________ consumption is consumption that depends upon the level of GDP and
________ consumption is consumption that does not depend upon the level of GDP.
A) Autonomous; induced
B) Induced; autonomous
C) Voluntary; autonomous
D) Autonomous; voluntary
The popularity of digital cameras has enticed large discount stores like Wal-Mart and
Costco to offer digital photo printing services. How does this affect the digital photo
printing market?
A) The demand curve for digital photo printing services shifts to the right.
B) The demand curve for digital photo printing services shifts to the left.
C) The supply curve for digital photo printing services shifts to the right.
D) The supply curve for digital photo printing services shifts to the left.
If a firm is the sole employer of a factor of production, it is known as
A) a monopoly.
B) a competitor.
C) a monopsony.
D) an economically discriminating firm.
Figure 4-3 Figure 4-3 shows Kendra’s
demand curve for ice-cream cones.
If the market price is $2.50, what is the maximum number of ice cream cones that
Kendra will buy?
A) 1
B) 2
C) 3
D) 4
The real business cycle model focuses on how
A) wage and price stickiness explains fluctuations in real GDP.
B) the labor theory of value is the best measure of value of a good or service.
C) the Federal Reserve should adopt a monetary growth rule.
D) productivity shocks explain fluctuations in real GDP.
If real GDP exceeded potential real GDP and inflation was increasing, which of the
following would be an appropriate fiscal policy?
A) a decrease in the money supply and an increase in the interest rate
B) an increase in government spending
C) an increase in taxes
D) an increase in oil prices
Suppose a negative externality exists in a market. If transactions costs are low and
parties are willing to bargain, then, according to the Coase theorem
A) an equitable solution can be reached only if property rights are assigned to the
victims of pollution and not the polluters.
B) an equitable solution can be reached only if property rights are assigned to polluters
and not to the victims of pollution.
C) an efficient solution can be reached regardless of the initial assignment of property
rights.
D) government intervention is necessary to reach an efficient and equitable solution.
The Philippines and Vietnam have roughly the same size population. Suppose the GDP
of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion. You
should conclude
A) a typical person in Vietnam is 10 times as well off as the typical person in the
Philippines.
B) a typical person in Vietnam is more than 10 times as well off as the typical person in
the Philippines.
C) a typical person in Vietnam is less than 10 times as well off as the typical person in
the Philippines.
D) it is not possible to make a good comparison of the economic well-being of a typical
individual in the 2 countries without additional information.
If aggregate expenditure is less than GDP, how will the economy reach macroeconomic
equilibrium?
A) Inventories will decline, and GDP and employment will decline.
B) Inventories will rise, and GDP and employment will decline.
C) Inventories will decline, and GDP and employment will rise.
D) Inventories will rise, and GDP and employment will rise.
Inelastic supply occurs whenever the elasticity of supply value is
A) negative and <-1.
B) any positive number.
C) positive and >1.
D) positive and <1.
If you want to know the present value of $10,000 received in one year, and the interest
rate is 4 percent, what formula can you use?
A) Present value equals $10,000 times 0.04.
B) Present value equals $10,000 divided by 1.04
C) Present value equals 1.04 divided by $10,000.
D) Present value equals $10,000 times 1.04.
Joss is a marketing consultant. Iris and Daphne are potential customers interested in
commissioning Joss to undertake a market survey and compile the findings in a report.
Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose
that the opportunity cost of Joss’s time is $1,200. Assume that Iris and Daphne do not
know each other. If the price is $800 per copy,
A) both Iris and Daphne will purchase Joss’s services and Joss will undertake the job.
B) only Daphne will purchase Joss’s services and Joss will undertake the job for her.
C) only Daphne will want to purchase Joss’s services but Joss will not be willing to do
the work.
D) neither Iris nor Daphne will commission the work.
How can economic growth help a country combat “brain drain”?
A) Economic growth increases the incomes of low-skilled workers relative to
high-skilled workers.
B) Economic growth opens up opportunities for better jobs and higher incomes for
skilled workers.
C) Economic growth allows highly skilled persons to earn more in a foreign country
than in their native country.
D) Economic growth combined with decreasing returns to human capital require
workers to achieve steadily higher and higher levels of education over time.
In January, buyers of gold expect that the price of gold will rise in February. What
happens in the gold market in January, holding all else constant?
A) The supply curve shifts to the right.
B) The demand curve shifts to the left.
C) The demand curve shifts to the right.
D) The quantity demanded increases.
Figure 3-7
Assume that the graphs in this figure represent the demand and supply curves for tuna.
Which panel best describes what happens in this market when there is a decrease in the
productivity of commercial fishermen?
A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)
If real GDP per capita in the United States is $8,000 in 2013, and if real GDP per capita
is $12,000 in 2023, what is the average annual percent changein the growth rate of GDP
per capita between 2013 and 2023?
A) 3.33%
B) 5%
C) 33%
D) 50%