ScholarMatic: Explanation & Answer
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51. In the resource market, firms demand resourcesin order to (Points: 1)
maximize profit
maximize total revenue
maximize marginal revenue
maximize utility
52. For a firm hiring a resource in a perfectlycompetitive resource market, its demand curve for the resource isits (Points: 1)
marginal product curve
marginal revenue product curve
marginal resource cost curve
marginal revenue curve
53. Marginal revenue product is defined as the(Points: 1)
change in total output that results from the employment of anadditional unit of a resource
change in total product that results from the employment of anadditional unit of a resource
change in total revenue that results from the employment of anadditional unit of a resource
change in resource employment that results from a change in totaloutput
54. The market price of output affects (Points:1)
the supply of the resources used to produce it
the demand for the resources used to produce it
the marginal product of the resources used to produce it
the marginal resource cost of the resources used to produce it
55. The difference between the average earnings ofeye surgeons and those of janitors is an example of (Points: 1)
a temporary differential
a permanent differential
a resource price difference that will cause a reallocation ofresources to different uses
a temporary difference that will be eliminated through thereallocation of resources to different uses
56. Nonmarket work includes time spent (Points:1)
producing goods and services for your employer
pursuing hobbies and crafts
engaging in strenuous physical exercise to reduce your weight
producing your own goods and services
57. Market work includes activities such as(Points: 1)
practicing your golf game
studying for an economics exam
teaching a college economics course
picking up empty cans for the bottle deposit
58. Leisure is (Points: 1)
subject to the law of diminishing marginal utility
usually considered an inferior good
a complementary good with nonmarket work
a complementary good with market work
59. Unions whose membership includes all workersin a particular product market, whether skilled or unskilled, areknown as (Points: 1)
exclusive unions
regional unions
craft unions
industrial unions
60. Craft unions typically attempt to increasewages by (Points: 1)
setting a wage floor
reducing labor supply
increasing labor demand
reducing initiation fees
61. Natural monopolies are firms that (Points:1)
have a downward-sloping long-run average cost curve over the entirerange of market demand
have an upward-sloping long-run average cost curve over the entirerange of market demand
are protected against the entry of new firms by patents, licenses,or other legal restrictions
control a nonreproducible resource that is critical toproduction
62. If producers support proposed regulation oftheir industry, then (Points: 1)
it is likely that consumers will benefit from the regulation
it is likely that producers are looking out for the interests ofthe consumers
it is likely that both producers and consumers will be adverselyaffected by the legislation
it is possible that consumers will be adversely affected by thelegislation
63. The Sherman Act (Points: 1)
prohibited restraint of trade
created the Federal Trade Commission
prohibited fraudulent advertising
regulated the railroads
64. The index that the U.S. government currentlyuses to determine whether a merger should be allowed is the(Points: 1)
Herfindahl index
Schumpeter index
Dow Jones average index
consumer price index
65. A good that is nonrival but exclusive iscalled (Points: 1)
a private good
a public good
a quasi-private good
an external good
66. Special-interest legislation usually (Points:1)
has widespread benefits and costs
has concentrated benefits and costs
has concentrated benefits but widespread costs
concerns the provision of public goods
67. Activities that go unreported to thegovernment in order to avoid paying taxes or because the activityis illegal are known collectively as the (Points: 1)
illegal economy
non-profit sector
special-interest category
underground economy
68. Relative to private firms, we should expectpublic bureaus to be (Points: 1)
smaller
more cost-efficient
less responsive to consumer demand
more concerned with adopting new technologies
69. If periodic use of a resource can be continuedindefinitely, that resource is said to be (Points: 1)
removable
renewable
cyclical
recyclable
70. Which of the following is an example of anopen-access resource? (Points: 1)
a city subway system
a college education
an elementary school education
whales in the ocean
71. A pollution tax (Points: 1)
is itself a form of negative externality
is a positive externality used to offset a negative one
is a price per unit of discharge of pollution
is a tax on pollution control equipment
72. If education creates positive externalities,(Points: 1)
private markets provide less than the socially optimal quantity ofeducation
private markets provide more than the socially optimal quantity ofeducation
the marginal private benefit curve is higher than the marginalsocial benefit curve
the marginal private cost curve is higher than the marginal socialcost curve
73. Which of the following is a flow variable?(Points: 1)
U.S. plant and equipment
the U.S. population
money supply
investment spending
74. If all firms expect greater demand for theirproducts or services, they will hire __________ resources (e.g.,labor and capital) and the economy will experience __________.(Points: 1)
more; growth
fewer; growth
more; federal budget deficits
more; recession
75. A recession is best defined as a period duringwhich (Points: 1)
the percentage of the population employed is declining
employment, output, and income decline
the price level is declining
more resources are used
76. When economists refer to the economy’s pricelevel, they mean (Points: 1)
the rate of inflation
the price of goods and services relative to consumers’ incomes
a general measure of prices of all goods and services
a period of level, or steady, prices
77. The aim of supply-side economics is to(Points: 1)
increase government spending to stimulate aggregate supply
stimulate exports to increase the balance of payments
decrease wages to make production cheaper
lower taxes to increase the supply of resources
78. Human capital represents (Points: 1)
the equipment that labor uses on-the-job to improve laborproductivity
a direct method of measuring output-per-worker
the education, skills and training embodied in workers
the technology, developed by humans, that is embodied inequipment
79. In order for a society to have a risingstandard of living, output per worker must grow (Points: 1)
more slowly than the labor force
at the same rate as the population
faster than the population
more slowly than the population
80. According to the convergence theory, (Points:1)
less-developed countries should grow faster than advanced onesbecause of the ability to copy new technology
the growth rates of all countries converge because in the long run,all resources are alike
human capital differences can never be made up
GDP and productivity growth rates should converge over time
81. Many people believe that government shouldpromote (Points: 1)
seriousness
hard work
greater happiness
economic education
82. Gross Domestic Product includes final goodsand services, but not intermediate goods because (Points: 1)
intermediate goods are not part of investment spending
the value of the intermediate goods is already included in thevalue of the final goods
the value of the intermediate goods is already included asinventory investment
intermediate goods are only produced by government
83. Which of the following statements aboutexports and imports is true? (Points: 1)
Both imports and exports are added to a nation’s GDP.
