Producer surplus is the Difference between the highest price someone is willing to pay
and the price he actually pays.
In the case of an upward-sloping aggregate supply curve, the change in real GDP
brought about by a change in government spending will be less than that predicted by
the simple government purchases multiplier.
If the market price is at equilibrium, the deadweight loss is zero.
Net worth and stockholders’ equity are both equal to the Difference between assets and
liabilities.
A quota is the same as a voluntary export restraint.
To complement actions by the Fed to reduce inflation, Congress and the President can
cut spending and/or raise taxes.
One problem with deflation is that it can raise the real value of debt.
Horizontal equity is achieved when taxes are collected from those who benefit from the
government expenditure of the tax revenue.
Centrally-planned economies tend to grow more quickly than market economies.
A decrease in the level of cyclical unemployment will shift the long-run Phillips curve.
The ________ curves are both vertical.
A) aggregate demand and short-run Phillips
B) long-run aggregate supply and short-run Phillips
C) long-run aggregate supply and long-run Phillips
D) short-run aggregate supply and short-run Phillips
When exchange rates are ________, we say that the country’s exchange rate is fixed.
A) determined in the market
B) set by a country’s central bank
C) determined by supply and demand
D) relatively stable
Figure 10-6
Which diagram demonstrates an increase in total utility following a decrease in the
price of popcorn?
A) the movement from d to e in Panel A
B) the movement from f to g in Panel B
C) the movement from h to k in Panel C
D) none of the above
Table 9-2
Assume the market basket for the consumer price index has two products € bread and
milk € with the following values in 2006 and 2013 for price and quantity: The
Consumer Price Index for 2013 equals
A) 118.
B) 116.
C) 86.
D) 85.
GDP in a country grew from $10 billion to $14 billion over the span of 5 years. The
average annual growth rate of GDP was
A) 4%.
B) 7%.
C) 10%.
D) 40%.
Which of the following explains why talented major league baseball players command
much higher salaries than neurosurgeons?
A) because the total value of baseball games is much higher than the total value of
neurosurgery
B) because it takes far more skill and training to be a major league baseball player than
to be a neurosurgeon
C) because the supply of talented major league baseball players is relatively low
compared to the supply of neurosurgeons. Therefore, major league baseball players
exert far more market power than neurosurgeon.
D) because the supply of talented major league baseball players is low relative to its
demand compared to the supply of neurosurgeons. Therefore, adding another player
yields far greater marginal benefit than adding another neurosurgeon.
Between 1980 and 2011, income inequality in the United States has increased in part
due to expanding international trade. How does expanding international trade contribute
to income inequality?
A) It increases the demand for a wide array of products which in turn increases prices
beyond the reach of average income individuals.
B) It allows producers to exploit workers and reduce the wages they are willing to pay
workers.
C) Domestic firms can now hire low-skilled workers anywhere in the world, putting
U.S. workers in competition with foreign workers. This has caused the wages of
unskilled workers to be depressed relative to the wages of other workers.
D) It reduces the cost of producing goods and therefore lowers the value of labor’s
services.
What is shown on a firm’s income statement?
A) costs
B) profits
C) revenues
D) All of these are shown on a firm’s income statement.
When a celebrity has the desire to have his image protected following his death, this is
best described as an example of the protection of
A) an invention.
B) a patent.
C) a trademark.
D) intellectual property.
If the market for a product is broadly defined, then
A) the good has many complements.
B) there are few substitutes for the product and the demand for the product is relatively
inelastic.
C) there are many substitutes for the product and the demand for the product is
relatively elastic.
D) the expenditure on the good is likely to make up a large share of one’s budget.
Firms that face downward-sloping demand curves for their output in the product market
are called
A) price takers.
B) price dictators.
C) monopolists.
D) price makers.
Reserves of a bank equal its
A) vault cash.
B) deposits with the Federal Reserve.
C) vault cash plus deposits with the Federal Reserve.
D) vault cash plus deposits of its customers.
Japan has a fairly high saving rate and the level of saving in Japan is above domestic
investment. Use the saving and investment equation to explain what Japan is doing with
this excess of saving above domestic investment.
List the five categories of federal government expenditures.
If workers accurately predict the rate of inflation, is there a short-run trade-off between
inflation and unemployment, as predicted by the Phillips curve? Why or why not?
What effect does the payment of government unemployment insurance have on the
unemployment rate?
Explain the difference between a cooperative equilibrium and a noncooperative
equilibrium in game theory.
What is a corporate bond and what does it specify?