Question 1

Which one of the following was a secondary effect of the stock market crash of 1929?

Accepted Answer

A)  an increase in the money supply in the early 1930s 
B)  a decline in consumption expenditures because of the reduction in the wealth of stockholders 
C)  an increase in the supply of loanable funds as people transferred funds from the stock market into savings accounts 
D)  an increase in tax revenues as the sellers of stocks paid the capital gains tax on stocks that had appreciated during the 1920s 
A)  an increase in the money supply in the early 1930s 
B)  a decline in consumption expenditures because of the reduction in the wealth of stockholders 
C)  an increase in the supply of loanable funds as people transferred funds from the stock market into savings accounts 
D)  an increase in tax revenues as the sellers of stocks paid the capital gains tax on stocks that had appreciated during the 1920s

Question 2

If the prices of energy products rise sharply, consumers will most likely

Accepted Answer

A)  sharply reduce their consumption of these products in both the short run and the long run. 
B)  reduce their consumption of these products slightly in the short run and more sharply in the long run. 
C)  reduce their consumption of these products sharply in the short run, but in the long run consumption will fall by only a small amount. 
D)  increase their consumption of these products slightly in the short run and more sharply in the long run. 
A)  sharply reduce their consumption of these products in both the short run and the long run. 
B)  reduce their consumption of these products slightly in the short run and more sharply in the long run. 
C)  reduce their consumption of these products sharply in the short run, but in the long run consumption will fall by only a small amount. 
D)  increase their consumption of these products slightly in the short run and more sharply in the long run.

Question 3

An SEC rule change allowing investment banks to increase the leverage of their investment capital prompted many investment banks to

Accepted Answer

A)  increase the amount of assets held in relation to mortgage-backed securities being issued. 
B)  decrease the amount of assets held in relation to mortgage-backed securities being issued. 
C)  decrease the amount of mortgage-backed securities being offered. 
D)  reduce the ratio of mortgage loans to equity capital of the investment bank. 
A)  increase the amount of assets held in relation to mortgage-backed securities being issued. 
B)  decrease the amount of assets held in relation to mortgage-backed securities being issued. 
C)  decrease the amount of mortgage-backed securities being offered. 
D)  reduce the ratio of mortgage loans to equity capital of the investment bank.

Question 4

Which of the following is true?

Accepted Answer

A)  A school voucher program targeted towards low- and middle-income families would cause racial and economic segregation among schools to rise. 
B)  In contrast with other public schools, charter schools are generally operated by religious organizations. 
C)  School voucher programs increase the salaries of excellent teachers. 
D)  School voucher programs decrease the diversity of schooling options. 
A)  A school voucher program targeted towards low- and middle-income families would cause racial and economic segregation among schools to rise. 
B)  In contrast with other public schools, charter schools are generally operated by religious organizations. 
C)  School voucher programs increase the salaries of excellent teachers. 
D)  School voucher programs decrease the diversity of schooling options.

Question 5

The share of new loans with a down payment of 5 percent or less extended by Freddie Mac and Fannie Mae

Accepted Answer

A)  declined substantially after 1999. 
B)  rose from 4 percent in 1998 to 12 percent in 2003 and 23 percent in 2007. 
C)  rose from 4 percent in 1998 to 23 percent in 2002, but declined to less than 10 percent in 2007. 
D)  never exceeded 10 percent of the new loans financed. 
A)  declined substantially after 1999. 
B)  rose from 4 percent in 1998 to 12 percent in 2003 and 23 percent in 2007. 
C)  rose from 4 percent in 1998 to 23 percent in 2002, but declined to less than 10 percent in 2007. 
D)  never exceeded 10 percent of the new loans financed.

Question 6

When it is difficult to assign and enforce property rights,

Accepted Answer

A)  markets result in outcomes that are often inefficient. 
B)  courts can easily negotiate efficient outcomes. 
C)  establishing better property rights is always the best way to deal with environmental problems. 
D)  government regulation can never improve on the outcomes generated by competitive markets. 
A)  markets result in outcomes that are often inefficient. 
B)  courts can easily negotiate efficient outcomes. 
C)  establishing better property rights is always the best way to deal with environmental problems. 
D)  government regulation can never improve on the outcomes generated by competitive markets.

Question 7

Federal tax legislation makes it cheaper for individuals and families to pay for health care

Accepted Answer

A)  by purchasing an insurance policy through their employer rather than paying for it directly with their own money. 
B)  by purchasing an insurance policy through their employer rather than directly purchasing health insurance from the company of their choice. 
C)  directly rather than through an insurance policy offered through their employer. 
D)  by both a and b above. 
A)  by purchasing an insurance policy through their employer rather than paying for it directly with their own money. 
B)  by purchasing an insurance policy through their employer rather than directly purchasing health insurance from the company of their choice. 
C)  directly rather than through an insurance policy offered through their employer. 
D)  by both a and b above.

Question 8

While most industrial categories have experienced a decline in the percentage of workers unionized, which one of the following categories has seen a significant increase in unionization?

