Multiple Choice

Identify the choice that best completes the statement or answers the question.
____ 1. Suppose the South was a price taker in the world market for cotton. The North’s implementation of the
Anaconda Plan during the Civil War, all else equal, caused cotton exports for the South to
a. increase, and Southern cotton consumption to decrease.
b. decrease, and Southern cotton consumption to decrease.
c. not change, and Southern cotton consumption to not change.
d. decrease, and Southern cotton consumption to increase.
____ 2. Had William Jennings Bryan’s monetary policy been adopted by the United States in the late 1800s, the long-
run price level would have
a. increased, and long-run employment would have increased.
b. increased, and long-run employment would have not changed.
c. decreased, and long-run employment would have not changed.
d. None of the above.

Figure 14.4
____ 3. Refer to Figure 14.4 above. In the market for soldiers above, the government’s demand for soldiers is D’,
and it chooses to pay a wage of WB, drafting the remaining solders. Compared to an all-voluntary force, the
total number of soldiers increases by
a. LB - LC
b. LC - LA
c. LA - LC
d. LC - LB
____ 4. Refer to Figure 14.4 above. In the market for soldiers above, the government’s demand for soldiers is D’,
and it chooses to pay a wage of WB, drafting the remaining solders. Compared to an all-voluntary force,
dead weight loss under the draft equals
a. area “d + e.”
b. area “f.”
c. area “d + e + f.”
d. None of the above.

____ 5. All else equal, the Morrill Tariff Act of 1861 caused the short-run price level to
a. increase, and short-run employment to increase.
b. increase, and short-run employment to decrease.
c. decrease, and short-run employment to decrease.
d. decrease, and short-run employment to increase.
 Figure 5.4
____ 6. Refer to Figure 5.4 above. In the market above, what is the change in consumer surplus when the market
moves from perfect competition to monopoly?
a. area “-(e + h)”
b. area “c + d - h”
c. area “-(c + d + e)”
d. None of the above.
Table 5.9—Schedule of Demand for a Good

Quantity Price Total Revenue Total Cost

0 $5 $0 $0
1 4 4 1
2 3 6 2
3 2 6 3
4 1 4 4
____ 7. Refer to Table 5.9 above. The profit-maximizing price that a monopoly charges equals
a. $3, and the monopoly produces 2 units.
b. $2, and the monopoly produces 2 units.
c. $4, and the monopoly produces 1 unit.
d. $2, and the monopoly produces 3 units.

____ 8. When Rockefeller decreased his marginal cost to produce oil, total consumer expenditure on oil
a. decreased, and consumer surplus increased.
b. increased, and consumer surplus decreased.
c. increased, and consumer surplus increased.
d. None of the above.
 Figure 4.1
____ 9. Refer to Figure 4.1 above. Suppose the South trades with the rest of the world. The world price equals P A.
The full implementation of the Anaconda Plan, during the Civil War, causes Southern consumer surplus to
a. decrease by area “b + c”
b. increase by area “b + c + d”
c. increase by area “a + b”
d. None of the above.

____ 10. After the Civil War, increased immigration from non-English speaking countries, all else equal, caused
manufacturing wages to
a. decrease, and the employment of native workers to not change.
b. decrease, and the employment of native workers to decrease.
c. increase, and the employment of native workers to increase.
d. None of the above.

____ 11. If an economy is experiencing deflation, it must be the case that real GDP is
a. decreasing.
b. increasing.
c. not changing.
d. changing uncertainly.

____ 12. Which company was the first in the world to issue stocks?
a. J.P. Morgan and Company
b. New York Stock Exchange
c. Dutch East India Company
d. None of the above.
____ 13. Suppose the U.S. is on the right-hand side of the Laffer Curve. Decreasing the income tax rate will
a. increase income tax revenue, and decrease the after-tax wage paid by firms.
b. decrease income tax revenue, and not change the after-tax wage paid by firms.
c. increase income tax revenue, and increase the after-tax wage paid by firms.
d. None of the above.

