1.Economics is concerned primarily with: c. the allocation of scarce resources.2. When Samuelson and Nordhaus write that “goods are limited while wants seem limitless,they mean that:d. there is no simple solution to the basic economic problems of scarcity andunlimited human wants.3. Which of the following are economic goods?e. All of the above, except a（A.Atlantic Ocean sea water.）7. The three fundamental questions of economic organization are:a. closely related to the concept of scarcity.11. Capital is: c. both an input and an output.12. Land, labor, and capital are: e. all of the above.13. Which of the statements below does not apply to the production-possibility frontier,or PPF?b. Quantities of inputs are measured along the axes of the PPF.14. Which of the statements below is a reason why an economy might produce a level of output that is beneathits production-possibility frontier?b. The available body of technological knowledge is not being fully utilized.15. Which of the following statements is false when an economy is on its PPF?d. Consumers will have all that they need.16. Which of the following statements could be used to explain an outward shift in the production-possibilityfrontier?e. All of the above apply.17. Which of the following are measured along the axes of a PPF graph?b. quantities of finished commodities.1. Markets can occur:a. whenever buyers and sellers of the same product can communicate with one another.2. If a commodity such as peanuts becomes overstocked, sellers will:c. lower their prices hoping to lure additional buyers into the marketplace.3. A market equilibrium is defined as occurring when:b. the price is such that the quantity that buyers want to buy is equal to the quantitythat sellers want tosell.7. An example of specialization in production can be seen when: d. all of the above.9. Capital, in an economic sense, includes all the following except: b. a $100 bill.14. The philosophy of laissez-faire means that:e. government interferes as little as possible in economic affairs.15. Government’s role in a modern economy is to: d. all of the above.16. Perfect competition means that:b. no firm or consumer is large enough to affect the market price.20. Pollution control policy is directed at improving: b. efficiency.1. A demand curve for widgets shows:c. the quantity of widgets that would be purchased per unit of time at eachalternative price, holdingother factors influencing demand fixed.2.As the price of airline tickets increases, the: c. quantity of tickets demanded decreases.3. The law of downward-sloping demand holds that:c. the quantity of a good that consumers willingly purchase increases as the priceof the good falls.Use Figure 3-1 to answer questions 4 through 7.4. A patient must purchase some exact quantity of a particular drug (no less, no more) and will payany price。

in order to obtain it. Which of the diagrams best illustrates this demand curve? B 5. The government declares that it is prepared to purchase any and all gold supplied to it bydomestic gold.mines at a price of $410 an ounce. Which of the diagrams best illustrates thisdemand curve? A6. An increase in consumers’ money incomes prompts them to demand a greater quantity of goodX at anyprice. Which of the diagrams best illustrates this demand curve? C7. I can buy any amount of sugar in my local supermarket at a fixed price of 40 cents per pound. No matterhow much I buy, I always pay the same price per pound. Which of the diagrams bestillustrates thissupply curve? A14. The supply curve describes:d. a direct relationship between price and quantity supplied.15. An increase in the cost of materials needed to produce snow skis causes the following changein the snowski market: b. the supply curve shifts to the left.21. Equilibrium in a market indicates: c. there is no tendency for price to change.1. The study of macroeconomics includes, among other topics, which of the following?e. all the above.2. The practice of directing government policy to support the macroeconomic health of the UnitedStates wasinitiated formally in: c. the Full Employment and Balanced Growth Act of 1946.3. The objective of stable prices can, in the view of at least some economists, be tackled byadjustments in: d. all the above.4. The main difference between nominal and real GDP is that:a. real GDP is adjusted for price changes while nominal is not.5. The main difference between a recession and a depression is that:b. unemployment is higher and lasts longer during a depression.6. If potential GDP is greater than actual GDP then:c. there is probably some unemployment in the economy.7. Policies directed at stimulating exports can influence: e. all of the above.10. Unemployment, inflation, and the rate of growth of actual GDP are all examples of:d. variables determined by the economy.14. The aggregate supply curve is positively sloped in the short run because of:c. output prices generally rising more quickly than input prices.15. In a macroeconomic model of the economy, which of the following is most likely to be considered as anexogenous variable? b. Domestic exports.18. If the AD schedule had shifted to the right in order to accommodate the OPEC oil shock, then:b. output would have remained the same, albeit with higher prices.1. The flow-of-product and