The Ultimate Microeconomics Knowledge Test Part II

This act permits states to pass right to work laws

The earliest unions in the US were ____

The principle of comparitive advantage essentially states that

• Total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good

• Specialization can reduce output rather than increase it

• Some goods have high opportunity costs and low absolute costs

• There are some goods for which the opportunity costs of production are the same regardless of who produces them

Under flexible exchange rates, an increase in the value of a domestic currency in terms of other currencies is referred to as

• An appreciation

• A depreciation

• A devaluation

• A revaluation

Special Drawing Rights (SDRs) are

• A reserve asset created by the International Monetary Fund that countries can use to settle international payments

• A liability payment from a branch bank to nation's central bank

• A country's surpluses in their fiscal budgets

• Exchanges of gold between nations

In a Lorenz curve perfect income equality is given by

• A 45 degree line originating from the origin

• A rectangular hyperbola

• A horizontal line

• A vertical line

According to economic historians, one characteristiv of international trade is that it

• Aids in the international transmission of ideas

• Reduces the world wide output of goods

• Reduces the world wide consumption of goods

• Causes persistent world wide inflation

The President of the US can obtain a court injunction to stop a astrike for an 80 day "cooling off" period if the strike is expected to imperil national health or safety. This power is granted in the

• Taft Hartley Act

• Wagner Act

• Landrum Griffin Act

• National Industrial Recovery Act

The age earning cycle us

• An earnings profile of an individual throughout his or her lifetime

• The earnings differences by age and by gender

• The difference in the relationship between age and earnings across countries

• Average incomes of people broken down by age categories

Under flexible exchange rate system, a decrease in the value of a domestic currency in terms of foreign currencies is referred to as

• An appreciation

• A depreciation

• A devaluation

• A revaluation

The more bowed the Lorenz curve the

• Less equal the income distribution

• More equal the income distribution

• Greater the overall wealth in the economy

• Less overall wealth in the economy

Flexible exchange rates are determined by

• The IMF

• The forces of supply and demand

• The government of the importing country

• The government of the exporting country

The monopsonist will employ labor at the point where the

• Marginal factor cost equals the marginal revenue product of labor

• Marginal revenue product equals the wage rate

• Marginal cost of output equals the marginal revenue

• Demand equals the supply of labor

The most powerful tool unions have at their disposal when bargaining with management is

• The Taft Hartley Act

• The ability to strike

• The secondary boycott

• The power of pure competition

Restrictions on imports

• Eventually reduce exports too

• Enhance economic welfare by encouraging more exports

• Are the quickest way for a country in recession to start on the path of economic recovery

• Usually have no long run effects on an economy

Under the Social Security program currently in existence

• Benefits are based on need

• Benefits are determined by whether one contributed to the system or not

• Benefits are provide to everyone who contributed to the system except those under private retirement plans

• Benefits are guaranteed to be no lower for future retirees than current retirees

Governments sometimes subsidize domestic industries. When this occurs

• The governments also impose tariffs on imports to protect the industries even more

• The subsidized industries have an advantage on international markets relative to non subsidized industries

• Firms cannot be guilty of dumping because their prices are not below their costs

• The subsidized industries sell less in international markets because it is more profitable to sell domestically

When the balance of trade is in balance

• The value of capital exports quals the value of capital imports

• The value of exports equals the value of imports

• The accounting identity does not hold

• The value of all debit transactions equal the value of all credit transactions

A right to work law makes it illegal for

• Emplyers to refuse to hire union workers

• Union membership to be a requirement for continued employment in any establishment

• Union membership to be denied on the basis of race, gender or national origin

• A union to exist in state

Dumping is defined as

• Selling a good abroad at prices below the costs of the firms in the foreign countries

• Exporting goods that are of inferior quality

• Selling a good abroad at prices below its cost of production or below the price charged in the home market

• Exporting goods that are sources of pullition

When unions exist in markets

• Firms must have market power in their output markets

• There no longer is a perfectly competitive labor supply

• Individual workers no longer make labor leisure trade off decisions

• Employers have market power in the labor market

Overall since the 1930's tariff rates in the United States have

• Increased

• Decreased

• Reamined unchanged

• Become very unstable changing week to week

The percentage of national income spent on health care

• Has steadily decreased since 1965

• Has steadily increased since 1965

• Increased until the end of the 1970s and then decreased in the 1980s and 1990s

• Decreased until the end of the 1970s and then increased in the 1980s and 1990s

The purpose of the Supplemental Security Income program is

• To supplement Social Security for the elderly with medical problems

• To provide a minimum income for the aged, blind and disabled

• To provide a guaranteed minimum income for all Americans

• To provide a minimum income for all households with children

The foreign exchange rate describes the

• Balance of trade

• Balance of payments

• Law of comparitive advantage

• Price of a foreign currency in terms of a domestic currency

Unions can increase labor productivity by

• Maximizing the number of workers in the union

• Reducing the supply of workers over time

• Reducing conflicts between workers and management

• Reducing the quantity of poorly made imports into the country

The monopsonistic exploitation of labor refers to

• The reduction in total output from monopoly in the product market

• The union wage differential

• Workers being paid less than their marginal revenue product

• The reduction in employment resulting from union wage setting

Karl Marx argued that income should be distributed

• According to desire

• According to need

• According to productivity

• So as to provide the strongest incentive to work

The balance of payments is

• The value of goods and services bought and sold in the world market

• A summary records of a country's economic transactions with foreign residents and governments

