The sum of capital inflows and the trade balance must be zero.
a. True
b. False
A liability to a bank is
a. something that the bank owns.
b. something that the bank owes.
c. something a customer owes the bank.
d. the value of bank buildings and hardware.
The “infant industry argument” recommends protectionism for industries that produce
children’s clothing.
a. True
b. False
If economic output is increased by increasing the number of people working in the
economy, then
a. both GDP per capita and labor productivity will increase.
b. both GDP per capita and labor productivity will decrease.
c. GDP per capita will increase.
d. Labor productivity will increase.
Figure 11-5
Crown Theater is the only movie theater in the city. Its cost and revenue curves are
shown in Figure 11-5. Monopolist Crown Theater would set the price of its tickets at
a. $7.50.
b. $6.00.
c. $4.50.
d. $3.00.
The 2006-2008 period can be accurately described as a time of stagflation.
a. True
b. False
In the basic 45-degree line model, what is the effect of an increase in the price level?
a. There will be movement to the left on the expenditure line.
b. There will be movement to the right on the expenditure line.
c. The expenditure line will shift downward.
d. The expenditure line will shift upward.
The OPEC production cuts of 1999-2000 increased energy prices and caused the
aggregate supply curve to
a. shift outward.
b. shift inward.
c. become flatter.
d. become steeper.
Perfect central planning is nearly impossible for all of these reasons except:
a. production processes between industries are often interdependent.
b. some processes must be decided together, and not individually, because of their
interdependence.
c. if the output target for one industry is adjusted, many others must also be adjusted.
d. all of these reasons are correct.
The consumption function shows an indirect relationship between consumer spending
and disposable income.
a. True
b. False
There has been a downward trend in the United States since 1980 in the ambient
concentrations of
a. sulfur dioxide.
b. carbon monoxide.
c. lead.
d. all of the above.
Which of the following is a fixed cost?
a. electricity
b. worker bonuses
c. mortgage on the building
d. steel to produce refrigerators
Which of the following is not an example of a type of factor of production?
a. land
b. labor
c. government
d. capital
When beneficial externalities are present in a market, the actual output will be
a. greater than the optimal output.
b. smaller than the optimal output.
c. equal to the optimal output.
d. either smaller or greater than the optimal output.
The perfectly competitive widget industry is in long-run equilibrium. A
profit-maximizing manufacturer receives total revenue of $55,000. He uses his labor,
$15,000 worth of wire, and $15,000 worth of steel to make the widgets. The
manufacturer
a. is earning an economic profit of $25,000.
b. must have an opportunity cost of labor of less than $25,000.
c. must have an opportunity cost of labor of exactly $25,000.
d. must have an opportunity cost of labor of more than $25,000.
The main reason why one nation trades with another is to
a. save its natural resources from rapid depletion.
b. exploit the advantages of specialization.
c. eliminate the danger of retaliation from other nations.
d. improve political alliances.
Elasticity of demand is another way to measure slope.
a. True
b. False
A decline in interest rates tends to expand the economy by
a. encouraging private investment and decrease in bank lending.
b. appreciating the currency and lowering the profitability criterion for investments.
c. decreasing the cost of capital and reducing net exports.
d. depreciating the currency and raising net exports.
The demand curve of the monopoly firm is always the
a. average revenue curve.
b. marginal revenue curve.
c. total revenue curve.
d. marginal cost curve above average variable cost.
Between 1980 and 2008 recycling in the United States has
a. decreased by less than 2%.
b. increased by less than 2%.
c. doubled.
d. tripled.
The effect of an import quota is to
a. raise the price and reduce the quantity of imports.
b. raise the price and the quantity of imports.
c. lower the price and the quantity of imports.
d. raise the quantity and reduce the price of imports.
“Circuit breaker” rules halt trading when the Dow declines below its previous day’s
closing value by a percentage amount, for:
a. one hour
b. two hours
c. the remainder of the trading day
d. any of these
If marginal cost is less than average cost, average cost must fall when more units are
produced.
a. True
b. False
In the case of the production of electronic calculators, introduced in the United States in
the 1960s,
a. a technological breakthrough reduced the input quantities needed to produce them.
b. quantity demanded increased significantly as prices fell.
c. production costs fell with advances in technology.
d. All of the above are correct.
How are Treasury bond prices affected when the interest rate rises?
a. The purchaser of the bond needs to spend less money to obtain a given number of
dollars of interest per year, so the price of the bond must decrease.
b. The purchaser of the bond needs to spend more money to obtain a given number of
dollars of interest per year, so the price of the bond must increase.
c. The purchaser of the bond needs to spend more money to obtain a given number of
dollars of interest per year, so the price of the bond must decrease.
d. The purchaser of the bond needs to spend less money to obtain a given number of
dollars of interest per year, so the price of the bond must increase.
American consumers decide to boycott grapes in support of the farm workers’ union.
Everything else being equal, the
a. price of grapes will rise.
b. supply of grapes will fall.
c. quantity supplied of grapes will fall.
d. demand curve for grapes will shift to the right.
Velocity is calculated as nominal GDP/money stock.
a. True
b. False
Adam Smith noted that people are adept at pursuing their own self-interests, and that
____ harnesses this self-interest remarkably well.
a. a totalitarian regime
b. a market system
c. a democratic government
d. a closed system
Determining the optimal choice of input combinations generally does not involve
a. substitution of one input for another.
b. fixing the level of technology in the long run.
c. minimizing cost, given the prices of inputs.
d. assessing the productivity of various inputs.
Figure 5-3
Assume the market consists of three consumers with the demand curves in Figure 5-3.
At a price of 1, the total market demand is
a. 40.
b. 80.
c. 140.
d. 150.
One economically valid approach to regulation is simply to break all large firms into
many smaller ones.
a. True
b. False