Question: The government, in the form of Medicare,

> If the supply and demand curves cross at a quantity of 100, then the price necessary to get firms to sell more than that will have to be _______ equilibrium. a) above b) at c) below d) within 10 percent either way of

> The underlying reason production possibilities frontiers are likely to be bowed out (rather than linear) is a) choices have consequences. b) there is always opportunity costs. c) some resources and people can be better used producing one good rather tha

> If the supply and demand curves cross at a price of $2, at any price above that there will be a) an equilibrium. b) a surplus. c) a shortage. d) a crisis.

> Medicaid spending per recipient is a) twice that of the average citizen’s use of health care. b) somewhat less than the average citizen’s use of health care. c) somewhat greater than the average citizen’s use of health care. d) half that of the avera

> One of the biggest problems for developing countries is that they are all too often a) ruled by representative democracies. b) populated by people unwilling to work hard. c) lack the financial, physical, and social infrastructure to grow. d) indulge

> The dependency ratio in the United States is a) growing. b) steady. c) falling rapidly. d) falling slowly.

> The Federal Reserve's response to the recession of 2007-2008 was a) clearly effective in shortening the recession. b) quick but not obviously effective in shortening the recession. c) slow and subject to criticism for being rather timid. d) procycli

> Suppose your grandmother told you (today) that she had set aside an amount of money in a savings account baring 3 percent interest that was sufficient to give you a $5,000 graduation present in exactly four years. How much would she have had to set aside

> The concern that gambling affects not only the gambler and casino but others is called a _____ and suggests that there would be too _______ production in an unregulated or untaxed market. a) positive externality; much b) negative externality; much c)

> Economists insist that bankruptcy laws are always harmful to a well-functioning economy. a) True b) False

> The market form for a new drug in an area where there are no competitors is a) perfect competition. b) monopolistic competition. c) oligopoly. d) monopoly.

> Medicaid spending per recipient is a) twice that of the average citizen’s use of health care. b) somewhat less than the average citizen’s use of health care. c) somewhat greater than the average citizen’s use of health care. d) half that of the avera

> If you have a $2000 covered health expense, a deductible of $500, and a 20% co-pay, then you pay _____ and the insurance company pays _____. a) $1500, $500 b) $1000, $1000 c) $800, $1200 d) $700, $800

> When tackling local environmental problems, taxes and regulations can be useful. The reason that global problems (like global warming) are more difficult to control is that a) it is in every country’s aggregate interest to ignore the problem. b) it is

> Decriminalizing a drug is likely to lead to a price decrease if a) the anticipated supply effect is greater than the anticipated demand effect. b) the anticipated demand effect is greater than the anticipated supply effect. c) the anticipated demand e

> Free trade agreements a) are just that, about tariff and quota-free trade. b) have very little to do with the trade of goods and services and more to do with currency exchange. c) are about making trade freer than it was before and rarely about makin

> The reason the Greek’s didn’t use a plan similar to TARP to save their banks was that a) the Greek Central Bank had no funds. b) the interest rates Greece would have had to pay on the loans would have been unaffordable. c) banks weren’t a problem in G

> If one country determines it wants a fixed exchange rate with another a) it can do nothing on its own, it must have the cooperation of the other country. b) it only needs to announce its desired exchange rate, and that will result. c) it must stand re

> The trends in U.S. international trade are such that a) imports are increasing and exports are decreasing. b) imports are decreasing and exports are increasing. c) both imports and exports are decreasing. d) both imports and exports are increasing.

> In the past 40 years work stoppages have a) plummeted. b) remained constant. c) increased slowly. d) increased rapidly.

> The large increase in the Labor Force Participation Rate that occurred between 1950 and 2000 was because a) women’s participation in the labor force doubled. b) men’s participation in the labor force increased. c) the proportion of the population over

> Fundamentally, housing prices are a function of the home’s a) location and amenities. b) amenities only. c) location only. d) interest rates only.

> The $400 billion deficits of 2005 were a) accurately forecast by the Office of Management and Budget in 2000. b) accurately forecast by the Office of Management and Budget in 2002. c) accurately forecast by the Office of Management and Budget in 2003

> Mandatory spending implies spending that is a) required by a previously passed set of laws. b) required by the U.S. Constitution. c) needed more than discretionary spending. d) off-limits for any cuts at any time.

