The change in consumption divided by the change in disposable income is equal to
A) the slope of the consumption function.
B) aggregate expenditure.
C) household saving.
D) real GDP.
How does the owner of a sole proprietorship relate to the business?
A) The owner and the business are separate legal entities.
B) The owner and the business are not separate legal entities.
C) The assets of the owner are considered separate from the asset of the business.
D) None of these describe the legal relationship of the owner to the business.
Table 10-4
For steak and cheese and grilled chicken sandwiches, the table contains the values of
the marginal utility (MU) and marginal utility per dollar (MU/P) for Mabel Jarvis.
Mabel has $14 to spend on steak and cheese and grilled chicken sandwiches. Which of
the following statements is true?
A) If Mabel maximizes her utility she will buy three steak and cheese sandwiches and
two grilled chicken sandwiches.
B) If Mabel was maximizing her utility when spending $14 and then received an
additional $4, she would receive the most marginal utility per dollar if her next
purchase was another grilled chicken sandwich.
C) Mabel will first buy two steak and cheese sandwiches; then with her remaining $6
she will buy three grilled chicken sandwiches.
D) To maximize her utility, Mabel will need a total of $36, the income needed to buy 6
steak and cheese sandwiches and 6 grilled chicken sandwiches.
Figure 4-5
Figure 4-5 shows the market for apartments in
Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.
What is the value of consumer surplus after the imposition of the ceiling?
A) $120,000
B) $230,000
C) $270,000
D) $430,000
Which of the following would increase the size of the government purchases
multiplier?
A) an increase in the tax rate
B) an increase in the quantity of imports purchased by households from an increase in
income
C) a decrease in the amount of consumption spending by households from an increase
in income
D) a decrease in the amount saved by households from an increase in income
Most doctors are employed by the government and most hospitals are owned by the
government in
A) Canada.
B) Japan.
C) the United Kingdom.
D) the United States.
Scenario 21-1 Consider the following data for a closed economy: Y = $12 trillion
C = $8 trillion
I= $2 trillion
G = $2 trillion
TR = $2 trillion
T = $3 trillion
Based on the information above, what is the level of public saving?
A) $0
B) $1 trillion
C) $2 trillion
D) negative $1 trillion (a deficit of $1 trillion)
Which of the following is a true statement about the multiplier?
A) The multiplier rises as the MPC rises.
B) The smaller the MPC, the larger the multiplier.
C) The multiplier is a value between zero and one.
D) The multiplier effect does not occur when autonomous expenditure decreases.
The German Hyperinflation of the early 1920s was caused by
A) the German government raising funds for expenditures by selling bonds to the
central bank.
B) an overly aggressive monetary policy implemented to combat a severe recession.
C) rising oil prices after World War I caused a severe stagflation and hyperinflation.
D) large deficits resulting from the high levels of war spending and falling taxes.
Ceteris paribus, in the long run, a negative supply shock causes
A) the long-run aggregate supply curve to shift to the left.
B) the price level to rise initially, and then return to its lower level.
C) unemployment to fall below its short-run level.
D) equilibrium real GDP to fall.
Figure 5-2
Figure 5-2 shows a market with a negative externality.
The deadweight loss due to the externality is represented by the area
A) abc.
B) abf.
C) abd.
D) ade.
Which of the following are not considered part of government purchases?
A) welfare benefits
B) teachers’ salaries paid by a local government
C) a tank purchased by the federal government
D) a bridge purchased by the state government
Table 17-4
Table 17-4 lists data for the production of Apple iPods. Apple is assumed to be a price
maker, so to increase its sales of iPods the firm must lower its price. MPL and MRPL
refer to the marginal product of labor and the marginal revenue product of labor,
respectively.
What are the price and quantity of workers that result in the maximum amount of
revenue Apple would earn from selling iPods?
A) $180; 1
B) $140; 2
C) $120; 2
D) $120; 4
The opportunity cost of taking a semester-long economics class is
A) the cost of tuition and fees only.
B) the value of the time spent in the classroom.
C) zero because there is no admission charged if you are enrolled in the course.
D) equal to the highest value of an alternative use of the time and money spent on the
class.
E) the knowledge and enjoyment you receive from attending the class.
In a decision tree, the difference between a decision node and a terminal node is that
A) at a decision node all participants are free to make individual decisions but at a
terminal node they must agree on a collective decision.
B) at a decision node all participants make the same decision, while at a terminal node
different players may make different decisions.
C) at a decision node, a decision must be made while a terminal node shows the payoff.
D) at a decision node a decision must be made, while at a terminal node the final
decision must be made.
Figure 26-16
In the figure above, suppose the economy in Year 1 is at point A and expected in Year 2
to be at point B. Which of the following policies could the Federal Reserve use to move
the economy to point C?
A) decrease income taxes
B) decrease the required-reserve ratio
C) buy Treasury bills
D) sell Treasury bills
If the market for a product is broadly defined, then
A) the good has many complements.
B) there are few substitutes for the product and the demand for the product is relatively
inelastic.
C) there are many substitutes for the product and the demand for the product is
relatively elastic.
D) the expenditure on the good is likely to make up a large share of one’s budget.
In 2013, Kendall Ford, an automobile dealership, spent $20,000 on a new car lift for its
repair shop, $2,000 on a new copy machine for its sales division, and $600,000 on Ford
Motor company stock. Unsold cars and trucks were valued at $400,000 on January 1,
2013 and unsold cars and trucks were valued at $900,000 on December 31, 2013. What
is Kendall Ford’s total investment spending in 2013?
A) $22,000
B) $322,000
C) $522,000
D) $1,022,000