Exhibit 32-4
If producers of this good engage in rent seeking which results in the government
imposing a price floor of P2, then consumers€ surplus ends up being area
a. D + E
b. A + B + C + D + E
c. A + B + C
d. C + E
e. A
Exhibit 32-4
Suppose that producers of this good engage in rent seeking which results in the
government imposing a price floor of P2.The loss of consumers’ surplus that occurs due
to the price floor is
a. B + C
b. A + B + C + D + E
c. A + B + C
d. C + E
e. A
Gross Domestic Product is computed by using
a. base-year prices.
b. wholesale prices.
c. previous-year prices.
d. current-year prices.
Suppose the economy is self-regulating and the (actual) unemployment rate is less than
the natural unemployment rate. This means that the economy is producing a level of
output
a. above its natural level and will eventually cut back on output.
b. below its natural level and will eventually increase output.
c. below its natural level but no forces exist to automatically increase output.
d. above its natural level and institutional constraints will automatically be reduced so
as to allow the economy to continue producing this level.
e. none of the above
Exhibit 7-1
What is the value ofdisposable income?
a. $3,618
b. $4,795
c. $3,727
d. $4,207
e. $4,017
If Real GDP was $8,742 billion in year 2 and it had been $8,509 billion in year 1, what
was the approximate economic growth rate during this time period?
a. 9.73 percent
b. 2.67 percent
c. 3.58 percent
d. 2.74 percent
Activists
a. probably favor economic fine-tuning.
b. favor rules-based monetary policy.
c. argue for the deliberate use of monetary and fiscal policies to smooth out the business
cycle.
d. argue against the deliberate use of monetary and fiscal policies to manage the
economy.
e. a and c
Exhibit 5-1
which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Suppose
that the government decides to set the money price of driving on the freeway at zero,
but creates programs that encourage drivers to carpool. If the carpooling program is
sufficiently successful to eliminate the shortage of freeway space at 8 a.m., graphically
the result of the increase in carpooling would be a
a. rightward shift of the supply of freeway space curve.
b. leftward shift of the demand for freeway space curve from D8a.m. to D11p.m.
c. movement up along D8a.m. to the point where D8a.m. intersects the supply curve.
d. leftward shift of the supply of freeway space curve.
Which of the following statements is true?
a. Productive inefficiency implies that it is possible to produce more of one good and no
less of another, but only if additional resources are made available.
b. Productive efficiency implies that it is possible to produce more of one good and no
less of another, even without additional resources.
c. Productive inefficiency implies that it is impossible to produce more of one good and
no less of another.
d. Productive inefficiency implies that it is possible to produce more of one good and no
less of another, even without additional resources.
Exhibit 3-14
At a price of $13, there is a ____________ unit____________ of good X.
a. 140; shortage
b. 160; shortage
c. 140; surplus
d. 20; surplus
e. 100; surplus
In the monetarist version of the AD-AS framework, a decrease in velocity produces a
__________ shift of the __________ curve.
a. rightward; AD
b. rightward; SRAS
c. leftward; AD
d. leftward; SRAS
According to the equation of exchange, if Real GDP is $3 trillion and the money supply
is $0.5 trillion, then velocity
a. must be 6.
b. must be 1/6.
c. must be 4 trillion.
d. must be 1/4 trillion.
e. cannot be determined without knowing what the price level is.
Exhibit 2-1
The opportunity cost of moving from point A to B is
a. 10,000 units of butter.
b. 20,000 units of butter.
c. 20,000 units of guns.
d. 10,000 units of guns.
Under free banking, banks are regulated by the Federal Reserve.
a. True
b. False
Expansionary fiscal policy
a. raises Real GDP more in an open economy than in a closed economy.
b. raises Real GDP more in a closed economy than in an open economy.
c. raises Real GDP equally in an open economy and in a closed economy.
d. does not affect Real GD€P in an open economy.
If the interest rate increases, the opportunity cost of holding money __________, and
the quantity demanded of money __________.
a. does not change; does not change
b. increases; also increases
c. decreases; increases
d. increases; decreases
e. decreases; also decreases
According to the efficiency wage model, firms tend to pay workers
a. the market-clearing wage that efficiently equates labor supplied and demanded.
b. in excess of the market-clearing wage to provide an incentive for productivity and
efficiency.
c. less than the market-clearing wage to assure themselves a pool of workers ready to
replace workers who quit.
d. less than the market-clearing wage to minimize labor cost per unit of production.
Exhibit 34-7
The world price of good X is $15. If imports of good X are legally limited to 30 units,
the price of X in the United States would be
a. $20.
b. $25.
c. $30.
d. $35.
e. none of the above
Suppose Japanese real interest rates fall.Typically, we should expect a ____________
shift of the U.S. AD curve with a ___________________ shift in United States real
interest rates.
a. rightward; larger
b. rightward; smaller
c. leftward; larger
d. leftward; smaller