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Answer questions 13. through 16. by referring to the graph below: Price $8 - 7- 6- 5- 4- 3- 2- 1- DS 0 0 10 20 30 40 50 60 70 80 90 100 Quantity ___ 13. The equilibrium quantity under free trade is: a. 30 units b. 50 units c. 80 units d. 100 units ___ 14. The quantity of domestic production under free trade is: a. 0 units b. 30 units c. 50 units d. 80 units ___ 15. The quantity of imports under free trade is: a. 0 units b. 30 units c. 50 units d. 80 units ___ 16. The market price, after imposing a quota of zero, is: a. $4 b. $5 c. $6 d. $7 ___ 17. Over the last couple of decades: a. Average tariff rates have been falling b. International trade has grown in importance c. Nations with more open economies have experienced more growth than nations with more closed economies d. All of the above FOR REVIEW ONLY - NOT FOR DISTRIBUTION WS DD International Trade 16 - 14
___ 18. Frédéric Bastiat’s “Petition of the Candlemakers”: a. is an argument for the wisdom of trade restrictions b. is a satirical attack on trade restrictions c. Both of the above d. Neither of the above Answer questions 19. through 22. based on the following information: One acre of land in Country X can produce 50 bushels of rice or 20 bushels of corn One acre of land in Country Y can produce 3 bushels of rice or 12 bushels of corn ___ 19. For Country Y, what is the opportunity cost of producing one bushel of rice? a. 1 bushel of corn b. 4 bushels of corn c. ¼ bushel of corn ___ 20. Country X has a comparative advantage in producing: a. corn b. rice c. Both corn and rice d. Neither corn nor rice ___ 21. Country Y has an absolute advantage in producing: a. corn b. rice c. Both corn and rice d. Neither corn nor rice ___ 22. Country Y has a comparative advantage in producing: a. corn b. rice c. Both corn and rice d. Neither corn nor rice ___ 23. If Nation A’s attractiveness to foreign investors increases relative to Nation B’s: a. the exchange rate for Nation A’s currency will appreciate relative to Nation B’s b. Nation A’s net exports will increase c. Both of the above d. Neither of the above ___ 24. The exchange rate for Nation A’s currency will appreciate versus that of Nation B if: a. Nation A has a higher inflation rate than Nation B b. Nation A has a higher economic growth rate than Nation B c. Nation A’s real interest rates increase relative to Nation B’s real interest rates d. All of the above ___ 25. From 1980 to 2010, China achieved a rapid increase in per capita Real GDP by: a. protecting its domestic producers with high tariffs b. abandoning globalization and closing off its economy from the rest of the world c. Both of the above d. Neither of the above ___ 26. From 1990 to 2010, India: a. lowered its average tariff rates from about 80% to about 13% b. increased its per capita Real GDP by 143% c. Both of the above d. Neither of the above FOR REVIEW ONLY - NOT FOR DISTRIBUTION 16 - 15 International Trade
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PRINCIPLES OF ECONOMICS JEFF HOLT S
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Principles of Economics, 6th Editio
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16. Study Guide for Chapter 7 17. C
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11. Appendix: Book Review - “The
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20. Appendix: The NCAA Cartel 21. S
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Introduction: A Brief History of U.
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In the twentieth century, per capit
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Appendix: The 35 Largest National E
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Multiple Choice: ___ 1. The Jamesto
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2. Describe the economic cost of th
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Chapter 1 Scarcity and Choices The
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Example 5B: At the end of 1982, the
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Example 11: When Cindy quits her jo
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consequences may result in failure
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An upward sloping curve (as in Exam
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In making decisions, humans tend to
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5. ______________________ _________
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___ 13. If the value of one variabl
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Y Point X Y A 0 1 B 3 3 C 6 5 D 9 7
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Chapter 2 Trade and Economic System
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Example 4B: The following quantitie
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1. An increase in the quantity of r
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3. For whom to produce? This is det
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The graph below illustrates the shi
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The two primary economic systems ar
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___ 12. The capitalist vision sees
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___ 25. According to the book “Ca
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Chapter 3 Demand, Supply, and Equil
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. For inferior goods, income and de
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The same information can be placed
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Not only does a free market elimina
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$7 - 6 - 5 - S 3 S1 S 2 Price 4 - 3
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Example 17: The graph below illustr
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Questions for Chapter 3 Fill-in-the
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___ 12. Assuming a market originall
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$8 - 7 - 6 - 5 - Price 4 - 3 - 2 -
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Chapter 4 Inflation and Unemploymen
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Computing the Rate of Inflation The
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Full Employment Though unemployment
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3. Cyclical unemployment - due to d
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During the Great Depression, the ec
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Appendix: Think Like an Economist -
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Answer questions 8. and 9. based on
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___ 25. The extension of unemployme
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Chapter 5 Measuring Total Output: G
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5. Leisure. Leisure time is by defi
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The U.S. is a high per capita GDP c
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Example 17: In “An International
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The simple circular flow diagram be
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___ 3. Which of the following would
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2. Explain what nonproduction trans
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Chapter 6 The Aggregate Market The
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Example 2C: Assume the same facts a
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Example 5B: The price of crude oil
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Price Level Real GDP SRAS AD 2 AD 1
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Appendix: Why the Aggregate Demand
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___ 3. DEF Company can invest in ne
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2. List and explain the two factors
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Chapter 7 Classical Economic Theory
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Notice that the investment demand c
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Long-Run Equilibrium If Real GDP is
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Example 6B: When the economy is in
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Laissez-faire If the economy is sel
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___ 5. According to Say’s Law: a.
