Equilibrium GDP is reached when
a. aggregate expenditure exceeds GDP
b. aggregate expenditure is less than GDP
c. aggregate expenditure equals the level of output
d. the level of output is greater than aggregate expenditure
e. the level of output is less than aggregate expenditure
For the average living standard of a nation to __________, __________ must increase
faster than the price level
a. increase; nominal GDP
b. increase; real GDP
c. decrease; nominal GDP
d. remain constant; nominal GDP
e. decrease; real GDP
Camille’s Chicken operates in a monopolistically competitive market. If Camille
implements a new free delivery service for customers,
At the profit-maximizing, or loss-minimizing, level of output in Figure 11-3, the firm’s
total cost is approximately
Which of the following is not a reason why wages respond slowly to changes in output?
a. Many labor contracts specify wages for up to three years.
b. The process of wage setting in large corporations is slow moving.
c. Frequent wage changes can reduce worker morale and reduce productivity.
d. Firms benefit from having a reputation of paying stable wages.
e. The labor supply and demand curves move rapidly to clear labor markets.
Which of the following would unambiguously increase consumption spending?
a. an increase in real disposable income coupled with a decrease in real wealth
b. an increase in real wealth coupled with more pessimistic expectations regarding
future income
c. a decrease in real disposable income coupled with a decrease in the interest rate
d. a decrease in the interest rate coupled with an increase in real wealth
e. increased pessimism regarding future income coupled with an increase in the interest
rate
For a firm producing in a perfectly competitive product market, the marginal revenue
product of labor eventually
Every time a bank calls in a loan, demand deposits are created.
Assume that markets clear. If in the labor market there is
a. an excess supply of labor, wages will rise
b. an excess demand for labor, wages will fall
c. an excess demand for labor, wages will rise
d. an excess supply of labor, wages stay constant
e. a decline in labor demand, wages will rise
The Phillips curve
a. is the same as a country’s production possibilities frontier..
b. is upward sloping.
c. illustrates the Fed’s choice between inflation and unemployment in the long run.
d. illustrates the Fed’s choice between inflation and unemployment in the short run.
e. illustrates the Fed’s choice between inflation and tax revenues in the short run.
If Pat pays $500 for a one-year bond that carries an interest rate of 10 percent per year,
how much will she be repaid at the end of the year?
a. $600
b. $510
c. $620
d. $550
e. $500
If a firm’s marginal revenue exceeds its marginal cost, it should
The number of sellers in an industry, in part, defines its market
Which of the following describes the relationship between net investment and total
investment?
a. Net investment = total investment – depreciation
b. Total investment = net investment + private investment – depreciation
c. Net investment = government investment – private investment – depreciation
d. Total investment = net investment – depreciation
e. Net investment = government investment – depreciation