Mankiw 1-17 Part 1
Indicate whether the sentence or statement is true or false.
____ 1. The central argument for free trade has changed a lot in the past two centuries.
____ 2. The analysis of a change in the equilibrium in a market is called comparative statics.
____ 3. A buyer's willingness to pay measures how much the buyer values the good.
____ 4. Fiscal policy cannot be used to move the economy along the short-run Phillips curve.
____ 5. The sacrifice ratio of the Volcker disinflation was larger than previous estimates had predicted.
Identify the letter of the choice that best completes the statement or answers the question.
These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of
____ 6. Refer to Graph 3-1. For Robinson Crusoe the opportunity cost of 1 pound of coconuts is
a. 2 pounds of fish.
b. 1/2 pound of fish.
c. 4 pounds of fish.
d. 1/4 pound of fish.
____ 7. Total surplus in a market is
a. the total costs to sellers of providing the goods less the total value to buyers of the goods.
b. always less than consumer surplus plus producer surplus.
c. the total value to buyers of the goods less the costs to sellers of providing those goods.
d. always greater than consumer surplus plus producer surplus.
____ 8. Suppose a professional gambler moves in 2000 from Utah, where he gambles illegally, to Nevada, where
gambling is legal. If he reports truthfully the same income in 2000 and 2001, as a result of his move
a. there is no effect on GDP because his income is included in both 2000 GDP and 2001
b. there is no effect on GDP because his income is excluded in both 2000 GDP and 2001
c. GDP will be higher in 2001.
d. GDP will be lower in 2001.
____ 9. In recent years, including 1998, the United States had
a. a trade surplus of over $100 billion.
b. a trade deficit of over $100 billion.
c. a trade surplus of less than $100 billion.
d. a trade deficit of less than $100 billion.
____ 10. Supply-side economists focus more than other economists on
a. how fiscal policy affects consumption.
b. the multiplier effect of fiscal policy.
c. how fiscal policy affects aggregate supply.
d. Both b and c are correct.