If we assume that the income elasticity of demand for food has been around 0.2 and that
agricultural producers have become increasingly more productive, we can conclude that
a. prices of food have increased.
b. supply increases have been less than demand decreases.
c. as consumers’ real incomes have been increasing over the years, they have been
spending absolutely less on food.
d. prices of food have been stable.
e. none of the above
Which of the following statements is false?
a. Government can remove individuals from a prisoner’s dilemma setting and make both
participants better off.
b. Government can define and enforce the property rights that individuals actually want
defined and enforced.
c. Individuals in a prisoner’s dilemma setting may want to get out of the prisoner’s
dilemma setting.
d. none of the above
Exhibit 5-1
which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Suppose
that the government decides to set the money price of driving on the freeway at zero,
but builds more freeways to eliminate the shortage of freeway space at 8
a.m.Graphically, the result of the increase in freeway space would be shown by
a. shifting the supply of freeway space curve rightward.
b. shifting the demand for freeway space curve leftward from D8a.m. to D11p.m.
c. a movement up along D8a.m. to the point where D8a.m. intersects the supply curve.
d. shifting the supply of freeway space curve leftward.
Why do societies need rationing devices?
a. Because people have too many needs and not enough wants.
b. Because price exists.
c. Because scarcity exists.
d. Because people have opportunity costs.
A tax rate increase necessarily leads to an increase in tax revenue for the government.
a. True
b. False
Exhibit 3-7
If S1 is the relevant supply curve, a decline in technology in theproduction of good X
causes
a. the supply of good X to shift from S1 to S2
b. the supply of good X to shift from S1 to S3.
c. a movement along S1 perhaps from point A to point B.
d. a movement along S1 perhaps from point A to point C.
e. no change in the supply of good X.
Exhibit 10-6
Which of the following is consistent with the economy producing Q2?
a. Total expenditures (TE) is less than total production (TP).
b. Firms are currently holding their optimum inventory levels.
c. Autonomous spending is greater than zero.
d. Total expenditures (TE) are equal to total production (TP).
e. none of the above
Bank A has checkable deposits of $800,000 and total reserves of $200,000. If the
required reserve ratio is 0.11, the bank has required reserves of
a. $600,000.
b. $88,000.
c. $112,000.
d. $22,000.
Exhibit 10-5
When TE is $300 billion, what will firms
most likely firms do next?
a. Firms will increase production to increase inventories to their optimum levels.
b. Firms will neither increase nor decrease production since the economy is in
equilibrium.
c. Firms will cut back production to reduce inventories to their optimum levels.
d. It is impossible to determine what firms are likely to do based on this
information.
A ____________________ loan is a nontraditional mortgage loan granted to persons
who have some factor, such as low credit ratings, which suggest that they could default
on the repayment of their debt.
a. mortgage-backed security
b. collateralized
c. subprime mortgage
d. risk-based mortgage
Which of the following statements represents a correct and sequentially accurate
economic explanation?
a. The (U.S.) dollar appreciates, net exports rise, total expenditures on goods and
services rises, AD rises, and the AD curve shifts rightward.
b. The interest rate falls, investment rises, total expenditures on goods and services
rises, AD falls, and the AD curve shifts leftward.
c. Wealth increases, consumption rises, total expenditures on goods and services rises,
AD falls, and the AD curve shifts rightward.
d. (Business) expectations about future sales become more positive, investment rises,
total expenditures on goods and services rises, AD rises, and the AD curve shifts
rightward.
e. Foreign real national income rises, net exports rise, total expenditures on goods and
services falls, AD rises, and the AD curve shifts rightward.
Exhibit 38-1
The coupon rate for bond C is
a. 0.25 percent.
b. 11 percent.
c. 3.6 percent.
d. 100 percent.