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Figure 4.3 illustrates the demand for tacos. An increase in price of tacos would bring
about a movement from
A) point a to point c.
B) point c to point a.
C) D2 to D0.
D) D0 to D1.
Recall Application 1, "Falling Home Prices, the Wealth Effect, and Decreased
Consumer Spending," to answer the following questions:
According to the application, from 1997-2006, the nationwide increase in home values
generated approximately ________ in consumer wealth.
A) a $6.5 trillion increase
B) a $26.5 trillion increase
C) a $9.5 trillion increase
D) a $1.5 trillion increase
Figure 18.4
Refer to Figure 18.4. With a tariff or quota, what is the equilibrium quantity of
artichokes in Duckland?
A) 85
B) 75
C) 65
D) 30
A product produced in a foreign country and purchased by residents of the home
country is:
A) an export.
B) an import.
C) savings.
D) investment.
Which of the following contributes to why corporate taxes are a much smaller source of
government revenues than in the previous decades?
A) falling corporate profits as a share of GDP
B) the growth of opportunities for tax shelters
C) incentives provided by Congress to stimulate business investment and research and
development
D) All of the above are correct.
Bank runs occur when:
A) the government runs away with the bank's money.
B) the owners of the bank run away with depositors' money.
C) the government withdraws large amounts of deposits from banks simultaneously.
D) depositors simultaneously withdraw large amounts of deposits from banks.
Real business cycle theory:
A) argues that shifts in consumption spending are responsible for fluctuations in output.
B) emphasizes only changes in tax rates.
C) ignores the effects of shocks to the production technology.
D) argues that fluctuations in output are caused by technological change.
Suppose Mexico does not allow multinational companies to put up factories within its
borders, but has a lot of Mexican companies with factories in Brazil and Argentina. In
this example, is GDP or GNP larger for Mexico? Explain.
Recall Application 3, "Civil Liberties and the Efficiency of Government," to answer the
following questions:
According to the application, improved civil liberties has been shown to be positively
correlated with:
A) return to government investment projects.
B) the number of failed government projects.
C) the size of the government.
D) the number of successful private investment projects.
The multiplier for government spending is the same as the
A) tax multiplier.
B) multiplier for autonomous consumption.
C) marginal propensity to import.
D) marginal propensity to save.
The long run aggregate supply curve assumes that in the long run, the economy:
A) has no unemployment.
B) has no inflation.
C) is at full employment.
D) does not experience supply shocks.
Financial intermediaries reduce the costs of negotiation by
A) pooling funds.
B) gaining expertise in evaluating and monitoring investments.
C) investing in a large number of projects with independent returns.
D) investing in a small number of projects with independent returns.
Figure 18.2
Refer to Figure 18.2. After trade and specialization begin, the maximum amount of
fishing poles that Macadamia can consume is
A) 40.
B) 100.
C) 120.
D) 160.
If nominal GDP is $12 trillion and the money supply is $8 trillion, then the velocity of
money is
A) 0.667.
B) 1.5.
C) 4.
D) 8.
Which of the following is an example of a normative question?
A) How will an increase in the price of gasoline affect taxi drivers?
B) What fraction of an income-tax cut will be spent on consumer goods?
C) Should the government provide free prescription drugs to senior citizens?
D) How will an increase in the minimum wage affect teenaged workers?
The most severe decline in output in U.S. history took place during:
A) the 1973-1975 period.
B) the 1929-1933 period.
C) the September 2001 to November 2001 period.
D) the July 1981 to November 1982 period.
Because resources are limited:
A) only the very wealthy can get everything they want.
B) firms will be forced out of business.
C) the availability of goods will be limited but the availability of services will not.
D) people must make choices.
