Figure 30-6
Which of the following would cause the change depicted in the figure above?
A) An increase in investment in infrastructure causes U.S. productivity to rise relative
to Mexican productivity.
B) A growing preference for Margaritas causes U.S. consumers to increase their
preferences for Mexican tequila relative to American-produced alcohol.
C) Dumping accusations result in the United States placing tariffs on produce imported
from Mexico.
D) A contractionary monetary policy causes a decrease in the price level of U.S. goods
relative to Mexican goods.
Consumption spending will ________ when disposable income ________.
A) increase; increases
B) increase; decreases
C) decrease; increases
D) change unpredictably; decreases
When an oligopoly market is in Nash equilibrium
A) firms have colluded to set their prices.
B) firms will not behave as profit maximizers.
C) a firm will not take into account the strategies of its rivals.
D) a firm will choose its best pricing strategy, given the strategies that it observes other
firms have taken.
Figure 17-6
If firms and workers have adaptive expectations, an expansionary monetary policy will
cause the short-run equilibrium to move from
A) point B to point C.
B) point A to point C.
C) point A to point B.
D) point B to point A.
E) point C to point B.
Which of the following is not a reason why the U.S. economy has been more stable
since 1950?
A) Goods have become a larger fraction of GDP and services have become a smaller
fraction of GDP.
B) The government has actively pursued policy to combat recessions and prolong
expansions.
C) Unemployment insurance and other government programs curtail the decline in
spending that occurs during a recession.
D) Services have become a larger fraction of GDP and goods have become a smaller
fraction of GDP.
How does the decreasing use of DVD players affect the market for prerecorded DVDs?
A) The demand curve for prerecorded DVDs shifts to the right.
B) The quantity of prerecorded DVDs demanded decreases.
C) The quantity of prerecorded DVDs demanded increases.
D) The demand curve for prerecorded DVDs shifts to the left.
Which of the following is an example of the way the financial markets in the United
States can encourage technological progress more efficiently than other countries?
A) Even when entrepreneurs cannot secure sufficient funding for projects from banks,
venture capital firms may be willing to lend money.
B) The level of legal protection for investors in the United States is relatively low.
C) Because the financial market in the United States is so large, the quantity of trading
in corporate stocks and bonds makes those investments less liquid.
D) Banks in the United States are more willing to take on risk because the government
guarantees each bank cannot lose more than $100,000 on any given loan that defaults.
Figure 9-3 Since 1953 the
United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates
the impact of the quota. What is the value of the deadweight loss as a result of the
quota?
A) $5.25 million
B) $8 million
C) $17.25 million
D) $20 million
Figure 12-1
If the economy is at point J, what will happen?
A) Inventories have fallen below their desired level, and firms decrease production.
B) Inventories have fallen below their desired level, and firms increase production.
C) Inventories have risen above their desired level, and firms decrease production.
D) Inventories have risen above their desired level, and firms increase production.
Planned aggregate expenditure is equal to
A) consumption spending only.
B) consumption spending plus planned investment spending.
C) planned investment spending only.
D) consumption spending plus planned investment spending plus government purchases
plus net exports.
Olive oil producers want to sell more olive oil at a higher price. Which of the following
events would have this effect?
A) an increase in the price of olive oil presses
B) a decrease in the cost of transporting olive oil to markets
C) an increase in the price of land used to plant olives
D) research finds that consumption of olive oil reduces the risk of heart disease
Table 2-30
This table shows the number of labor hours required to produce a wristwatch and a
bushel of rice in Japan and Thailand. a. Which country has an absolute advantage in the
production of wristwatches?
b. Which country has an absolute advantage in the production of rice?
c. What is Japan’s opportunity cost of producing one wristwatch?
d. What is Thailand’s opportunity cost of producing one wristwatch?
e. What is Japan’s opportunity cost of producing one pound of rice?
f. What is Thailand’s opportunity cost of producing one pound of rice?
g. If each country specializes in the production of the product in which it has a
comparative advantage, who should produce wristwatches?
h. If each country specializes in the production of the product in which it has a
comparative advantage, who should produce rice?
Income inequality in the United States has increased somewhat over the past 25 years.
Two factors that appear to have contributed to this are
A) tax cuts on high income individuals and large increases in prices of stocks.
B) strong economic growth and low inflation.
C) rapid technological change and expanding international trade.
D) outsourcing of jobs by U.S. firms and cuts in taxes on capital gains.
Who was the economist who first proposed that governments use taxes and subsidies to
correct for externalities?
A) Ronald Coase
B) A. C. Pigou
C) Adam Smith
D) David Hume