earnings or cost approaches to GDP:b. are two different ways of measuring the same thing.2. The double-counting problem refers to:a. the inclusion of both intermediate and final products in the calculation of GDP.3. There would be double counting in the computation of GDP if statisticians were to sum the:c. total output of iron ore and the total output of iron.4. To compute a firm’s contribution to GDP on a value added basis, the value at market price of the goodsthat it has produced must be diminished by: e. none of the above.5. Economic growth is always measured in real terms because:d. the price level changes from year to year.6. In GDP statistics, investment includes:c. any increase in the amount of year-end inventories over inventories held atthe beginning of the year inquestion.8. In NDP statistics, a negative investment figure:b. could appear if the total of depreciation on buildings and equipment wassufficiently large.9. In GDP statistics, the value of housing services, the houses are occupied by their owners, is:d. counted in GDP using an arbitrary estimate of rental value.10. One of the five items listed below is not in the same class as the other four for purposes of national incomeaccounting. Which one? b. government transfer payments.11. If you want to compute disposable personal income from NDP, one thing you must not do is:a. deduct depreciation.12. In computing the size of the government spending component of GDP, all government:a. expenditures on commodities and services are counted.14. If nominal GDP was $360 (billion) in 1992 and if the price level rose by 20 percent from 1990 to 1992,then the 1992 GDP, measured in 1990 prices, was (in billions): a. $300.17. The consumer price index is in part based upon the share of income devoted to which of the followingmajor categories? e. all of the above.1. The marginal propensity to consume is:d. the ratio of a change in consumption to a change in income level at any income level.2. At the break-even level of income: d. saving is equal to 0.3. The break-even point on a family’s consumption function is the point at which:b. its income equals its consumption.4. The relationship between the marginal propensities to consume and to save holds that:a. their sum must equal 1, since some fraction of marginal income must go to extraconsumptionspending and the remaining fraction to extra saving.6. If people do not consume all their incomes and if they put the unspent amount into a bank, they are, innational income and product terms: a. saving but not investing.15. The consumption function refers to:d. a schedule showing the amount a family (or community) will spend onconsumption at different levelsof income.16. According to the statistical evidence, which of the following characterizes the typical American family’sbehavior with respect to consumption?d. A decreasing proportion of income is spent on consumption as income increases.17. A family spends $2000 on consumption when its income is 0, and $6000 on consumption when itsincome is $6000. Assume that its consumption function is a straight line. This family’s marginal propensityto consume is: a. 2/3.19. Permanent income can be best described as: d. the long-run trend in household income.25. Investment spending does not include: d. the issuing of new stock.1. Business cycles seem to be caused:c. by factors of any type that mostly influence aggregate demand.2. Which of the following would you not expect to see during a period of recession?e. Lower unemployment compensation payments.6. If we look to any particular kind of spending as a key factor in accounting for the business cycle, we find it in: b. net investment, specifically spending on durable goods.8. Statistically, the widest swings between peak and bottom of the business cycle are to found in:c. the production of durables and capital goods.9. The multiplier-accelerator theory focuses on the relationship between:c. GDP and investment spending.10. Which of the following would be considered as a supply shock to the economy?d. all of the above.13. The multiplies-accelerator theory:a. suggests that business cycles may be self-generating.14. Which of the terms below is not a component of aggregate demand?e. all of the above terms are part of AD.15. Which of the following expressions best describes the money-supply effect? d. As prices increase, the decline in the real money supply will affect aggregate demand.1. Suppose that business firms change their plans and increase the total of their spending on new plant and equipment. The basic multiplier model would lead us to expect:b. GDP and consumer spending to rise.2. In the simplest Keynesian model with only consumption and investment contributing to aggregate demand, if the value of the marginal propensity to consume is 0.8, then the value of the multiplier must be: e. 5.0.3. If an equilibrium level of GDP were altered by a reduction in planned investment spending, then we would expect to see GDP: c. fall and S fall also.4. Assume that government spending and net exports are both zero. On a graph that plots spending against GDP, the intersection of the consumption function and a 45° line drawn up fromthe origin necessarily indicates: e. none of the above, unless I happens to be zero.5. Consider a simple economy