Consumption is $5 million, planned investment spending is $8 million, government
purchases are $10 million, and net exports are equal to $2 million. If GDP during that
same time period is equal to $27 million, what unplanned changes in inventories
occurred?
A) There was an unplanned increase in inventories equal to $2 million.
B) There was no unplanned change in inventories.
C) There was an unplanned decrease in inventories equal to $2 million.
D) There was an unplanned decrease in inventories equal to $19 million.
A decrease in capital outflows from the United States will
A) decrease the balance on the financial account.
B) increase the balance on the financial account.
C) increase the balance on the capital account.
D) decrease the balance on the current account.
Several studies have shown promising links between green tea consumption and cancer
prevention. How does this affect the market for green tea?
A) The quantity of green tea demanded increases because of a change in tastes in favor
of green tea.
B) The green tea demand curve shifts to the right because of a change in tastes in favor
of green tea.
C) The green tea demand curve shifts to the left because this new information will
increase the price of green tea.
D) The quantity of green tea demanded decreases because this new information will
increase the price of green tea.
In September 2012, the average price of gasoline in the United States was $3.91 per
gallon, and consumers purchased nearly 5 percent less gasoline than they had during
September 2011, when the average price of gasoline was $3.66 per gallon. Based on
these figures, when the price of gasoline rose from $3.66 per gallon to $3.91 per gallon,
total revenue
A) increased.
B) decreased.
C) did not change.
D) There is not enough information to determine what happened to total revenue.
Suppose a tax equal to the value of the marginal external cost at the optimal output is
imposed on a pollution generating good. All of the following will result from the tax
except
A) an increase in the equilibrium market price.
B) a decrease in the equilibrium quantity produced and consumed.
C) a decrease in market supply of the good.
D) an increase in the demand for the good.
A corporation is
A) the easiest type of business to set up.
B) the least expensive type of business to set up.
C) the most difficult type of business to set up.
D) the least profitable type of business to set up.
Suppose Joe is maximizing total utility within his budget constraint. If the price of the
last pair of jeans purchased is $25 and it yields 100 units of extra satisfaction and the
price of the last shirt purchased is $20, then, using the rule of equal marginal utility per
dollar spent, the extra satisfaction received from the last shirt must be
A) 2,000 units of utility.
B) 500 units of utility.
C) 100 units of utility.
D) 80 units of utility.
Figure 3-1
A decrease in the price of a complementary good would be represented by a movement
from
A) A to B.
B) B to A.
C) D1 to D2.
D) D2 to D1.
Table 2-4 Production Choices for Dina’s Diner
Dina faces ________ opportunity costs in the production of sliders and hot wings.
A) increasing
B) decreasing
C) constant
D) negative
Painters who paint water towers earn higher wages relative to painters who paint houses
because
A) the demand for tower painters is greater than the demand for residential painters.
B) painting water towers is more risky than painting houses.
C) the tower painters’ union is probably more powerful than the house painters’ union.
D) the supply of water tower painters exceeds the supply of house painters.
Which of the following is a reason why we should consider the federal national debt a
problem?
A) The federal government is in danger of defaulting on its debt.
B) If the debt drives up interest rates, crowding out will occur.
C) If the debt was incurred to finance improvements in infrastructure, crowding out will
occur.
D) If the debt was incurred to finance research and development, crowding out will
occur.
How does contractionary monetary policy affect net exports in the short run?
A) Contractionary monetary policy increases exports and reduces imports.
B) Contractionary monetary policy reduces exports and increases imports.
C) Contractionary monetary policy increases exports and increases imports.
D) Contractionary monetary policy reduces exports and reduces imports.
Cost-plus pricing may be a reasonable way to determine price when
A) marginal cost and average fixed cost are roughly equal.
B) marginal cost and average cost are about the same.
C) marginal cost differs significantly from average cost.
D) marginal cost is very low.
In the United States in 2012, the percentage of firms that employed between 3 and 199
workers and did not offer health insurance as a fringe benefit to the workers was about
A) 2%.
B) 39%.
C) 61%.
D) 98%.
Figure 17-1
Suppose that the economy is currently at point A, and the unemployment rate at A is the
natural rate. What policy would the Federal Reserve pursue if it wanted the economy to
move to point B in the long run?
A) Buy treasury bills.
B) Sell treasury bills.
C) Raise the discount rate.
D) Decrease the money supply.
E) No policy will move the economy to point B in the long run.