Government purchases
a. are only weakly related to aggregate income
b. include spending on goods and services plus transfer payments
c. are inversely related to aggregate income
d. are inversely related to the price level
e. are inversely related to the interest rate
Which of the following would notcause the demand curve for college football tickets to
shift?
a. an increase in the price of professional football tickets
b. a decrease in the price of college basketball tickets
c. an increase in the price of college football tickets
d. a drop in student incomes
e. an increase in student preferences for college football tickets
The most volatile component of GDP is
a. tax revenue
b. government purchases of goods and services
c. the nation’s capital stock
d. private investment spending
e. private consumption expenditures
Suppose a U.S. automobile manufacturer produced $200 million worth of automobiles
in the United States in 2009, but $50 million worth went unsold. How much was the
company’s contribution to GDP?
a. $50 million
b. $250 million
c. $150 million
d. $200 million
e. -$150 million
The formula for calculating the tax multiplier is
a. MPC/(1 – MPC)
b. MPC/(1 + MPC)
c. -MPC/(MPC – 1)
d. -MPC/(1 – MPC)
e. MPC + (1 – MPC)
Orange juice and cranberry juice are substitute goods. An increase in the price of orange
juice results in a(n)
a. increase in the demand for orange juice
b. increase in the supply of cranberry juice
c. increase in the quantity demanded of orange juice
d. increase in the demand for cranberry juice
e. decrease in the quantity demanded of cranberry juice
Carl is considering attending a concert with a ticket price of $35. He estimates that the
cost of driving to the concert and parking there will total an additional $20. In order to
attend the concert, Carl will have to take time off from his part-time job or forgo
studying for an exam scheduled for the next morning. He estimates that he will lose 5
hours at work, at a wage of $6 per hour, or 5 hours of study time. If Carl considers
studying the best alternative use of his time, his opportunity cost of attending the
concert equals
a. $55
b. $55 plus the value of the higher exam grade he could earn by studying for 5 hours
c. $85 plus the value of the higher exam grade he could earn by studying for 5 hours
d. $85 minus the value of the higher exam grade he could earn by studying for 5 hours
e. $55 minus the value of the higher exam grade he could earn by studying for 5 hours
In the long run, changes in equilibrium GDP are most likely to be caused by
a. changes in full-employment output
b. open market operations by the Fed
c. changes in nominal wages
d. contractionary or expansionary fiscal policy
e. none of these; long-run equilibrium GDP is a constant
Microeconomics is the branch of economics that concerns
a. the overall healthof the economy
b. the behavior of individual households, firms, and governments
c. the overall level of trade between nations
d. local governments only
e. the general level of output
The precise definition of GDP is the total value of all
a. goods and services produced by a nation, minus household labor
b. goods and services produced by a nation, minus depreciation
c. goods and services produced for the marketplace during a given period
d. final goods and services produced for the marketplace during a given period, within a
nation’s borders
e. final goods and services produced within a nation’s borders and by this nation’s
citizens abroad during a given period
If British tastes changed so that Britons began to desire more American goods, there
would be
a. a rightward movement along the supply of British pounds curve in the dollar-pound
market
b. a leftward movement along the supply of British pounds curve in the dollar-pound
market
c. a rightward shift of the supply of British pounds curve in the dollar-pound market
d. a leftward shift of the supply of British pounds curve in the dollar-pound market
e. no change in the supply of British pounds curve in the dollar-pound market
If there is an excess supply of Tunisian dinars at a given exchange rate, what will lead
the market into an equilibrium?
a. Finding themselves unable to buy all the dinars they want to buy, buyers will accept a
lower price.
b. Finding themselves unable to buy all the dinars they want to buy, sellers will offer a
lower price.
c. Finding themselves unable to sell all the dinars they want to sell, sellers accept a
higher price.
d. Finding themselves unable to buy all the dinars they want to buy, buyers offer a
higher price.
e. Finding themselves unable to sell all the dinars they want to sell, sellers accept a
lower price.
Assume the economy is at full employment. Which of the following would you expect
if oil prices suddenly decreased?
a. A recession
b. A decrease in employment below its full-employment level
c. An economic contraction
d. A technological breakthrough
e. An increase in employment above its full-employment level
If the economy is currently experiencing a high unemployment rate, the greatest cost is
a. extra government spending
b. rewarding those who do not work but collect government benefits
c. lost output
d. the cost of job searching
e. the extra cost of funding job fairs