> Federal Reserve independence is a) completely fictitious. b) totally complete. c) subject to Congress’s desire to keep it independent. d) subject to the Supreme Court’s desire to keep it independent.

> Nondiscretionary fiscal policy has its impact by a) magnifying the economic ups and downs already occurring. b) purposefully adjusting interest rates. c) Congress focusing its constant attention on the economy. d) dampening the economic ups and downs

> Congress and the president have control of the tax system and government spending. As a result, their policies will directly impact a) aggregate supply. b) aggregate demand. c) residual demand. d) the demand for loanable dollars.

> In early 2005, inflation increased unexpectedly due to an increase oil prices. This helped a) borrowers. b) lenders. c) people on fixed incomes. d) workers.

> Whether a firm stays in business or shuts down depends heavily on the concept of a) economic profit. b) actual profit. c) market share. d) concentration ratios.

> The average total cost curve will be cut by the marginal cost curve from below as long as a) fixed costs are rising. b) average costs are decreasing. c) marginal costs eventually increase. d) marginal costs continually decrease.

> When the National Hockey League had its 2004–2005 work stoppage, it was a) a player strike over salaries that were too low. b) a player strike over a limited ability to move to another team. c) an owner lockout over reducing salaries. d) an owner loc

> The fact that the demand for eggs is inelastic should not surprise you because a) they are a very cheap food. b) the demand for nearly all food products are inelastic. c) the supply of eggs is inelastic. d) they are so expensive.

> The underlying reason that there are unattainable points on a production possibilities frontier diagram is that there a) is government. b) are always choices that have to be made? c) is a scarcity of resources within a fixed level of technology. d) is u

> Suppose a firm has $1,000,000 in fixed costs and variable costs equal to $100; for every unit they produce, a) their marginal costs are decreasing. b) their fixed costs are decreasing. c) their average costs are decreasing. d) the marginal costs are

> A monopolistic competitor’s brand identity is protected by a a) trademark. b) patent. c) copyright. d) bond.

> An example of an externality that we see every day is a) people paying high prices for gasoline. b) people enjoying their ability to drive to work. c) oil companies making record profits. d) the emissions from a car’s tailpipe.

> Which concept from Chapter 1 can be used to explain how it is possible for it to be in the individual interest of each nation to engage in protectionist policies but for everyone to be worse off if they all engage in protectionist policies? a) The falla

> In order to sustain economic growth in a developed economy, it is important for a) taxes to continuously decrease. b) government spending to continuously increase. c) worker productivity to increase. d) worker productivity to decrease.

> The dollar to yuan exchange rate will equal a) the yuan to dollar exchange rate. b) the reciprocal of the yuan to dollar exchange rate. c) the yuan to euro exchange rate. d) the square of the yuan to dollar exchange rate.

> Theoretically speaking, all trade is based on a) comparative advantage. b) absolute advantage. c) numerical advantage. d) political advantage.

> Using a higher rate of discount a) makes no difference when calculating the present value of future liabilities. b) raises the present value of future liabilities. c) lowers the present value of future liabilities.

> Gasoline prices in early 2007 were above $2.25. They were a) the highest nominal prices and highest inflation-adjusted prices in American history. b) the highest nominal prices but were not the highest inflation-adjusted prices in American history. c)

> Gasoline prices _______ in late 2007 through mid-2008. a) spiked b) increased relatively slowly c) remained constant d) plunged

> The most precise tool of monetary policy is a) the adjustment of the federal funds target. b) the adjustment of the discount rate. c) the adjustment of the reserve requirement. d) the use of open-market operations.

> When evaluating whether or not to make an investment one should focus on the _____ because doing so takes into account anticipated inflation. a) nominal interest rate b) real interest rate c) exchange rate d) junk bond rate

> Inflation is measured using _________ in a price index. a) the absolute increase b) a multiyear weighted average increase c) the percentage year-to-year increase d) logarithm-adjusted absolute increase

> If a crime prevention mechanism works initially, but increasing it further has no additional impact that is an example of a) diminishing returns. b) downward sloping demand. c) the division of labor. d) economic loss.

> Orphan drug laws were created because the motivation to invent drugs for these diseases was a) much greater than normal because prices could be high. b) much less than normal because prices would be too low. c) much less than normal because firms anti

> When a program like Medicaid is introduced, the market demand curve for health care will a) increase and flatten. b) increase and become more steep. c) decrease and flatten. d) decrease and become more steep.

