Compared to a perfectly competitive firm, a monopolist
a. is less likely to advertise.
b. will, according to Schumpeter, invest fewer resources in research and development.
c. usually produces an inefficiently small level of output.
d. is less likely to face government regulation.
Which of the following taxes is most likely to be shifted?
a. a property tax on an owner-occupied residence
b. a progressive income tax
c. a flat-rate state income tax
d. a general sales tax
An optimal allocation of resources is one which is:
a. unfair.
b. fair.
c. efficient.
d. inefficient.
By law, employers in the United States may not ask prospective female employees
whether they plan to have babies. The existence of this law seems most likely to
a. increase the probability that firms will practice economic discrimination against
women.
b. decrease the probability that firms will practice economic discrimination against
women.
c. increase the probability that firms will practice statistical discrimination against
women.
d. decrease the probability that firms will practice statistical discrimination against
women.
A deficit nation in a fixed exchange rate system can improve its balance of payments by
increasing
a. its money supply.
b. its interest rates.
c. its level of real GDP.
d. aggregate demand.
TANF compels welfare recipients to go to work after a period of two years.
a. True
b. False
Gross Domestic Product includes the sale of intermediate goods and services.
a. True
b. False
A decrease in the price of one good results in a parallel shift in the budget line.
a. True
b. False
When a company’s stock is owned by thousands of individuals,
a. management will be very independent.
b. management will be lacking.
c. individuals will band together to socialize the firm.
d. management will be prevented by government from taking any risks.
If the President and Congress agree to balance the budget during a recession, then the
appropriate monetary policy is
a. no change from the current policy.
b. reduce the growth of the money supply.
c. constant growth of the money supply.
d. increase the growth of the money supply.
Figure 18-3
In which panel of Figure 18-3 would an excise tax be borne entirely by the consumer?
a. 1
b. 2
c. 3
d. 4
If investment spending is relatively insensitive to changes in the interest rate, then the
most effective expansionary policy would be
a. a reduction in required reserves.
b. Fed purchases of government securities.
c. a personal income tax increase.
d. a personal income tax cut.
Briefly and concisely define the following terms.
a. voluntarism
b. direct controls
c. depletable resource
Perfect Competition is an industry in which there is only one supplier of a product that
has no close substitutes.
a. True
b. False
Economists use models in order to
a. experiment with alternative circumstances.
b. make educated guesses about real life events.
c. predict outcomes under various hypothetical conditions.
d. increase understanding of how a relationship actually works.
e. All of the above are correct.
A firm that is earning zero economic profit should go out of business.
a. True
b. False
The goal of a union may be to maximize the
a. number of union members.
b. income received by workers in the relevant industry.
c. number of workers employed in the relevant industry.
d. All of the above are correct.
An advantage emission taxes and permits have over direct controls is that the former
a. work well even if pollution output cannot be accurately measured.
b. can respond quickly to new information about the dangers of particular pollutants.
c. make it in firms’ interests to reduce pollution in the most efficient manner possible.
d. reduce pollution to zero.
The aggregate supply curve is drawn with
a. the price level on the vertical axis and nominal GDP on the horizontal.
b. nominal GDP on the vertical axis and real GDP on the horizontal.
c. the price level on the vertical axis and real GDP on the horizontal.
d. real GDP on the horizontal and the rate of inflation on the vertical.
Chronic trade deficits lead to a growing national debt.
a. True
b. False
It is possible to represent three dimensions on a two-dimensional graph by using
a. a contour map.
b. a razor blade.
c. curved lines.
d. all of the above.
Figure 5-9
In Figure 5-9, the consumer’s marginal rate of substitution at his optimum choice of X
and Y is
a. −1.
b. 16.
c. 8.
d. −8.
The difference between Gross National Product and Net National Product is the
a. rate of inflation.
b. statistical discrepancy encountered in calculating GDP.
c. difference between real versus nominal GDP.
d. depreciation of the economy’s capital stock.
The system of grants from one level of government to another is an example of fiscal
federalism.
a. True
b. False
In a simple economy (no government sector), the equilibrium level of GDP will be less
than the full employment level of income if, at the full employment level of income, the
a. saving that consumers want to do is less than investing that businesses want to do.
b. saving that consumers want to do is greater than investing that businesses want to do.
c. saving that consumers want to do is less than spending that consumers want to do.
d. inventories are being depleted.
In 2010 and 2011, President Obama advocated deficit reduction through decreased
spending while Republicans in Congress advocated increased taxation to achieve the
same goal.
a. True
b. False
If a country begins to import more of a commodity, one can normally expect the price
of the commodity to
a. remain unchanged in that nation.
b. rise and then fall below where it was originally.
c. rise in that nation.
d. drop in that nation.
If the Japanese economy is currently suffering from a recession we should expect U.S.
exports to Japan to
a. decrease.
b. increase.
c. remain the same.
d. increase only if the Japanese Yen depreciates.
Regulatory agencies always protect consumers by forcing regulated firms to sell at the
lowest possible price.
a. True
b. False
Figure 22-10
Figure 22-10 shows the effect on the market for disk drives of a(n)
a. quota.
b. tariff.
c. export subsidy.
d. import subsidy.
e. export tax.
The recession of 1973-1975 was unusual in that both inflation and unemployment
increased at the same time. This suggests that the primary cause of the recession was an
a. inward shift of the aggregate demand curve.
b. outward shift of the aggregate supply curve.
c. inward shift of the aggregate supply curve.
d. outward shift of the aggregate demand curve.
A horizontal line always has a slope of one.
a. True
b. False