On May 12, 2011, the U.S. dollar was worth 28 Russian rubles. How many U.S. dollars
did it take to buy one Russian ruble?
a. 0.01
b. 0.04
c. 0.28
d. 0.40
How will a cut in a fixed tax affect the consumption schedule?
a. It will shift downward.
b. It will shift upward.
c. It will become flatter.
d. It will become steeper.
The economy’s self-correcting mechanism appears to be more efficient at curing
a. recessionary gaps by reducing price levels.
b. inflationary gaps by reducing price levels.
c. unemployment by reducing wage levels.
d. inflationary gaps through inflation.
Usury laws carry the potential of hurting
a. borrowers.
b. lenders.
c. borrowers and lenders.
d. government.
Increasing economic growth may be beneficial because
a. mass poverty is a serious problem in the United States.
b. most Americans do not have the basic goods and services necessary for a decent life.
c. the price level falls only if the economy is growing.
d. most of the world is still below the poverty level of income.
The rule for the optimal use of any input says that
a. when MRP is less than price, it pays to expand resource use.
b. when MRP is greater than price, it pays to expand resource use.
c. when MRP equals price, resource use should be cut back.
d. resources should be used only if MRP exceeds price.
It is possible that if a monopoly is broken up, the cost of production for that product
could increase.
a. True
b. False
The loan supply curve has a positive slope
a. for all savers.
b. only for savers with fixed accumulation targets.
c. for all savers except those with fixed accumulation goals.
d. only for those contemplating retirement.
Nominal GDP includes the current value of services produced in the economy.
a. True
b. False
In a market economy, government decides the answers to the three economic decisions.
a. True
b. False
A policy of marginal-cost pricing will ensure that many regulated industries will lose
money.
a. True
b. False
A good produced in 2009 and held in inventory until it is sold in 2010 would be
included in which measure of GDP?
a. Half the value in 2009 and half the value in 2010
b. In 2010 GDP
c. In both 2009 and 2010 GDP
d. In 2009 GDP
Figure 22-9
In Figure 22-9, at price OC total quantity demanded exceeds quantity supplied and
price will rise to
a. OJ in Pastaland.
b. OA in Pestoland.
c. OA in both countries.
d. OJ in both countries.
Which of the following was designed to head off panics among market participants and
forestall crashes like the ones in October 1929 and October 1987?
a. Program trading
b. Circuit breakers
c. Derivatives
d. Volatility index
The different effects of fiscal and monetary policy in an open economy with mobile
capital hinges on their different effect on
a. price levels.
b. interest rates.
c. the money supply.
d. real GDP.
Rational choice requires that opportunity cost be
a. ignored in making a decision.
b. considered for individual choices, but not for societal choices.
c. computed, but not actually used in making a decision.
d. considered as part of making a decision.
e. used as the sole decision criterion.
Table 8-1
According to the data in Table 8-1, the value of GNP is
a. 900.
b. 950.
c. 955.
d. 960.
Figure 17-3
Given the situation in graph (1) in Figure 17-3, what movement would be expected in
graph (2) from the economy’s self-correcting mechanism?
a. A to B
b. A to D
c. C to E
d. D to C
Uncoordinated decisions in perfect competition lead to mass confusion and inefficiency.
a. True
b. False
One advantage of emissions permits is that they allow the government to choose the
level of pollution reduction.
a. True
b. False
Gross Domestic Product is a monetary measure of
a. total consumption in the economy.
b. the total value of all final goods and services.
c. total industrial output.
d. the total value of all foreign sales and purchases.
In the short run, a firm may have accounting losses and remain in operation.
a. True
b. False
Production technology determines the relationship of total cost to outputs.
a. True
b. False
Briefly and concisely define the following terms and explain their importance in the
study of economics.
a. excess capacity theorem
b. price leadership
c. kinked demand curve
d. perfectly contestable market
A tax that does not change consumers’ behavior creates no
a. economic burden.
b. excess burden.
c. tax revenue.
d. tax incidence.
An increase in the capital stock would be expected to
a. decrease the labor force.
b. increase the level of output.
c. decrease real GDP per capita.
d. increase real GDP per capita.
Consumers most likely decide on their current consumption spending by looking at
their short-run income prospects.
a. True
b. False
When various firms fail because their output is not demanded by society, workers may
suffer
a. structural unemployment.
b. frictional unemployment.
c. seasonal unemployment.
d. cyclical unemployment.
A recession abroad would
a. increase U.S. net exports and increase aggregate demand.
b. increase U.S. net exports and increase aggregate supply.
c. reduce U.S. net exports and reduce aggregate demand.
d. reduce U.S. net exports and increase aggregate demand.
Which of the following are not included in the M1 definition of the money supply?
a. cash and currency
b. checkable deposits
c. money market deposit accounts
d. All of the above are included.
If the U.S. government decides to eliminate a budget surplus by reducing taxes, the
most likely effect would be
a. falling prices.
b. a reduction in the trade deficit.
c. an increase in unemployment.
d. upward pressure on prices.