Introduction to Economics

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.

Select one:

a. everything is variable.
b. all else is held equal.
c. no one knows which variables will change and which will remain constant.
d. what is true for the individual is not necessarily true for the whole.

Improvements in the productivity of labor will tend to:

Select one:

a. decrease wages.
b. decrease the supply of labor.
c. increase wages.
d. increase the supply of labor.

If the state of Washington’s government collects $75 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be a:

Select one:

a. budget deficit.
b. budget surplus.
c. decrease in payroll tax.
d. decrease in proportional taxes.

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year.

Select one:

a. 2%
b. 12%
c. 22%
d. 32%

_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.

Select one:

a. GDP per capita.
b. The Industrial Revolution.
c. The living standard.
d. Investment and inventions.

The slope of the production possibility frontier is determined by the ________________ of expanding production of one good, measured by how much of the other good would be lost.

Select one:

a. absolute advantage.
b. opportunity cost.
c. relative advantage.
d. specialization.

Consumption in the United States is about ____________ of GDP, and it moves relatively little over time.

Select one:

a. 10%
b. 33%
c. 68%
d. 90%

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:

Select one:

a. out of the labor force.
b. unemployed.
c. employed in the underground economy.
d. underemployed.

Deregulation occurs when a government eliminates or scales back rules relating to all but one of the following. Which one is it?

Select one:

a. prices that can be charged.
b. natural monopoly.
c. conditions of entry in a certain industry.
d. quantities that can be produced.

The nature of demand indicates that as the price of a good increases:

Select one:

a. suppliers wish to sell less of it.
b. more of it is produced.
d. buyers desire to purchase less of it.

The high-income economies of the world contain approximately of the world’s population and produce and consume _ of the world’s GDP.

Select one:

a. 14%; over 50%.
b. 12%; over 60%.
c. 14%; over 70%.
d. 12%; over 80%.

The term “basic research” applies specifically to research pertaining to fundamental scientific breakthroughs that may offer commercial applications in the ______________.

Select one:

a. distant future.
b. near future.
c. immediate future.
d. short run.

The neoclassical perspective on macroeconomics emphasizes that in the long run, the economy seems to rebound back to its _ and its ________.

Select one:

a. long term growth; cyclical unemployment.
b. potential GDP; natural rate of unemployment.
c. natural level of output; cyclical unemployment rate.
d. real GDP; natural rate of unemployment.

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good.

Select one:

a. the production possibilities frontier.
b. allocative efficiency.
c. scarcity.
d. utility.

A new American import quota on imported steel would be likely to:

Select one:

b. increase American production of steel.
a. increase the production of steel-using American firms.
c. generate tax revenue to the government.
d. reduce the cost of production to steel-using American firms.

A firm’s _ consist of expenditures that must be made before production starts that typically, over the short run, _____ regardless of the level of production.

Select one:

a. fixed costs; do not change.
b. variable costs; are constantly changing.
c. fixed costs; are consistently changing.
d. variable costs; do not change.

A tariff differs from a quota in that a tariff is:

Select one:

d. a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.
a. levied on imports, whereas a quota is imposed on exports.
b. levied on exports, whereas a quota is imposed on imports.
c. a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported.

The term “applied research” refers to research that is focused on a particular product that promises:

Select one:

a. to offer commercial applications in the short-term.
b. to offer commercial applications in the long-term.
c. an economic payoff in the short or medium-term.
d. an economic payoff in the medium or long-term.

Negotiations between unions and a firm or firms is called __________________.

Select one:

a. collective bargaining.
b. cooperative bargaining.
c. united bargaining.
d. organized bargaining.

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

Select one:

a. high-skill labor.
b. lower wage.
c. technology.
d. market.

When one nation can produce a product at lower cost relative to another nation, it is said to have a(n) __________________ in producing that product.

Select one:

a. relative advantage.
b. absolute advantage.
c. economy of scale.
d. production efficiency.

The term _________________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.

Select one:

a. price setter.
b. business entity.
c. price taker.
d. trend setter.

The term ___________________ is used to describe the common pattern whereby each marginal unit of a consumed good provides less of an addition to utility than the previous unit.

Select one:

a. diminishing marginal utility.
b. marginal utility pattern.
c. marginal income utility.
d. decreasing marginal utility.

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

Select one:

a. government.
b. market.
c. firm.
d. business sector.

________ economists place an emphasis on run economic performance.

Select one:

a. Phillips; short.
b. Keynesian; long.
c. Neoclassical; long.
d. Says; short.

If South Dakota’s governor reports a budget surplus in 2011, that state government likely:

Select one:

a. received more in taxes than it spent in that year.
b. increased the proportional tax level.
c. equalized spending and taxes in that year.
d. increased the corporate income tax rate.