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3. On the graph below, draw an aggr
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Chapter 8 Keynesian Economic Theory
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Example 2B: The graph below illustr
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Example 5: Assume that the table be
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Notice on the graph on the previous
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According to Keynesian theory, a ch
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“The General Theory” also inclu
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___ 8. If the consumption function
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3. If the MPC is .667, and investme
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Chapter 9 Fiscal Policy The basic e
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Keynesian Fiscal Policy Theory and
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Example 5A: The federal government
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The Laffer Curve What will happen t
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Appendix: The Importance of Incenti
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___ 4. A decrease in government exp
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2. Explain what automatic stabilize
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Chapter 10 Money, Money Creation, a
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Example 4B: The castaways on Gillig
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Looking at the balance sheet below,
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Demand-side One-shot Inflation Exam
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4. Inflation increases uncertainty
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life; it came into existence not by
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calculated by using the potential d
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___ 12. If the required-reserve rat
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4. Referring to the balance sheet f
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Chapter 11 The Federal Reserve Syst
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5. After Bank X sells the $300,000
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Low Mortgage Interest Rates Mortgag
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Relaxed Standards for Mortgage Loan
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The Bursting of the Housing Bubble
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On February 17, 2009, the federal g
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Fed policies caused short-term inte
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___ 10. The Fed’s most important
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___ 25. In response to the recessio
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Chapter 12 Monetary Policy The basi
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2. A change in aggregate demand (AD
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Monetarist Transmission Mechanism C
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3. Borrowers do not have to seek ou
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Appendix: Book Review - “The Age
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Questions for Chapter 12 Fill-in-th
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___ 16. The primary source of incom
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7. According to Alan Greenspan, wha
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Chapter 13 Taxes, Deficits, and the
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Example 5: In 2015, Taxpayer A had
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of $5 and a quantity of 10 units. T
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The complexity of the tax law also
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the current government spending and
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cut of 1964. The top rate was lower
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Page 227 and 228: 3. How would eliminating the loopho
Page 229 and 230: Chapter 14 Economic Growth The basi
Page 231 and 232: 2. Labor. Labor can contribute to e
Page 233 and 234: estricting international trade (e.g
Page 235 and 236: An improvement in technology (e.g.
Page 237 and 238: The table below shows the economic
Page 239 and 240: will increase both Real GDP and per
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Page 243 and 244: ___ 26. The opinion that economic g
Page 245 and 246: Chapter 15 Less Developed Countries
Page 247 and 248: Example 8: Countries A, B, C, and D
Page 249 and 250: Obstacles to Economic Development f
Page 251 and 252: c. Restrictions on international tr
Page 253 and 254: Appendix: Book Review - “The Powe
Page 255 and 256: Example 25: In Brazil, about half t
Page 257 and 258: Study Guide for Chapter 15 Chapter
Page 259 and 260: ___ 13. Among the counterproductive
Page 261 and 262: 4. List four ways that governments
Page 263 and 264: Chapter 16 International Trade The
Page 265 and 266: Other Benefits of Free Internationa
Page 267 and 268: Example 6: The graph below illustra
Page 269 and 270: competitive disadvantage. But dumpi
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Page 273 and 274: Smith was skeptical of government a
Page 275: ___ 4. For Country X, what is the o
Page 279 and 280: 4. On the graph below: (1) What is
Page 281 and 282: Chapter 17 Elasticity We are often
Page 283 and 284: Example 4A: What is price elasticit
Page 285 and 286: Example 5A: Gertie’s Gas and Go i
Page 287 and 288: Example 10A: When the price of Good
Page 289 and 290: Example 13B: On the graph below, su
Page 291 and 292: $7 - 6 - 5 - Price 4 - 3 - 2 - 1 -
Page 293 and 294: In the long run, would the deadweig
Page 295 and 296: ___ 7. The factors that determine w
Page 297 and 298: 3. a. Which price (or prices) from
Page 299 and 300: Chapter 18 Utility The basic econom
Page 301 and 302: Nonetheless, society generally assu
Page 303 and 304: Example 9: Capital City operates a
Page 305 and 306: Marginal rate of substitution - the
Page 307 and 308: The diamond-water paradox is the ob
Page 309 and 310: Complete the table below to answer
Page 311 and 312: 4. The graph below shows indifferen
Page 313 and 314: Chapter 19 The Firm The basic econo
Page 315 and 316: than contributing to team productio
Page 317 and 318: 1. Difficulty in raising large amou
Page 319 and 320: Corporations also use self-financin
Page 321 and 322: Example 24: A blacksmith who produc
Page 323 and 324: For financing needs, proprietorship
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5. List two things that the absence
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Chapter 20 Production and Costs The
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In Example 5B, Birdwell finds that
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variable cost initially decreases,
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Quantity TC MC AFC AVC ATC 0 240 X
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If the scale of operation is increa
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average total cost. Average fixed c
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___ 11. Concerning the cost curves:
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5. Complete the following cost tabl
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Chapter 21 Perfect Competition The
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Even though a perfect competitor ca
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Example 6C: This example builds on
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At what price will there be neither
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Appendix: Perfect Competition in th
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Multiple Choice: ___ 1. A perfect c
