Marla is an architect who is designing a home for Chuck. Chuck is paying Marla $150
per hour to design his new home. When Chuck and Marla get married, Marla continues
to work on designing the home, but she no longer charges Chuck for her work. As a
result, GDP ________ because ________.
A) falls; Marla’s work takes place in the underground economy once she’s married
B) falls; Marla’s work becomes less valuable once she’s married
C) falls; Marla’s architectural design services are no longer bought by Chuck once
they’re married
D) rises; Marla becomes more productive once she’s married
Suppose there is a bank panic. Which of the following would not be a consequence of
this bank panic?
A) Bank total reserves would decrease.
B) Required reserves would increase.
C) Bank checking account balances would decrease.
D) Individual banks would have to shrink the value of loans they made.
E) The economy would likely enter into a recession.
Marge buys 5 CDs and 7 DVDs. The marginal utility of the 5th CD and the marginal
utility of the 7th DVD are both equal to 30 utils. Can we say that this is the optimal
combination of CDs and DVDs for Marge?
A) No. We need to know her preferences for CDs and DVDs.
B) Yes.
C) No. We need to know the prices of the CDs and DVDs.
D) No. If this was the optimal combination, the marginal utility per dollar of the 5th CD
and the 7th DVD would be equal.
Figure 5-3 Figure 5-3 represents the market for
medical services with and without insurance, and the effect of a third-party payer
system on the demand for medical services. With insurance and a third-party payer
system, what price do doctors receive for medical services?
A) $40
B) $55
C) $65
D) >$65
In a competitive market the ________ curve shows the marginal benefit received by
consumers and the ________ curve shows the marginal cost to producers.
A) .demand; supply
B) supply; demand
C) demand; market demand
D) supply; market supply
Jewelry manufacturers produce a range of products such as rings, necklaces, bracelets,
and brooches. What fundamental economic question are they addressing by offering
this range of items?
A) How to produce goods that consumers want?
B) Why produce a variety of items?
C) What to produce?
D) Who to produce the items for?
Table 15-4
Shakti Inc. has been granted a patent for its Arnica toothache balm. Table 15-4 shows
the demand and the total cost schedule for the firm.
What is the amount of the deadweight loss generated by Shakti when it produces the
monopoly output?
A) $124
B) $42
C) $36
D) $12
Investment, as defined by economists, would include the purchase of a
A) corporate bond.
B) government bond.
C) share of stock in ExxonMobil.
D) computer by an accounting firm.
A falling price level is called ________ and a fall in the rate of inflation is called
________.
A) disinflation; a contraction
B) a contraction; disinflation
C) disinflation; deflation
D) deflation; disinflation
Table 12-13
Using the table above, answer the following questions. The numbers in the table are in
billions of dollars.
a. What is the equilibrium level of real GDP?
b. What is the MPC?
c. If investment spending declines by $50 billion, what will happen to equilibrium
GDP?
Which of the following statements about a simple circular flow model is false?
A) Producers are buyers in the factor market and sellers in the product market.
B) Households are neither buyers nor sellers in the input market.
C) Producers are buyers in the factor market.
D) Households are sellers in the product market.
The budget deficit is defined as
A) T – (G + TR), and this is negative.
B) T – (G + TR), and this is positive.
C) T + (G – TR), and this is negative.
D) T + (G + TR), and this is negative.
A Big Mac costs $4.00 in the United States and 9.00 reals in Brazil. If the exchange rate
is 2 reals per dollar, purchasing power parity predicts that
A) the dollar will appreciate as the demand for dollars falls in the long run.
B) the dollar will appreciate as the supply of dollars falls in the long run.
C) the dollar will depreciate as the demand for dollars falls in the long run.
D) the dollar will depreciate as the supply of dollars rises in the long run.
All of the following are examples of spending on factors of production in the circular
flow model except
A) Bima hires two students to work at his ice-cream store.
B) “Get Fit Together” purchases 3 new treadmills for its gym.
C) Iris buys a dozen roses for her mother’s birthday.
D) The Banyan Tree rents a much larger property so that it can add a restaurant to its
facilities.
If a demand curve shifts to the right, then
A) demand has increased.
B) quantity demanded has increased.
C) demand has decreased.
D) quantity demanded has decreased.
Jack just received a promotion at work and now works 50 hours per week instead of 35.
As a result,
A) the unemployment rate increased.
B) the unemployment rate decreased.
C) the labor force participation rate increased.
D) neither the unemployment rate nor the labor force participation rate changed.
Figure 7-2
Figure 7-2 represents the market for
medical services with and without insurance, and the effect of a third-party payer
system on the demand for medical services.
With insurance and a third-party payer system, what is the amount of the deadweight
loss?
A) $0
B) $1,500
C) $3,000
D) $9,500