The U.S. income tax is currently a __________ tax.
a. progressive
b. proportional
c. regressive
d. proactive
One reason that helps to explain the law of supply is the law of
a. diminishing marginal utility.
b. diminishing marginal returns.
c. decreasing opportunity costs.
d. demand.
Suppose that a tariff is imposed on imported cheese. This will have the effect of
__________ the quantity consumed of cheese, __________ consumers’ surplus, and
__________ the government’s tariff revenues.
a. increasing; increasing; increasing
b. decreasing; decreasing; increasing
c. increasing; decreasing; decreasing
d. decreasing; increasing; increasing
e. decreasing; increasing; decreasing
Exhibit 4-9
Suppose that the government imposes a price ceiling at a price of $10.The number of
units that would be exchanged in this market would be
a. 150, since that is the equilibrium quantity and the price ceiling is below the
equilibrium price.
b. 220, since that is the number of units demanded at the price ceiling (and the quantity
demanded is greater than the quantity supplied).
c. 90, since that is the number of units supplied at the price ceiling (and the quantity
supplied is less than the quantity demanded).
d. 155, since that is the average of the quantity demanded and the quantity supplied at
the price ceiling.
Suppose that an American-made pair of blue jeans has a price of $80. If the exchange
rate is $0.095 = 1 peso, then a Mexican consumer would have to pay approximately
__________ pesos to purchase the blue jeans, but if the exchange rate is $0.085 = 1
peso, then a Mexican consumer would have to pay _________ pesos to purchase the
blue jeans.
a. 7.6; more
b. 842; more
c. 7.6; fewer
d. 842; fewer
e. 8,444; fewer
An increase in the number of buyers in a particular market for a good will result in a
___________________ for that good.
a. movement up along the demand curve
b. movement down along the demand curve
c. leftward shift in the demand curve
d. rightward shift in the demand curve
In the case of a negative externality, the government can use a ________________ to
turn an inefficient outcome into an efficient one.In the case of a positive externality, the
government can use a ________________ to turn an inefficient outcome into an
efficient one.
a. tax; subsidy
b. subsidy; tax
c. tax; tax
d. subsidy; subsidy
Business-cycle macroeconomics involves changes in Real GDP around a
____________ LRAS curve, while economic-growth macroeconomics deals with
increases in Real GDP resulting from a ______________ LRAS curve.
a. rightward-shifting; fixed
b. fixed; leftward shifting
c. leftward shifting; fixed
d. fixed; rightward-shifting
Candidates in a two-person race express very similar positions a few weeks before the
election. A voter complains that there is not much difference between the two
candidates. What this voter misunderstands or ignores is that
a. each candidate has an incentive to be like the other.
b. each candidate has an incentive to be different from the other.
c. each candidate has an incentive to be perceived as in the “middle of the road,” and if
both candidates correctly act on this incentive they will end up sounding alike.
d. this simply happens sometimes.
e. none of the above
Suppose that the exchange rate between the U.S. dollar and the Mexican peso is 1 peso
= $0.11.If the U.S. dollar price per Mexican peso changes to 1 peso =$0.10, the peso is
said to have __________ and the dollar to have __________.
a. depreciated; appreciated
b. appreciated; appreciated
c. appreciated; depreciated
d. depreciated; depreciated
All other things held constant, lower marginal (income) tax rates
a. necessarily increase tax revenues.
b. necessarily decrease tax revenues.
c. decrease the attractiveness of productive activities relative to leisure and tax-
avoidance activities, and shift the SRAS curve rightward.
d. do not affect the attractiveness of productive activities relative to leisure and tax-
avoidance activities and therefore the SRAS does not shift rightward or leftward.
e. increase the attractiveness of productive activities relative to leisure and tax-
avoidance activities and shift the SRAS curve rightward.
Exhibit 3-16
Which of the graphs best represents the market for theater tickets that are already sold
out on the day of the performance?
a. (1)
b. (2)
c. (3)
d. (4)
If businesses buy fewer capital goods, and nothing else changes, then total expenditures
on U.S. goods and services will decrease. And if total expenditures decrease, then
__________ will decrease; consequently, the __________ curve will shift __________.
a. aggregate demand (AD); AD; rightward
b. short-run aggregate supply (SRAS); SRAS; leftward
c. aggregate demand (AD); AD; leftward
d. interest rates; AD; leftward
e. prices; AD; rightward
An option is a contract that always
a. gives the owner the right, but not the obligation, to buy shares of a stock at a
specified price within the time limits of the contract.
b. gives the owner the right, but not the obligation, to sell shares of a stock at a
specified price within the time limits of the contract.
c. states that the seller agrees to provide a particular good to the buyer on a specified
future date at an agreed-upon price.
d. gives the owner the right, but not the obligation, to buy or sell shares of a stock at a
specified price within the time limits of the contract.
Exhibit 4-3
Which of the following is true?
a. If price P1 is set as a price ceiling it will have an effect on the market for good X.
b. If price P1 is set as a price floor it will have an effect on the market for good X.
c. Price P1 is the equilibrium price for good X.
d. If price P1 is set as a price floor, then it is the highest price that can legally be
charged in the market for good X.