with no government or trade. Actual GDP would then be above its equilibrium level if:a. the amount that consumers planned to save exceeded the amount thatbusinesses and others planned to invest.7. Suppose that the current level of GDP is $500 billion and that consumers wish to spend $390billion ofthat $500 billion on consumption. Let the total amount of investment spending plannedbe $120 billion.These figures indicate that GDP is:b. out of equilibrium and will rise in the future.19. Government spending is plotted as a horizontal line with respect to GDP because:a. we assume, for simplicity, that G is independent of GDP.20. The stimulative effect of a tax cut is smaller than an equivalent dollar increase in government spendingbecause: d. all the above.21. When government spending changes, the effect on the economy is:c. the same as a change in investment.25. GDP is in equilibrium at its full-employment level. The federal government finds it necessary to increaseits expenditures on goods and services by $10 billion. It wants to increase taxes sufficientlyso that there willbe no more serious threat of inflation;i.e., it wants the net change in theequilibrium level of GDP to be zero.The probable increase in tax collections needed will be:a. more than $10 billion.1. The major functions of the financial system are: e. A, B, and C.2. The major financial instrument or assets are: e. A, B, and C.3. What is the relationship between interest rates and asset prices? a. Inverse.4. Assume that the money interest rate is 7 percent and that inflation is 2 percent.What is the real interestrate? c. 5 percent.7. Suppose that a one-year bond pays $100 of interest plus the original principal of$2000 when the bondmatures. If market rates of interest are 8%, how much should you be willing to pay for thisbond? b. $1944.44.10. The strictest definition of money, M1, includes: a. coins, currency, and demand deposits.13. The essential difference between money and near-money is that:a. money is directly spendable, whereas near-money is not.23. Jackie deposits, in bank X, $10,000 in paper currency that has been hidden and out ofcirculation for a longtime. The legal minimum reserve requirement for banks is 25percent ofdeposits. Bank X is one among manybanks. Unless bank X is already short on reserves, this depositwould enable the bank, if it wished, to increaseits loans by at least: b. $7500.24. Assuming that the loan increase does not set off any increase of coins and paper currency inhand-to-handcirculation, the deposit described in question 16 would enable the banking system toincrease its loans by amaximum of: d. $30,000.1. The phrase “open-market operations” refers specifically to:e. the Federal Reserve’s buying or selling government securities.5. If the Federal Reserve System raises the discount rate, this act should be interpreted as part of a generalpolicy intended primarily to:a. reduce the total of commercial-bank reserves.9. If the Federal Reserve sells a large quantity of U.S. government securities to the public, it would bereasonable to conclude that this action is intended to:b. decrease the total of loans made by commercial banks to their customers.10. If the Federal Reserve buys a large quantity of U.S. government securities from the public, then:a. the Federal Reserve liability in the form of bank reserve deposits will go up.1. Suppose agricultural output requires only two inputs, labor and land. The quantity of land available isfixed; the quantity of labor is variable. Then, as labor quantity is increased in order to increase output quantity,the law of diminishing returns will begin to operate, and:a. the ratio of labor to land will increase, but the ratio of land to output willfall.4. If the amount of capital employed increased while the amount of labor and other inputs stayedapproximately fixed, and if the capital-output ratio remained constant, then:d. technological improvements must have been made.5. A deepening of capital must, in the absence of technological change, eventually:a. increase the capital-output ratio.6. “Deepening of capital” means:a. an increase in the stock of capital relative to the size of the labor force.8. If a nation’s capital-output ratio gradually increases over time despite capital deepening, then:e. the law of diminishing returns is operating with respect to capital’sproductivity.9. According to Okun’s Law, if potenti al GDP rose by 9 percent between 1979 and 1982but actual GDP did not change, then unemployment should have climbed from 5.8 percent in 1979 to:b. 10.3 percent.11. Psychological studies indicate that being fired from a job is:c. generally as upsetting as the death of a close friend.12. A person who is waiting to be recalled to a job would be classified as: b. unemployed.15. The existence of involuntary unemployment:b. depends critically upon the Keynesian assumption that wages do not fall inresponse to excess supplyin the labor market.2. Moderate inflation: e. is described by all the above.3. Inflation can be associated with:b. increasing or decreasing real GDP, depending upon its source.4. One of the potential costs of unanticipated inflation is:a. the redistribution of wealth from lenders to debtors.6. Unbalanced and unanticipated inflation usually causes: e. none of the above.。