________ behavioral assumption about humans was that people usually act in a
rational, self-interested way.
A) Thomas Malthus’s
B) Adam Smith’s
C) Karl Marx’s
D) Ben Bernanke’s
Suppose that an increase in capital per hour worked from $15,000 to $20,000 increases
real GDP per hour worked by $500. If capital per hour worked increases further to
$25,000, by how much would you expect real GDP per hour worked to increase if there
are diminishing returns?
A) by less than $500
B) by exactly $500
C) by more than $500 but less than $5,000
D) by more than $5,000 but less than $20,000
The five most important variables that determine the level of consumption are
A) disposable income, wealth, expected future income, price level, and interest rate.
B) wealth, savings account balances, checking account balances, stock portfolio
balances, and bond portfolio balances.
C) government purchases, interest rates, income, taxes, and transfers.
D) government purchases, saving account balances, wealth, interest rates, portfolio
balances.
Which of the following statements is true about revenue?
A) Revenue is the total amount received for selling a good or service.
B) Revenue is calculated by dividing the price per unit by the number of units sold.
C) The terms “revenue” and “profit” can be used interchangeably.
D) A firm’s revenue will increase as its costs increase.
If the economy is falling below potential real GDP, which of the following would be an
appropriate fiscal policy to bring the economy back to long-run aggregate supply? An
increase in
A) the money supply and a decrease in interest rates.
B) government purchases.
C) oil prices.
D) taxes.
A study by Edward Prescott found that the ________ marginal tax rates in the United
States relative to Europe resulted in a ________ quantity of labor supplied in the United
States.
A) higher; larger
B) lower; larger
C) higher; smaller
D) lower; smaller
Figure 12-3
Refer to Figure 12-3. Suppose that investment spending decreases by $5 million,
decreasing aggregate expenditure and decreasing real GDP from GDP2 to GDP1. If the
MPC is 0.8, then what is the change in GDP?
A) -$4 million
B) -$5 million
C) -$25 million
D) -$40 million
Figure 17-7
Refer to Figure 17-7. Consider the Phillips curves depicted in the graph above. The Fed
announces its intention to decrease inflation from 10 percent to 5 percent per year, and
it succeeds. If expectations of inflation are reduced to 8 percent by the Fed’s
announcement, the rate of unemployment will be ________ in the short run.
A) less than 5.5 percent
B) 5.5 percent
C) between 5.5 and 7.5 percent
D) 7.5 percent
During what period of time did the United States most consistently adhere to the gold
standard?
A) from the nineteenth century until the 1930s
B) from the eighteenth century until the nineteenth century
C) from 1914 until 1929
D) from 1944 until 1980
Figure 15-14
Refer to Figure 15-14. In the figure above, if the economy in Year 1 is at point A and
expected in Year 2 to be at point B, then the appropriate monetary policy by the Federal
Reserve would be to
A) lower interest rates.
B) raise interest rates.
C) lower income taxes.
D) raise income taxes.
A student comments to his roommate that the only way he will be able to pass his final
exams is to not sleep for the next three days. This statement suggests that
A) students are more concerned about good grades than good health.
B) society should value sleep more highly than good grades.
C) there is a trade-off between studying and sleep.
D) society should value good grades more highly than sleep because students can catch
up on their sleep once final exams are over.