> If you became convinced that marijuana was neither addictive nor contributed to externalities, then banning it creates a) a social benefit without social cost. b) what economists call deadweight loss. c) what economists call a vacuum. d) a social ben

> The proximate cause of the Greek problem was a) vast overspending during the previous decade. b) lax tax collections during the previous decade. c) a burst housing bubble. d) Both a) and b).

> Which of the following would immediately be more valuable for most people? a) A $1,000 increase in the child credit b) A decrease in the degree to which brackets are inflation-indexed c) An indexing of the alternative minimum tax d) A $2,500 increas

> The impact of slowing economic growth over a long period of time is a) negligible. b) the lost growth times the number of years. c) substantial because of the exponential aspect of growth.

> In which type of mortgage do you neither build nor lose equity? a) A zero-down mortgage b) A traditional constant-payment, zero-down mortgage c) An interest-only mortgage d) A negative-amortization mortgage

> The U.S. budget a) is required to be balanced. b) is never truly balanced, but historically surpluses are more common than deficits. c) is never truly balanced but historically surpluses are less common than deficits. d) is typically balanced except

> Disagreements between the Congress and the president about the federal budget occur frequently. When they cannot agree on a budget but want to keep the government running, they a) use the president’s budget. b) use Congress’s budget. c) use a budget c

> Discretionary fiscal policy is the purview of a) Congress only. b) the president only. c) Congress and the president collectively through law. d) the Federal Reserve.

> Use the aggregate supply-aggregate demand model to determine which of the following will lead to higher aggregate output. a) A tax increase b) A spike in world oil prices c) A cut in interest rates d) A cut in government spending

> Owing to its usefulness and relative simplicity, the supply and demand model is often used a) because nearly every major industry in the United States is governed by perfect competition. b) because nearly every major industry in the United States is go

> Suppose you observe that minor changes in supply seem to cause dramatic changes in price, you would conclude that a) demand is unit elastic. b) demand is elastic. c) demand is inelastic. d) demand is perfectly inelastic.

> When an economics student draws a supply and demand diagram to model an increase in the income, she is assuming this change happens a) semper fidelis. b) ceteris paribus. c) ipso facto. d) defacto.

> A change in the price of eggs will impact a) the demand for eggs. b) the supply of eggs. c) the quantity demanded and the quantity supplied of eggs but neither demand nor supply. d) both the supply and demand for eggs.

> When compared to people of your grandparents’ generation, you can expect the net present value of Social Security to be a) much better. b) about the same. c) slightly worse. d) much worse.

> An industry in which there are a very limited number of large firms is likely to be characterized by a) monopoly. b) oligopoly. c) monopolistic competition. d) perfect competition.

> The proximate cause of the Spanish problem was a) vast overspending during the previous decade. b) lax tax collections during the previous decade. c) a burst housing bubble. d) Both a & b.

> From one country’s perspective a strong currency is a) always good. b) always bad. c) good for some people and bad for others.

> In terms of when these fiscal shortfalls are likely to require significant changes to budgets or program rules, which of the following is likely to occur first? a) State pension funds b) Local pension funds c) Medicare d) Social Security

> Per capita real economic growth during the Industrial Revolution through the mid-1970s was a) negative. b) zero. c) 1 percent. d) 2 percent.

> In the years prior to the recession the economy was growing a) at about its typical rate. b) at a rate much slower than typical. c) at a rate much faster than typical.

> The FY 2016 federal budget was around a) $4 million. b) $4 billion. c) $4 trillion. d) $4 quadrillion.

> In the market for loanable dollars, an increase in the profitability of investments overall will be revealed in a) an increase in the supply of loanable dollars. b) an increase in the demand for loanable dollars. c) a decrease in the supply of loanab

> The optimal level of police protection would compare the _______ with the ________. a) marginal cost of hiring an additional officer; marginal benefit of crime reduction b) average cost of all officers; average benefit per officer of crime reduction c

> The type of private property that is protected by a copyright or patent is a) land. b) financial capital. c) intellectual property. d) personal property.

> The intermediate-term external benefits of Head Start a) focus on reducing the likelihood of the children ending up in prison. b) focus on reducing the likelihood that the children will become pregnant as teenagers. c) are significant if you not that

> Federal spending is typically ___ percent of GDP. a) less than 10 b) between 18 and 22 c) between 25 and 30 d) more than 30

> A patent is necessary to motivate innovation in areas where the innovation is a) costly to figure out and easily copied. b) cheap to figure out and difficult to copy. c) costly to figure out and difficult to copy. d) cheap to figure out and cheap to

> When a 65-year-old goes to the hospital, the part of Medicare that pays for the hospital bill is a) Part A. b) Part B. c) Part C. d) Part D.

