Econ 210

Front 1

Which of the following best illustrates fallacy of composition

Back 1

If Mr. Smith had more money, he would be wealthier; if a nation's money supply were larger, the people of the nation would be wealthier.

Front 2

A candidate for president made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if:

Back 2

either A or C occurs, but not as a result of B

Front 3

If the armed forces rely exclusively on volunteers to fill their ranks, it is likely that military personnel will largely be individuals who:

Back 3

have lower valued opportunities available

Front 4

Which of the following statements describes a capitalist market-based economy (ie, the United States economy)

Back 4

I and II only; economic resources are allocated based on prices and profits and private ownership of resources is fundamental to innovation, growth and trade.

Front 5

Economist believe that people respond to incentives in predictable ways. Therefore, if the government imposed a tax on each child born, one would expect that;

Back 5

fewer children would be born

Front 6

"the best way to cure poverty in the US is through an expanded skill training program targeted at inner city unemployment." This statement is an example of

Back 6

normative economics

Front 7

The opportunity cost of an action is

Back 7

the value of the alternatives that must be sacrificed to take the action

Front 8

when economist assume that people act rationally, it means they:

Back 8

make decisions based on what they believe is best for themselves using available information

Front 9

which of the following is most consistent with the rule of rational choice?

Back 9

"when evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects."

Front 10

Suppose the economy is operating at a point inside its production possibilities curve (PPC) From this information it can be concluded that:

Back 10

resources are being used inefficiently.

Front 11

when a person possesses a comparative advantage in the production of one good or service it:

Back 11

permits gains from trade to be realized due to a more efficient use of resources

Front 12

specialization and trade are beneficial to two countries:

Back 12

all of the above

Front 13

why would the US want to trade with Spain, give that the US is so much larger and more productive?

Back 13

Comparative advantage

Front 14

when a country expands its trade with other countries, which of the following is likely to occur?

Back 14

some job losses will occur in some industries

Front 15

in general, demand curves slope downward because:

Back 15

consumers will substitute products fro those products whose prices has risen

Front 16

The law of supply indicates that

Back 16

producers will offer more of a product at high prices than they will at low prices

Front 17

if two goods are complements

Back 17

all of the above are true

Front 18

when the price of a product increases, a consumer is able to buy less of the product with a given money income. This describes:

Back 18

the income effect

Front 19

students at the University of Missouri Kansas City pay $100 per year for a parking permit. Many students complain, however, that they are unable to find a parking place. This suggests that:

Back 19

parking permits are underpriced

Front 20

Assuming that pizza and beer are complements, if the price of pizza decreases, economists would expect:

Back 20

the demand for beer to increase.

Front 21

assuming soybeans and tobacco can be grown on the same land, an increase in the price of tobacco, other things being equal, causes a

Back 21

leftward shift in the supply curve for soybeans

Front 22

which of the following will NOT impact the demand for orange juice?

Back 22

agricultural subsidies (government payments) to farmers to grow more oranges

Front 23

the demand for a good will likely shift outward to the right if:

Back 23

the price of the good is expected to rise in the future

Front 24

markets:

Back 24

bring buyers and sellers together.

Front 25

Economist believe that individuals act as if they are motivated:

Back 25

primarily by self-interest

Front 26

because of scarcity

Back 26

society must sacrifice valuable alternatives to obtain more goods and services it desires.

Front 27

"the government should levy higher taxes on the rich and use the additional revenues to provide better housing for the poor." this statement illustrates

Back 27

a normative economic statement

Front 28

joe's boss offers him twice his usual wage to work tonight instead of taking his girlfriend to the Bruce Springsteen concert at the Spring Center. This offer will likely:

Back 28

increase the opportunity cost of going to the concert.

Front 29

despite the warning on a package of cigarettes about the potential health hazards of smoking, Tom lights up a cigarette. An economist would conclude that:

Back 29

in Tom's judgement, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost.

Front 30

The following action will NOT shift a production possibility curve (PPC) curve outward:

Back 30

shifting preferences of consumers to cheaper products

Front 31

when two countries gain from trade

Back 31

both countries can move beyond their respective production possibilities curve

Front 32

If the US Auto Workers Union is able to obtain a substantial wage increase for auto workers, other things being equal, the price of cars will rise. This rise in prices can be attributed to

Back 32

a decrease in the supply of cars

Front 33

a new safety report is released that claims that sport utility vehicles are prone to roll over during crashes. The likely effect of this report on the equilibrium price and quantity of sport utility vehicles is:

Back 33

equilibrium price decrease; equilibrium quantity decrease

Front 34

what would be the effect on the equilibrium price and equilibrium quantity of new housing if mortgage interest rates rise and the cost of building a house rise simultaneously

Back 34

the equilibrium price cannot be predicted but the equilibrium quantity will fall.

