The new growth theory holds that growth can persist indefinitely based on the major
assumption that
A) discoveries result from regulations.
B) knowledge capital does not experience diminishing returns.
C) knowledge is a public capital good.
D) discoveries bring profit.
E) knowledge destroys profit.
Refer to Figure 28.2.2. If the short-run aggregate supply curve does not shift, and
remains at SAS0, then the expected inflation rate is
A) zero.
B) 10 percent.
C) 15 percent.
D) 5 percent.
E) -10 percent.
Refer to Figure 29.3.1, which shows the outlays and revenues for the government of
Pianoland. If potential GDP is $750 billion,
A) neither a structural surplus nor a structural deficit exists.
B) the structural deficit is $60 billion.
C) the structural deficit is $40 billion.
D) the structural surplus is $60 billion.
E) the structural surplus is $40 billion.
The creation of a successful movie illustrates choices made in self-interest that also
achieve the social interest if
A) the movie has a higher attendance than any other movie produced that year.
B) the movie is produced at the lowest possible cost, and the movie gives the greatest
possible benefit.
C) the movie addresses a social issue.
D) the movie is an Academy award winner because an Academy award winning movie
is most popular with the movie-going public.
E) the movie is produced in a country where workers typically earn less than workers in
North America.
When a tariff is imposed, the gap between the domestic price and the price received in
the exporting country is captured by
A) consumers in the importing country.
B) the domestic producers of the good.
C) the government of the importing country.
D) foreign exporters.
E) the domestic importers of the good.
An income Lorenz curve
A) graphs the cumulative percentage of income against the cumulative percentage of
households.
B) measures the income among households ranked from the poorest to the richest.
C) measures the income among households ranked from the richest to the poorest.
D) measures the factor prices earned by the rich compared with the poor.
E) is a downward-sloping curve.
Of the groups listed below, which is most likely to lobby for protection?
A) workers in the import industry
B) workers in the export industry
C) consumers in the import industry
D) producers in the export industry
E) all of the above
If firms in a perfectly competitive market are making an economic profit, new firms
will enter. This entry shifts the market
A) demand curve leftward, and the market price falls.
B) demand curve rightward, and the market price rises.
C) supply curve leftward, and the market price rises.
D) supply curve rightward, and the market price falls.
E) supply curve rightward and the market demand curve leftward.
Consider the factors of production. The price in a(n) ________ market is a rental rate.
A) capital
B) housing
C) entrepreneurship
D) labour
E) capital services
Refer to Figure 28.2.2. Complete the following sentence. The figure illustrates
A) cost-push inflation.
B) demand-pull inflation.
C) a cost-push inflation spiral.
D) a one-time rise in the price level.
E) a deflation.
John receives a marginal benefit of $80 from one satellite. Nick receives a marginal
benefit of $50 from one satellite. Christina receives a marginal benefit of $65 from one
satellite. John, Nick, and Christina are the only people in the economy What is the
economy’s marginal social benefit from one satellite?
A) $30
B) $195
C) $15
D) $80
E) $65
Use the table below to answer the following questions.
Table 5.2.1
Table 5.2.1 gives information on marginal cost for the XYZ firm. If XYZ sells the first
unit at a price of $6, what is the producer surplus on that unit?
A) $4
B) $6
C) $9
D) $12
E) $7
Slowdonia’s current growth rate of real GDP per person is 1 percent a year. How long
will it take to double real GDP per person?
A) 10 years
B) 35 years
C) 70 years
D) 100 years
E) Real GDP per person will never double
If Canadian interest rates rise, the exchange rate value of the dollar ________ and net
exports ________.
A) rises; increase
B) rises; decrease
C) falls; increase
D) falls; decrease
E) rises only if the U.S. interest rates fall concurrently; decrease
The initial budget equation for pop (p) and movies (m) is Qp = 20 – 4Qm, and the price
of a pop is $5. If the price of a pop falls to $4, what is the new budget equation?
A) Qp = 25 – 2Qm
B) Qp = 25 – 4Qm
C) Qp = 25 – 5Qm
D) Qp = 20 – 5Qm
E) none of the above
The three main avenues through which the government redistributes income are
A) subsidized services, sales taxes, and user fees.
B) sales taxes, income maintenance programs, and income taxes.
C) income maintenance programs, user fees, and welfare programs.
D) subsidized services, income taxes, and income maintenance programs.
E) welfare programs, income taxes, and income maintenance programs.
Markup
A) does not exist in monopoly.
B) does not exist in monopolistic competition.
C) exists in perfect competition.
D) is the difference between price and average total cost.
E) exists in both monopoly and monopolistic competition.
The demand for good A is unit elastic if
A) a 5 percent fall in the price of A results in an infinite increase in the quantity of A
demanded.