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___ 17. Perfect competition: a. req
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Answers for Chapter 21 Fill-in-the-
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Chapter 22 Monopoly Of the four mar
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3. Exclusive ownership of an essent
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maximizing quantity (4 units) creat
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$22 - 20 - 18 - 16 - 14 - Deadweigh
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2. Negotiating, beginning at a high
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Legal barriers are created by gover
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___ 8. The slope of the demand curv
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Price Quantity 3. List some of the
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Chapter 23 Monopolistic Competition
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For Percomp (the perfect competitor
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Example 7A: The graph below represe
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Example 9: The Organization of the
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Example 12 illustrates the dilemma
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its current price and quantity. The
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___ 14. Game theory: a. is a method
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Answers for Chapter 23 Fill-in-the-
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Chapter 24 Factor Markets The basic
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$ $240 - 200 - 160 - 120 - 80 - 40
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Since producers will attempt to equ
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2. Differences in nonmoney aspects
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were his strikeouts, walks, and hom
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___ 3. To maximize profits, a produ
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___ 19. According to the book, “M
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Multiple Choice: 1. a. 8. c. 15. d.
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Chapter 25 Labor Unions The primary
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The elasticity of demand for union
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Example 4A: Assume that the graph b
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Notice from the graph in Example 6
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Wage Factory A Quantity of Labor S
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As a cartel, a labor union faces a
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___ 10. For a monopsony: a. there i
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3. The graph below represents a lab
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Chapter 26 Interest, Present Value,
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An increase in expected rates of re
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An asset is valuable because we exp
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Example 13B: General Ordnance prove
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Appendix: Present Value Table One f
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___ 4. An increase in expected rate
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Problems: 1. List and explain the t
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Chapter 27 Market Failure The basic
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External Benefit If a market genera
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Example 2: To encourage the consump
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$100 - 90 - 80 - MSC 70 - $ 60 - 50
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A common good is nonexcludable. Non
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Study Guide for Chapter 27 Chapter
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___ 5. What government policy would
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4. Based on the information on the
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Chapter 28 Public Choice and Govern
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Candidates and the Median Voter Mod
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Example 8: According to State and F
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Example 10: When Elvis Presley was
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4. Pessimistic bias. This is the te
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___ 5. An elected official will: a.
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2. If a certain policy will yield s
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Chapter 29 Government Regulation of
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underproduction is the amount that
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micromanagement results in business
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market. They may agree with their c
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Questions for Chapter 29 Fill-in-th
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___ 10. The public interest theory
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4. List the four types of costs imp
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Chapter 30 Agriculture and Health C
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weather may cause bumper crops. Bad
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Security and Rural Investment Act o
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Example 12: From 1960 to 2013, the
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1. NHI would provide universal heal
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d. Insurance providers are not allo
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Study Guide for Chapter 30 Chapter
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Answer questions 7. through 10. by
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___ 21. If there were no individual
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Chapter 31 Income Distribution and
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Income is more equally distributed
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over a typical career is the accumu
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Ideal Income Redistribution The ide
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Poverty - a family whose income fal
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Appendix: Income Inequality around
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How is this story an analogy for th
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___ 2. In 2013, the Lowest Income 6
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Problems: 1. Explain the two primar
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Absolute advantage - when one natio
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Fiat money - money by government de
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Nonrivalrous good - a good for whic
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Absolute advantage, 16-9 Absolute e
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“Company town”, 25-6 Comparativ
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Eli Lilly and Company, 22-1 Emergen
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Houston, Texas, 15-10 Human capital
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Market, 3-1, 3-8-9 Market basket, 4
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Political bias, 9-4, 12-7 Political
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Short run production, 20-2-3 Short-
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Upturns, 9-4 USDA, 27-9, 30-1-2, 30
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