Choose the correct answer from a, b ,c and d for the following questions

1.How is the economic surplus generated by a decision calculated?

a.It is the total benefits minus total costs arising from the decision.

b.It is the sum of costs arising from the decision.

c.It is the total benefits plus total costs arising from the decision.

d.It is the sum of benefits arising from the decision.

2.Decisions should reflect the _____ costs, rather than just the _____ costs.

a. opportunity; financial

b. opportunity; nonfinancial

c. nonfinancial; financial

d. financial; marginal

3.Which of the following scenarios illustrates the law of demand?

a. A research company finds that the more expensive a particular brand of a designer handbag, the more that consumers are willing to purchase the brand.

b. Kathleen eats more steak when the price is low, and less when the price is high.

c. John likes to drink spring water. At $2 he buys four bottles of water, and at $1.50 he still buys four bottles of water.

d. Francis does not care about the price of coffee at the coffee shop - he must buy two cappuccinos every day, regardless of the price.

4.A downward-sloping demand curve implies:

a. there is an inverse relationship between price and quantity demanded.

b. buyers are willing to buy less when prices are lower.

c. there is a positive relationship between price and quantity demanded.

d. there is no relationship between price and quantity demanded.

8.Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario?

a. You will take fewer pumpkins to the market to sell.

b. You will wind up with many unsold pumpkins.

c. You can charge a higher price per pumpkin.

d. You will be able to sell only the highest-quality pumpkins.

9.Suppose that one hour of labor in Singapore can produce 20 computers or 40 cellphones. Further, suppose that one hour of labor in Ireland can produce 10 computers or 15 cellphones. _____ has a comparative advantage in the production of computers. _____ has a comparative advantage in the production of cellphones.

a. Ireland; Ireland

b. Ireland; Singapore

c. Singapore; Ireland

d. Singapore; Singapore

11.Which of the following is an example of a durable good?

a. fresh flowers from the florist

b. your haircut

c. your new car

d. a soft drink

13.A decreasing returns to scale production function is one where increasing all inputs by a certain proportion leads to output rising by:

a. exactly double the proportion.

b. a larger proportion.

c. the same proportion.

d. a smaller proportion.

15.During the Great Recession, the United States Congress increased the length of time that unemployment benefits could be received from 52 weeks to 99 weeks. This change caused:

a. an increase in the costs for the government.

b. a decrease in unemployment.

c. an increase in the labor force participation rate.

d. an increase in the number of employed people in the economy.

16.The equilibrium unemployment rate is also known as the _____ unemployment rate.

a. structural

b. frictional

c. cyclical

d. long-run

17.In 1995, when the consumer price index was 152.38, women earned a median income of $12,130 per year. If the consumer price index in 2015 was 236.99, how much was $12,130 in 2015 dollars?

a. $16,259

b. $18,865

c. $7,799

d. $12,130

18.The real interest rate is the:

a. economic growth rate adjusted for the effects of inflation.

b. nominal interest rate minus the rate of inflation.

c. nominal interest rate plus the rate of inflation.

d. percentage of the nominal interest that is inflation.

20.You are a financial adviser. Your client, Archie, wants professional management of his investments but also wants a diversified portfolio. Which of the following investments is right for Archie?

a. Small corporation stocks

b. Large corporation stocks

c. A mutual fund

d. Corporate bonds

22.An example of a leading indicator is:

a. unemployment.

b. the stock market.

c. nonfarm payrolls.

d. unemployment insurance claims.

23.What was the Fed's inflation target in 2019?

a. 5%.

b. 3.5%.

c. 0.75%.

d. 2%.

24.On which of the following is there a tax incentive in the United States?

(i) health insurance purchased through employers

(ii) employer contributions for life insurance

(iii) rental value on owner-occupied housing

(iv) your mortgage

a. (iv) only

b. (i), (ii), (iii), and (iv)

c. (i), (iii), and (iv)

d. (iii) and (iv)

25.In the AD-AS framework, price and quantity are represented by _____, respectively.

a. the real interest rate and consumption

b. the GDP deflator and the real GDP

c. nominal interest rates and the real GDP

d. the real GDP and the real interest rate