If the long-run aggregate supply curve is vertical,
A) the economy stays at the natural rate of inflation in the long run.
B) the short-run Phillips curve must be vertical.
C) unemployment and inflation are positively related in the long run.
D) the trade-off between unemployment and inflation cannot be permanent.
Rent control is an example of
A) a subsidy for low-skilled workers.
B) a price floor.
C) a price ceiling.
D) a black market.
Which of the following is an experiment which tests whether fairness is important in
consumer decision making?
A) the fair trade principle
B) the ultimatum game
C) the preferential treatment game
D) the behavioral experiment
Economic efficiency is achieved when there is a market outcome in which the marginal
benefit to consumers of the last unit produced is equal to its marginal cost of production
and
A) economic surplus plus consumer surplus equals producer surplus.
B) consumer surplus plus producer surplus is maximized.
C) economic surplus is minimized.
D) the difference between consumer surplus and producer surplus is maximized.
The Smoot-Hawley Tariff
A) lowered U.S. tariffs by 50 percent following World War II.
B) was passed by the U.S. Congress following the Civil War as a means of increasing
government revenue.
C) was passed by the U.S. Congress upon a recommendation made by the General
Agreement on Tariffs and Trade (GATT) in 1948.
D) raised average tariff rates by over 50 percent in the United States in 1930.
If inflation in Mexico is lower than it is in the United States,
A) the purchasing power of the peso in buying Mexican goods will fall relative to the
dollar.
B) the value of the dollar will rise in the long run.
C) the value of the peso will rise in the long run.
D) the purchasing power of the dollar in buying American goods will rise relative to the
peso.
From an initial long-run equilibrium, if aggregate demand grows faster than long-run
and short-run aggregate supply, then Congress and the president would most likely
A) decrease the required reserve ratio.
B) decrease government spending.
C) decrease oil prices.
D) decrease tax rates.
In the United States, corporate profits are taxed
A) only at the corporate level.
B) only when investors receive dividends.
C) at both the corporate level and when investors receive dividends.
D) neither at the corporate level nor when investors receive dividends.
Table 2-6
The Fruit Farm produces only apples and pears. The table aboveshows the maximum
possible output combinations of the two fruits using all resources and currently
available technology. a. Graph The Fruit Farm’s production possibilities frontier. Put
apples on the horizontal axis and pears on the vertical axis. Be sure to identify the
output combination points on your diagram.
b. Suppose The Fruit Farm is currently producing at point D. What is the opportunity
cost of producing an additional 8,000 pounds of pears?
c. Suppose The Fruit Farm is currently producing at point D. What happens to the
opportunity cost of producing more and more pears? Does it increase, decrease or
remain constant? Explain your answer.
d. Suppose The Fruit Farm is currently producing at point G. What happens to the
opportunity cost of producing more and more apples? Does it increase, decrease or
remain constant? Explain your answer.
e. Suppose The Fruit Farm is plagued by the apple maggot infestation which destroys
apple trees but not pears. Show in a graph what happens to its PPF.
Figure 7-1 Figure 7-1 shows the U.S.
demand and supply for leather footwear. Suppose the government allows imports of
leather footwear into the United States. What will be the quantity demanded?
A) Q0
B) Q1
C) Q2
D) Q2 – Q0
Workers in high-income countries have ________ to work with than do workers in
low-income countries.
A) less physical capital
B) more physical capital
C) more labor
D) more labor and less physical capital