Discouraged workers are classified by the BLS as
A) part of the labor force.
B) out of the labor force.
C) unemployed.
D) employed.
E) part-time employees.
The town of Harmonia gives away all 500 tickets to its annual Founder’s Day Free
Concert-in-the-Park to local residents. Each year, more than 500 people wish to attend
the concert, so some of the residents who receive the free tickets sell them for as much
as $75 each. Is a transaction where someone pays a resident $75 for a “free ticket”
economically efficient?
A) No, people should never be allowed to sell items they received for free.
B) Yes, it was a voluntary exchange that benefited both parties.
C) No, the buyer paid too much for the ticket.
D) Yes, it is efficient only from the perspective of the seller and not from the
perspective of the buyer.
The central role of ________ in a market economy is bringing together savers and
borrowers.
A) corporations
B) sole proprietors
C) financial intermediaries
D) stock exchanges
When the coupon rate on newly issued bonds decreases relative to older, outstanding
bonds, what happens?
A) The market price of the older bond falls in the secondary market.
B) The market price of the older bond rises in the secondary market.
C) Older bonds can still be sold at their face value.
D) Older bonds will sell for more than their face value.
Firms free ride on the research and development of other firms when they
A) buy a firm’s newly developed product, and then give it away to consumers.
B) use knowledge other firms have developed without paying for that knowledge.
C) license a new technology from a firm that developed the new technology.
D) choose a level of research and development that is inefficiently high.
Total revenue equals
A) price per unit times quantity sold.
B) price per unit times quantity supplied.
C) price per unit times change in quantity sold.
D) change in price per unit times quantity sold.
Which of the following variables will not cause the market supply curve of labor to
shift?
A) increases in population
B) a favorable change in consumer tastes
C) a change in the labor participation rate of women
D) an increase in the number of people between the ages of 16 and 65
Which of the following will cause a direct increase in consumption spending?
A) an increase in planned investment
B) an increase in government spending
C) an increase in disposable income
D) a decrease in net export spending
Whenever a firm can charge a price greater than marginal cost,
A) the firm must be a monopolist.
B) there is some loss of economic efficiency.
C) consumers have the ability to choose a close substitute.
D) the firm will earn economic profits.
A cut in tax rates effects equilibrium real GDP through two channels: ________
disposable income and consumer spending, and ________ the size of the multiplier
effect.
A) decreasing; increasing
B) decreasing; decreasing
C) increasing; increasing
D) increasing; decreasing
Commodity money
A) has value independent of its use as money.
B) has little to no value independent of its use as money.
C) is backed by a valuable commodity such as gold.
D) can be used to purchase commodities, but not services.
In the United States, health care spending per person based on income per person is
________ the average for most other countries.
A) slightly lower than
B) significantly higher than
C) significantly lower than
D) comparable to
If the quantity demanded for a product exceeds the quantity supplied, the market price
will rise until
A) the quantity demanded equals the quantity supplied. The product will then no longer
be scarce.
B) quantity demanded equals quantity supplied. The equilibrium price will then be
greater than the market price.
C) only wealthy consumers will be able to afford the product.
D) quantity demanded equals quantity supplied. The market price will then equal the
equilibrium price.
Figure 7-2 Figure 7-2 represents the market
for vaccinations. Vaccinations are considered a benefit to society, and the figure shows
both the marginal private benefit and the marginal social benefit from vaccinations.
Marginal private benefit is represented by which curve?
A) D1
B) D2
C) Supply
D) All of the above represent marginal private benefit.
Costa Rica is a leading exporter of bananas. What explains the comparative advantage
of this country in banana production?
A) climate and soil conditions in Costa Rica which are well-suited for banana
production
B) investment by multinational firms such as Chiquita Brands International and the
Dole Food Company
C) a large supply of unskilled labor
D) positive externalities
Article Summary. In a September 2013 speech to the Independent Bankers
Association of Texas, Federal Reserve Bank of Dallas president Richard Fisher
stated that the Fed’s credibility was harmed when it announced the previous week
that it would continue its large bond purchasing program. In June, Fed Chairman
Ben Bernanke had stated that that the program could begin to be cut back later in
the year, and several other Fed officials expressed being open to the announced
timing of this policy. Bernanke’s change in his announced timeline of the Fed’s
intentions regarding the bond purchasing program brought criticism that the Fed
had misled investors. In his speech, Fisher stated “I disagreed with the decision of
the committee and argued against it. Doing nothing at this meeting would increase
uncertainty about the future conduct of policy and call the credibility of our
communications into question. I believe that is exactly what has occurred, though I
take no pleasure in saying so.” Fisher has been a long-time opponent of the Fed’s
bond purchasing program, claiming it is ineffective and may well lead to future
inflation, and had been calling for the Fed to begin phasing out this program in
September. Source: “Fisher: Standing pat on policy hurt Fed’s credibility,”
Reuters, September 23, 2013.
Richard Fisher brought the Fed’s credibility into question when it decided to continue
with its bond purchasing program despite leading many to believe that the program
would begin to be phased out. Prior to this, over the past two decades whenever a
change in Fed policy had been announced, the change has ________ taken place,
leading to ________ credibility.
A) rarely; greater
B) actually; greater
C) rarely; less
D) actually; less
The table below describes the value added in the production of a gallon of gasoline by
each stage of production. (The values are hypothetical.)
Table 8-10
a) What is the value added by each stage of production?
b) What is the total value added?
For simplicity, you can ignore the cost of the inputs for oil drilling.