Accepted Answer

A)  retail trades 
B)  the hotel and restaurant industry 
C)  the government sector 
D)  automobile manufacturing 
A)  retail trades 
B)  the hotel and restaurant industry 
C)  the government sector 
D)  automobile manufacturing

Question 9

The Endangered Species Act

Accepted Answer

A)  weakened the property rights of landowners. 
B)  encourages landowners to find new ways to provide habitat for listed species. 
C)  provides compensation to landowners affected by the law. 
D)  has not benefited any of the species protected under the act. 
A)  weakened the property rights of landowners. 
B)  encourages landowners to find new ways to provide habitat for listed species. 
C)  provides compensation to landowners affected by the law. 
D)  has not benefited any of the species protected under the act.

Question 10

Higher prices for natural resources are

Accepted Answer

A)  a natural and inevitable result of resource depletion. 
B)  not possible for more than a short time, as technological advances clearly guarantee falling resource prices. 
C)  not the story of the last two centuries, because resource prices have decline through most of this period. 
D)  the major cause of resource shortages in the world. 
A)  a natural and inevitable result of resource depletion. 
B)  not possible for more than a short time, as technological advances clearly guarantee falling resource prices. 
C)  not the story of the last two centuries, because resource prices have decline through most of this period. 
D)  the major cause of resource shortages in the world.

Question 11

By raising their wages, unions typically

Accepted Answer

A)  increase total productivity, which must rise proportionally with the wage rate. 
B)  encourage employers to find substitutes for union labor. 
C)  raise the wages of nonunion workers as well. 
D)  lower the prices consumers pay for the products produced by union firms. 
A)  increase total productivity, which must rise proportionally with the wage rate. 
B)  encourage employers to find substitutes for union labor. 
C)  raise the wages of nonunion workers as well. 
D)  lower the prices consumers pay for the products produced by union firms.

Question 12

Suppose that new demands greatly reduce the proved reserves of titanium to unexpectedly low levels, and it appears that the new demands will continue. If the market price is unregulated, we should expect that the price will

Accepted Answer

A)  rise sharply, calling forth added exploration and more effective (and more costly) recovery methods, resulting in additional new supplies of titanium. 
B)  rise sharply, calling forth new ways for manufacturers to conserve titanium and to find substitutes for it. 
C)  over time, bring the quantity supplied of titanium into balance with the quantity demanded. 
D)  do all of the above. 
A)  rise sharply, calling forth added exploration and more effective (and more costly) recovery methods, resulting in additional new supplies of titanium. 
B)  rise sharply, calling forth new ways for manufacturers to conserve titanium and to find substitutes for it. 
C)  over time, bring the quantity supplied of titanium into balance with the quantity demanded. 
D)  do all of the above.

Question 13

Between 1960 and 1980, the female/male annual earnings ratio of full-time workers ____. Between 1980 and 2009, the female/male annual earnings ratio of full-time workers ____.

Accepted Answer

A)  changed very little; fell 
B)  changed very little; rose 
C)  fell; changed very little 
D)  rose; changed very little 
A)  changed very little; fell 
B)  changed very little; rose 
C)  fell; changed very little 
D)  rose; changed very little

Question 14

Given the current structure of the Social Security and Medicare programs, the retirement of the baby boom generation during the years following 2010 will be most likely to

Accepted Answer

A)  reduce government expenditures on health care and income transfers. 
B)  increase government expenditures on health care and income transfers. 
C)  result in large budget surpluses. 
D)  result in lower tax rates. 
A)  reduce government expenditures on health care and income transfers. 
B)  increase government expenditures on health care and income transfers. 
C)  result in large budget surpluses. 
D)  result in lower tax rates.

Question 15

Which of the following is true?

Accepted Answer

A)  All types of environmental problems can be solved merely by the enforcement of individual property rights. 
B)  Environmental regulation cannot improve environmental quality. 
C)  Income levels exert little impact on the demand for environmental quality. 
D)  Markets often result in outcomes that are inefficient when it is difficult to assign and enforce property rights. 
A)  All types of environmental problems can be solved merely by the enforcement of individual property rights. 
B)  Environmental regulation cannot improve environmental quality. 
C)  Income levels exert little impact on the demand for environmental quality. 
D)  Markets often result in outcomes that are inefficient when it is difficult to assign and enforce property rights.

Question 16

During the decade following the passage of the 1962 equal pay legislation and the 1964 civil rights legislation,

Accepted Answer

A)  the male/female wage differential became much smaller. 
B)  the male/female wage differential became much larger. 
C)  there was little change in the earnings of women relative to men. 
D)  the educational choices of women and men became less similar. 
A)  the male/female wage differential became much smaller. 
B)  the male/female wage differential became much larger. 
C)  there was little change in the earnings of women relative to men. 
D)  the educational choices of women and men became less similar.

Question 17

When the money supply declined by approximately 30 percent during the 1929 through 1933 period,

Accepted Answer

A)  real output increased. 
B)  the general level of prices increased. 
C)  the velocity of money increased by a proportional amount. 
D)  unemployment increased. 
A)  real output increased. 
B)  the general level of prices increased. 
C)  the velocity of money increased by a proportional amount. 
D)  unemployment increased.