B) a 5 percent rise in the price of A results in a 10 percent decrease in the quantity of A
demanded.
C) any increase in the price of A results in a 1 percent decrease in the quantity of A
demanded.
D) a 5 percent rise in the price of A results in no change in the quantity of A demanded.
E) a 5 percent rise in the price of A results in a 5 percent decrease in the quantity of A
demanded.
Classical macroeconomists recommend
A) policies that actively offset changes in long-run aggregate supply that result in
negative economic growth.
B) an increase in the quantity of money to offset decreases in aggregate demand and a
decrease in the quantity of money to offset increases in aggregate demand.
C) policies that actively offset changes in aggregate demand that bring recession.
D) policies that minimize the disincentive effects of taxes on employment, investment,
and technological change.
E) all of the above
Refer to Figure 7.3.1. The tariff ________ Canada’s imports of shirts by ________
million shirts per year.
A) decreases; 16
B) decreases; 8
C) increases; 8
D) increases; 4
E) increases; 16
The devices the government can use to achieve a more efficient allocation of resources
in the presence of external benefits include all of the following except
A) subsidies.
B) patents.
C) copyrights.
D) taxes.
E) vouchers.
Which of the following quotations describes a nonexcludable and nonrival good?
A) “Mom, Ashley is looking at me.”
B) “Mom, Morgan won’t let me watch the Backyardigans because she is watching Dora
the Explorer.”
C) “Mom, Harrison won’t let me in his room.”
D) “Mom, Taylor told me on the phone that he is also watching the Backyardigans on
TV at his house, but I’m not allowed to go over there.”
E) “Mom said everyone in this house gets to enjoy the flowers in the garden.”
Refer to Table 21.3.1. The reference base period is 2014. The CPI in 2014 is
A) 100.
B) 157.
C) 129.
D) 64.
E) 153.
If Canada imposes a tariff on imported steel, the tariff
A) raises the Canadian price of imported steel.
B) decreases the Canadian production of steel.
C) increases the total Canadian consumption of steel.
D) decreases employment in the Canadian steel industry.
E) increases Canadian consumer surplus.
It is efficient to produce an additional shirt if the
A) marginal social benefit from producing the shirt exceeds zero.
B) marginal social benefit of producing the shirt equals zero.
C) consumer surplus from the additional shirt exceeds its producer surplus.
D) marginal social benefit from producing the shirt is greater than the marginal social
cost of producing it.
E) producer surplus from the additional shirt exceeds its consumer surplus.
Consider all the effects of fiscal policy. A cut in the income tax
A) shifts the AD curve rightward but does not shift either the LAS or SAS curve.
B) shifts the AD, SAS, and LAS curves rightward.
C) shifts the SAS curve rightward but does not shift either the AD or LAS curve.
D) shifts both the SAS and LAS curves rightward but does not shift the AD curve.
E) shifts the LAS curve rightward but does not shift either the AD or SAS curve.
If variables x and y move up and down together, they are
A) positively related.
B) negatively related.
C) conversely related.
D) unrelated.
E) trendy.
The market in which the currency of one country is exchanged for the currency of
another country is the
A) money market.
B) capital market.
C) foreign exchange market.
D) forward exchange market.
E) international trading market.
Consider Fact 21.2.3. If these policies are successful, we would expect to see Oregon’s
natural unemployment rate to
A) fall to zero percent.
B) fall.
C) not change.
D) rise.
E) be equal to the sum of cyclical, structural, and frictional unemployment rates.
Sunscreen factories are required to limit production to 100 bottles a day, which is less
than the efficient quantity. The 100 bottles could be allocated to beachgoers by
________, which is ________ by the fair rules idea of fairness and ________ by the
fair results idea of fairness.
A) first-come first-served; fair; unfair
B) personal characteristics; fair; fair
C) force; unfair; fair
D) majority rule; fair; fair
E) first-come first-served; fair; fair
According to public choice theory, government failure occurs because
A) government officials do not listen to the pleading of special interest groups.
B) lobbyists write legislation.
C) government officials act in their own self-interest.
D) voters are fully informed about the effects of policies.
E) government cannot calculate the levels of externalities because there is no market for
them.
A recessionary gap is the amount by which
A) potential GDP exceeds real GDP.
B) demand will increase to achieve full employment at a given price level.
C) the supply curve must increase to achieve full employment at a given price level.
D) the price level must adjust to achieve full employment.
E) real GDP exceeds potential GDP.
If a monopolist can perfectly price discriminate, then
A) price equals average cost for each unit sold.
B) price equals marginal cost for each unit sold.
C) price equals marginal cost for the last unit sold.
D) the firm can ignore the marginal cost curve.
E) price is greater than marginal revenue for each unit sold.