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Question 1

The gain in profit income from an increase in immigration according to this diagram is...

a) ...the area BDL´ L.

b) ...the area of WBDW´ .

c) ...the areas WBFW´ and FDL´ L together.

d) ...the areas WBDW´ and FDL´ L together.

Question 2

To the extent that "law and order" is non-excludable and is non-rival, it is a classic example of...

a) ...a negative externality.

b) ...a positive externality.

c) ...increasing returns.

d) ...a public good.

Question 3

Examples of non-distortionary taxes are...

a) ...those levied unexpectedly after economic decisions have taken place.

b) ...ad valorem taxes.

c) ...those consistent with the Ramsey principle of public finance.

d) ...proportional income taxes.

Question 4

The relationship between the number of unfilled job vacancies and the number of unemployed workers gives us...

a) ...the Ramsey Principle.

b) ...the Laffer Curve

c) ...the long-run Phillips Curve

d) ... an indicator of the effectiveness of labour market matching of heterogenous workers and jobs.

Question 5

Which of the following is NOT a consequence of strict job severance regulations across the economy?

a) Firms delay new hires in good times until they are really sure that the economy has improved.

b) Such regulations increase the effective cost of labour to firms.

c) Firms will be able to pay lower wages because greater job security has offset value to workers.

d) Firms will make increased use of temporary work agencies.

Question 6

Economic policymakers find supply-side policies attractive because they…

a) …supply-side policies eliminate dead-weight loss from taxation.

b) …supply-side policies do not imply a short-run trade-off between unemployment and inflation.

c) …supply-side policies will reduce output gaps by increasing total factor productivity.

d) …supply-side policies help to shift the Beveridge curve away from the origin.

Question 7

A welfare trap is more likely to occur, the (A)________ the basic welfare benefit and the (B)________ the effective marginal tax rate on the initial earnings of an individual receiving welfare.

a) (A) lower
(B) lower

b) (A) higher
(B) lower

c) (A) lower
(B) higher

d) (A) higher
(B) higher

Oxford University Press, Online Resource Centre, Chapter 18.

Chapter 18