Which of the following is the definition of a capital gain?
a. An increase in a firm’s capital stock
b. Profit earned from selling a financial asset
c. The dividend earned from a company’s stock
d. Taxes saved by selling a share of corporate stock
e. The profit earned by a corporation
When the inflation rate ends up being lower than expected,
a. everyone benefits because money is cheaper
b. everyone benefits because prices do not increase
c. lenders of fixed-rate mortgages generally benefit because they will make higher
profits than they had calculated
d. borrowers with fixed-rate loans will benefit because their purchasing power will not
decline as much
e. no one benefits because everyone made financial calculations based on the projected
interest rate
Wages often respond slowly to changes in output.
The production possibility frontier in Figure 2-8 assumes that U.S. agricultural land is
used either to raise cotton for clothing or to grow wheat. This is an example of a(n)
Figure 2-8
a. critical assumption
b. optimizing assumption
c. assumption of scarcity
d. simplifying assumption
e. realistic assumption
Newly constructed homes are classified as
a. private consumption
b. housing services
c. housing supply
d. investment
e. construction.
Refer to Figure 15-5. Assuming that the economy starts at point X, a decrease in world
oil prices would
a. move the economy to point A
b. move the economy to point B
c. shift the aggregate supply curve upward to curve E
d. shift the aggregate supply curve downward to curve F
e. have no impact since the model only shows the relationship between the overall price
level and real GDP.
Macroeconomics focuses on the behavior of economic agents such as the consumer, a
business firm, or a specific market.
In the expenditure approach to measuring GDP, we add the values of all
a. intermediate goods in addition to all final goods purchased
b. goods and services purchased by each type of final user
c. goods and services purchased in the United States
d. goods and services purchased by intermediate and final users
e. goods and services purchased by the private sector.
Consider the competitive market for oil. Which of the following would result from the
discovery of new oil fields that can be profitably accessed at the current price?
a. both b and d
b. an increase in the demand for oil
c. an excess demand for oil as oil companies shift resources to developing the new
fields
d. an excess supply of oil if the price of oil fails to drop sufficiently
e. an increase in the expected future price of oil
If it costs $8 to produce a certain product and the product sells for $9, then
a. the markup is approximately 11.1 percent
b. the market for this product must be monopolistic
c. the markup is $1
d. firms in this industry should shut down to minimize their losses
e. the revenue gained from the last unit produced is $1
Which of the following explains why economists may disagree over normative issues?
a. They have different beliefs and values.
b. They examine the same data to draw their conclusions.
c. They need to disagree in order to publish their research findings.
d. They often employ different statistical techniques when examining data.
e. Some work only on microeconomic issues, while others focus exclusively on
macroeconomic issues.
The primary reason that U.S. money has value is that it
a. is backed by gold
b. is fiat money
c. is accepted by others in exchange for goods and services
d. is commodity money
e. has a fixed value established by the Federal Reserve.