The production possibility frontier in Figure 2-8 assumes that U.S. agricultural land is
used either to raise cotton for clothing or to grow wheat. This is an example of a(n)
Figure 2-8
Refer to Figure 8-1. If the real hourly wage rate was $6, what would be the effect?
a. There would be a shortage of 40 million workers and the wage rate would rise.
b. There would be a shortage of 20 million workers and the wage rate would rise.
c. There would be a surplus of 40 million workers and the wage rate would fall.
d. There would be a surplus of 20 million workers and the wage rate would fall.
e. There would be unemployment.
The aggregate demand curve identifies the level of aggregate production corresponding
to a change in the price level.
For the total product curve shown in Figure 7-3, diminishing marginal returns to labor
If the Federal Reserve sells bonds, the required reserve ratio is 0.25 and the money
supply decreases by $10,000, how did the Fed accomplish this change?
a. The Fed sold $10,000 in bonds.
b. The Fed sold $7, 500 in bonds.
c. The Fed sold $2,500 in bonds.
d. The Fed sold $7,518 in bonds.
e. The Fed sold $40,000 in bonds.
The AD curve is derived by adding up demand curves for all goods and services.
The table below shows the total number of loaves of bread a bakery can bake per year
with different numbers of ovens. The market for bread is perfectly competitive, with a
market price of $2 per loaf. What is the marginal revenue product of the third oven?
If the price of jelly (a complement with peanut butter) decreases, both the demand and
supply curves of peanut butter will shift rightward.
If the government announces a new increase in spending with no change in taxes, which
of the following would most likely occur?
a. No change in the aggregate demand curve as well as no movement along it
b. A leftward shift of the aggregate demand curve
c. An upward movement along the aggregate demand curve
d. A rightward shift of the aggregate demand curve
e. A downward movement along the aggregate demand curve
Xanadu Corp. has issued 90 million shares of stock, and it has no plans to issue any
more in the near future. If the demand for Xanadu stock increases,
Additional highway traffic
Refer to Figure 11-7. If the economy is currently producing at point X, what does the
short-run macro model predict will happen?
a. Nothing will happen; the economy is in equilibrium.
b. Prices will rise and firms will increase production.
c. Prices will fall and firms will increase production.
d. Inventories will shrink and firms will increase production.
e. Inventories will accumulate and firms will cut production.
All of the following, except one, are sources of product differentiation. Which is the
exception?
In the short run, a contractionary fiscal policy would cause
a. the AD curve to shift to the right
b. equilibrium real GDP to decrease and the price level to increase
c. the AS curve to shift left
d. the economy to slide along the AD curve
e. equilibrium GDP and the price level to fall
The Consumer Price Index includes the prices of only those goods
a. purchased by consumers
b. purchased by consumers and produced in the United States
c. that are brand new and purchased by consumers
d. purchased by consumers and government
e. purchased by consumers, government and firms
]If consumers become more optimistic, which of the following is the most likely in the
short run?
a. A decrease in output, a decrease in money demand, and a decrease in the interest rate.
b. An increase in output, an increase in money demand, and an increase in the interest
rate.
c. An increase in output, an increase in money demand, and a decrease in the interest
rate.
d. A decrease in output, an increase in money demand, and a decrease in the interest
rate.
e. An increase in output, a decrease in money demand, and a decrease in the interest
rate.
If a nation begins to export a good,
a. the domestic price of that good will decrease
b. that country will typically erect barriers to trade
c. domestic producers of the good will be harmed
d. domestic consumers of the good will be harmed
e. both domestic consumers and domestic producers will benefit
Refer to Figure 15-4. If the economy is currently at point X, an increase in output will
a. move the economy to point A
b. move the economy to point B
c. shift the aggregate supply curve up to curve AS2
d. shift the aggregate supply curve down to curve AS3
e. have no effect on the price level and there will be no movement away from point X.