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The crowding-in effect implies that a decrease in government purchases causes:
A) interest rates to fall, which decreases investment.
B) interest rates to fall, which increases investment.
C) interest rates to rise, which decreases investment.
D) interest rates to rise, which increases investment.
Which of the following is a problem with the price system that can lead to fluctuations
in output?
A) The price system works silently in the background.
B) Prices can be slow to adjust.
C) Prices may be flexible.
D) all of the above
Figure 4.4 illustrates the supply of tacos. A technological advancement which makes
tacos cheaper to produce would most likely cause a movement from
A) point a to point c.
B) point c to point a.
C) S2 to S0.
D) S0 to S2.
The level of output produced when the labor market is in equilibrium is called
A) natural output.
B) product market equilibrium output.
C) potential output.
D) global production output.
Recall Application 1, "Increasing Life Expectancy and Aging Populations Spur Costs of
Entitlement Programs," to answer the following questions:
According to the application, one implication of increasing the taxes to pay for the
higher costs of entitlement programs is:
A) a smaller US federal budget.
B) a higher interest rate on US Treasury Bills.
C) an increase in the disposable income of the nonretired individuals.
D) the increased tax burden on firms and individuals.
The following table lists the basket of goods in the
Consumer Price Index for the nation of Astro (Assume 2010 is the base year.)
Table 6.2
Using the information in Table 6.2, the Astro Consumer Price Index for 2011 is
A) 87.
B) 99.
C) 126.
D) 238.
If the consumption function is C = 90 + 0.75y, then the marginal propensity to consume
is
A) 0.2.5.
B) 0.75.
C) 67.5.
D) 90.
The relationship between consumer spending and income is known as the
A) rate of income.
B) consumption function.
C) inflation rate.
D) rate of individual wealth.
Figure 9.2 Refer to Figure 9.2. Suppose the economy is at Point A, a decrease in taxes
causes a movement to Point:
A) B.
B) D.
C) E.
D) C.
Table 2.2 Julianne runs a business and needs to
decide how many hours to stay open. Table 2.2 illustrates her marginal costs of staying
open for each additional hour. Suppose that Julianne's marginal benefit of staying open
per hour is $24. If she is following the marginal principle, how many hours should
Julianne stay open?
A) 2 hours
B) 4 hours
C) 6 hours
D) 7 hours
Mark quit his job as a salesman where he made $43,000 per year to start his own t-shirt
making business. His business expenses are $6,000 per year on rent, $12,000 per year
on supplies, and $4,000 per year on part-time help. As for his personal expenses, his
apartment costs him $4,800 per year and his personal bills are an extra $1,200 per year.
Which of the following is not part of the opportunity cost of running his business?
A) his apartment costs
B) his personal bills
C) his part-time labor costs
D) his apartment costs and his personal bills
When the market does not produce the most efficient outcomes, it is known as:
A) market failure.
B) corruption.
C) fraud.
D) capitalism.
Table 6.12 Refer to
Table 6.12. If 1998 is the base year, the highest inflation rate is between the years:
A) 2000 and 2001.
B) 1999 and 2000.
C) 1998 and 1999.
D) cannot be determined from the given information
Suppose that the chain-weighted index for GDP in Gambia was 275 in 2011 and 350 in
2012. The inflation rate between those two years was approximately
A) 20.2 percent.
B) 27.3 percent.
C) 37.5 percent.
D) 75 percent.
At lower interest rates the
A) money supply is indeterminate.
B) money supply is lower.
C) quantity of money demanded is higher.
D) quantity of money demanded is lower.
An open market purchase by the Fed
A) increases the total amount of reserves in the banking system.
B) decreases the total amount of reserves in the banking system.
C) does not change the total amount of reserves in the banking system.
D) causes the reserve requirement to fall.
The citizens of a country may prefer a tariff to a quota because:
A) a quota, but not a tariff, generates additional revenue for the government, which can
be used for public programs.
B) a quota, but not a tariff, generates additional profits for importers, not the
government.
C) a tariff, but not a quota, generates additional revenue for the government, which can
be used for public programs.
D) a tariff, but not a quota, generates additional profits for importers, not the
government.
Recall Application 1, "Beyond Purchasing Treasury Securities," to answer the following
questions:
The Fed's purchase of long term bonds to directly affect long term interest rates is
called:
A) quantitative easing.
B) open market purchase.
C) bank bailout.
D) open market sale.
