Refer to Figure 15.2. Adjustment from a short-run equilibrium to the long-run
equilibrium is represented by a movement from point ________ to point ________.
A) a; e
B) a; c
C) e;
D) a;
A supply curve is defined as the relationship between
A) the price of a good and the quantity that consumers are willing to buy.
B) the price of a good and the quantity that producers are willing to sell.
C) the income of consumers and the quantity of a product that consumers are willing to
buy.
D) the income of consumers and the quantity of a product that producers are willing to
sell.
Recall Application 3, “A Troubled Euro,” to answer the following questions:
According to the application, how could Greece deal with its debt problems now that
their currency is part of a single currency union?
A) They should build more houses to generate tax revenues.
B) They should sharply decrease spending, even if it would cause prolonged period of
high unemployment rates.
C) They can increase government spending to increase aggregate demand.
D) They can increase the money supply to lower interest rates.
Refer to Figure 8A.2. If the economy were saving at the rate 1,
A) saving would equal depreciation at e1.
B) capital stock would increase until the economy reached K2.
C) the economy would grow until it reached e2.
D) all of the above
A tax on labor causes a larger drop in equilibrium employment when:
A) the labor supply curve is steep than when it is flat.
B) the labor demand curve is steep than when it is flat.
C) the labor supply curve is flat than when it is steep.
D) the labor demand curve is flat than when it is steep.
The sum of the marginal propensity to consume (MPC) and the marginal propensity to
save (MPS) is
A) equal to one.
B) greater than one.
C) less than one.
D) negative.
Nations that are unable to borrow money to pay for budget deficits often resort to
A) printing new money to cover the deficit.
B) purchasing bonds issued by other nations.
C) lowering taxes.
D) destroying money already in circulation.
For country A, an export is a good produced in:
A) country B and purchased by residents of country B.
B) country B and purchased by residents of country A.
C) country A and purchased by residents of country B.
D) country A and purchased by residents of country A.
Suppose Venezuela experiences economic expansion in 2013, yet its unemployment
rate is 15 percent, and economists have estimated that the natural rate of unemployment
in Venezuela is also approximately 15 percent. All else equal, if this is the case, what
will tend to happen in the Venezuelan economy over time?
A) Wages and prices will fall.
B) Wages and prices will rise.
C) Wages will rise and prices will fall.
D) Wages and prices will remain close to their current levels.
Recall Application 4, “Securitization: the Good, the Bad, and the Ugly,” to answer the
following questions:
According to the Application, the reason why investors were lured into purchasing
securities comprised of ‘subprime” loans was that:
A) the securities were so new that investors did not completely understand the risks.
B) the risks were low even if the real estate market headed south.
C) the subprime loans were FDIC insured.
D) All of the above are correct.