Referring to Figure 2-13, if you had to choose how to allocated $5 million and your
objective was to save the most lives, you would
Figure 2-13
Total Lives Saved
After an excise tax is imposed on a good or service,
Why were banking panics and failures largely eliminated after 1933?
a. There were fewer recessions.
b. There was more government spending.
c. All U.S. currency began to be backed by gold.
d. Congress created deposit insurance.
e. The banking sector became less important as the US became a more trade-oriented
economy.
Refer to Figure 14-9. If the aggregate expenditure line shifts from AE1(r = 8%) to
AE2(r = 10%), which of the following is the most likely cause of that shift?
a. An increase in the money supply
b. A decrease in the money supply
c. An increase in government purchases
d. A decrease in government purchases
e. An increase in taxes
Combinations of goods outside the production possibilities curve
If people work longer or harder,
a. they are unambiguously worse off
b. living standards will rise but nonmarket activities must be sacrificed
c. living standards will fall
d. more output can be produced, but living standards will fall
e. they will have fewer consumer goods to enjoy
The law of diminishing marginal returns says that as more of a variable input is
combined with a fixed input, total output will increase; however, the increases in the
firm’s output will become ever smaller.
Which panel in Figure 5-2 shows the combined effects of an increase in the price of
oranges and a decrease in the price of apples?
Assume you are lending money to a friend for a year and want to earn real interest of 5
percent on the loan. If you believe the inflation rate the next year will be 3 percent, you
should charge your friend a nominal interest rate of
a. 5 percent
b. 8 percent
c. 3 percent
d. 15 percent
e. whatever he will pay
Which of the following is the closest to being a perfectly competitive firm?
If U.S. imports total $100 billion and exports total $150 billion, which of the following
would be true?
a. U.S. net exports equal -$50 billion.
b. The U.S. has a trade surplus of $50 billion.
c. The U.S. has a trade deficit of $100 billion.
d. The U.S. has a trade deficit of $50 billion.
e. The U.S. has a trade surplus of $150 billion.
According to the classical model, if there are too many elementary school teachers in
the labor market,
a. the government should institute a retraining program to give the unemployed teachers
new job skills
b. the wages for elementary teachers will fall, eventually causing the number of excess
teachers to shrink
c. the wage for elementary teachers will increase for those who are employed, but
unemployment of teachers will remain high
d. this situation provides an example of cyclical unemployment, which often occurs in
the long run
e. people will quit training to become elementary school teachers and soon there will be
a shortage in this labor market
What are the marginal propensity to consume and level of autonomous consumption
spending for a consumption function of the following form: C = 1,200 + 0.5DI?
a. The marginal propensity to consume is 0.5; autonomous consumption spending is
$0.50.
b. The marginal propensity to consume is 0.5; autonomous consumption spending is
$1,200.
c. The marginal propensity to consume is 1,200; autonomous consumption spending is
$0.50.
d. The marginal propensity to consume is 1,200; autonomous consumption spending is
$600.
e. There is insufficient information to answer this.
The foreign exchange rate can be influenced by the Federal Reserve.
Figure 12-7 shows the number of calculators that can be assembled each day by various
numbers of workers. If calculators sell in a perfectly competitive market where the
price per calculator is $20, what is the marginal revenue product (MRP) of hiring the
second worker?