The average percentage markup in the economy
a. is of special interest in microeconomics
b. fluctuates greatly from year to year
c. depends on competitive conditions in the economy
d. depends on the level of GDP
e. increases as the interest rate increases
In Figure 5-3, the price elasticity of demand equals __________ between points T and
U and equals __________ between points V and W.
Which of the following is a pure public good?
Which of the following would shift the aggregate demand curve to the right?
a. An increase in government purchases
b. An increase in investment spending
c. An open market purchase of bonds by the Fed
d. All of the above
e. None of the above
What could be a reason for a rising inflation rate?
a. A decrease in government spending
b. A supply shock that shifts the aggregate supply curve downward
c. Unemployment below the natural rate
d. Growing consumer pessimism
e. A negative spending shock
Which of the following is true about perfect competition?
The demand curve faced by a monopolist is
An increase in the interest rate reduces the opportunity cost of holding money.
The term price taker is used to describe a situation in which consumers have no
influence over the market price for a good or service and must take whatever price is set
by the economically powerful firms.
If an excise tax is imposed on a good or service,
When marginal revenue equals price for all levels of output, the firm is operating in a
perfectly competitive market.
The basic problem addressed in economics is
If Arthur has a comparative advantage in sewing and Susan has a comparative
advantage in accounting, then
If money demand falls on its own (i.e., not in response to a spending shock), what must
the Fed do to stabilize GDP?
a. Increase the money supply
b. Decrease the money supply
c. Leave the money supply and money demand unchanged
d. Increase money demand
e. Decrease money demand
To approximate the percentage change in real income over any period of time,
a. we need to subtract the percentage change in nominal income from the inflation rate
b. we need to subtract the rate of inflation from the percentage change in nominal
income
c. we need to divide the percentage change in nominal income by the inflation rate
d. we need to multiply the change in income by the inflation rate
e. we need to multiply the nominal percentage change in income by the percentage
change in inflation rate
Figure 12-5 shows the number of baseballs a manufacturer can produce each day with
different quantities of labor. Each baseball sells for $5 in a competitive market. For
which level of employment is the marginal product of labor is greatest?
The Fed’s objectives present it with a true dilemma when
a. there are demand shocks caused by shifts in money demand
b. there are demand shocks caused by changes in spending
c. there are negative supply shocks
d. cyclical unemployment exists
e. there is member bank opposition
We could try to use a powerful computer to construct a macroeconomic model
including tens of thousands of demand and supply curves, for every market in the
economy. This would not be a useful undertaking because
a. it would not be worth the increased level of complication and effort needed to collect
all information
b. the model would be simplistic
c. the model would inevitably leave out important information
d. the suggested prices would inevitably be wrong in each market
e. the model would not be realistic
Stagflation is the combination of
a. falling output and a falling price level
b. falling output and rising unemployment
c. falling output and a rising price level
d. falling output and falling unemployment
e. rising unemployment and a falling price level