When unemployment is above its natural rate, the inflation rate will eventually
A) increase.
B) decrease.
C) move to its natural rate.
D) become equal to the natural rate of unemployment.
The ability of a firm to charge a price greater than marginal cost is called
A) monopoly power.
B) price-making power.
C) cost-plus pricing.
D) market power.
Monetary policy has ________ impact on the long-run Phillips curve.
A) a positive
B) a negative
C) an unpredictable
D) no
Which of the following statements is true?
A) Monopolists are price makers. All other firms are price takers.
B) Unlike other industries, monopoly industries have high barriers to entry.
C) Only monopoly firms are granted patents and copyrights.
D) Unlike other firms, a monopolist’s demand curve is the same as the market demand
curve.
If opportunity costs are ________, the production possibilities frontier would be
graphed as a negatively sloped straight line.
A) decreasing
B) increasing
C) negative
D) constant
Actual investment spending does not include
A) spending on consumer durable goods.
B) spending on new capital equipment.
C) spending on new houses.
D) changes in inventories.
Aggregate expenditure includes spending on
A) C + I + G.
B) C + I + G – NX.
C) C + I + G + NX.
D) C + I + depreciation – NX.
If households in the economy decide to take money out of checking account deposits
and hold it as currency, this will initially
A) not change M1 and increase M2.
B) decrease M1 and decrease M2.
C) decrease M1 and not change M2.
D) not change M1 and not change M2.
A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000.
The price of each good is $10. Calculate the firm’s short-run profit or loss.
A) loss of $6,000
B) profit of $6,000
C) profit of $30,000
D) There is insufficient information to answer the question.
If an increase in income leads to in an increase in the demand for sushi, then sushi is
A) a normal good.
B) a neutral good.
C) a complement.
D) a necessity.
How has the growing popularity of factory outlet stores affected the market for clothing
at retail department stores?
A) the demand curve for clothing at retail department stores shifts to the right.
B) the demand curve for clothing at retail department stores shifts to the left.
C) the supply curve for clothing at retail department stores shifts to the right.
D) the supply curve for clothing at retail department stores shifts to the left.
One reason why adverse selection problems arise in health insurance markets is that
A) sick people are more likely to want health insurance than healthy people.
B) because of advances in medical technology, people are living longer. These medical
advances are costly and drive up the price of insurance for everyone.
C) the average age of citizens of the United States has increased in recent years, and
will continue to increase over the next 20 to 30 years. As older citizens retire, more and
more of their medical bills will have to be paid by younger workers.
D) fewer men and women are choosing medical careers because of the increase in the
cost of malpractice insurance.
One criticism of the Fed’s quantitative easing policy is that low interest rates ________
the return to saving. One key reason people save is to finance their retirement. Retired
people typically favor low-risk investments, such as bank certificates of deposit or
Treasury bonds. But with the interest rates on these assets reduced to historically low
levels, many retired people were forced to either ________ their spending or buy riskier
investments.
A) increase; increase
B) reduce; decrease
C) increase; decrease
D) reduce; increase
Assume that you observe the long-run average cost curve of ACME Bookstores, a
national chain. Starting from the point on the curve where output is zero and moving to
the right which of the following lists the behavior of long-run average costs in the
correct sequence (that is, which will be observed first, second, etc.)?
A) minimum efficient scale; economies of scale; constant returns to scale; diseconomies
of scale
B) economies of scale; constant returns to scale; diseconomies of scale; minimum
efficient scale
C) constant returns to scale; economies of scale; minimum efficient scale; diseconomies
of scale
D) economies of scale; minimum efficient scale; constant returns to scale; diseconomies
of scale
An increase in the price of pineapples will result in
A) a smaller quantity of pineapples supplied.
B) a larger quantity of pineapples supplied.
C) a decrease in the demand for pineapples.
D) an increase in the supply of pineapples.