The term after the bell means after the closing of the stock market.
a. True
b. False
Can a change in the Japanese price level cause the United States to move downward
along its J-curve?
a. Yes, if the Japanese price level falls and the United States does not buy more
Japanese goods.
b. Yes, if the Japanese price level falls and the United States buys more Japanese goods.
c. Yes, if the Japanese price level rises and the United States does not buy significantly
fewer Japanese goods.
d. No, a change in relative price levels cannot initiate the J-curve phenomenon.
If it is discovered that using drugs enhances a person’s chance of contracting a lethal
disease, the cost of using drugs
a. increases.
b. decreases.
c. is not affected.
d. is irrelevant, since they are illegal anyway.
In a self-regulating economy, wages will fall and prices will rise when there is an
inflationary gap.
a. True
b. False
The voting outcome and the most preferred outcome of the median voter are the same
in a simple majority vote where there are several options from which to choose.
a. True
b. False
A fall in the price of foreign inputs leads to a
a. rightward shift of the AD curve.
b. leftward shift of the AD curve.
c. rightward shift of the SRAS curve.
d. leftward shift of the SRAS curve.
Situation 33-1
Suppose that the equation that represents the expected benefits of burglary for a given
prospective criminal is as follows:
EB = Ps x Loot
The criminal’s cost equation is as follows:
EC = [Pp x (I + F)] +AC
Where:
EB is the expected benefits of burglary
Ps is the probability of successfully burglarizing a house
Loot is the dollar take from the burglary
EC is the expected costs of burglary
Pp is the probability of imprisonment
I is the income the criminal gives up if caught and imprisoned
F is the dollar value the criminal puts on freedom
AC is the anguish cost of committing a burglary
If the prospective criminal sets the following values:
Ps = 65 percent
Loot = $20,000
Pp = 20 percent
I = $30,000
F = $15,000
AC = $5,000
The prospective criminal€s expected benefit from committing the burglary is
______________ and his expected cost of committing the burglary is
_______________.Economic theory tells us that under these circumstances, the
prospective criminal ______________ commit the burglary.
a. $13,000; $14,000; will
b. $13,000; $14,000; will not
c. $6,667; $50,000; will not
d. $57,500; $50,000; will
Exhibit 34-12
PW is the price that exists in a free world market. If the U.S. imposes a quota to reduce
imports to Q4 – Q3, price will rise to
a. P1.
b. P2.
c. P3.
d. P4.
e. There is not enough information to answer the question.
Exhibit 34-11
PW is the price that exists in the market before a tariff is imposed and PW + T is the price
that exists in the market after a tariff is imposed. Because of the tariff, consumers’
surplus falls and producers’ surplus rises by the area
a. BCFE.
b. BCGE.
c. DBCG.
d. DBCF.
e. none of the above
Which of the following would not result from a price ceiling (set below the equilibrium
price)?
a. a shortage
b. fewer exchanges
c. an increase in supply
d. nonprice rationing devices
Exhibit 4-4
Which of the following statements is false?
a. Graph (1): A price ceiling set at P2 would not have an impact on the market.
b. Graph (2): As supply increases, equilibrium price remains constant.
c. Graph (3): As demand increases, equilibrium quantity remains constant.
d. Graph (4): As supply increases, equilibrium quantity increases.
The real balance effect helps to explain “a change in
a. aggregate demand.”
b. the quantity demanded of Real GDP.”
c. aggregate supply.”
d. the quantity supplied of Real GDP.”
Assuming no cash leakages and no excess reserves held by banks, a required reserve
ratio of 0 percent would mean that the simple deposit multiplier is
a. 0.
b. 1.
c. 10.
d. 100.
e. infinity.