The economist who won the Nobel Prize in Economics in 1995, and whose name is
closely connected with rational expectations theory, is
a. Robert Solow.
b. Paul Samuelson.
c. Milton Friedman.
d. Robert Lucas.
e. John Maynard Keynes.
The government imposes a $2.50 per-unit tax on the production of good X. As a result
the
a. supply curve forgood X shifts leftward and the price of good X rises.
b. quantity supplied of good X falls and the price of good X rises.
c. demand curve for good X shifts leftward and the price of good X falls.
d. supply curve for good X shifts rightward and the price of good X falls.
e. supply curve for good X shifts leftward and the price of good X falls.
In direct finance, funds are loaned and borrowed through a financial intermediary.
a. True
b. False
One U.S. Senator promises to vote for a measure that another U.S. Senator wants only
if the favor is returned in kind. This is an example of
a. rational ignorance.
b. median voter politics.
c. logrolling.
d. public interest talk.
e. none of the above
Exhibit 34-10
Danielle’s opportunity cost of mowing the lawn is
a. 0.50 clean houses.
b. 2.40 clean houses.
c. 2.00 clean houses.
d. 0.60 clean houses.
In real business cycle theory, business cycle expansions begin as a result of changes in
a. GDP.
b. long-run aggregate supply.
c. aggregate demand.
d. consumption.
e. investment demand.
Which of the following issues is most unlikely to be addressed by an economist
practicing positive economics?
a. the relationship between the minimum wage and the number of unemployed
unskilled workers
b. the effect of a minimum wage increase on inner-city crime rates
c. the desirability of a minimum wage increase
d. the consequences of implementing a minimum wage law in China
People will be more likely to vote if they believe that their vote will determine the
outcome of the election.
a. True
b. False
Suppose aggregate demand is too high to bring about the Natural Real GDP level. A
Keynesian policy prescription would call for a(n) _____________________ to close
this inflationary gap.
a. increase in government spending
b. decrease in government spending
c. increase in taxes
d. decrease in taxes
e. b or c
If the multiplier is 5, then the MPC must be
a. 1/5.
b. 1/6.
c. 3/4.
d. 4/5.
e. 2/3.
A person tends to be ______________ likely to lose her temper with a boss than with a
friend because the opportunity cost of losing her temper with her boss tends to be
_____________ than the opportunity cost of losing her temper with her friend.
a. less; higher
b. more; higher
c. less; lower
d. more; lower
Under a gold standard, if the market price of gold is below the official price of gold (set
by the monetary authority), people will be more likely to sell gold
__________________, which will cause the money supply to _______________ and
the price level.to _______________.
a. to the monetary authority; fall; fall
b. to the monetary authority; rise; rise
c. in the gold market; fall; fall
d. in the gold market; rise; rise
Exhibit 6-2
How many persons are not in the labor force in year 1?
a. 25 million
b. 50 million
c. 75 million
d. 175 million
e. 200 million
A good provides __________ and a bad provides __________.
a. utility; satisfaction
b. disutility; utility
c. dissatisfaction; satisfaction
d. utility; disutility
e. satisfaction; utility
There is currently a price ceiling in the market for transplanted kidneys, which has
helped to create a shortage of transplanted kidneys.
a. True
b. False
Exhibit 34-2
The U.S. demand and supply for a good are shown. Under a policy of free trade, the
world price is PW. If there is a policy change such that imports are prohibited, the price
becomes PN, U.S. consumers are worse off if imports are __________; specifically,
their consumers’ surplus changes by area __________.
a. prohibited; PWABD
b. permitted; PWDE
c. prohibited; PNBCPW
d. permitted; PN BDPW
e. none of the above
Which set of changes is definitely predicted to lower Real GDP in the short run?
a. Interest rates rise and wage rates fall.
b. Interest rates rise and there is a beneficial supply shock.
c. Interest rates rise and labor productivity increases.
d. Interest rates rise and individuals expect lower (future) incomes.
e. c and d