The discount rate is
A) the interest rate banks charge each other for overnight loans.
B) the interest rate banks charge their best customers.
C) the interest rate the Fed charges to banks for loans from the Fed.
D) the interest rate the U.S. Treasury pays on Treasury Bills.
Which of the following would increase the current account balance of the United
States?
A) an increase in imports
B) an increase in the amount of money the U.S. government sends in foreign aid to
other countries
C) an increase in the balance of trade
D) an increase in the amount of income U.S. companies pay out to foreigners who own
investments in the United States.
What is shown on a firm’s income statement?
A) costs
B) profits
C) revenues
D) All of these are shown on a firm’s income statement.
Collusion is
A) common among monopoly firms.
B) an agreement among firms to charge the same price or otherwise not to compete.
C) necessary for firms to raise money by borrowing from investors or from banks in
order to fund research and development required to develop new products.
D) legal under U.S. antitrust laws if the intent is to increase competition.
Table 26-1
Which of the following will not occur as the result of a decrease in net taxes?
A) decreased household saving
B) decreased government saving
C) a shift to the left of the supply curve for loanable funds
D) all of the above
If a firm shuts down in the short run, it will
A) break even.
B) declare bankruptcy.
C) suffer a loss equal to its variable costs.
D) suffer a loss equal to its fixed costs.
Figure 16-5
In the dynamic model of AD–AS in the figure above, if the economy is at point A in year
1 and is expected to go to point B in year 2, Congress and the president would most
likely pursue
A) expansionary fiscal policy.
B) contractionary fiscal policy.
C) expansionary monetary policy.
D) contractionary monetary policy.
E) contractionary automatic stabilizers.
Which of the following is an appropriate discretionary fiscal policy if equilibrium real
GDP falls below potential real GDP?
A) an increase in government purchases
B) an increase in the supply of money
C) an increase in individual income taxes
D) a decrease in transfer payments
Which of the following items is likely to have the highest income elasticity of demand?
A) a bus ride
B) a meal at Taco Bell
C) a vacation home in the Swiss Alps
D) a tank of gasoline
If economies of scale are relatively important in an industry, the typical firm’s
A) marginal cost curve will decline continuously until it reaches minimum efficient
scale.
B) long-run average cost curve will begin rising before it reaches minimum efficient
scale.
C) long-run average cost curve will reach a minimum at a level of output that leaves
room for a large number of firms to enter the industry.
D) long-run average cost curve will reach a minimum at a level of output that is a
relatively large fraction of total industry sales.
How can freedom of the press promote economic growth?
A) A free press can act as a watchdog for corruption, increasing chances for economic
growth.
B) A free press can be more easily swayed to report only one side of any issue.
C) A free press reduces the likelihood that judges will protect private property rights.
D) A free press does not promote economic growth.
Which of the following is an example of an activity undertaken by an entrepreneur?
A) choosing the color scheme for your renovated kitchen
B) being promoted to the position of Chief of Police
C) being appointed to the U.S. Supreme Court
D) starting your own snow cone business
Which of the following is correct about the economic decisions consumers, firms, and
the government have to make?
A) Governments may face the problem of shortages but not scarcity in making
economic decisions.
B) Only individuals face scarcity; firms and the government do not.
C) Firms and the government face scarcity; individuals only face shortages.
D) Each faces the problem of scarcity, which necessitates trade-offs in making
economic decisions.
If the Fed chose to change its policy actions implemented during the heart of the
recession faster than the timing suggested by the White House, this would be an
indication of the Fed’s
A) lack of credibility.
B) independence.
C) changing its monetary policy target.
D) frictional relationship with the White House.