Question

34. A government-imposed ceiling on apartment rents, if set above the equilibrium rent level, would
A.   have no effect on the housing market.
B.    lead to a persistent shortage of apartments.
C.    lead to a persistent surplus of apartments.
D.   shift the supply curve for apartments to the right.

41. We have a flexible exchange rate system, in equilibrium and with the balance of trade in balance. Now, U.S. exports become less attractive to foreign purchasers. The U.S. can expect to see a _______ on its balance of trade, and a subsequent __________ in the value of the dollar.
A.   surplus; depreciation
B.    surplus; appreciation
C.    deficit; appreciation
D.   deficit; depreciation

43. A friend points out that, in recent years, the price of DVD players has fallen but the numbers sold have increased substantially. He claims that this contradicts the law of supply. Your best economic response would be to note that, in recent years,
A.   demand has been shifting inward.
B.    demand has been shifting outward.
C.    supply has been shifting inward.
D.   supply has been shifting outward.

45. Relative to Britain, the U.S. interest rate rises. We would expect U.S. ______ to increase and the value of the dollar to ___________.
A.   imports; appreciate
B.    exports; appreciate
C.    exports; depreciate
D.   imports; depreciate

2.         The Arbezani economy is operating at a point inside its production possibility frontier. This may be because
A.        poor management practices have led to an inefficient use of resources.
B.         Arbez is a very small nation and can’t produce much.
C.         the economy has very poor technological know-how.
D.        Arbez has only a small resource base.

Answer 1

Q34) option C)

If price ceiling is above equilibrium price, then less demand & more supply, thus shortage.

Q41) option D)

If exports fall, then BOP can be in deficit, leading to depreciation of currency.

Q43) option D)

When supply shifts to right, with demand unchanged, then price falls & output rises.

Q45) option A)

If interest rate rises , then investment in US rises, capital enters in to economy, thus demand for US dollar rise,it appreciates,

& So exports become expensive, exports fall & imports rise.

Q2) option A)

Any point inside PPF imply that resources are being used inefficiently, so that less output is produced..

Poor technology doesn't imply that we are inside PPF, it shifts ppf inside , also small resource base shifts it inwards.