Treasury bonds are issued by the federal government through the _____________________.

Select one:

a. Federal Reserve
b. Central Bank
c. U.S. Department of the Treasury
d. U.S. Office of the Comptroller of Currency

__________ arises when firms act together to reduce output and keep prices high.

Select one:

a. Collusion
b. A cartel
c. A monopoly
d. An oligopoly

The unemployment rate measures:

Select one:

a. the number of people unemployed divided by the number of people employed.
b. unemployed workers as a percentage of the labor force.
c. unemployed workers as a percentage of the population age over-sixteen.
d. unemployed workers as a percentage of the population.

A ______________ is a promise to fix or replace the good, at least for a certain period of time.

Select one:

a. service contract
b. insurance policy
c. money-back guarantee
d. warranty

If Bill performs plumbing upgrades for Alice in exchange for her incorporating his business, then their _________________________ will be satisfied.

Select one:

a. balance of trade
b. double coincidence of wants
c. convenience of exchange
d. division of labor

______________________ refers to the additional revenue gained from selling one more unit.

Select one:

a. Marginal revenue
b. Total revenue
c. Economic profit
d. Accounting profit

In economics, a firm that faces no competitors is referred to as _________________.

Select one:

a. an oligopoly
b. a monopoly
c. a perfect competitor
d. an oligopolizor

An import quota does which of the following?

Select one:

a. decreases the price of the imported goods to consumers
b. increases the price of the domestic goods to consumers
c. redistributes income away from domestic producers of those products toward domestic producers of exports
d. both a) and c)

In countries like _____________ the command economy predominates.

Select one:

a. China and Vietnam
b. Cuba and North Korea
c. South Africa and Kenya
d. Germany and France

The term _________________ refers to the additional utility provided by one additional unit of consumption.

Select one:

a. utility
b. marginal utility
c. added utility
d. Giffen utility

Which of the following is the best example of a quota?

Select one:

a. a tax placed on all small cars sold in the domestic market
b. a limit imposed on the number of men’s suits that can be imported from a foreign country
c. a subsidy from the American government to domestic manufacturers of men’s suits so they can compete more effectively with foreign producers of men’s suits
d. a $100-per-car fee imposed on all small cars imported

____________ means selling goods below their cost of production.

Select one:

a. Protectionism
b. Dumping
c. Import quotas
d. Non-tariff barriers

The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that:

Select one:

b. domestic producers can attain the economies of scale to allow them to compete in world markets.
a. firms will be protected from subsidized foreign competition.
c. there will be adequate supplies of crucial resources in case they are needed for national defense.
d. it will not be subjected to a takeover from a foreign competitor.

During the recent U.S. recession, some large automakers required bailouts from the federal government to avoid being forced into bankruptcy by their _________________.

Select one:

a. shareholders
b. bondholders
c. Chief Executive Officer
d. Board of Directors

During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force.

Select one:

a. 25%
b. 45%
c. 65%
d. 85%

If markets throughout the global economy all have flexible and continually adjusting prices, then:

Select one:

a. all market-oriented economies will implement coordinated wage reductions.
b. each economy will always head for its natural rate of unemployment.
c. each economy must shift in aggregate demand and create additional employment.
d. all changes in prices and wages will create additional employment.

The term _____________ describes circumstances where a country’s exports exceed its imports.

Select one:

a. trade deficit
b. trade imbalance
c. trade surplus
d. trade balance

The term ____________ refers to a market exchange that affects a third party who is outside or external to the exchange.

Select one:

a. social costs
b. spillover
c. market failure
d. private costs

If a country’s economic data shows private savings of $300 million, government spending of $350 million, tax revenue of $400 million, and a trade surplus of $75 million, then what does investment equal?

Select one:

b. $475 million
a. $775 million
c. $275 million
d. $700 million

The ___________________ is the institution designed to control the quantity of money in the economy and also to oversee the:

Select one:

a. FOMC; passing of tax and spending bills.
b. Central Bank; safety and stability of the banking system.
c. FFIEC; day-to-day democratic control of policy.
d. FDIC; responsibility for deposit insurance.

Which of the following institutions oversees the safety and stability of the U.S. banking system?

Select one:

a. Office of the Comptroller of the Currency
b. Federal Financial Institutions Examination Council
c. Federal Open Market Committee
d. The Federal Reserve

Attending college is a case where the ________________ exceeds the monetary cost.

Select one:

a. budget constraint
b. marginal analysis
c. opportunity cost
d. marginal utility

If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be:

Select one:

a. an increase in payroll tax.
b. an increase in excise tax.
d. a budget deficit

________________ occurs when a group of legislators all agree to vote for a package of otherwise unrelated laws that they individually favor.

Select one:

a. Pork-barrel spending
b. Logrolling
c. Competitive spending
d. Politically conservative spending