1. In a market economy, the idea of "market discipline" says what determines whether an entrepreneur will continue producing a new product or terminate its production?
2. government regulations
3. licensing by industrial development regulations
4. the profit the entrepreneur receives from selling the product
5. whether Palpatine, the supreme ruler of the galaxy, is pleased with the product.

1 points

QUESTION 2

1. Which of the following are true regarding private property rights?
2. Private property rights are not conducive to economic growth.
3. Private property rights do not give the owner incentive to consider the wishes of others when deciding how to use his property.
4. Private property rights often lead to the property being abused.
5. Private property rights link the personal benefits of an action with the personal costs of it.

1 points

QUESTION 3

1. If inflation is high and variable
2. a firm is unlikely to build a new factory or undertake other costly investment in physical capital.
3. makes it easier for businesses and households to plan wisely for the future.
4. will increase the purchasing power of a fixed quantity of money.
5. will improve the information given by market prices.

1 points

QUESTION 4

1. When the economy is doing well (e.g., the economy is in long-run equilibrium)
2. the unemployment rate will be zero
3. the unemployment rate will be high during economic booms.
4. we would expect to have some unemployment due to structural and frictional factors.
5. the employment/population ration will average close to 100%.

1 points

QUESTION 5

1. Iron Mike, a worker in a steel mill, loses his job due to a decrease in steel demand in a recession. Iron Mike is confident that when the economy recovers, he will get his job back. He is ___________ unemployed.
2. frictionally
3. structurally
4. cyclically
5. seasonally

1 points

QUESTION 6

1. While walking on the beach after scuba diving, Steve finds an empty beer bottle. After rubbing it, a genie emerges. Instead of granting wishes, the genie creates a fundamental change in the economy that causes Steve's job skills to be rendered obsolete. As a result, Scuba Steve is ______________ unemployed.
2. frictionally
3. structurally
4. cyclically
5. seasonally

1 points

QUESTION 7

1. In the long run,
2. there is no shortage or surplus of resources.
3. a firm's profits increases if the general price level increases.
4. GDP may or may not be equal to potential GDP.
5. the general price level is steadily falling.

1 points

QUESTION 8

1. Which of the following is an example of the invisible hand in action?
2. The government promises universal healthcare for all Americans.
3. Someone always shows up at the door at the worst possible time.
4. An annoying driver chucks some litter out of his window.
5. There is always a McDonald's restaurant near interstate highway exists, so it is easy to find somewhere to eat when you are traveling and don't know the area.

1 points

QUESTION 9

1. Suppose a firm's labor costs are fixed by long term contract. Inflation will thus __________ the firm's profits in the short-run.
2. decrease
3. increase
4. not change
5. change, but in an ambiguous direction

1 points

QUESTION 10

1. Suppose that King Kong Bundy is the ruler of his kingdom and possesses absolute power. King Bundy decides to seize the property from a local feudal lord who has displeased him. This would be an example of
2. contracts being fairly enforced in a court system.
3. hyperinflation.
4. markets supplying goods and services.
5. a violation of the rule of law.

1 points

QUESTION 11

1. Boxer Ivan Drago flies from Moscow, Russia to Las Vegas, Nevada for an exhibition boxing match and sees that the dollar price of foreign currency is $/R=0.02. Note that "R" is the symbol for the ruble, which is the currency used in Russia. This dollar price of foreign currency means
2. 1 dollar costs R0.02
3. 1 ruble costs $0.02
4. 1 ruble costs $50
5. 1 dollar costs R2

1 points

QUESTION 12

1. After winning his exhibition boxing match, Drago flies back to Moscow and sees that the dollar price of foreign currency is now $/?=0.03. This means that the dollar has________ against the ruble.
2. depreciated
3. appreciated
4. not changed
5. who knows?

1 points

QUESTION 13

1. As a result of your answer to question #12, Russian goods will be _________ relative to American goods and American goods will be ________ relative to Russian goods, compared when Drago arrived in Las Vegas in question #11.
2. less expensive, unchanged in price
3. more expensive, less expensive
4. less expensive, more expensive
5. more expensive, unchanged in price

1 points

QUESTION 14

1. Homer Simpson goes to bed one night and thanks to an accident at the Springfield Nuclear Power Plant, there is a wrinkle in the space-time continuum that causes the consumer price index to fall in half. However, Homer still has the same amount of money in his wallet in the morning that he has the night before. Consequently, Homer's purchasing power has ___________.
2. not changed
3. changed in an ambiguous direction
4. decreased
5. increased

1 points

QUESTION 15

1. As a result to your answer to question #14, Homer will ____________ his demand for final goods and services.
2. increase
3. decrease
4. not change
5. change, but in an ambiguous direction

1 points

QUESTION 16

1. Frank "The Tank" worked as a realtor during the housing boom in the 2000s. When the boom turned to bust, Frank lost his job. Frank looked for a job as a realtor for a while, but eventually gave up looking. In the U-3 unemployment rate, Frank would be
2. frictionally unemployed.
3. structurally unemployed.
4. cyclically unemployed.
5. not in the labor force.

1 points

QUESTION 17

1. Refer to question #16. Frank giving up looking for a job would cause the employment-to-population ratio to ___________.
2. rise
3. fall
4. remain unchanged
5. change, but in an ambiguous direction.

1 points

QUESTION 18

1. Suppose you take out a loan from the bank in order to buy something cool, like a jet pack. You have to pay the loan back in a year at 3% interest. Over that year, the rate of inflation is 1%. This mean the nominal interest rate on the loan is _________ while the real interest rate is _________.
2. 1%, 3%
3. 3%, 1%
4. 3%, 2%
5. 2%, 3%

1 points

QUESTION 19

1. Refer to question #18.Suppose inflation is actually 0% over the course of the year, instead of 1% from question #18. As a result of this lower inflation rate, you would ______ and the bank would ________.
2. lose, gain
3. gain, lose
4. gain, gain
5. lose, lose

1 points

QUESTION 20

1. Suppose GDP in a country is growing at 4% per year. According to the "Rule of 70," it will take ___________ years for GDP in that country to double.
2. 70
3. 35
4. 17.5
5. 10

1 points

QUESTION 21

1. The phase of the business cycle where the economy goes from expanding to contracting is called the
2. expansion
3. contraction
4. trough
5. peak

1 points

QUESTION 22

1. Suppose a mad scientist rapidly increases the money supply, leading to inflation. This would make it _________ for borrowers to pay their loans back.
2. easier
3. more difficult
4. no difference in how hard it is
5. either easier or harder, depending on what the rate of inflation is

1 points

QUESTION 23

1. King Kong Bundy decides to invest in K-12 education by guaranteeing all of his subjects of his kingdom a high school education. Currently, most of his subjects drop-out in the 6th grade. This additional education will
2. have no effect on economic growth.
3. lead to tariffs and quotas that restrict trade.
4. increase his kingdom's human capital
5. lead to a brain drain.