Question 18

According to water resource economists

Accepted Answer

A)  water is seldom in short supply anywhere in the world. 
B)  we are not running out of water, but specific places do run short of water, given the status of their water supply arrangements and ease (or lack of) transferability of water among users. 
C)  the world is running out of water, just as it is running out of accessible oil. 
D)  there is no workable way to make water markets function properly, because in the end, we can't make more water the way we can make more bread or automobiles. 
A)  water is seldom in short supply anywhere in the world. 
B)  we are not running out of water, but specific places do run short of water, given the status of their water supply arrangements and ease (or lack of) transferability of water among users. 
C)  the world is running out of water, just as it is running out of accessible oil. 
D)  there is no workable way to make water markets function properly, because in the end, we can't make more water the way we can make more bread or automobiles.

Question 19

The Social Security retirement program is financed by a 10.6 percent payroll tax that applies to earnings up to an income cutoff that is adjusted upward annually by the growth rate of nominal wages. As of 2011, the income cutoff was

Accepted Answer

A)  $15,000. 
B)  $32,700. 
C)  $106,800. 
D)  $250,000. 
A)  $15,000. 
B)  $32,700. 
C)  $106,800. 
D)  $250,000.

Question 20

Women earn less on average than men. Which of the following would be the logical conclusion?

Accepted Answer

A)  Women must be the victim of employment discrimination. 
B)  Women must be less productive. 
C)  Men must be more highly motivated and materialistic. 
D)  Without consideration of preferences and productivity factors, differences in unadjusted mean earnings do not necessarily reflect employment discrimination. 
A)  Women must be the victim of employment discrimination. 
B)  Women must be less productive. 
C)  Men must be more highly motivated and materialistic. 
D)  Without consideration of preferences and productivity factors, differences in unadjusted mean earnings do not necessarily reflect employment discrimination.

Which one of the following was a secondary effect of the stock market crash of 1929?

If the prices of energy products rise sharply, consumers will most likely

An SEC rule change allowing investment banks to increase the leverage of their investment capital prompted many investment banks to

Which of the following is true?

The share of new loans with a down payment of 5 percent or less extended by Freddie Mac and Fannie Mae

When it is difficult to assign and enforce property rights,

Federal tax legislation makes it cheaper for individuals and families to pay for health care

While most industrial categories have experienced a decline in the percentage of workers unionized, which one of the following categories has seen a significant increase in unionization?

The Endangered Species Act

Higher prices for natural resources are

By raising their wages, unions typically

Suppose that new demands greatly reduce the proved reserves of titanium to unexpectedly low levels, and it appears that the new demands will continue. If the market price is unregulated, we should expect that the price will

Between 1960 and 1980, the female/male annual earnings ratio of full-time workers . Between 1980 and 2009, the female/male annual earnings ratio of full-time workers .

Given the current structure of the Social Security and Medicare programs, the retirement of the baby boom generation during the years following 2010 will be most likely to

Which of the following is true?

During the decade following the passage of the 1962 equal pay legislation and the 1964 civil rights legislation,

When the money supply declined by approximately 30 percent during the 1929 through 1933 period,

According to water resource economists

The Social Security retirement program is financed by a 10.6 percent payroll tax that applies to earnings up to an income cutoff that is adjusted upward annually by the growth rate of nominal wages. As of 2011, the income cutoff was

Women earn less on average than men. Which of the following would be the logical conclusion?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Filters

Exam 16: Applying the Basics: Special Topics in Economics

Which one of the following was a secondary effect of the stock market crash of 1929?

If the prices of energy products rise sharply, consumers will most likely

An SEC rule change allowing investment banks to increase the leverage of their investment capital prompted many investment banks to

Which of the following is true?

The share of new loans with a down payment of 5 percent or less extended by Freddie Mac and Fannie Mae

When it is difficult to assign and enforce property rights,

Federal tax legislation makes it cheaper for individuals and families to pay for health care

While most industrial categories have experienced a decline in the percentage of workers unionized, which one of the following categories has seen a significant increase in unionization?

The Endangered Species Act

Higher prices for natural resources are

By raising their wages, unions typically

Suppose that new demands greatly reduce the proved reserves of titanium to unexpectedly low levels, and it appears that the new demands will continue. If the market price is unregulated, we should expect that the price will

Between 1960 and 1980, the female/male annual earnings ratio of full-time workers ____. Between 1980 and 2009, the female/male annual earnings ratio of full-time workers ____.

Given the current structure of the Social Security and Medicare programs, the retirement of the baby boom generation during the years following 2010 will be most likely to

Which of the following is true?

During the decade following the passage of the 1962 equal pay legislation and the 1964 civil rights legislation,

When the money supply declined by approximately 30 percent during the 1929 through 1933 period,

According to water resource economists

The Social Security retirement program is financed by a 10.6 percent payroll tax that applies to earnings up to an income cutoff that is adjusted upward annually by the growth rate of nominal wages. As of 2011, the income cutoff was

Women earn less on average than men. Which of the following would be the logical conclusion?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Filters

Between 1960 and 1980, the female/male annual earnings ratio of full-time workers . Between 1980 and 2009, the female/male annual earnings ratio of full-time workers .