If the marginal cost of producing a television is constant at $200, then a firm should
produce this item
A) only if the marginal benefit it receives is greater than $200 plus an acceptable profit
margin.
B) as long as the marginal benefit it receives is just equal to or greater than $200.
C) as long as its marginal cost does not rise.
D) until the marginal benefit it receives reaches zero.
Figure 16-3
Refer to Figure 16-3. In the graph above, suppose the economy is initially at point A.
The movement of the economy to point B as shown in the graph illustrates the effect of
which of the following policy actions by the Congress and the president?
A) a decrease in income taxes
B) a decrease in interest rates
C) a decrease in government purchases
D) an increase in the money supply
Figure 4-9
Figure 4-9 shows the market for cigarettes. The government plans to impose a unit tax
in this market.
Refer to Figure 4-9. What is the size of the unit tax?
A) $8
B) $5
C) $3
D) cannot be determined from the figure
Which of the following is considered a negative supply shock?
A) increasing immigration in the economy causes the labor supply to rise
B) an improvement in technology
C) an increase in unemployment
D) an unexpected decrease in the refining capacity for oil
A stock’s dividend yield is determined by
A) dividing the dividend payment by the stock’s initial price.
B) dividing the dividend payment by the stock’s closing market price.
C) dividing the stock’s closing market price by the dividend payment.
D) subtracting the stock’s initial purchase price from the stocks’ closing market price on
a given day.
A bank is legally required to hold a fraction of its ________ as ________.
A) deposits; required reserves
B) deposits; excess reserves
C) loans; excess reserves
D) loans; required reserves
If the required reserve ratio is RR, the simple deposit multiplier is defined as
A) .
B) .
C) x change in bank reserves.
D) x change in bank reserves.
In the long run, the Phillips curve is a ________ at ________.
A) horizontal line; 0% inflation
B) negatively sloped line; the intersection of aggregate demand and short-run aggregate
supply
C) vertical line; the natural rate of unemployment
D) vertical line; the expected rate of inflation
Free trade refers to trade between countries
A) that is without shipping costs.
B) that is licensed by both governments.
C) that is without restrictions.
D) of products which are free to low-income consumers.
Suppose consumer preference for beef starts to rise while the cost of raising beef
continues to rise. In the market for beef, this would be represented by the equilibrium
price ________ and the equilibrium quantity ________.
A) increasing; increasing or decreasing
B) decreasing; increasing or decreasing
C) increasing or decreasing; increasing
D) increasing or decreasing; decreasing
To reassure investors who were unwilling to buy mortgages in the secondary market,
the U.S. Congress used two government sponsored enterprises, ________, to sell bonds
to investors and use the funds to purchase mortgages from banks.
A) the Fed and the Treasury Department
B) Fannie Mae and Freddie Mac
C) the Securities and Exchange Commission (SEC) and the Federal Trade Commission
(FTC)
D) ACORN and the Federal Housing Administration (FHA)
Workers expect inflation to fall from 4% to 1% next year. As a result, this should
A) shift the short-run aggregate supply curve to the left.
B) shift the short-run aggregate supply curve to the right.
C) move the economy up along a stationary short-run aggregate supply curve.
D) move the economy down along a stationary short-run aggregate supply curve.
Trade that is within a country or between countries is based on the principle of
A) absolute advantage.
B) scarcity.
C) competition.
D) comparative advantage.