How does the owner of a sole proprietorship relate to the business?
A) The owner and the business are separate legal entities.
B) The owner and the business are not separate legal entities.
C) The assets of the owner are considered separate from the asset of the business.
D) None of these describe the legal relationship of the owner to the business.
If a firm knew every consumer’s willingness to pay and could prevent arbitrage, it could
charge every consumer a different price. This practice is known as
A) first-degree exploitation, or perfect price discrimination.
B) maximization of producer surplus, or perfect price discrimination.
C) first-degree price discrimination, or perfect price discrimination.
D) first-degree transfer of consumer surplus, or perfect price discrimination.
In a study conducted by Marianne Bertrand and Sendhil Mullianthan, identical resumes
were sent in response to help wanted ads in newspapers, with half of the resumes
assigned an African-American-sounding name and half assigned a white-sounding
name. The study found that
A) employers were equally likely to interview workers with white-sounding names and
with African-American-sounding names.
B) employers were 50 percent less likely to interview workers with
African-American-sounding names.
C) employers were 50 percent less likely to interview workers with white-sounding
names.
D) no employers chose to interview workers with African-American-sounding names.
Which of the following could cause nominal GDP to increase, but real GDP to
decrease?
A) The price level rises and the quantity of final goods and services produced rises.
B) The price level rises and the quantity of final goods and services produced falls.
C) The price level falls and the quantity of final goods and services produced rises.
D) The price level falls and the quantity of final goods and services produced falls.
In preparing their estimates of the stimulus package’s effect on GDP, Obama
administration economists estimated a government purchases multiplier of 1.57. This
indicates that a ________ increase in government purchases would increase equilibrium
real GDP by $157 billion
A) $1 billion.
B) $10 billion.
C) $100 billion.
D) $157 billion.
If the Fed is using policy to combat inflation, what is likely to happen in the foreign
exchange market and to the foreign exchange value of the dollar?
A) The demand for the dollar will increase and the foreign exchange value of the dollar
will rise.
B) The demand for the dollar will decrease and the foreign exchange value of the dollar
will rise.
C) The demand for the dollar will increase and the foreign exchange value of the dollar
will fall.
D) The demand for the dollar will decrease and the foreign exchange value of the dollar
will fall.
Suppose you have surveyed a few industries and obtained information about the income
elasticity of demand for their products. If you expect that the economy is headed for a
long recession, you would advise people to look for jobs in an industry with
A) a high positive income elasticity coefficient such as 5.
B) a low positive income elasticity coefficient such as 0.8.
C) a “high” negative income elasticity coefficient such as -4.
D) a “low” negative income elasticity coefficient such as -0.2.
Which of the following would not be included in the expenditure category called
investment expenditures?
A) spending on new houses
B) a purchase of shares of preferred stock
C) a purchase of a copy machine by FedEx Office
D) the cars held in inventory on a local Ford dealer’s lot
Two actions by the Fed during Alan Greenspan’s term as chairman have been identified
as possibly contributing to the financial crisis in 2008. Which of the following was one
of those actions?
A) decreasing the money supply to fight the possibility of disinflation
B) the decision during 1998 to help save the hedge fund Long Term Capital
Management
C) working in concert with the European Central Bank to stabilize the dollar / euro
exchange rate
D) financing the war in Afghanistan by printing money and generating rapid inflation
Compared to the United States, health care spending per person in other high-income
countries has been
A) growing at a slower rate.
B) growing at a faster rate.
C) growing at approximately the same rate.
D) declining at approximately the same rate.
Which of the following could cause nominal GDP to decrease, but real GDP to
increase?
A) The price level rises and the quantity of final goods and services produced rises.
B) The price level falls and the quantity of final goods and services produced rises.
C) The price level rises and the quantity of final goods and services produced falls.
D) The price level falls and the quantity of final goods and services produced falls.
The tax increases necessary to fund future Social Security and Medicare benefit
payments would be
A) small, and have little effect on economic growth.
B) small, but could discourage work effort, entrepreneurship and investment, thereby
slowing economic growth.
C) large, but would have little effect on economic growth.
D) large, and could discourage work effort, entrepreneurship and investment, thereby
slowing economic growth.
Enforcing property rights in an economy will
A) cause the market system to work less efficiently.
B) decrease the level of foreign portfolio investment.
C) encourage corruption and expand the underground economy.
D) raise the level of investment.