1) The crowding-out effect of the public debt may be dampened if the
investment-demand curve is shifting to the right.
2) Mainstream economists contend that use of stabilization policy has helped increase
macro stability in the U.S. economy over the past 40 years.
3) An individual bank can safely lend out a multiple of its excess reserves, but the
banking system can safely lend out only an amount equal to the excess reserves in the
banking system.
4) a government subsidy per unit of output increases supply.
5) the production of durable goods is more stable than the production of nondurables
over the business cycle.
6) According to the inverted-U theory of R&D, other things equal, firms in industries
with concentration ratios around 10 percent will be more technologically progressive
than firms in industries with 50 percent concentration ratios.
7) A firm’s optimal amount of R&D occurs where the marginal benefit of this activity
exceeds marginal cost by the greatest amount.
8) the short run is a period of time during which all costs are fixed costs.
9) if the xyz company can sell 4 units per week at $10 per unit and 5 units per week at
$9 per unit, the marginal revenue of the fifth unit is $5.
10) during the past ten years the u.s. economy has experienced three recessions.
11) The interest-rate cost-of-funds curve is perfectly elastic because firms can borrow
as much or as little as they want at market interest rates.
12) the number of countries belonging to the world trade organization (wto) currently
(2008) is about.
a.151.
b.105.
c.128.
d.22.
13) The Board of Governors of the Federal Reserve has ____ members.
A.5
B.7
C.9
D.14
14) according to the office of immigration statistics, approximately what percentage of
legal immigrants in 2007 were parents, children, siblings, or other qualified relatives of
legal permanent u.s. residents?
a.13 percent
b.50 percent
c.66 percent
d.81 percent
15)
Refer to the above diagram for the Federal funds market. If the Fed wants to increase
reserves from $200 billion to $300 billion it should:
A.buy bonds from banks and the public.
B.sell bonds to banks and the public.
C.buy bonds from banks and sell them to the public.
D.buy bonds from the public and sell them to banks.
16) The following information about a banking system: new currency deposited in the
system = $40 billion; legal reserve ratio = 0.20; excess reserves prior to the currency
deposit = $0.
Refer to the above information. The $40 billion deposit of new currency will support
total checkable deposits of:
A.$160 billion.
B.$200 billion.
C.$40 billion.
D.$128 billion.
17) Assume that all workers are equally productive but the wage rate for men is $12
compared to $9 for women. An employer who employs only male workers must have a
discrimination coefficient of:
A.more than $3.
B.at most .3.
C.less than $3.
D.1.33 or less.
18)
refer to the above diagram. given production possibilities curve (a), the combination of
civilian and war goods indicated by point x is unattainable to this economy.
19)
Refer to the above table. In a choice between education and public safety:
A.a majority of voters would favor education.
B.no voter decision is possible.
C.a majority of voters would favor public safety.
D.the outcome would depend on which item was listed first on the ballot.
20) Answer the next four questions based on the following data using year 1 as the base
year. All dollars are in billions. Calculate to one decimal place.
(a)What was the percentage rise in prices between years 1 and 2?
(b)What was the percentage rise in prices between years 2 and 3?
(c)What was the percentage rise in prices between years 3 and 4?
21) Innovation:
A.is the first discovery of a product or process, rather than its first successful
commercial introduction.
B.includes new products, but not new production methods.
C.is also known as diffusion.
D.can either increase or decrease the market share of a large firm, depending on
whether it is introduced by the large firm or one of its competitors.
22) The marginal productivity theory of income distribution has been criticized
because:
A.the resulting distribution of income is likely to be too equal to maintain production
incentives.
B.income from inherited property is inconsistent with the theory.
C.purely competitive conditions characterize most resource markets.
D.it fails to recognize that resource demand is derived from product demand.
23) In a purely competitive static economy:
A.the demand for loanable funds would disappear.
B.uncertainty would increase, causing profit to rise.
C.economic profit would be zero.
D.economic profit would be maximized.
24)
Refer to the above diagram for a private closed economy. The MPC and MPS are:
A..6 and .4 respectively.
B..7 and .3 respectively.
C.both .5.
D.both .7.
25) How do new classical economists view the importance of policy rules and
discretion in macroeconomic policy?
26) Comment on the statement: Increasing government spending is preferred to a cut in
taxes when the U.S. government seeks to fight a recession.
27) Describe two basic differences between the mainstream and monetarist economic
theories.
28) A state decides to pass a new law raising the excise tax on cigarettes. What would
be the probable incidence of this new tax?
29) Use the features of the competitive model to explain why the entry of generic drugs
can reduce the price of a medication by 30 to 40 percent.
30) What is the basic difference between a public good and a private good?
31) Explain the statement: Clean air and water have become increasingly scarce and
valuable resources because they have been treated in the past as if they were free and
unlimited in supply. What methods might be used to internalize spillover costs?