A financial intermediary accepts deposits from savers and makes loans to borrowers.

A financial intermediary accepts deposits from savers and makes loans to borrowers.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 2

One of the ugly stepsisters argues that she, rather than Cinderella, should go to the ball because she will derive more utility from it than Cinderella. An economist would:
 a. agree, since the ugly stepsister's reasoning is sound.
 b. want to know how much utility each will receive from attending the ball in order to determine which woman should attend.
  c. point out that making interpersonal utility comparisons is not possible.
 d. ask how many balls each woman has attended in order to calculate the marginal utility that each would derive from attending, and then decide who should go to the ball.

QUESTION 3

Economic freedom refers to the freedom of the government to control resources and labor in a country.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 4

Empirical evidence suggests that the federal budget has remained more or less in surplus between 1990 and 2002.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 5

If Tom purchases and consumes an entire Pizza, which of the following is likely to be true?
 a. The total utility of the first two pieces will be positive and the marginal utility of the second piece will be negative.
  b. The marginal utility of the second piece will be positive and the total utility of the first two pieces will be negative.
  c. The total utility of the first two pieces will be positive and the marginal utility of the second piece will be less than the marginal utility of the first piece.
  d. The marginal utility of the second piece will be positive and the total utility of the first two pieces will be less than the marginal utility of the first piece.

QUESTION 6

Any kind of social regulation raises the per unit cost of production of a good and hence leads to a loss of producer and consumer surplus.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 7

Spending on goods and services by all levels of government in the U.S. combined is smaller than investment spending but larger than consumption.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 8

A price increase for pizza will reduce the quantity of pizza demanded because it reduces a buyer's purchasing power. This is called :
 a. income effect
 b. the alternative effect
 c. the substitution effect
  d. the normal good effect

QUESTION 9

When examining the costs of regulation to the U.S. economy, economists can safely ignore the opportunity costs of regulation because they are relatively insignificant compared with the direct costs of regulation.
 a. True
  b. False
  Indicate whether the statement is true or false