Figure 4-11 Figure 4-11 shows the demand
and supply curves for the coffee market. The government believes that the equilibrium
price is too low and tries to help almond growers by setting a price floor at $7.00. What
is the value of producer surplus after the imposition of the price floor?
A) $3,000
B) $3,600
C) $4,200
D) $4,500
A Big Mac costs $4.56 in the United States and 9.2 zlotys in Poland. If the exchange
rate is 3 zlotys per dollar, purchasing power parity predicts that
A) the dollar will appreciate as the demand for dollars rises in the long run.
B) the dollar will appreciate as the supply of dollars falls in the long run.
C) the dollar will depreciate as the demand for dollars falls in the long run.
D) the dollar will depreciate as the supply of dollars rises in the long run.
The key idea of the aggregate expenditure model is that in any particular year, the level
of GDP is determined mainly by
A) investment spending.
B) export spending.
C) government spending.
D) the level of aggregate expenditure.
Expansionary fiscal policy ________ the price level and ________ equilibrium real
GDP.
A) decreases; increases
B) increases; decreases
C) increases; increases
D) decreases; decreases
Which of the following is the best example of a tariff?
A) a subsidy from the U.S. government to domestic manufacturers of residential air
conditioners to enable them to compete more effectively with foreign producers
B) a limit on the quantity of residential air conditioners that can be imported from a
foreign country
C) a $150 fee imposed on all imported residential air conditioners
D) a tax placed on all residential air conditioners sold in the domestic market to help
offset the impact of emissions on the environment
A firm has successfully adopted a positive technological change when
A) it can produce more output using the same inputs.
B) it produces less pollution in its production process.
C) it can pay its workers less yet increase its output.
D) it sees an increase in worker productivity.
A typical consumer of health care in the United States
A) pays the full price of his or her health care.
B) pays more than the full price of his or her health care.
C) does not pay any of the price of his or her health care.
D) does not pay the full price of his or her health care.
An increase in the government budget deficit will shift the ________ curve for loanable
funds to the ________ and the equilibrium real interest rate will ________.
A) supply; right; fall
B) supply; left; rise
C) demand; right; rise
D) demand; left; fall
The supply curve of a public goods shows
A) the total quantities that all producers are willing and able to supply at each price.
B) the maximum amount suppliers require to produce each quantity of the good.
C) the total cost of producing each unit of the good.
D) the marginal cost of producing each unit of the good.
Table 3-4
The table above shows the demand schedules for cashews of two individuals (Jordy and
Amy) and the rest of the market. If the price of cashews falls from $4 to $2, the market
quantity demanded would
A) decrease by 28 lbs.
B) increase by 36 lbs.
C) increase by 28 lbs.
D) decrease by 36 lbs.
In September, buyers of silver expect that the price of silver will rise in October. What
happens in the silver market in September, holding all else constant?
A) The quantity demanded decreases.
B) The demand curve shifts to the left.
C) The demand curve shifts to the right.
D) The quantity demanded increases.
Tax laws affect
A) economic efficiency but not equity.
B) equity but not economic efficiency.
C) consumption and production, not efficiency and equity.
D) both efficiency and equity.
Relative to a perfectly competitive market, a monopoly results in
A) a gain in producer surplus equal to the gain in consumer surplus.
B) a gain in producer surplus equal to the loss in consumer surplus.
C) a gain in producer surplus less than the loss in consumer surplus.
D) greater economic efficiency.
What is the present value of $888 in a one year if the current rate of interest is five
percent?
A) $4,440
B) $845.71
C) $177.60
D) none of these
Beginning in 2008, The Federal Reserve and the U.S. Treasury Department responded
to the financial crisis by intervening in financial markets in unprecedented ways.
Briefly summarize the actions of the Fed and Treasury.
A central concept in macroeconomics is the idea of the natural rate of unemployment.
Why does it make sense to define full employment to occur when the unemployment
rate equals the natural rate of unemployment, instead of when the unemployment rate
equals zero? Elaborate and explain carefully.
Table 8-32
The table above represents hypothetical data from the National Income Accounts for
2013. Use the data to calculate personal income and disposable income.
If American demand for purchases of British goods has decreased, how would you
expect the equilibrium exchange rate in the market for dollars to respond? Support your
answer graphically.
Why are the long-run effects of an increase in aggregate demand on price and output
different from the short-run effects?
Suppose Political Party A proposes a tax cut on business income to stimulate the
economy. Political Party B opposes the tax cut on business income asserting that it
would only help businesses, not the average working man and woman. If you were
hired as an economist for Political Party A, explain how the tax cut on business income
would help the average working man and woman.
Explain why economics is considered a social science.