Which of the following is the best example of a stock variable?
a. U.S. GDP in 2008
b. The daily sales of economics textbooks
c. Bill Gates’ annual salary from Microsoft Corporation
d. The total wealth of the 50 richest U.S. citizens
e. U.S. government purchases during 2008
If I = $2,000, G = $4,000, T = $1,000, NX = $0, autonomous consumption = $1,000 and
the marginal propensity to consume is 0.6, what is the equilibrium value of output?
a. $16,000
b. $7,000
c. $6,400
d. $3,840
e. $8,000
Equilibrium GDP and the interest rate are interdependent.
If you own 10% of the shares of a corporation’s stock, and the corporation is expected
to earn $9 million a year in after-tax profits forever, and the interest rate is 0.05, what is
the value of your shares?
Suppose that Pat has the legal right to fly an extremely noisy airplane over Chris’s
apartment and that he values that right at $1,000 per year. Chris would be willing to pay
$800 per year to avoid the noise. In this case,
When we talk about injections in the classical model, we refer to
a. taxes
b. total government purchases.
c. federal government purchases only.
d. state government purchases only.
e. local government purchases only.
A firm’s total cost of production is the
Which of the following is included in the M2 money stock?
a. bonds
b. stocks
c. gold
d. savings-type accounts
e. credit card balances
Firms in a monopolistically competitive industry maximize profits by
The Fed typically decreases the money supply by
a. selling government bonds
b. buying government loans
c. selling government loans
d. printing more currency
e. buying government bonds
Generally, as goods are more broadly defined,
Renee plans to graduate and enter the job market in the spring. Economists are
forecasting a recession during the spring. As a result, she
a. is happy because unemployment rates are low during a recession
b. is happy because salaries are usually higher during a recession
c. does not care because the availability of jobs is not affected by whether there is a
recession
d. is unhappy because it is generally difficult to find a job during a recession
e. favors increasing taxes to help head off the recession
A change in the wage rate causes a firm’s labor demand curve to shift.
The demand for funds in the financial market comes from one source: the business
sector’s investment spending.
Which of the following cases represent the smallest increase in the real national debt?
a. The price level increases by 200 percent and the nominal debt increases by 200
percent.
b. The price level increases by 200 percent and the nominal debt increases by 100
percent.
c. The price level increases by 200 percent and the nominal debt increases by 500
percent.
d. The price level increases by 100 percent and the nominal debt increases by 300
percent.
e. None of the above
A welfare loss in a market