Monetarism is a school of thought put forth by ________, who argued that the economy
would most likely be at potential GDP.
A) Karl Marx
B) Milton Friedman
C) Finn Kydland and Edward Prescott
D) Robert Lucas and Thomas Sargent
Figure 7-5 Figure 7-5 represents the market for
medical services with and without insurance, and the effect of a third-party payer
system on the demand for medical services. If consumers paid the full price of medical
services, the equilibrium quantity would be
A) 400.
B) 800.
C) 1,200.
D) >1,200.
The revenue received from the sale of ________ of a product is a marginal benefit to
the firm.
A) an additional unit
B) the total number of units
C) no units
D) only profitable units
The Danish currency, the krone, is pegged to the euro at a rate of 7.43 kroner (kroner is
the plural of krone) to the euro. At the pegged exchange rate, how many euros would be
exchanged for one krone?
A) 0.135
B) 1.00
C) 2.48
D) 7.43
Without an increase in the supplies of factors of production, how can a nation achieve
economic growth?
A) by producing more high-value goods and less of low-value goods
B) through technological advancement which enables more output with the same
quantity of resources
C) by lowering the prices of factors of production
D) by increasing the prices of factors of production
Suppose President Obama is successful in passing a $5 billion tax increase. Assume that
taxes are fixed, the economy is closed, and the marginal propensity to consume is 0.75.
What happens to equilibrium GDP?
A) There is a $20 billion increase in equilibrium GDP.
B) There is a $20 billion decrease in equilibrium GDP.
C) There is a $15 billion increase in equilibrium GDP.
D) There is a $15 billion decrease in equilibrium GDP.
On a balance sheet
A) total assets must equal total liabilities plus equity.
B) total assets plus equity must equal total liabilities.
C) total assets plus total liabilities must equal zero.
D) total assets plus total liabilities plus equity must equal zero.
Figure 11-1
The marginal product of the 7th worker is
A) 66.
B) 9.43.
C) 2.
D) -2.
A small economy increased its capital per hour worked (K/L) from $40,000 to $50,000.
As a result, real GDP per worker (Y/L) grew from $20,000 to $25,000. If the economy
increases its capital per hour worked by another $10,000 to $60,000, but there is no
change in technology, by how much more and in what direction will output per worker
change?
A) Output per worker will increase by exactly $5,000.
B) Output per worker will increase by more than $5,000.
C) Output per worker will increase by less than $5,000.
D) Output per worker will fall by more than $5,000.
Figure 10-6
A change in income is shown in
A) Panel A.
B) Panel B.
C) Panel C.
D) none of the above panels.
Table 9-5
Madison and Austin own Cafe Ole’. Table 9-5 lists the number of empanadas and tacos
Madison and Austin can each make in one hour. Select the statement that accurately
interprets the data in the table.
A) Madison has an absolute advantage in making tacos and Austin has an absolute
advantage in making empanadas.
B) Madison has an absolute advantage in making empanadas and Austin has an absolute
advantage in making tacos.
C) Madison has an absolute advantage in making empanadas and tacos.
D) Austin has an absolute advantage in making empanadas and tacos.
Figure 11-15
What is the combination of inputs that produces 200 gooseberry pies at the lowest cost?
A) combination e: 10 hours of labor and 48 units of capital
B) combination f: 40 hours of labor and 24 units of capital
C) combination g: 60 hours of labor and 14 units of capital
D) combination h: 60 hours of labor and 9 units of capital
The Federal Reserve cut the federal funds rate seven times between September 2007
and March 2008. What event led the Fed to make these reductions in the federal funds
rate?
A) It was in response to reductions in the discount rate, which was also lowered seven
times over the same time period.
B) The chairman of the Federal Reserve System persuaded members of the Federal
Open Market Committee to lower interest rates in order to reduce the price of oil in
international markets.
C) During this period there was a substantial reduction in the demand for housing.
D) Several large investment banks failed during this time period.
The Santa Fe Spark Plug Company supplies spark plugs to automotive parts dealers. An
increase in the demand for its product led Santa Fe to hire 150 new workers. Santa Fe
also plans to expand the capacity of its plant but this project will take 2 years to
complete. Which of the following statements is true?
A) The wages and benefits paid to the new workers are implicit costs.
B) The long run for Santa Fe is longer than 1 year.
C) The short run for Santa Fe is 1 year.
D) In the short run Santa Fe’s variable costs increase but its fixed costs decrease.
Which of the following factors will not cause the labor demand curve to shift?
A) increases in human capital
B) changes in technology
C) change in the price of the product produced with labor
D) the wage rate
The process of bundling loans together and buying and selling these bundles in a
secondary financial market is called
A) open market operations.
B) securitization.
C) fractional reserve lending.
D) seigniorage.
An externality is
A) a benefit realized by the purchaser of a good or service.
B) a cost paid for by the producer of a good or service.
C) a benefit or cost experienced by someone who is not a producer or consumer of a
good or service.
D) anything that is external or not relevant to the production of a good or service.