Fun Time Toys produced $60 million worth of toys in 2008. Because of a slow
Christmas shopping season, only $50 million worth was sold to consumers, and the
remaining $10 million worth went into inventories. Based on this information, how was
GDP affected in 2008?
a. $60 million was added to GDP; $50 million was classified as consumption spending
and $10 million was classified as private investment
b. $60 million was added to GDP, all classified as consumption spending
c. $50 million was added to GDP, all classified as consumption spending
d. $40 million was added to GDP; $50 million was classified as consumption and -$10
million was classified as private investment
e. $40 million was added to GDP, all classified as consumption
Thomas Malthus argued that population grows geometrically and the food supply grows
arithmetically.
The assumption that labor markets clear makes it very easy for the classical model to
explain recessions.
Transfer payments are important for society because
a. the government needs to perform acts of goodwill to maintain citizens’ support
b. we could not count GDP without them
c. they serve to redistribute money from one group of citizens to another
d. government investment is an important component of GDP
e. they result in lower taxes for citizens
If an excise tax is imposed on shirts,
Which of the following best describes the history of bank failures in the U.S. from 1863
to the present?
a. Bank failures were eliminated after 1913.
b. Bank failures were common until 1940 but were almost nonexistent until the late
1980s and early 2000s.
c. Bank failures have always been rare events.
d. Bank failures were common until 1940 and were eliminated thereafter.
e. Bank failures have always been common.
The price elasticity of demand is
The firm in Figure 11-2 is monopolistically competitive. The diagram illustrates a
Since World War II, there has been a worldwide movement away from free trade
policies.
A decrease in the price of a particular good, with all other variables constant, causes
Which of the following is not a function of the Federal Reserve System?
a. Supervising the banking system.
b. Deciding the maximum interest rates banks can charge for loans.
c. Clearing checks.
d. Acting as a bank for banks.
e. Dealing with financial crises.
If a consumer’s budget line between meat and potatoes has a vertical axis intercept at
100 pounds of meat and a horizontal axis intercept at 100 pounds of potatoes
Which of the following statements is true?
a. Nominal GDP = (price index /real GDP) x 100
b. Nominal GDP = (real GDP /price index) x 100
c. Real GDP = (price index /nominal GDP) x 100
d. Real GDP = (nominal GDP /price index) x 100
e. Price index = (real GDP /nominal GDP) x 100
As baby boomers move into their retirement years, the incomes of geriatricians (doctors
for the aged) will most likely
Investment spending is inversely related to the interest rate.
In Figure 16-3, if Costa Rica and Panama have identical resources, then Panama has
a(n)
Figure 16-3
Quantities of goods that can be produced in one day with available resources:
a. absolute advantage only in producing bicycles
b. comparative advantage in producing both bicycles and rugs
c. absolute advantage only in producing rugs
d. comparative advantage only in producing rugs
e. absolute advantage in producing both rugs and bicycles