Both imports and exports are subtracted from a nation’s GDP.
Imports are added to a nation’s GDP; exports are subtracted.
Exports are added to a nation’s GDP; imports are subtracted.
84. In the resource market, (Points: 1)
businesses borrow money to buy the capital resources they need
businesses sell services to the households
firms provide the resources to the households
households sell the resources to firms in return for factorpayments
85. Consumption spending is the biggest aggregateexpenditure, about (Points: 1)
one half
three fifths
two fifths
two thirds
86. Which of the following is the best indicatorof the performance of the national economy? (Points: 1)
the balance of trade with other nations
the federal government budget deficit
the size of the nation’s stock of money
the flow of new goods and services produced in the nation
87. When workers are over-qualified for theircurrent jobs or can find only part-time work, we say they are(Points: 1)
discouraged workers
not in the labor force
overemployed
underemployed
88. Inflation is (Points: 1)
a reduction in everyone’s standard of living
a rise in the real prices of all goods and services
a general and continuing rise in the money prices of goods andservices
a continuing rise in everyone’s standard of living
89. Demand-pull inflation is associated with(Points: 1)
decreasing aggregate demand and lower unemployment
increasing aggregate demand and lower unemployment
decreasing aggregate demand and greater unemployment
increasing aggregate demand and greater unemployment
90. Suppose you received a 3 percent increase inyour nominal wage. Over the year, inflation ran about 6 percent.Which of the following is true? (Points: 1)
Your real wage fell.
Your nominal wage fell.
Both your nominal and real wages decreased.
Although your nominal wage fell, your real wage increased.
91. An increase in the interest rate, other thingsconstant, will (Points: 1)
shift the supply of loanable funds curve to the left
shift the supply of loanable funds curve to the right
increase the quantity of loanable funds supplied
shift the demand for loanable funds curve to the left
92. The federal government budget is (Points:1)
a year-end record of how much the government received in income andhow much it spent
a plan for government expenditures and revenues for the comingyear
always in balance: receipts must equal expenditures
equal to government receipts minus government expenditures
93. The Budget of the United States Government isofficially submitted by (Points: 1)
the President to the Congress and contains proposals for governmentexpenditures
the Congress to the President and contains proposals for governmentexpenditures
the President to the Congress and contains proposals for taxincreases
the Congress to the President and contains proposals for taxincreases
94. Because of automatic stabilizers, governmentbudget deficits are (Points: 1)
positive during both expansions and contractions
negative during both expansions and contractions
smaller during expansions and larger during contractions
zero if averaged out over the entire business cycle
95. An increase in the price level will (Points:1)
shift the money demand curve to the right
shift the money demand curve to the left
increase the quantity of money people want to hold
decrease the quantity of money people want to hold
96. If the Fed sells government securities tobanks, eventually we expect (Points: 1)
short-run aggregate supply to increase
interest rates to increase
the price level to increase
aggregate demand to increase
97. Which monetary policy would be appropriate toclose a contractionary gap? (Points: 1)
a tax cut
a decrease in government purchases
an increase in reserve requirements
the Fed’s purchase of U.S. government securities
98. The United States is a major exporter of(Points: 1)
diamonds
bauxite
coffee
corn
99. If there are no trade restrictions, a countrywill import a particular good if (Points: 1)
domestic quantity supplied equals domestic quantity demanded at theworld price
there is excess domestic quantity demanded at the world price
world quantity supplied is less than world quantity demanded
world quantity supplied is greater than world quantity demanded
100. A tariff is (Poin
a tax on financial transactions
a tax on either imports or exports
the result of a treaty
a penalty imposed on importers of capital
ScholarMatic: Explanation & Answer
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