Suppose your expenses for this term are as follows: tuition: $5,000, room and board:
$3,000, books and other educational supplies: $500. Further, during the term, you can
only work part-time and earn $4,000 instead of your full-time salary of $10,000. What
is the opportunity cost of going to college this term, assuming that your room and board
expenses would be the same even if you did not go to college?
A) $5,500
B) $8,500
C) $11,500
D) $14,500
Which of the following will not shift the demand curve for a good?
A) an increase in population
B) an increase in the price of the good
C) a decrease in the price of a substitute good
D) an increase in consumer incomes
Investment spending ________ during a recession, and ________ during an expansion.
A) declines; increases
B) increases; declines
C) increases; increases
D) declines; declines
Suppose that Congress allocates $5 billion to an “energy-efficient appliance rebate”
program. It also raises taxes by $5 billion to keep the deficit from growing. If the
marginal propensity to consume is 0.8, what is the effect on equilibrium GDP?
A) GDP does not change.
B) GDP increases by $25 billion.
C) GDP increases by $4 billion.
D) GDP increases by $5 billion.
The current account deficits incurred by the United States in the 1990s and early 2000s
were caused, in the opinion of many economists, by
A) federal budget deficits.
B) “flight to quality” as foreign investors favored U.S. investments.
C) a sharp decline in private saving.
D) Both B and C are correct.
Federal government expenditures, as a percentage of GDP,
A) have risen since the early 1950s to the present.
B) have fallen since the early 1950s to the present.
C) rose from 1950 to 1991, fell from 1992 to 2001, and have risen from 2001 to the
present.
D) rose from 1950 to 2001 and then fell from 2001 to the present.
E) rose from 1950 to 1980, fell from 1981 to 2001, and have risen from 2001 to the
present.
Which of the following determines the amount of money the banking system as a whole
can create?
A) the quantity of bank reserves
B) the quantity of vault cash held by banks
C) the gold reserves held by the Federal Reserve
D) the limit on profits by banks imposed by the U.S. Congress
Figure 3-2
Refer to Figure 3-2. A technological advancement would be represented by a
movement from
A) A to B.
B) B to A.
C) S1 to S2.
D) S2 to S1.
Table 2-2
Production choices for Nadia’s Neckware
Refer to Table 2-2. Assume Nadia’s Neckware only produces ascots and bowties. A
combination of 8 ascots and 18 bowties would appear
A) along Nadia’s production possibilities frontier.
B) inside Nadia’s production possibilities frontier.
C) outside Nadia’s production possibilities frontier.
D) at the horizontal intercept of Nadia’s production possibilities frontier.
In the United States, corporate profits are taxed
A) only at the corporate level.
B) only when investors receive dividends.
C) at both the corporate level and when investors receive dividends.
D) neither at the corporate level nor when investors receive dividends.