Question

Question 1

Which one of the following individuals is not counted as unemployed?

1) A recent college graduate currently without any employment and looking for her first full-time job

2) A 35-year-old woman fired from her prior work because of poor performance and looking for another job

3) A 50-year-old woman laid off from her former job because of a downturn in the company's sales and looking for another job

4) A 22-year-old aspiring actress currently without any show business employment, but working temporarily as a waitress while she auditions for acting jobs

Question 2

According to the quantity theory of money and prices, a 10 percent increase in the money supply ultimately leads to:

1) a 10 percent increase in real GDP.

2) a 10 percent increase in real national output.

3) a 10 percent increase in the price level.

4) a 10 percent increase in velocity.

Question 3

If a consumer concludes that the marginal utility of the last dollar spent on vegetables exceeds the marginal utility of the last dollar spent on junk food, he will respond by:

1) consuming relatively more junk food and fewer vegetables.

2) consuming relatively more vegetables and less junk food.

3) consuming equal amounts of vegetables and junk food.

4) halting consumption of junk food altogether.

Question 4

A decrease in long-run average costs resulting from increases in output is:

1) attributed to economies of scale.

2) attributed to diseconomies to scale.

3) attributed to constant returns to scale.

4) attributed to the law of diminishing marginal product.

Question 5

Microeconomics is the study of:

1) the behavior of the economy as a whole.

2) how rising prices affect the level of employment in the economy.

3) how individuals and firms make decisions.

4) the effect that money has in the economic system.

Question 6

Absent government interference, the wage rate for labor in a competitive market is established:

1) solely by the firm's demand for labor.

2) solely by the market supply of labor.

3) by both the demand for and supply of labor at each individual firm.

4) by the market supply and market demand for labor.

Question 7

The rate of unemployment is calculated as the number of:

1) unemployed workers divided by the number of employed workers.

2) people in the civilian labor force divided by the number of unemployed.

3) unemployed divided by the number of people in the civilian labor force.

4) employed workers divided by the number of unemployed workers.

Question 8

Which of the following statements concerning the distinction between positive and normative economics is true?

1) Positive statements are concerned with what is, while normative statements are concerned with what someone thinks should be.

2) Positive statements are concerned with what people think, while normative statements are concerned with what people do.

3) Positive statements are true while normative statements are false.

4) Positive statements are concerned with what is while normative statements are concerned with what will be.

Question 9

Assume there is an increased demand in the United States for Australian wines. If all other factors are held constant, this will result in:

1) an increase in the U.S. dollar exchange rate for Australian dollars.

2) an appreciation of the U.S. dollar.

3) a movement along the demand curve for Australian wine.

4) a decrease in the par value of the Australian dollar.

Question 10

If an economy is at long-run equilibrium, and consumers' confidence in the economy rises:

1) aggregate demand will shift leftward and the price level will rise.

2) aggregate demand will shift leftward and the price level will fall.

3) aggregate demand will shift rightward and the price level will rise.

4) aggregate demand will shift rightward and the price level will fall.

Question 11

Macroeconomics is best defined by which of the following statements?

1) Macroeconomics is the study of how firms strive to maximize their profits.

2) Macroeconomics is the study of the behavior of the economy as a whole.

3) Macroeconomics is the study of individual economic units.

4) Macroeconomics is the study of how the prices of individual goods are determined.

Question 12

The profit-maximizing price and quantity established by the unregulated monopolist in the above figure are:

1) Q1 units of output and a price of P5.

2) Q3 units of output and a price of P3.

3) Q1 units of output and a price of P1.

4) Q4 units of output and a price of P4.

Question 13

Which of the following best represents the law of demand?

1) As the price of a good decreases, the demand for the good increases.

2) As the price of a good increases, the quantity demanded of that good decreases.

3) As the demand for a good increases, the price of that good increases.

4) As the price of a good decreases, the demand curve for that good shifts to the right.

Question 14

When considering GDP as a measure of the nation's economic performance, which of the following statements is not true?

1) GDP is a good measure of a nation's overall welfare.

2) GDP is useful to map changes in the economy's domestic economic performance over time.

3) GDP is underestimated because it does not include illegal activities.

4) GDP would be a better measure of economic performance if it included nonmarket activities.

Question 15

Which one of the following statements is false?

1) TC = TFC + TVC

2) ATC = AFC + AVC

3) AFC = TFC divided by Q

4) MC = TC divided by Q

Question 16

If a monopolist wishes to increase its output and quantity sold:

1) it must reduce its price, so its marginal revenue is greater than its price.

2) it must reduce its price, so its marginal revenue is less than its price.

3) it must raise its price, so its marginal revenue is greater than its price.

4) it must raise its price, so its marginal revenue is less than its price.

Question 17

The Consumer Price Index measures:

1) the average of raw material prices paid by producing firms.

2) the level of prices with respect to goods and services purchased by a typical consumer in urban areas.

3) the average of the prices of all goods produced in a country and goods imported from other countries.

4) hourly wage rates of manufacturing workers.

Question 18

Strategic behavior and game theory are features of which market structure?

1) Perfect competition

2) Monopoly

3) Monopolistic competition

4) Oligopoly

Question 19

One major assumption of economics is that people:

1) act as if they systematically pursue self-interest.

2) behave randomly without any predictable pattern.

3) are sometimes rational and sometimes irrational.

4) always pursue the interests of others first.

Question 20

According to Keynesian economics, if there are unutilized resources in the economy and aggregate demand increases:

1) real GDP will rise and price level will remain constant.

2) real GDP will fall and price level will remain constant.

3) real GDP will rise and price level will rise.

4) real GDP will rise and price level will fall.