In an economy without international trade, we can expect total output to equal
a. consumption spending plus investment spending plus government purchases
b. consumption spending minus leakages
c. the sum of leakages and injections
d. consumption spending plus investment spending
e. total spending minus leakages and injections
The table below describes an amusement park’s revenues from different numbers of
batting cages. If the price of constructing a new batting cage is $6,000, how many cages
should the park construct?
Microeconomics analyzes individual parts of the economy rather than broad economic
aggregates.
Figure 11-2 illustrates a monopolistically competitive firm. In order to maximize profit,
or minimize loss, the firm will
An entrepreneur is best described as
If the total amount of demand deposits in the country increases by $12,000 after the Fed
purchases $6,000 in bonds, what is the required reserve ratio?
a. 0.4
b. 0.1
c. 0.2
d. 0.5
e. 0.3
Suppose the economy includes two distinct groups of people: wage earners and goods
sellers. If the price level falls by 10 percent and nominal wages remain unchanged,
a. there will be no redistribution of purchasing power because all wage earners in the
U.S. economy receive indexed wages
b. income will be redistributed from wage earners to goods sellers
c. income will be redistributed from goods sellers to wage earners
d. real wages will fall by 10 percent
e. real wages will remain unchanged
Figure 2-5 shows five different combinations of rockets and cruise ships that a country
could manufacture. The production possibilities frontier that is illustrated in Figure 2-5
exhibits
Looking at their ratio of debt to GDP, which following five countries should be
expected to face serious economic trouble in the future?
a. Fredonia: 40 percent
b. Syldavia: 70 percent
c. Borduria: 120 percent
d. Ruritania: 20 percent
e. Dystopia: 100 percent.
Which of the following does the long-run Phillips curve tell us?
a. That output can be below potential in the long run
b. That the unemployment rate can take on any value in the long run
c. That output can be maintained above potential in the long run
d. That unemployment will return to the natural rate in the long run
e. That the inflation rate cannot rise above 10 percent in the long run
If the wage rate increases, there is an increase in the quantity of labor supplied. This
means the labor supply curve shifts outward.
The relationship between the marginal product of labor (MP), the product price (P) and
the marginal revenue product of labor (MRP) in a perfectly competitive market is
In the classical view, all markets clear, except the labor market.
The aggregate production function shows
a. the total output the economy can produce with different quantities of labor and
technology, holding land and capital constant
b. the total output the economy can produce with different quantities of land and labor,
holding capital and technology constant
c. the total output the economy can produce with different quantities of labor, holding
land, capital and technology constant
d. the total output the economy can produce with different quantities of labor and
capital, holding land and technology constant
e. the total output the economy can produce with different quantities of technology,
holding land, labor and capital constant
In an Israeli factory, each worker can produce 2/5 of a shirt in an hour or 1/3 of a pair of
pants in an hour. If there are 500 workers in the factory, then the maximum number of
shirts that can be made in an hour is
a. 100
b. 200
c. 50
d. 250
e. 300
Which of the following is a definition of the real interest rate in a world with a positive
inflation rate?
a. The percentage increase in the borrower’s purchasing power from taking a loan
b. The percentage decrease in the borrower’s dollars from taking a loan
c. The percentage increase in the lender’s purchasing power from making a loan
d. The percentage increase in the lender’s dollars from making a loan
e. The percentage decrease in the lender’s dollars from making a loan
Fiat money is
a. money with intrinsic value like gold coins.
b. anything that serves as a means of payment by government declaration.
c. any currency made of paper.
d. a tangible asset like a house.
e. money that is backed by gold.
One way to achieve efficiency in a market with a negative externality is
From 1929 to 1933, U.S. output dropped by about
a. 10 percent
b. 20 percent
c. 25 percent
d. 50 percent
e. 75 percent
In what way is the result of a subsidy given to either demanders or suppliers similar to
the result of a price ceiling?