Front 35

if both the supply and demand for computer games increases, the the equilibrium price of the games

Back 35

is indeterminate and the equilibrium quantity rises

Front 36

suppose the US steps up efforts to combat drug trafficking and, with the aid of the Colobian military, destroys a significant percentage of cocaine crops. Predict the impact of the increased drug interdiction the on the market for cocaine in the US

Back 36

the supply of cocaine will decrease, causing the price of cocaine to increase

Front 37

Which of the following is not included in the calculation of GDP

Back 37

a construction firm's purchase of lumber to build a four bedroom home.

Front 38

GDP equals $10 trillion. If consumption equals $7 trillion, investment equals $2 trillion, and government spending equals $3 trillion:

Back 38

imports exceed exports by $2 trillion

Front 39

In calculating GDP

Back 39

additions to inventories are added to GDP while decreases in inventories are subtracted from GDP

Front 40

we would be guilty of double counting if we included in GDP the sales value of

Back 40

The value of the tires used in the production of a new automobile.

Front 41

which of the following would count as investment spending in the calculation of GDP?

Back 41

a rise in the inventories of Dell Computers

Front 42

Government purchases, under the expenditure approach to calculating GDP, do NOT include:

Back 42

social security benefit payments to retirees.

Front 43

Which of the following are most likely classified by economists as consumer durable goods?

Back 43

Automobiles, furniture, CD players

Front 44

An item that is included in BOTH US GDP and US GNP is

Back 44

wages earned by a US citizen employed at an American owned company in Toledo, Ohio.

Front 45

which of the following factors that affect our well being does GDP fail to adequately account for?

Back 45

all of the above

Front 46

which of the following is not part of US GDP?

Back 46

all of the above ARE included in GDP

Front 47

Which component of current US GDP under the expenditure approach is the largest?

Back 47

Consumption

Front 48

If nominal GDP = $200 billion and the price index =125, Real GDP equals

Back 48

$160 billion

Front 49

which of the following activities would the government NOT count as an indication that a person is actively looking for work?

Back 49

asking friends whether they have heard of any job opportunities.

Front 50

if the frictional unemployment rate is 4%, the structural unemployment rate is 2%, and the cyclical unemployment rate is 1%

Back 50

both A and B are correct; the natural rate of unemployment is 6% the overall unemployment rate is 7%

Front 51

suppose there are 10 million part time workers and 90 million full time in an economy. If five million of the part time workers switch to full time work, we can conclude that

Back 51

the official unemployment rate will remain unchanged.

Front 52

economists usually use the term "recession" to refer to

Back 52

two or more consecutive quarters of declining real GDP

Front 53

the type of unemployment that occurs because of a recession is called

Back 53

cyclical unemployment

Front 54

if there are discouraged workers

Back 54

the unemployment rate will tend to understate the true level of unemployment

Front 55

inflation will be LEAST harmful if

Back 55

it is correctly anticipated and interest rates adjust accordingly

Front 56

in calculating the CPI, the base year is

Back 56

both A and C are correct; equal to 100 and the benchmark against which other years are compared

Front 57

if the consumer price index in 2006 =150 and consumer price index in 2007=188, what is the rate of inflation?

Back 57

25%

Front 58

if the real rate of interest is 6.2% and the inflation rate is 4.3%, what is the nominal rate of interest?

Back 58

10.5%

Front 59

if the marginal propensity to consume (mpc) is 0.75, then the marginal propensity to save (mps) must be:

Back 59

0.25

Front 60

if sam's consumption goes from $8,000 to $12000, what is sam's marginal propensity to consume? (mpc)

Back 60

0.4

Front 61

Which of the following will NOT cause the consumption function to shift?

Back 61

a change in consumer disposable income

Front 62

a decrease in interest rates is likely to result in

Back 62

an increase in consumption spending

Front 63

the equation C=0.75Y + 35, where C is consumption and Y is disposable income, tell us:

Back 63

households will consume $35 if their disposable income is zero and will consume three-fourths of any increase in disposable income they receive

Front 64

assume that a new machine tool having a useful life of only one year cost $80,000. Also assume that net of such operating costs as power, taxes, and so forth, the additional revenue resulting from buying this tool is expected to be $96,000. The expected rate of return on this tool is:

Back 64

20%

Front 65

If the price level increases in the US relative to foreign countries, then American consumers will purchase more foreign goods and fewer American goods" this statement describes

Back 65

the foreign purchases effect

Front 66

a decrease in aggregate demand (AD) would result from:

Back 66

higher taxes

Front 67

which of the following is most likely to favor the appreciation of the American dollar:

Back 67

an American professor on extended vacation in Paris

Front 68

The discovery of new profitable technological investment opportunities, combined with inventory levels that have risen far above desired levels, would have what effect on aggregate demand (AD)?

Back 68

AD could either increase or decrease, depending on which change was of a greater magnitude

Front 69

If the US dollar depreciates relative to foreign currencies,we would expect;

Back 69

US exports to rise and imports to fall