1. Which of the following is a cause of recent United States trade deficits?
A. Stagnant incomes
B. Lower U.S. incomes
C. Increased U.S. incomes
D. Increased foreign incomes
2. What impact does immigration have on domestic output of the United States?
A. Decreased output
B. Falling output
C. No effect
D. Increased output
3. Price supports for agricultural products result in a
A. lower price and higher output.
B. lower price and lower output.
C. higher price and lower output.
D. higher price and higher output.
4. The unemployed are disproportionately represented among the uninsured because
A. one must be working to qualify for Medicaid.
B. most are young and in excellent health, so they choose not to purchase health insurance.
C. a large percentage of the unemployed are heads of single-parent families.
D. most workers obtain health insurance through their employers.
5. Unimpeded immigration between two nations tends to
A. reduce business income in the nation receiving immigrants but increase it in the nation experiencing emigration.
B. reduce business income in both nations.
C. increase business income in the nation receiving immigrants but reduce it in the nation experiencing emigration.
D. increase business income in both nations.
6. In the United States
A. taxes decrease but transfers increase income inequality.
B. both taxes and transfers decrease income inequality.
C. taxes increase but transfers decrease income inequality.
D. both taxes and transfers increase income inequality.
7. Improved agricultural technology is likely to have what effect on the agricultural product market?
A. Demand will increase
B. Supply will increase
C. Supply will decrease
D. Demand will decrease
8. The following diagram is a flexible exchange market for foreign currency
Refer to the diagram. Other things equal, a rightward shift of the demand curve would
A. reduce the equilibrium quantity of euros.
B. depreciate the euro.
C. depreciate the dollar.
D. appreciate the dollar.
9. Suppose Slow Ketchup requires that, as a condition of purchase, all restaurants using its product must buy and make available its new sales product. This arrangement is an example of
A. an interlocking directive.
B. price-fixing.
C. a tying contract.
D. price discrimination.
10. A merger between firms at different stages of the production process is known as a
A. monopoly merger.
B. vertical merger.
C. horizontal merger.
D. production merger.
11. Refer to the diagram. If farmers produce a normal crop of Qn, their gross income
A. will be 0PpPNQn.
B. will be Pp × Qn.
C. cannot be determined.
D. will be 0PnNQn.
12. Which of the following is a reason for increasing demand for healthcare?
A. Health care consumption has become fashionable
B. Low prices
C. Supplier-induced demand
D. Excess supply
13. When considering all of the parts of the balance of payments for a nation, what item might you want to look at to determine if a nation has a trade surplus or deficit?
A. Net transfers
B. Balance on capital account
C. Balance on financial account
D. Balance on goods and services
14. Which one of the following acts declared "[e]very contract, combination…or conspiracy, in restraint of trade or commerce among the several states…to be illegal"?
A. The Wheeler-Lea Act.
B. The Interstate Commerce Act.
C. The Federal Trade Commission Act.
D. The Sherman Act.
15. What is an effect of incoming immigration on the wages of low-skilled laborers?
A. Decreased wages
B. Increased wages
C. Decreased demand for labor
D. Decreased supply of labor
16. Why might government want to allow natural monopolies to keep their monopolies?
A. Natural monopolies cannot make a normal profit.
B. Natural monopolies result in the highest output possible.
C. Natural monopolies always charge the lowest price.
D. Natural monopolies can achieve very low costs through economy of scale.
17. Which one of the following is most likely to increase the Herfindahl index of a particular industry?
A. A conglomerate merger.
B. A vertical merger.
C. A horizontal merger.
D. A price-fixing arrangement among all the industry firms.
18. Refer to the diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The trading possibilities curves imply that
A. world resources will be allocated more efficiently if the two nations specialize and trade based on comparative advantage.
B. the domestic production possibilities curves entail unemployment and/or the domestic misallocation of resources.
C. both countries have a trade surplus that will result in economic growth.
D. both nations will be worse off as a result of international specialization and trade.
19. Which of the following is a disadvantage of the flexible exchange rate system?
A. Automatic reactions to changes in balance of payments
B. Uncertainty in currency values
C. Higher prices
D. More government involvement
20. What type of exchange rate system do most modern nations have?
A. Fixed exchange rate
B. The managed float
C. The gold standard
D. Flexible exchange rate
