Shrimp is an increasingly popular part of the American diet. Louisiana shrimpers, who
represent the bulk of the U.S. industry, were almost all put out of business by Hurricane
Katrina. How did this affect the equilibrium price and quantity of shrimp?
Of the $840 billion American Recovery and Reinvestment Act stimulus package which
was enacted in 2009, the largest tax cuts occurred in which category?
A) business tax cuts
B) energy tax cuts
C) individual tax cuts
D) infrastructure tax cuts
If a person takes $100 from his/her piggy bank at home and puts it in his/her savings
account, then M1 will ________ and M2 will ________.
A) increase; increase
B) not change; increase
C) decrease; increase
D) decrease; not change
E) increase; decrease
Expansionary monetary policy to prevent real GDP from falling below potential real
GDP would cause the inflation rate to be ________ and real GDP to be ________.
A) higher; higher
B) higher; lower
C) lower; higher
D) lower; lower
Investment spending will decrease when
A) the interest rate falls.
B) the corporate income tax decreases.
C) business cash flow decreases.
D) firms become more optimistic about earning future profits.
Identify each of the following as (i) part of an expansionary fiscal policy, (ii) part of a
contractionary fiscal policy, or (iii) not part of fiscal policy. a. The personal income tax
rate is lowered.
b. Congress cuts spending on defense.
c. College students are allowed to deduct tuition costs from their federal income taxes.
d. The corporate income tax rate is lowered.
e. The state of Nevada builds a new tollway in an attempt to expand employment and
ease traffic in Las Vegas.
Consider a good whose consumption takes place publicly. Your decision to buy that
good depends
A) both on the characteristics of the product and on how many other people are buying
the good.
B) only on the characteristics of the good.
C) only on how many other people buy the good.
D) only on the price of the good.
Over the past twenty years, the number of small family farms has fallen significantly
and in their place there are fewer, but larger, farms owned by corporations. Which of
the following best explains this trend?
A) diseconomies of scale in farming
B) economies of scale in farming
C) diminishing returns to labor in farming
D) declining productivity
All of the following are examples of oligopolistic markets except
A) the broadcasting industry.
B) aircraft manufacture.
C) college bookstores.
D) seafood restaurant chains.
If the United States has a current account deficit and the capital account is zero, which
of the following must be true?
A) The balance on the financial account must equal the balance on the current account.
B) Net foreign investment must be negative as well.
C) Domestic private saving must be less than net foreign investment.
D) Domestic public saving must be less than net foreign investment.
New growth theory
A) states that the rate of technological change is determined outside the working of the
market system.
B) does not adequately explain the factors that determine productivity.
C) states that the rate of technological change is caused by economic incentives.
D) states that the rate of technological change is unaffected by economic incentives.
Which of the following could explain why there is an increase in potential GDP but the
equilibrium level of GDP falls?
A) SRAS shifted to the right by more than LRAS.
B) AD shifted to the right by more than SRAS.
C) AD shifted to the right by less than SRAS.
D) AD did not shift and SRAS shifted to the left.
Experience with patents in the pharmaceutical industry shows that when patents on
drugs expire,
A) most patients will continue to buy the drugs from the same firms because their
doctors recommend they buy brand-name drugs.
B) prices remain high without patent protection because of a lack of competition. Firms
that are not granted patents cannot compete with firms that are granted patents.
C) other firms are free to produce chemically identical drugs. Competition reduces the
profits that had been earned by the firms that received patents.
D) firms will find ways to obtain additional patent protection€often by making cosmetic
changes in drugs that were patented€so that they can continue charging high prices.