• A summary record of a country's purchases and sales of goods and services in the world market

• The value of merchandise goods bought and sold in the world market

The Lorenz curve is a geometric representation of

• The profile of earnings for a "typical" family over time

• The standard of living experience by the poor in a country

• The difference between pre-tax and post tax income

• The distribution of income

When economists David Gould, GL Woodbridge and Roy Ruffin examined the data on the relationship between increases in imports and the rate of unemployment, they concluded that

• Free trade leads to increased unemplyment

• There is no casual link between increases in imports and the rate of unemployment

• Increases in imports always preceded increases in unemployment by a period of 6 months to 1 year

• Increases in imports always preceded increases in imports by a period of 6 months to 1 year

The marginal cost of a unit of labor in a perfectly competitive labor market is

• Its average MRP

• Equal to product price

• The market wage rate

• Equal to MRP

Absolute advantage is defined as

• Having a lower average fixed cost in production of a good than does someone else

• The ability to use more input of resources than others can

• The ability to produce more output from given inputs of resources than others can

• The ability to produce more output of one good relative to another good than another country can

The General Agreement on Tariffs and Trade is an international agreement

• To establish the North American continent as a free trade area

• To encourage peaceful settle of trade disputes but no particular point of view about the desirability of higher or lower tariffs

• To encourage world trade by lowering tariffs and other trade barriers

• To make all tariffs illegal

The basic purpose of the Bretton Woods meeting was to

• Fix prices

• Locate the world's supply of gold

• Slow down inflation after World War II

• Create a new international payment system

Unilateral transfers are

• Transactions that take place within the geographic boundaries of a country

• Gifts from residents of one country to foreigners

• Transactions that take place across geographic boundaries but in which both transactors are citizens of the same country

• Government transactions that involve reserves

A new industry develops and we want to protect its foreign competition. Which one of the following appropriately describes this type of protection?

• National security

• Cartelization

• Infant industry

• Protecting American Jobs

The Bretton Woods agreement established the

• Gold standard

• G-7

• System of managed flexible exchange rates

• International Monetary Fund

An Increase in the countries rate of inflation is apt to

• Decrease demand for the countries currency

• Worsen it's balance of trade and payments

• Lower its nominal rate of interest and encourage an inflow of capitol

• Reduce its imports and improve its trade balance

The fact that the United States has a trade deficit means that

• The United States is a bad place to invest capitol

• The economy in our country is weak and we cannot compete with the Japanese

• The United States has a surplus in its capital account

• The United States has a deficit in its capital account

The exchange rate system in use since the early 1970s is best described as a

• Dollar standard

• Adjustable peg system

• Fixed exchange rate system

• Freely floating or managed "dirty" floating exchange rate system

A problem with third party financing of much health care is that

• It reduces the quality of health care received by most people

• It discourages physicians from getting second opinions and running tests to be sure the right procedure is used

• It causes the demand for medical services to increase which causes health care costs to increase

• It discourages people from relying on the judgements of physicians in making decisions about health care

Which statement best desfcribes the behavior of the monopsonist in the labor market?

• It restricts it output to keep the product price high

• It hires less labor but pays the competitive wage rate

• It must pay different amounts for each unit of labor hired

• It hires less labor and pays a lower wage rate than in the competitive case

A closed shop is a business enterprise in which

• Employees cannot belong to a union when they are employed, and cannot join a union and keep working there

• Employees must join the union to maintain employment

• Employees must belong to the union before they can be employed

• Employees cannot belong to the union when they are hired but may join the union later and keep their jobs

Specialization and international trade lead to

• An outward shift in the production possibilities frontier

• An inward shift in the production possibilities frontier

• A lower opportunity cost of domestic production of all goods

• An enhanced level of consumption

The fact that there is a minus sign before the number for unilateral transfers means that

• Country x has significant inflation

• Country x imported more goods than it exported

• Country x recieved more in foreign aid than it gave in foreign aid

• Country x game more to foreigners than foreigners gave to country x

The contributive standard of income distribution is met by

• Setting wages according to marginal productivity

• Having a highly progressive income tax

• Having the government determine all wages

• Using local committees to determine the needs of families in the area