policy will cause a greater
share of income to be collected from those with high incomes than from those
with lower incomes.
proportional tax
regressive tax
progressive tax
excise tax
Question 4
What do goods like gasoline, tobacco, and alcohol typically
share in common?
A progressive tax is imposed on each of them.
A regressive tax is imposed on each of them.
They are all subject to government excise taxes.
They are all subject to government fiscal taxes.
Question 5
_____________________ are a form of tax and spending rules
that can affect aggregate demand in the economy without any additional change
in legislation.
Standardized employment budgets
Discretionary fiscal policies
Automatic stabilizers
Budget expenditures
Question 6
When the interest rate in an economy decreases, it is most
likely as a result of:
an increase in the government budget surplus or its budget
deficit.
a decrease in the government budget surplus or its budget
deficit.
an increase in the government budget surplus or a decrease
in its budget deficit.
a decrease in the government budget surplus or an increase
in its budget deficit.
Question 7
When governments are borrowers in financial capital markets,
which of the following is least likely to be a possible source of the funds
from a macroeconomic point of view?
central bank prints more money
increase in household savings
decrease in borrowing by private firms
foreign financial investors
Question 8
A __________________ often results in an outflow of
financial capital leaving the domestic economy and being invested in the global
economy.
trade surplus
trade deficit
fiscal deficit
twin surplus
Question 9
From a macroeconomic point of view, which of the following
is a source of demand for financial capital?
savings by households and firms
foreign financial investment
domestic household private savings
government borrowing
Question 10
The U.S. economy has two main sources for financial capital:
_______________________ and ____________________________.
private savings from U.S. households and firms; inflows of
foreign financial investment
private sector investment; government borrowing
private savings from U.S. households and firms; government
borrowing
private sector investment; inflows of foreign financial
investment from abroad
KNOWLEDGE CHECK 10
Question 1
When banks hold excess reserves because they don't see good
lending opportunities:
it negatively affects contractionary monetary policy.
it negatively affects expansionary monetary policy.
expansionary monetary policy is unaffected.
contractionary monetary policy is unaffected.
Question 2
How are the specific interest rates for the lending and
borrowing markets determined?
U.S. Treasury Department Board policy
by the forces of supply and demand
through open market operations
by altering the discount rate
Question 3
Atlantic Bank is required to hold 10% of deposits as
reserves. If the Central Bank increases the discount rate, how would Atlantic
Bank respond?
by noting a decrease in net worth
by increasing its reserves
its balance sheet will be unchanged
it can make more loans with increased loan assets
Question 4
What term is used to describe the interest rate charged by
the Central Bank when it makes loans to commercial banks?
discount rate
reserve requirement
Fed rate
open market rate
Question 5
Which of the following is considered to be a relatively weak
tool of monetary policy?
quantitative easing
altering the discount rate
reserve requirements
reducing the money supply
Question 6
Regardless of the outcome in the long run,
______________________ always has the effect of stimulating the economy in the
short run.
expansionary monetary policy
contractionary monetary policy
reverse quantitative easing policy
tight monetary policy
Question 7
Which of the following institutions oversees the safety and
stability of the U.S. banking system?
Office of the Comptroller of the Currency
Federal Financial Institutions Examination Council
Federal Open Market Committee
The Federal Reserve
Question 8
When the Central Bank acts in a way that causes the money
supply to increase while aggregate demand remains unchanged, it is:
following a contractionary monetary policy.
following a quantitative easing policy.
following a tight monetary policy.
following an expansionary monetary policy.
Question 9
Which of the following events would cause interest rates to
increase?
lower tax rates
a higher discount rate
lower reserve requirements
an open market operation to buy bonds
Question 10
When the Central Bank lowers the reserve requirement on
deposits:
the money supply increases and interest rates decrease.
the money supply and interest rates decrease.
the money supply and interest rates increase.
the money supply decreases and interest rates increase
