The federal budget deficit acts as an automatic stabilizer because
A) government tax revenues decrease during a recession.
B) unemployment insurance payments decrease during a recession.
C) food stamp payments increase during expansionary periods.
D) Medicaid payments increase during expansionary periods.
Suppose the price of capital and labor remain constant. As a firm’s expenditures for
capital and labor increase, its isocost line
A) shifts out parallel to the original isocost line.
B) shifts in parallel to the original isocost line.
C) rotates outward on the Y-intercept.
D) rotates outward on the X-intercept.
Table 20-11
Suppose an economy has only three goods and the typical family purchases the amounts
given in the table above. If 2005 is the base year, then what is the CPI for 2013?
A) 40.08
B) 100
C) 180
D) 208
Figure 29-1
The French fall in love with California wines and triple their purchases of this beverage.
Assuming all else remains constant, this would be represented as a movement from
A) B to A.
B) C to D.
C) B to C.
D) A to D.
E) A to B.
How does the owner of a corporation relate to the business?
A) The owners of the business have a separate legal distinction from the business.
B) The owners of the business have no separate legal distinction from the business.
C) The personal assets are part of the corporation’s assets.
D) None of these describe the legal relationship of corporate owners to the business.
A recent study indicated that “Stricter college alcohol policies such as raising the price
of alcohol, or banning alcohol on campus, decreases the number of students who use
marijuana.” This indicates that the cross-price elasticity between alcohol and marijuana
is positive.
When the demand for a product is less elastic than the supply
A) consumers pay the majority of the tax on the product.
B) firms pay the majority of the tax on the product.
C) firms pay the entire tax on the product.
D) consumers pay the entire tax on the product.
Which type of business is the most difficult to set up?
A) sole proprietorship
B) partnership
C) corporation
D) There is no difference in the difficulty of establishment.
According to the “Rule of 70,” how many years will it take for real GDP per capita to
double when the growth rate of real GDP per capita is 5%?
A) less than 1 year
B) 5 years
C) 14 years
D) 35 years
Figure 12-2 4
If the U.S. economy is currently at point N, which of the following could cause it to
move to point K?
A) Households expect future income to decline.
B) Household wealth rises.
C) The firm’s cash flow rises as profits rise.
D) Government expenditures increase.
Assume the United States is the “domestic” country and China is the “foreign” country.
Which of the following might increase the real exchange rate between the United States
and China?
A) an appreciation of the yuan
B) a depreciation of the dollar
C) an increase in the price level in the United States.
D) an increase in the price level of China
Figure 4-4
The figure above represents the market for iced tea. Assume that this is a competitive
market. If the price of iced tea is $3
A) the quantity supplied is greater than the economically efficient quantity.
B) the quantity demanded is economically efficient but the quantity supplied is
economically inefficient.
C) economic surplus is maximized.
D) too many consumers want to buy iced tea.
What is always true at the quantity where a firm’s average total cost equals average
revenue?
A) The firm’s revenue is maximized.
B) The firm’s profit is maximized.
C) The firm breaks even.
D) Marginal cost equals marginal revenue.
When the price of oil rises unexpectedly, the equilibrium price level ________ and the
unemployment rate ________ in the short run.
A) rises; falls
B) rises; rises
C) falls; falls
D) falls; rises
The change in a firm’s total cost from producing one more unit of a good or service is
the firm’s
A) explicit cost of production.
B) marginal cost of production.
C) average cost of production.
D) implicit cost of production.
Figure 30-7
At what level should the Indian government peg its currency to the dollar to make U.S.
imports cheaper in India?
A) greater than $.02/rupee
B) less than $.02/rupee
C) equal to $.02/rupee
D) $1/rupee
By offering less generous unemployment insurance programs, the United States can
expect
A) citizens to pay more in taxes than citizens pay in Europe.
B) workers to be slow in gaining new skills in response to fluctuations in the labor
market.
C) shorter periods of unemployment for their workers.
D) longer periods of unemployment for their workers.
If households in the economy decide to take money out of checking account deposits
and put this money into savings accounts, this will initially
A) decrease M1 and increase M2.
B) decrease M1 and decrease M2.
C) decrease M1 and not change M2.
D) increase M1 and decrease M2.
If national laws protecting the health and safety of workers completely eliminate any
and all risk, then
A) workers in risky occupations become better off.
B) compensating wage differentials disappear and workers in risky occupations may be
no better off.
C) compensating differentials would grow because workers could not be compensated
by being given lower risk jobs.
D) more people would be employed.