When firms exit a perfectly competitive industry, the market supply curve shifts to the
left.
Answer:
The total amount of consumer surplus in a market is equal to the area below the demand
curve.
Answer:
When a firm experiences negative technological change it can produce the same output
with fewer inputs.
Answer:
Expanding, contracting, and managing the money supply is easier for a central bank
under the gold standard.
Answer:
A monetary policy target is a variable that the Fed can affect directly, which then affects
one or more of the Fed’s policy goals.
Answer:
It is possible for a market for a good to experience a surplus and a shortage at the same
time.
Answer:
Suppose a monopoly is producing its profit-maximizing output level. Now suppose the
government imposes a lump-sum tax on the monopoly, independent of its output. As a
result the monopoly’s profit will fall.
Answer:
The gold in Fort Knox backs all U.S. currency.
Answer:
The government makes all economic decisions in a mixed economy.
Answer:
In an open economy, there is interaction with other economies in terms of both trading
of goods and services and borrowing and lending.
Answer:
Holding everything else constant, government approval of horizontal mergers is more
likely to be granted if the “market” that firms are in are broadly defined rather than
narrowly defined.
Answer:
In the United States, corporate profits are taxed
A) only at the corporate level.
B) only when investors receive dividends.
C) at both the corporate level and when investors receive dividends.
D) neither at the corporate level nor when investors receive dividends.
Answer:
A bond’s coupon payment divided by the bond’s current price is equal to the bond’s
A) dividend yield.
B) current yield.
C) price-earnings ratio.
D) maturity value.
Answer:
Holding all other personal characteristics-such as age, gender, and income-constant,
economists would expect that
A) people without health insurance will be less likely to be overweight than people with
health insurance.
B) people without health insurance will be more likely to be overweight than people
with health insurance.
C) people without health insurance will be equally likely to be overweight as people
with health insurance.
D) there is no correlation between not having health insurance and being overweight.
Answer:
Firms do not have market power in which of the following market structures?
A) perfect competition only
B) perfect competition and monopolistic competition
C) oligopoly
D) monopoly
Answer:
Measuring the impact of a quota or tariff on the U.S. economy is an example of
________. Stating that a quota or tariff should be eliminated is an example of
________.
A) statistical analysis; economic analysis
B) positive analysis; normative analysis
C) econometric analysis; protectionism
D) trade analysis; an opinion
Answer:
In a graph that illustrates a perfectly competitive firm, marginal revenue is
A) a diagonal line that lies below the firm’s demand curve.
B) a line that intersects the firm’s demand curve from below at its lowest point.
C) a line that intersects the firm’s average total cost curve from below at its lowest
point.
D) the same as the firm’s demand curve.
Answer:
According to the quantity theory of money, inflation is caused by
A) the money supply growing slower than real GDP.
B) GDP growing faster than the money supply.
C) GDP growing at the same rate as the money supply.
D) the money supply growing faster than real GDP.
Answer:
State and local governments subsidize college students with grants and low-interest
loans. The loans and subsidies are examples of
A) positive externalities.
B) Coase subsidies.
C) Pigovian subsidies.
D) emission allowances.
Answer:
Table 12-4
Given the consumption schedule in the table above, the marginal propensity to save is
A) 0.3.
B) 0.4.
C) 0.5.
D) 0.6.
Answer:
Before a doctor decides to keep her office open on Saturdays, she should
A) make sure that the marginal cost of doing so will exceed the marginal benefit.
B) only consider the increase in total profit from doing so.
C) weigh the costs and benefits of staying open on Saturdays before deciding if she
should go through with this idea.
D) only look at the marginal benefit of doing so, because marginal cost will not change.
Answer:
The natural rate of unemployment will not change following an increase in ________
unemployment.
A) cyclical
B) frictional
C) structural
D) all of the above
Answer:
Securities dealers that trade stocks and bonds outside exchanges comprise the
A) foreign exchange market.
B) over-the-counter market.
C) NASDAQ market.
D) outlet market.
Answer:
During the 1990s, Japan experienced periods of deflation and very low nominal interest
rates, approaching zero percent. Why would lenders of money agree to a nominal
interest rate of almost zero?
Answer:
Anti-globalization and protectionism are both arguments against free trade. How do
these two arguments differ?
Answer:
Why are music, television, and movie companies concerned about their products being
posted to Internet websites such as YouTube?
Answer:
According to the theory of purchasing power parity, if the inflation rate in the United
States is greater than the inflation rate in Canada, explain what should happen to the
exchange rate between the U.S. dollar and the Canadian dollar.
Answer:
In equilibrium, what determines the price of capital and what determines the price of
natural resources?
Answer: