The more narrowly we define a good, the easier it is to find substitutes, and
Which of the following policies would increase the demand for loanable funds and thus
investment spending?
a. A reduction in the investment tax credit.
b. An increase in the corporate profits tax.
c. A reduction in the capital gains tax.
d. An increase in the investment tax credit.
e. An increase in transfer payments.
Which of the following is a leakage in an open economy?
a. Planned investment
b. Imports
c. Exports
d. Government purchases
e. Money
If the cost per unit of output for a particular product is $50 and the product sells for $55,
what is the percentage markup over cost per unit?
a. 200 percent
b. 10 percent
c. 100 percent
d. 20 percent
e. 50 percent
In analyzing the market for a particular good, the most appropriate size of the market to
consider
An increase in the price level
a. increases investment spending, thereby shifting the AD curve to the left
b. does not shift the AD curve
c. causes the government’s budget deficit to fall
d. increases investment spending, thereby shifting the AD curve to the right
e. shifts the AS curve outward
Increases in the government-imposed minimum wage tend to increase unemployment
among unskilled workers.
An increase in government purchases, an increase in the interest rate, and an increase in
consumption all shift the aggregate expenditure line upward.
Using dollar values to calculate GDP is advantageous because
a. people can most easily understand dollar amounts
b. it employs a common unit of measurement for very different things
c. less valuable goods count the same as more valuable goods
d. other methods of calculating production are not as intuitively clear
e. money is a universal yardstick for measurement
An example of a frictionally unemployed individual is
a. Sylvia, who quit her job to spend more time with her children
b. Rod, the lifeguard, who cannot find a job because the temperature is too low in
October
c. Ileana, a college student who quits her job to return to school
d. Steve, an individual does not have skills to keep his job as an aerospace engineer
e. Samantha, who quits her job to look for better one
Figure 4-3 shows the supply and demand for socks. If a price floor of $6 is imposed,
the quantity of socks actually purchased will be
A movie at the movie theater is an example of a good that is
Which of the following is the best definition of potential output?
a. The output that could be produced if the economy were above full employment
b. The output that could be produced if the economy had no unemployment
c. The output that could be produced if the economy had no frictional unemployment
d. The output that could be produced if the economy were at full employment
e. The output that could be produced if the economy had no structural unemployment
If firms in a market have been prohibited from reaching the minimum efficient scale,
Why do financial intermediaries aid in the efficient operation of the economy?
a. Without them it would be difficult for small savers to lend to large borrowers.
b. They lend funds to businesses at a zero interest rate.
c. They print currency.
d. They regulate the money supply.
e. They engage in open market operations.
All of the following, except one, would increase the demand for a particular model of a
Ford automobile. Assume that this model is a normal good. Which is the exception?
