If sellers have an expectation of higher future prices:
A) the current supply of that good will decrease.
B) the current demand for that good will increase.
C) the current supply of that good will increase.
D) the current demand for that good will decrease.
Economists have found that as a nation’s economy grows:
A) the poorest families are left behind.
B) the poorest families have a decline in income.
C) the poorest families share in the prosperity.
D) the poorest families are unaffected.
The boom period of the late 1990s was a good example of:
A) the irrationality of long-term investments when share prices are not high enough.
B) the Q-theory of investment at work.
C) the impact that low interest rates have of investment expenditure.
D) the depressing effect on share prices of low expectations about future dividends.
Recall Application 1, “Measuring Price Stickiness in Consumer Markets,” to answer the
following questions:
According to the application, which of the following goods showed considerable price
stickiness?
A) shoes
B) binoculars
C) fishing rod and fly
D) All the goods above showed price stickiness.
Which of the following is an example of a marginal question?
A) How much will my chances of finding a job improve if I raise my GPA from a C to a
C+ grade average?
B) What is the average cost of a college education?
C) How many students borrow money in order to attend college?
D) What is the average income of a college graduate?
Using data from 2011, rank the federal government revenue sources from largest to
smallest.
A) individual income tax, social insurance tax, estate tax, corporate tax
B) individual income tax, estate tax, social insurance tax, corporate tax
C) estate tax, individual income tax, corporate tax, social insurance tax
D) individual income tax, corporate tax, estate tax, social insurance tax
An increase in government expenditure has a multiplier effect on aggregate demand due
to:
A) the fact that the marginal propensity to consume is larger than one.
B) the additional spending by consumers stimulated by the actual government
expenditure.
C) the autonomous nature of private consumption expenditure.
D) the negative slope of the consumption function.
When the economy is producing above full employment, the unemployment rate is
below the natural rate. This makes it more difficult for:
A) firms to hire workers, causing the wages to rise.
B) workers to find jobs, causing the wages to rise.
C) workers to quit jobs, causing the wages to drop.
D) firms to hire workers, causing the wages to drop.
Recall the Application about running a lawn-cutting business using solar-powered
equipment to answer the following question(s). The time and invested funds involved
in starting a lawn-cutting business address the economic concept of
A) the marginal principle.
B) opportunity cost.
C) the real-nominal principle.
D) the principle of diminishing returns.
Recall Application 4, “The Introduction of Cell Phones and the Bias in the CPI,” to
answer the following questions:
According to the application, the failure to include cell phones in the calculation of the
CPI creates an upward bias on the telecommunications component of the CPI by 0.8 to
1.9 percent. The reason for this upward bias is most likely from:
A) the decrease in the price of cell phones.
B) the increase in the price of cell phones.
C) the increase in the price of cell phone calls.
D) B and C are correct.
If incomes decrease and electricity is a normal good, then:
A) the demand for electricity increases.
B) the demand for electricity decreases.
C) the quantity demanded for electricity decreases.
D) the quantity demanded for electricity increases.
In our most basic model of the economy, the only expenditures made are:
A) consumption and investment.
B) consumption only.
C) investment only.
D) consumption and government only.
Figure 4.1
Refer to Figure 4.1 that shows Mary and Tom’s individual demand curves for meals per
week at Fratelli’s Italian Restaurant. Assuming Mary and Tom are the only consumers in
the market, if the market quantity demanded is 3 the price must be:
A) $5.
B) $10.
C) $15.
D) $20.
Suppose the exchange rate between the US and Japan changed from $1 = 100 yen to $1
= 90 yen. In this scenario, the yen ________ and the US dollar ________.
A) appreciated, depreciated
B) depreciated, depreciated
C) appreciated, appreciated
D) depreciated, appreciated