1. According to the official definition of unemployment, a person is unemployed if he/she...

a. works part time but wants to work full time

b. doesn't have a job and is actively looking for one

c. doesn't have a job and gave up on looking for one

d. all of the above

2. An outward shift in the aggregate demand (AD) curve would have been the result of

a. a decrease in the price level

b. an increase in the price level

c. businesses become more optimistic about future sales

d. businesses become more pessimistic about future sales

3. One measure of the inflation rate is the...

a. sum of CPIs of adjacent years

b. percent change in the CPI of adjacent years

c.percentage change in the Real GDP of adjacent years

d. GDP minus the Real GDP in a year

4. As the interest rate rises, the cost of a given investment project and businesses invest

a. rises; more.

b. rises; less.

c. falls; more.

d. falls; less.

5. According to (neo)classical economists, if the amount of funds households save is greater than the amount of funds firms invest, then

a. the interest rate will fall, ultimately moving to a level where the amount of funds households plan to save equals the amount of funds firms plan to invest.

b. the interest rate will rise, ultimately moving to a level where the amount of funds houscholds plan to save equals the amount of funds firms plan to invest.

c. the interest rate will remain constant and people will simply buy more goods.

d. more money will be used for leisure purposes, since houscholds save in order to consume leisure at some later time.

6. A society is productive inefficient when:

a. It produces a point inside or below Its PPE.

b. It does not produce the maximum ouput with its given resources and technology.

c. It can produce more or one good without giving up some of the another good.

d. Both a and b.

e. All of the above. (2)

7. What is the reason for the law of increasing opportunity costs?

a. There is no reason: it just is.

b. People having varying abilities and those with lower opportunity costs of producing a good produce it before people with higher opportunity costs produce

c.. The price of a good rises as more of it is demanded.

d. As more of a good is produced, the taxes applied to the production of the good rise.

e. cand d.

8. If the workers of a firm successfully negotiate an increase in wages, which of the following is most likely to happen?

a. The demand curve for the product the firm produces shifts rightward.

b. The demand curve for the product the firm produces shifts leftward.

c. The supply curve of the product the firm produces shifts rightward.

d. The supply curve of the product the firm produces shifts leftward. (2)

9. If the demand for computer software rises as income rises, then computer software is a (an)

a. Inferior good.

b. Substitute good for computers.

c. Normal good.

d. Complement good for computers.

e. c and d. (2)

10. Variables X and Y are independent of each other. If we plot X on the horizontal axis and Y on the vertical axis, the line that connects combinations of X and Y in a two-variable diagram is

a. parallel to the horizontal axis

b. downward-sloping (left to right)

c. parallel to the vertical axis

d. upward-sloping (left to right)

e. a or c (2)

11. An outward shift in the aggregate demand (AD) curve would have been the result of

a. a decrease in the price level

b. an increase in the price level

c. businesses become more optimistic about future sales

d. businesses become more pessimistic about future sales

12. Refer to the figure below:

Assume the economy is originally in equilibrium at point A. If wage rates rise, at which point is the economy most likely to end up in the short run?

a. A

b. B

c. C

d. D