When aggregate expenditure = GDP,
A) macroeconomic equilibrium occurs.
B) the federal budget is balanced.
C) net exports equal zero.
D) saving equals zero.
Adhira buys chocolates and almonds. She has 3 bars of chocolates and 4 bags of
almonds. The marginal utility of the third chocolate bar is 18 units of utility and the
marginal utility from the fourth bag of almonds is also 18. Is Adhira maximizing her
utility?
A) Yes, the marginal utility from the last unit of each good is equal.
B) No, she must buy 1 more chocolate bar to equate her quantities of the two goods.
C) No, she must cut back to 3 bags of almonds to equate her quantities of the two
goods.
D) Without information on her income and the prices of the two goods, we cannot
answer the question.
If the price of garlic is represented by equation P = 25 – QD, then the corresponding
quantity of garlic demanded is represented by the equation
A) QD = P – 25.
B) QD = P + 25.
C) QD = 25 – P.
D) QD = -25 + P.
A federal budget deficit ________ interest rates, which ________ exchange rates
(foreign currency per domestic currency), and ________ the balance of trade.
A) raises; raises; reduces
B) reduces; raises; reduces
C) raises; reduces; reduces
D) reduces; reduces; raises
In an open economy, the government purchases multiplier will be
A) larger as the marginal propensity to import decreases.
B) smaller as the marginal propensity to import decreases.
C) smaller as the marginal propensity to tax decreases.
D) larger as the marginal propensity to consume decreases.
Consider the following data for a closed economy:
a. Y = $12 trillion
b. C = $8 trillion
c. I= $3 trillion
d. TR = $2 trillion
e. T = $3 trillion Use the data provided to calculate the level of private saving and the
level of public saving and demonstrate their relationship to investment.
Table 21-2
Using the table above, what is the approximate average annual growth rate from 2010
to 2013?
A) -1%
B) 1%
C) 2%
D) 4%
Two actions by the Fed during Alan Greenspan’s term as chairman have been identified
as possibly contributing to the financial crisis in 2008. Which of the following was one
of those actions?
A) decreasing the money supply to fight the possibility of disinflation
B) the decision to keep the federal funds rate at 1 percent from June 2003 to June 2004
C) working in concert with the European Central Bank to stabilize the dollar / euro
exchange rate
D) financing the first Gulf War by printing money and generating rapid inflation
Table 18-10
Table 18-10 shows the income tax brackets and tax rates for single taxpayers in
Bauxhall. A tax exemption is granted for the first $10,000 earned per year. Suppose you
earn $75,000.
a. What is the amount of taxes you will pay?
b. What is your average tax rate?
c. What is your marginal tax rate?
Figure 2-8 Figure 2-8 above shows the production
possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids.
What is the opportunity cost of one dozen roses?
A) 0.4 dozen orchids
B) 2.5 dozen orchids
C) 7.25 dozen orchids
D) 16 dozen orchids
Some superstar athletes in the sports industry earn very high levels of income relative to
other occupations, and over time the wage differential has been increasing. What could
have caused this?
A) The supply of star athletes has decreased.
B) The supply of star athletes has increased due to college athletic programs.
C) Technological advances such as cable television has increased the demand for sports
entertainment.
D) The market power of athletes’ unions has increased.
Assuming that the total market size remains constant, a monopolistically competitive
firm earning profits in the short run will find the demand for its product decreasing in
the long run because
A) new entrants into the market are more likely to have cutting edge products.
B) as the firm raises its price in the long run, it will lose some customers to new
entrants in the market.
C) some of its customers have switched to purchasing the products of new entrants in
the market.
D) its costs of production rises.
An example of business fixed investment spending is
A) a purchase of a home by a household.
B) a purchase of a computer by an accounting firm.
C) a purchase of a bond by General Electric Corporation.
D) $200 million of unsold cars at a car dealership.
Average total cost is
A) total cost divided by the quantity of output produced.
B) total explicit costs divided by the quantity of output produced.
C) variable cost divided by the quantity of output produced.
D) the change in fixed plus variable cost divided by the quantity of output produced.
If the economy is falling below potential real GDP, which of the following would be an
appropriate fiscal policy to bring the economy back to long-run aggregate supply? An
increase in
A) the money supply and a decrease in interest rates.
B) government purchases.
C) oil prices.
D) taxes.
What can be done to deal with the principal-agent problem?
A) threaten to liquidate the firm
B) link top manager salaries to the profits of the firm or the price of the firm’s stock
C) have the CEO be a rotating position
D) forbid managers from owning any company stock
The difference between a firm’s assets and liabilities is its
A) accounting profit.
B) economic profit.
C) net worth.
D) implicit costs.
The nominal interest rate equals the real interest rate ________ the inflation rate.
A) times
B) divided by
C) plus
D) minus
A major problem with using tradable emissions allowance system to control pollution is
A) that it grants firms a license to pollute.
B) the XOAiculty in determining the emissions target.
C) that it discourages firms from implementing cost-effective pollution control
technology.
D) that it does not eliminate pollution completely.