____ 14. When the North won pivotal battles during the Civil War, the velocity of Greenbacks
a. did not change.
b. changed uncertainly.
c. increased.
d. decreased.
____ 15. During the Reconstruction Era, which amendment granted voting rights regardless of race, color, or previous
condition of servitude?
a. Thirteenth Amendment
b. Fifteenth Amendment
c. Fourteenth Amendment
d. Nineteenth Amendment

____ 16. Suppose that when Henry Ford decided to pay a $5 a day efficiency wage, all others in the industry had done
the same. Henry Ford would have enjoyed which of the following benefits from efficiency wages?
a. Lower worker turnover
b. Less worker shirking
c. All of the above
d. None of the above

____ 17. Suppose the price elasticity of demand for wooden chairs in the early 1700s was equal to 0.50. All else
equal, a 2% increase in the price of wooden chairs would cause industry revenue to
a. increase by 2%.
b. increase by 1.50%.
c. decrease by 2%.
d. None of the above.

____ 18. Farmers during the 1920s were price takers in the world market. As European countries rebuilt their farms
after WWI, the domestic price of food
a. increased, and the domestic consumption increased.
b. increased, and the domestic consumption decreased.
c. decreased, and the domestic consumption increased.
d. decreased, and the domestic consumption decreased.

____ 19. When General Robert E. Lee surrendered to the Union on April 9, 1865, there was immediately a
a. surplus of Confederate notes, causing the price-level to increase.
b. shortage of Confederate notes, causing the price-level to decrease.
c. shortage of Confederate notes, causing the price-level to increase.
d. None of the above.

____ 20. During the early 1920s, which Secretary of Treasury believed that extremely low taxes would encourage
investment and ensure prosperity?
a. James Dickinson
b. J.P. Morgan.
c. Andrew Mellon
d. Morgan Chase
 Figure 9.1
____ 21. Refer to Figure 9.1 above. A tariff in the above market results in producer surplus of
a. area “e + j”.
b. area “e + f + g + h + i”.
c. area “e”.
d. None of the above.

____ 22. Suppose that a Yeoman farmer grows food in the late 1800s, and he replaces his iron plow with a steel plow,
increasing productivity. All else equal, this adoption would have caused the equilibrium price of food to
a. increased, and producer surplus to the farmer to increase.
b. not change, and producer surplus to the farmer to increase.
c. decrease, and producer surplus to the farmer to decrease.
d. None of the above.

____ 23. Henry Ford decides to pay an efficiency wage of $5 a day when the rest of the market pays $2. Suppose the
probability of detecting a worker shirking is 50%. Assuming a one-period problem, a worker will shirk if the
gain from doing so is equal to at least
a. $1.50.
b. $0.
c. $6.00.
d. $2.50.

____ 24. Suppose a labor union today successfully negotiates a higher-than-competitive wage. The size of the labor
force will
a. increase.
b. change uncertainly.
c. decrease.
d. not change.

____ 25. For the North, which of the following funded most of its Civil War expenditures?
a. Tariff revenue and excise taxes
b. Printing Greenbacks
c. The Revenue Acts of 1861, 1862 and 1864
d. Issuing government bonds
____ 26. Rank the following wars’ conscription systems from least to most efficient
a. Vietnam War / Civil War / American Revolutionary War
b. Vietnam War / American Revolutionary War / Civil War
c. Civil War / Vietnam War / American Revolutionary War
d. American Revolutionary War / Civil War / Vietnam War

____ 27. The quote, “You shall not press down upon the brow of labor this cross of thorns, you shall not crucify
mankind upon a cross of gold,” defended which group?
a. Women
b. Labor unions
c. Farmers
d. Religious minorities
____ 28. The Fordney-McCumber Tariff of 1922, all else equal, caused domestic consumption in importing markets to
a. increase, and producer surplus in importing markets to increase.
b. increase, and producer surplus in importing markets to decrease.
c. decrease, and producer surplus in importing markets to increase.
d. None of the above.

____ 29. For some industries in the late 1800s, technological advances caused total industry revenue to increase. The
market demand for these goods was
a. either elastic or inelastic.
b. neither elastic nor inelastic.
c. elastic.
d. inelastic.

____ 30. Freebie (bubble one for credit). Do you cut the tags out of your clothing?
a. Yes, I hate them!
b. I only cut the tags out of clothing that bothers me.
c. I buy tagless clothing, since I hate tags so much.
d. No, the tags do not bother me.