The aggregate demand curve will shift to the right ________ the initial decrease in
taxes.
A) by less than
B) by more than
C) by the same amount as
D) sometimes by more than and other times by less than
Economists ________ that price controls are desirable.
A) are in agreement
B) are reluctant to state
C) never believe
D) only recently agree
Table 4-4
Table 4-4 shows the demand and supply schedules for the low-skilled labor market in
the city of Westover.
Refer to Table 4-4. Suppose that the quantity of labor demanded decreases by 40,000 at
each wage level. What are the new free market equilibrium hourly wage and the new
equilibrium quantity of labor?
A) W = $10.00; Q = 390,000
B) W = $9.50; Q = 380,000
C) W = $8.50; Q = 340,000
D) W = $8.00; Q = 350,000
Some economists argue that the short-run Phillips curve is not vertical, and that
monetary policy can be effective in the short run. Which one of the following is not one
of the reasons for this skepticism?
A) Empirical evidence shows workers and firms have rational expectations.
B) Contracts with workers and suppliers may hinder firms’ abilities to adjust to price
changes.
C) Wages and prices may not adjust rapidly enough to keep the short-run Phillips curve
vertical.
D) Individuals may not be able to use information of Fed Policy to make a reliable
forecast of inflation.
The Federal Reserve System’s four monetary policy goals are
A) low government budget deficits, low current account deficits, high employment, and
a high foreign exchange value of the dollar.
B) low rate of bank failures, high reserve ratios, price stability, and economic growth.
C) price stability, high employment, economic growth, and stability of financial
markets and institutions.
D) price stability, low government budget deficits, low current account deficits, and low
rate of bank failures.
Figure 4-5
Figure 4-5 shows the market for apartments in Bay City. Recently, the government
imposed a rent ceiling at R0.
Refer to Figure 4-5. What is the area that represents consumer surplus after the
imposition of the ceiling?
A) A + B+ D
B) A + B + C
C) A + B + D + F
D) A + B + D + F + G
The tax multiplier is smaller in absolute value than the government purchases multiplier
because some portion of the
A) decrease in taxes will be saved by households and not spent, and some portion will
be spent on imported goods.
B) decrease in taxes will be saved by households and not spent, and some portion will
be spent on consumer durable goods.
C) increase in government purchases will be saved by households and not spent, and
some portion will be spent on imported goods.
D) increase in government purchases will be saved by households and not spent, and
some portion will be spent on consumer durable goods.
In the first six months of 2003, branches of Commerce Bank in New York City were
robbed 14 times. The New York City Police recommended steps the bank could take to
deter robberies, including the installation of plastic barriers called “bandit barriers.” The
police were surprised the bank did not take their advice. According to a deputy
commissioner of police, “Commerce does very little of what we recommend. They’ve
told our detectives they have no interest in ever putting in the barriers.”
It would seem that Commerce bank would have a strong incentive to install “bandit
barriers” to deter robberies. Why wouldn’t they do it?
A) The banks would rather delay installation of any theft deterring equipment in
anticipation of new lower cost innovations in the security devices market.
B) The banks must have weighed the cost of installing bandit barriers against the
benefits and decided that they have “no interest in ever putting in the barriers.”
C) The banks are concerned that “bandit barriers” would send the wrong message to
customers € that the bank is unsafe.
D) The banks probably resent any interference from the police department.
The number of people receiving Medicare is expected to grow to 80 million by the year
A) 2105.
B) 2020.
C) 2030.
D) 2075.
The Latvian currency, the lat, is pegged to the euro at a rate of 0.71 lats to the euro. At
the pegged exchange rate, how many euros would be exchanged for one lat?
A) 0.29
B) 0.71
C) 1.41
D) 1.71
A decrease in which of the following would decrease the tax wedge?
A) marginal tax rate
B) money supply
C) national debt
D) federal budget deficit
In 1930, the U.S. government attempted to help domestic firms that were harmed by the
Great Depression by passing the Smoot-Hawley Tariff. In response to this tariff, other
countries ________ and international trade ________.
A) lowered their tariffs; thrived
B) raised their tariffs; collapsed
C) eliminated tariffs; began to grow outside of the United States
D) doubled their tariffs; became unrestricted
Table 9-15
Refer to Table 9-15. Looking at the table above, real average hourly earnings in 2011
were
A) $9.
B) $9.52.
C) $10.
D) $12.63.