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If a competitive market operates perfectly, it relies on
A) the number of people buying goods.
B) the laws of supply and demand.
C) how many products can be produced for sale.
D) how much people are willing to pay for the products.
Markets exist
A) so people can buy and sell things.
B) because people are self-sufficient.
C) because each person specializes in the production of many products.
D) as an arrangement where buyers do not interact with sellers.
The burdens of the national debt generally fall on
A) past generations.
B) the present generation.
C) future generations.
D) all of the above.
The theory of investment that links investment spending to stock prices is known as the
A) accelerator model.
B) neoclassical theory of investment.
C) multiplier model.
D) Q-theory of investment.
According to Say's law:
A) recessions occur because income from the production of goods is insufficient to
ensure full employment.
B) the act of producing goods and services generates income that is equivalent to the
value of goods and services produced enabling buyers to purchase those goods.
C) because households save some of their income, not all goods and services produced
will be purchased.
D) the demand for products creates the supply of products.
Figure 1A.2
Refer to Figure 1A.2. If this consumer rents 60 DVDs, how many movie tickets will she
purchase?
A) 0
B) 5
C) 10
D) 15
Joe runs a business and needs to decide how many hours to stay open. Figure 2.2
illustrates his marginal benefit of staying open for each additional hour. Suppose that
we observe Joe staying open 3 hours per day. If he is following the marginal principle,
what must his marginal cost per hour be?
A) $24
B) $32
C) $40
D) $48
A country undertakes a devaluation in order to
A) increase its net exports.
B) decrease its net exports.
C) raise the value at which its currency is pegged.
D) move to a flexible exchange rate system.
Spending on programs that ________, such as Social Security and Medicare, is
classified as entitlement and mandatory spending.
A) is authorized by Congress on an annual basis
B) has been authorized by prior law
C) is authorized only in times of budget surpluses
D) is authorized only in times of budget deficits
Recall the Application about the increase in Chinese demand for pecans to answer
the following question(s). Between 2006 and 2009, Chinese imports of U.S. pecans
increased from 9 million pounds per year to 88 million pounds per year, and as a
result of the increase in demand, the equilibrium price increased by about 50
percent. The increase in demand was caused in part by widespread reports in the
Chinese media extolling the health benefits of pecans. According to the Application,
one reason for the increase in Chinese demand for pecans was
A) a decrease in income.
B) the expectation of higher future prices.
C) an increase in consumer preferences.
D) an increase in the price of walnuts, a substitute good.
Suppose that the unemployment rate is ________ the natural rate. We would expect
prices to rise, money demand to rise, interest rates to rise, and total demand to
________.
A) above; rise
B) above; fall
C) below; rise
D) below; fall
Suppose an economy consists of 500,000 individuals 16 years and older, 260,000 are
employed, and 21,000 are unemployed but actively seeking work. In this example the
labor force is
A) 239,000.
B) 260,000.
C) 281,000.
D) 500,000.
Jim's nominal wage increased by 3%, and the prices of goods that Jim buys increased
by 2%. Jim's real wage has:
A) increased.
B) remained constant.
C) decreased.
D) changed by 5%, but the direction of the change is ambiguous.
