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31 Oct 2020

9. Which of the following is nonrival and nonexcludable?

a.The defense services provided by a new stealth bomber

b.A pair of pants

c.A beautiful sunset

d.An uncrowded theme park such as Walt Disney World

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Microeconomics
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Understanding the concept of Public Goods
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Raushan Raj
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31 Oct 2020

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Related questions

Select all of the following that are best described as sunk costs.

A.The cost of an expensive pair of shoes that I want, but will likely never wear.

B.The non-refundable deposit made a month ago to hold your spot on a rafting trip.

C.The additional money you must pay if you actually go on the rafting trip.

D.The morning run that I miss out on so that I have time to go to Starbucks before class

Imagine Germany and Greece produce only beer and olives. Germany can produce at most 500 kegs of beer or 2000 jars of olives. Greece has fewer workers and a 4 day work week, but they can still produce at most either 100 kegs of beer or 1000 jars of olives. Which of the following is false.

A.Germany has the absolute advantage in producing olives.

B.Greece has the comparative advantage in producing olives.

C.Germany has the comparative advantage in producing beer.

D.Greece does not have a comparative advantage in beer or olives.

Economic thought suggests that when making a decision you should:

A.Compare the opportunity cost with the true economic cost and choose the lowest.

B.Compare the marginal benefit (MB) with the marginal cost (MC) and only do something if MB>MC for that choice.

C.Always buy the cheapest option.

D.Go for the option with lowest average cost relative to average benefit.

A point lying exactly on the production possibility frontier is:

A.an efficient point

B.a super-efficient point

C.a non-attainable point

D.an inefficient point

Which of the following is the best example of a Ć¢Ā€ĀœnormativeĆ¢Ā€Ā economic question?

A.What percentage of the wealth is owned by the wealthiest 1% of the US population?

B.Is the income distribution in the United States fair?

C.How much would the economy grow if a new oil pipeline was approved?

D.What will the employment impacts be from a new, higher, minimum wage?

You are on a cruise in the Caribbean Sea, which cost $1,000. On this particular day you have the choice between two activities, both of which would provide marginal mental benefits to your state of mind. The first is a scuba diving trip whose cost was included in the price of the cruise (you get to swim with a school of hammerheads). The second is a shopping spree on St. Thomas that would cost you $500. Which costs and benefits (select all that apply) should you consider when deciding which activity to undergo?

The marginal benefits of the scuba trip.

The $500 cost of the shopping trip.

The marginal benefits of the shopping trip.

The $1,000 cost of the cruise.

All of the above.

8. Which of the following items is included in the calculation of GDP?

a.Purchase of a used car.

b.Purchase of 100 shares of General Motors stock.

c.Purchase of an intermediate good.

d.None of the above would be included

9. Difference between Real and Nominal GDP is:

a.Change in price level from base year to current year

b.Measured by excluding some of the sectors

c.That real GDP is always smaller than Nominal GDP

d.None of the above

10. GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports are:

a.+$53 billion

b.-$84 billion

c.-$47 billion

d.-$161 billion

11. Equality (As a tool of measurement for quality of life) refers to a balance of Economic and Political Power between which two groups?

a.Homeless and Employed

b.Men and Women

c. Different ethnic groups

d. Rich and Poor

12.What is inflation?

a.A fall in the general level of prices occurs, workers need more money to pay for goods, clothing, and shelter

b.A rise in the general level of prices occurs, workers need more money to pay for goods, clothing, and shelter

c.A rise in the general level of prices occurs, workers need less money to pay for goods, clothing and shelter

d.A fall in the general level of prices occurs, workers need less money to pay for goods, clothing and shelter

13.Which of the following is the best measure of how inflation affects consumers?

A.The increase in the price of gold

B. The increase in the consumer price index

C. The increase in the price of a single product

D. The decrease in the consumer price index

14. The Consumer Price Index (CPI)

a. Measures the rate of output in the economy over one year.

b.Measures the increase in wholesale prices since a base year.

c.Is deficient because it does not include medical prices.

d.Is used to calculate the rate of inflation over a given period.

15.How is the unemployment rate computed?

a. Number of unemployed persons divided by the number of economically active (i.e. employed and unemployed) persons aged fifteen years and over.

b.Number of unemployed persons divided by the number of people aged fifteen years and over.

c.Number of unemployed persons divided by the number of employed persons aged fifteen years and over.

d.None of the above

1.Economists use the term money to refer to

A.all wealth.

B.all assets, including real assets and financial assets.

C.all financial assets, but not real assets.

D.those types of wealth that are regularly accepted by sellers in exchange for goods and services.

Ā 

2.Which of the following is a function of money?

A.a unit of account

B.a store of value

C.medium of exchange

D.. All of the above are correct.

Ā 

3.You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate?

A.medium of exchange

B.unit of account

C.store of value

D.liquidity

Ā 

4.Any item that people can use to transfer purchasing power from the present to the future is called

A.a medium of exchange.

B.a unit of account.

C.a store of value.

D.None of the above is correct.