> The risk-averse person will buy health insurance a) only if the expected health costs equal the insurance premium. b) only if the expected health costs are greater than the insurance premium. c) even if the expected health costs are less than the insu

> If a chemical does environmental damage but is used in the production of a good that provides satisfaction to the consumer and profit to the producer an economist a) will insist that the market be left alone. b) will insist that the chemical be complet

> When discussing an addictive drug, an economist is likely to focus on a) both the external costs and the “information problem” associated with addiction. b) the moral costs totally. c) the cost of the drug to the user. d) the costs of production.

> Trade agreements are enforced a) militarily by the United States. b) militarily by the United Nations. c) by the consent of the parties to abide by the judgment of the arbitrators. d) only by the willingness of the parties to respond favorably to eac

> For developed economies sustained increases in aggregate supply, absent increases in aggregate demand, will result in a) growth for a while, but ultimately it will result in only inflation. b) continuous economic growth. c) deflationary risks. d) a b

> In 2015, which country had the largest trade surplus with the United States? a) Saudi Arabia b) Canada c) China d) Japan

> In which type of mortgage to you build equity the fastest? a) A zero-down mortgage b) A traditional constant-payment, 20 percent-down mortgage c) An interest-only mortgage d) A negative-amortization mortgage

> The off-budget – on-budget distinction a) is important because two large programs, Social Security and Medicare, largely run off-budget. b) is a historical fiction. c) deals with long-lasting products of government (like roads and bridges). d) is im

> The evidence is that welfare reform in 1996 resulted in ____ welfare rolls. a) a substantial increase in b) a slight increase in c) a substantial decrease in d) no impact on

> When engaging in monetary policy, the impact of expansionary policy on an aggregate demand – aggregate supply model is to a) increase aggregate demand. b) increase aggregate supply. c) decrease aggregate demand. d) decrease aggregate supply.

> Adjustments to tax and spending policies serve as primary elements of a) discretionary fiscal policy. b) nondiscretionary fiscal policy. c) monetary policy. d) exchange rate policy.

> Use the aggregate supply-aggregate demand model to determine which of the following will lead to higher prices. a) A tax increase b) A fall in world oil prices c) An increase in interest rates d) An increase in government spending

> Gross domestic product is counted using two methods: one which counts all the ways people _____ money and another which counts all the ways people _____ money. a) earn, spend b) spend, save c) earn, save d) loan, borrow

> When firms add workers and find that the additional workers add less to output than their predecessors did, they are experiencing a) the division of labor. b) diminishing returns. c) the law of large numbers. d) diminishing marginal utility.

> Suppose a firm cannot figure out whether the demand for the good it sells is elastic or inelastic but discovers that every time it raises its price, its total revenue declines. Their a) demand is unit elastic. b) demand is elastic. c) demand is inela

> The elasticity of demand is related to the slope of the demand curve a) and only the slope of the demand curve. b) but also the (price, quantity) position on the demand curve. c) but also the slope of the supply curve. d) and whether the good is norm

> The supply and demand model examines how prices and quantities are determined a) in markets. b) by governments. c) by churches. d) by monopolists.

> The cause of the European financial crisis had its origins in a) the creation of the euro. b) vast overspending in Germany. c) uncompetitive tax collections in Greece. d) speculative home buying in Belgium.

> What two numbers “balance”? a) The current account and exports. b) The capital account and the current account. c) Exports and imports. d) Short term investment income and short term investment payments.

> If anti-scalping laws are perfectly enforced, it will result in a) deadweight loss. b) a significant increase in consumer surplus. c) a significant increase in producer surplus. d) a significant loss to people who are going to the event.

> America’s most significant trading partner is a) Saudi Arabia. b) Canada. c) China. d) Japan.

> Per capita real economic growth during the pre–Revolutionary War era was a) negative. b) zero. c) 1 percent. d) 2 percent.

> In measuring gross domestic product, goods produced by foreign firms in the United States are a) counted, and so are goods produced by American firms in foreign countries. b) counted, but goods produced by American firms in foreign countries are not co