1. If the cross price elasticity of demand between two commodities is positive, then these commodities are
Select one:
a. are complements.
b. are inferior.
c. are superior.
d. are substitutes.
Answer...?
2. Along a given indifference curve, a consumer reduces the quantity of one good in favor of more units of the other. In this situation
Select one:
a. the marginal utility of the first rises and the marginal utility of the second good falls.
b. Total utility rises.
c. Both the marginal rate of substitution falls and the marginal utility of the first rises and the marginal utility of the second good falls are correct.
d. the marginal rate of substitution falls.
Answer...?
3. Along a given indifference curve, a consumer reduces the quantity of one good in favor of more units of the other. In this situation
Select one:
a. the marginal utility of the first rises and the marginal utility of the second good falls.
b. Total utility rises.
c. Both the marginal rate of substitution falls and the marginal utility of the first rises and the marginal utility of the second good falls are correct.
d. the marginal rate of substitution falls.
Answer...?
4. Moral hazard is a barrier to financing global growth because
Select one:
a. of the differences between financing using loans, portfolio investment and foreign direct investment.
b. there is the possibility that the funds are used for riskier behavior than the lender agreed to.
c. firms sometimes have trouble determining whether they need funds or not.
d. if investors have trouble identifying high-risk firms they may be unwilling to give money to creditworthy firms.
5. Moral hazard is a barrier to financing global growth because
Answer...?
6. Which of the following statements is FALSE?
Select one:
a. Price elasticity of supply can never equal 1.
b. Time is an important consideration in determining supply elasticity.
c. A horizontal supply curve is possible.
d. A perfectly inelastic supply curve is a vertical line.
Answer...?
7. Corporations are able to raise large amounts of financial capital because
Select one:
a. of limited liability and the treatment of a corporation as an individual entity.
b. of the tax breaks corporations are given relative to partnerships or proprietorships.
c. of the elimination of the problem of separation of ownership and control.
d. of their greater ability to monitor the performance of decision makers.
Answer...?
8. The largest quota subscriber of the International Monetary Fund (IMF) is
Select one:
a. China.
b. Japan.
c. Germany.
d. the United States.
Answer...?
9. To derive the demand curve from the indifference map,
Select one:
a. vary the prices of both goods while holding income constant.
b. vary the price of one good while holding the price of the other good and income constant.
c. vary income while holding the prices constant.
d. vary the price of one good and income while holding the price of the other good constant.
Answer...?
10. As an individual consumes more of a particular commodity, the total level of utility derived from that consumption will
Select one:
a. increase at a constant rate.
b. increase at a decreasing rate.
c. remain constant.
d. increase at an increasing rate.
Answer...?
11. Which of the following is a TRUE statement about stock markets?
Select one:
a. It is always better to buy growth stocks than the older and more stable blue-chip stocks.
b. Economists can make above-average profits in the stock market because of their specialized knowledge of economics.
c. It is illegal for a friend of a corporate executive to make large profits in the stock market by using his inside information.
d. The stock market on average over time is random and totally unrelated to the performance of the economy.
Answer...?
12. Income elasticity of demand is defined as
Select one:
a. the percentage change in demand divided by the percentage change in income.
b. the percentage change in income divided by the percentage change in quantity demanded.
c. the change in quantity demanded divided by the change in market price.
d. the change in quantity demanded divided by the change in income.
Answer...?
13. The consumption possibilities curve is the
Select one:
a. budget constraint.
b. indifference curve.
c. supply curve.
d. demand curve.
Answer...?
14. According to the random walk theory,
Select one:
a. the probability that a stock's price will increase tomorrow is greater if it increased today.
b. the probability that a stock's price will increase tomorrow is greater if it decreased today.
c. the best forecast of tomorrow's price is today's price.
d. the best forecast of tomorrow's price is found by determining the trend for the last five trading days.
Answer...?
15. "Unit elasticity of demand can be found everywhere along a straight-line demand curve with a slope of -1." Do you agree or disagree? Explain.
Answer:
16. For which of the following would the absolute price elasticity of demand be greatest?
Select one:
a. Pepsi Cola
b. Tickets to the Super Bowl
c. Salt
d. Gasoline
Answer...?
16. The price of a hamburger is $1 and the price of a movie is $4 and the consumer has $10. A consumer has purchased 2 hamburgers and 2 movies, receiving 25 units of utility for the second hamburger and 100 units of utility for the second movie. The set of goods
Select one:
a. is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies.
b. is not an optimum because the consumer has not spent all of his money.
c. is an optimum since the entire income is spent and total utility is minimized.
d. is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good.
Answer...?
17. Marginal utility
Select one:
a. is stable, but then as a person consumes more of a good or service, has a propensity to increase.
b. equals the total satisfaction from consumption of goods and services.
c. can be thought of as being the equivalent to total utility.
d. at first rises and then declines as a person consumes more of a good or service.
Answer...?
18. The nominal rate of interest is 4% and the anticipated rate of inflation is 5%. What is the real rate of interest?
Select one:
a. 1%
b. 4%
c. -1%
d. 9%
Answer...?
19. Using the above table, what is the total utility of consuming 3 bottles of soda?
Select one:
a. 115
b. 135
c. 120
d. 240
Answer...?
20. Dead capital is
Select one:
a. machinery that fails to operate properly.
b. a capital resource that depreciates rapidly.
Answer...?
21. What is the annual rate of growth of per capita real GDP if real GDP grows at a constant rate of 5 percent per year and the annual rate of population growth is 3 percent?
Select one:
a. 1.7 percent
b. 8 percent
c. 5 percent
d. 2 percent
c. machinery that requires constant maintenance.
d. any capital resource that lacks clear title of ownership.
Answer...?