Ā 

5.Liquidity refers to

A.the ease with which an asset is converted to the medium of exchange.

B.the measurement of the intrinsic value of commodity money.

C.the measurement of the durability of a good.

D.how many time a dollar circulates in a given year.

Ā 

6.Which list ranks assets from most to least liquid?

A.money, bonds, cars, houses

B.money, cars, houses, bonds

C.bonds, money, cars, houses

D.bonds, cars, money, houses

Ā 

7.When we measure and record economic value, we use money as the

A.liquid asset.

B.medium of exchange.

C.unit of account.

D.store of value.

Ā 

8.Commodity money is

A.backed by gold.

B.the principal type of money in use today.

C.money with intrinsic value.

D.receipts created in international trade that is used as a medium of exchange.

Ā 

9.Fiat money

A.has no intrinsic value.

B.is backed by gold.

C.is a medium of exchange but not a unit of account.

D.is any close substitute for currency such as checkable deposits.

Ā 

10.M1 includes

A.currency.

B.demand deposits.

C.traveler's checks.

D.All of the above are correct.

Ā 

11.Which of the following items is included in M2?

A.credit cards

B.money market mutual funds

C.corporate bonds

D.large time deposits

Ā 

12.Which of the following does the Federal Reserve not do?

A.conduct monetary policy

B.act as a lender of last resort

C.convert Federal Reserve Notes into gold

D.serve as a bank regulator

Ā 

13.The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of

A.the Board of Governors.

B.the FOMC.

C.the regional Federal Reserve Bank presidents.

D. the U.S. Treasury.

Ā 

14.When conducting an open-market sale, the Fed

A.buys government bonds, and in so doing increases the money supply.

B.buys government bonds, and in so doing decreases the money supply.

C.sells government bonds, and in so doing increases the money supply.

D.sells government bonds, and in so doing decreases the money supply.

Ā 

15.An open-market purchase

A.increases the number of dollars and the number of bonds in the hands of the public.

B.increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.

C.decreases the number of dollars and the number of bonds in the hands of the public.

D.decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.

Ā 

16. If a bank has a reserve ratio of 8 per cent, then

A.government regulation requires the bank to use at least 8 per cent of its deposits to make loans.

B.the bank's ratio of loans to deposits is 8 per cent.

C.the bank keeps 8 per cent of its deposits as reserves and loans out the rest.

D.the bank keeps 8 per cent of its assets as reserves and loans out the rest.

Ā 

17.If a bank uses $100 of excess reserves to make a new loan when the reserve ratio is 20 per cent, this action by itself initially makes the money supply

A.and wealth increase by $100.

B.and wealth decreased by $100.

C.increase by $100 while wealth does not change.

D.decrease by $100 while wealth decreases by $100.

Ā 

18.The money multiplier equals

A.1/R, where R represents the number of reserves in the economy.

B.1/R, where R represents the reserve ratio for all banks in the economy.

C.1/(1+R), where R represents the number of reserves in the economy.

D.1/(1+R), where R represents the reserve ratio for all banks in the economy.

Ā 

19.If the reserve ratio is 10 per cent, the money multiplier is

A.100.

B.10.

C.9/10.

D.1/10.

Ā 

20.As the reserve ratio increases, the money multiplier

A.increases.

B.does not change.

C.decreases.

D.could do any of the above.

Ā 

21.If the reserve ratio is 5 per cent, then $1,000 of additional reserves can create up to

A.$200 of new money.

B.$2,000 of new money.

C.$20,000 of new money.

D.None of the above is correct.

Ā 

22.When the Fed makes open-market purchases, bank

A.withdrawals and lending increase.

B.withdrawals increase and lending decreases.

C.deposits and lending increase.

D.deposits increase and lending decreases.

Ā 

23.The discount rate is the interest rate that

A.banks charge one another for loans.

B.banks charge the Fed for loans.

C.the Fed charges banks for loans.

D.the Fed charges Congress for loans.

Ā 

24.If the discount rate is lowered, banks borrow

A.less from the Fed so reserves increase.

B.less from the Fed so reserves decrease.

C.more from the Fed so reserves increase.

D.more from the Fed so reserves decrease.

Ā 

25.The Fed can increase the money supply by conducting open-market

A.sales or by raising the discount rate.

B.sales or by lowering the discount rate.

C.purchases or by raising the discount rate.

D.purchases or by lowering the discount rate.

Ā 

26.The Fed can directly protect a bank during a bank run by

A.increasing reserve requirements.

B.selling government bonds to the bank.

C.lending reserves to the bank.

D.doing any of the above.

Ā 

27.The federal funds rate is the interest rate

A.the Federal Reserves charges for loans it makes to the federal government.

B.the Federal Reserve charges banks for short-term loans.

C.banks charge each other for short-term loans of reserves.

D.on newly issued one-year Treasury bonds.

Ā 

28.If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by

A.buying bonds. This buying would increase the money supply.

B.buying bonds. This buying would reduce the money supply.

C.selling bonds. This selling would increase the money supply.

D.selling bonds. This selling would reduce the money supply.

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