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Economists perceive a college applicant's grade point average and standardized test
scores (such as SAT and ACT scores) to be rationing devices.
a. True
b. False
A divisive society is one in which members of society work together for the common
good.
a. True
b. False
Keynes believed that investment is
a. dependent on a number of factors, including business expectations.
b. mainly determined by changes in interest rates.
c. unrelated to business expectations.
d. related to business expectations only during recessionary periods.
A $100 billion increase in government spending increases Real GDP by $900
billion.Assuming a constant price level, what does the government spending multiplier
equal?
a. 9
b. 900
c. 800
d. 8
e. 7
Exhibit 39-4
Under a price support program of $4 per bushel, how many bushels of surplus wheat
does the government purchase?
a. 0
b. 200
c. 700
d. 900
Between 1977 and 2004, the inflation-adjusted prices for an array of goods traded
between countries __________ while the inflation-adjusted prices for an array of goods
not traded between countries _____________________.
a. fell; increased.
b. rose; increased as well.
c. fell; decreased as well.
d. rose; decreased.
The sum of consumers' surplus and producers' surplus is maximized at equilibrium.
a. True
b. False
Microeconomics is the branch of economics that deals with
a. highly aggregated markets or the entire economy.
b. the production side of the economy, exclusively.
c. the buying side of the economy, exclusively.
d. human behavior and choices as they relate to relatively small units --- an individual, a
firm, an industry.
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. Tariff revenues equal the area
a. DBCG.
b. EBCF.
c. CFG.
d. BCGE.
e. DBCF.
The effects of a quota include:
a. decreasing consumers' surplus.
b. increasing total revenue for the importers who sell the allowed number of imported
units.
c. increasing producers' surplus.
d. b and c
e. a, b, and c
If the investment demand curve is vertical, a decrease in the interest rate will
__________ investment, and therefore aggregate demand will __________.
a. increase; increase
b. decrease; increase
c. decrease; decrease
d. decrease; remain unchanged
e. not affect; remain unchanged
If the natural unemployment rate is 5.5 percent, then the economy is in an inflationary
gap when the actual unemployment rate is
a. greater than 5.5 percent.
b. less than 5.5 percent.
c. 0 percent.
d. 5.5 percent.
If new legislation allowed patients to sue their health-maintenance organization (HMO),
we would expect the supply curve for HMO-provided health care to shift to the left and
the price of such coverage to rise.
a. True
b. False
