Tax deductions were significantly ____ under the Tax Reform Act of 1986.
a. increased
b. decreased
c. expanded
d. left unchanged for individual taxpayers
Figure 3-7
What is the opportunity cost of moving from point B to point A in Figure 3-7?
a. 20 units of X
b. 50 units of X
c. 25 units of X
d. 75 units of X
The demand curve for capital is
a. its entire marginal physical product curve.
b. the downward-sloping portion of its marginal physical product curve.
c. its entire marginal revenue product curve.
d. the downward-sloping portion of its marginal revenue product curve.
A federal deficit that raises interest rates will, everything else being equal,
a. lead to a dollar depreciation.
b. decrease imports.
c. reduce exports.
d. reduce the balance of trade deficit.
One major problem with Social Security is that it is a “pay as you go” system.
a. True
b. False
One difficulty of computing the value of GDP is that there are no market prices for
a. exports and imports.
b. business investments.
c. government goods and services.
d. resource values.
Investment spending might be larger when GDP is higher. Such added investment as
GDP rises is called
a. mutual investment.
b. induced investment.
c. positive investment.
d. net investment.
Figure 9-3
In Figure 9-3, at $3,000 billion GDP,
a. inventories will be falling, signaling businesses to decrease production.
b. inventories will be falling, signaling businesses to increase production.
c. planned saving increases planned investment.
d. inventories will be accumulating, signaling businesses to increase production.
Since World War II,
a. air pollution has worsened in most U.S. cities.
b. many new pollutants have been introduced or identified.
c. the federal government has reduced its reliance on economic incentives as a means of
reducing pollution.
d. All of the above are correct.
Rising productivity usually reduces workers’ standards of living.
a. True
b. False
Unlike recent events in England, the United States has no recent history of bank
failures.
a. True
b. False
The United States economy in the mid-2000s did not experience stagflation because
a. energy prices declined.
b. the energy content of GDP declined.
c. the U.S. economy became more volatile since 1980.
d. all of the above.
Under what conditions is it most likely that a corporation will issue new stock as a form
of finance?
a. when the interest rate is rising
b. when the interest rate is falling
c. when the firm’s stock prices is falling
d. when bond prices are very high
According to economic theory, under perfect competition, the price of a depletable
resource whose costs of transportation and extraction are negligible
a. is a poor indicator of scarcity.
b. must rise at the rate of interest.
c. will be unable to change to avert running out of it.
d. is too erratic to allow markets to respond to shortages.
Price ceilings will likely result in the growth of black markets.
a. True
b. False
The composition of M2 as of December 2010 includes saving deposits at savings banks
and credit unions.
a. True
b. False
It is possible to charge a price for a pure public good.
a. True
b. False
The short run is that period during which there are no fixed commitments.
a. True
b. False
A constant contributor to labor productivity growth during the entire 1948-2000 period
was
a. capital formation.
b. technological change.
c. labor force growth.
d. government spending.
An appreciation of the Japanese yen would shift the Japanese aggregate demand curve
inward.
a. True
b. False
Which of the following is a symptom of a price floor?
a. scalping of Super Bowl tickets
b. surplus cheese
c. the New York city housing shortage
d. black markets
e. milk shortages
The money creation formula is oversimplified because it assumes that
a. every recipient of a bank loan will redeposit the proceeds in another bank.
b. loan recipients will not take any of the proceeds in cash.
c. every bank lends out all excess reserves.
d. All of the above are correct.
The convergence hypothesis suggests that poor countries may close the income gap
with rich countries.
a. True
b. False
The most basic investigative tool of economics is the
a. concept of scarcity.
b. mechanism of supply and demand.
c. coordination and trade syndrome.
d. inflation-unemployment trade-off.
e. regulation of business.
A profit-maximizing firm will hire inputs until MRP = P of the input.
a. True
b. False
The short run is the time period during which
a. all of the firm’s costs are fixed.
b. the value of the firm’s assets starts to decay.
c. the firm can adjust all inputs freely.
d. some of the firm’s input decisions are constrained by previous commitments.
Figure 9-3
In Figure 9-3, saving at equilibrium GDP is.
a. $1,200 billion.
b. $1,000 billion.
c. $800 billion.
d. $600 billion.
e. $400 billion.
If the fluctuations in the economy’s real growth rate from year to year are caused
primarily by variations in the rate at which aggregate demand increases, then data
would show the most rapid inflation occurs when
a. unemployment is the highest, and the lowest inflation occurs when unemployment is
the lowest.
b. AS grows most rapidly, and the lowest inflation occurs when AS grows most slowly.
c. AD rises most slowly, and the lowest inflation occurs when AD rises most rapidly.
d. output grows most rapidly and the lowest inflation when output grows most slowly.
What amount of money was appropriated by Congress for fiscal stimulus bill of 2009?
a. $225 billion
b. $252 billion
c. $700 billion
d. $787 billion
Given a fixed amount of time, a decision to supply labor or not is simultaneously a
decision to
a. demand goods and services or not.
b. demand leisure or not.
c. supply capital and land or not.
d. supply leisure or not.
If marginal profit is zero, then average profit is at a maximum.
a. True
b. False
The behavior of the monopolistic firm:
a. maximizes the benefits to consumers, given the resources available to the economy.
b. reduces output in order to raise prices in the short-term.
c. results in excess capacity and inefficiency.
d. both b and c
Figure 18-2
Figure 18-2 shows the widget market before and after an excise tax is imposed. After
the tax is imposed, the amount that a firm keeps for itself from the sale of each widget
is ____.
a. $95
b. $100
c. $120
d. $125
When exchange rates are set by government decree,
a. appreciation is called devaluation.
b. depreciation is called devaluation.
c. depreciation is called deflation.
d. appreciation is called inflation.