A general formula for the multiplier is
A) .
B) .
C) .
D) .
“Because chips and salsa are complements, an increase in the price of chips will cause
the demand for salsa to decrease. This initial shift in demand for chips results in a
higher price for chips; this higher price will cause the demand curve for chips to shift to
the right.” Which of the following correctly comments on this statement?
A) The statement will be true if consumer tastes for chips and salsa do not change.
B) The statement is false because a change in the price of chips would not change the
demand for chips.
C) The statement is false because salsa is an inferior good; chips are normal goods.
D) The statement is false because one cannot assume that chips and salsa are
complements for all consumers.
Growth in real GDP per capita for the world economy was greatest during
A) the seventeenth century.
B) the eighteenth century.
C) the nineteenth century.
D) the twentieth century.
Improvements in inventory control represent a positive technological change because
they allow firms to produce the same output with fewer inputs. In recent years, many
firms have adopted an inventory system in which firms accept shipments from suppliers
as close as possible to the time they will be needed. Wal-Mart has been a pioneer in
using inventory control systems to this in its stores. This type of inventory system is
called a ________ inventory system.
A) first-in-first-out
B) cash-and-carry
C) just-in-time
D) buy-now-pay-later
If you want to earn a real interest rate of 3% on money you lend, and you expect that
inflation will be 2%, what nominal rate of interest will you charge?
A) 1%
B) 5%
C) 6%
D) 9%
Figure 21-2
Which of the following is consistent with the graph depicted above?
A) An expected expansion increases the profitability of new investment.
B) The government runs a budget surplus.
C) There is a shift from an income tax to a consumption tax.
D) New government regulations decrease the profitability of new investment.
Figure 24-1
Ceteris paribus, a decrease in the value of the domestic currency relative to foreign
currencies would be represented by a movement from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
Firms in Thailand that had ________ while the baht was pegged to the dollar faced
interest payments that were higher than they had planned once the Thai government
abandoned the peg because the baht had been pegged ________ the equilibrium
exchange rate for the baht.
A) borrowed dollars; above
B) borrowed baht; above
C) borrowed dollars; below
D) borrowed baht; below
The Federal Open Market Committee consists of the seven members of the ________,
the president of the Federal Reserve Bank of New York, and ________.
A) Federal Reserve’s Board of Governors; four members of the Council of Economic
Advisors
B) Federal Reserve’s Board of Governors; four presidents from the other 11 Federal
Reserve banks
C) Council of Economic Advisors; four presidents from the 11 Federal Reserve banks
D) Council of Economic Advisors; four members of the U.S. Banking Committee
Table 2-15
Table 2-15 shows the output per day of two gardeners, George and Jack. They can
either devote their time to mowing lawns or cultivating gardens. Which of the following
statements istrue?
A) Jack has a comparative advantage in both tasks.
B) George has a comparative advantage in both tasks.
C) Jack has a comparative advantage in lawn mowing and George in garden cultivating.
D) Jack has a comparative advantage in garden cultivating and George in lawn mowing.
Table 2-12
This table shows the number of labor hours required to produce a digital cameras and a
bushel of wheat in China and South Korea.
a. Which country has an absolute advantage in the production of digital cameras?
b. Which country has an absolute advantage in the production of wheat?
c. What is China’s opportunity cost of producing one digital camera?
d. What is South Korea’s opportunity cost of producing one digital camera?
e. What is China’s opportunity cost of producing one pound of wheat?
f. What is South Korea’s opportunity cost of producing one pound of what?
g. If each country specializes in the production of the product in which it has a
comparative advantage, who should produce digital cameras?
h. If each country specializes in the production of the product in which it has a
comparative advantage, who should produce wheat?
Figure 4-6 Figure 4-6 shows the
demand and supply curves for the coffee market. The government believes that the
equilibrium price is too low and tries to help almond growers by setting a price floor at
$7.00. What is the value of the portion of consumer surplus that has been transferred to
producer surplus as a result of the price floor?
A) $1,200
B) $1,500
C) $1,800
D) $3,000
Actual investment spending includes spending by consumers on
A) durable goods.
B) nondurable goods.
C) new houses.
D) services.
The factors of production include
A) wages.
B) capital.
C) investment.
D) transfers.
Figure 17-6 Figure 17-6
shows two different compensation schemes for the Safelite Glass Corporation, an
installer of auto glass windshields. Under Scheme I, the firm pays a consistent wage of
$80 per day based on an 8-hour workday. Qmin represents the cut-off point under the
hourly-wage system: if a worker installed fewer than Qmin windshields, the worker got
fired. Scheme II represents a piece-rate scheme with an earnings floor: no worker
would get less than $80 per day (for an 8-hour workday) and would have to produce at
least Qmin. For any output level beyond Q* the worker earned an additional $20 for
each unit produced.
Which of the following statements about Scheme II is false?
A) It is likely to draw highly productive workers who see the opportunity to increase
their wages.
B) It could discourage less productive workers and induce them to leave the firm.
C) It allows workers to increase their daily wage without penalizing those who are
content with their daily wage.
D) It is more risky for senior employees.