A decrease in aggregate demand causes a decrease in ________ only in the short run,
but causes a decrease in ________ in both the short run and the long run.
A) the price level; real GDP
B) real GDP; real GDP
C) the price level; the price level
D) real GDP; the price level
According to the ability-to-pay principle of taxation,
A) individuals who receive the benefit of a good or service should bear a greater share
of the tax burden.
B) it is fair to expect a greater share of the tax burden to be borne by people who have a
greater ability to pay.
C) people in the same economic situation should bear an equal share of the tax burden.
D) individuals who are willing to bear a greater share of the tax burden should be
compensated with non-monetary benefits.
Figure 4-10 Figure 4-10 shows the
market for apartments in Bay City. Recently, the government imposed a rent ceiling at
R0. What area represents the deadweight loss after the imposition of the ceiling?
A) G + H
B) J + H
C) C + E + J + H
D) C + E
Most economists agree that some of the burden of the corporate income tax
A) is reduced because the tax is progressive.
B) is shared by the federal government.
C) is reduced because the tax is used to attain a social objective.
D) is passed on to consumers in the form of higher prices.
Consider the following statements:
a. Soda drinkers purchase more soda from a grocery store that sells soda at a lower
price than other rival grocery stores in the area.
b. Homeowners do not take steps to increase security even though they believe it is
more costly to allow burglaries than to install security monitoring equipment.
c. Manufacturers produce less of a particular cell phone when its selling price rises.
Which of the above statements demonstrates that economic agents respond to
incentives?
A) a only
B) b only
C) c only
D) a and b
E) a, b, and c
The level of saving in Japan has historically been high relative to the level of domestic
investment. Based on this information, we would expect that
A) Japan’s net foreign investment has been relatively low.
B) Japan’s net exports have been relatively high.
C) Japan’s capital inflows are positive.
D) Japan’s private saving is greater than its public saving.
Figure 10-5
“Crowding out” of firm investment as a result of a budget deficit is illustrated by the
movement from ________ in the graph above.
A) A to B
B) B to A
C) B to C
D) C to A
Which of the following would result in a trade surplus for the United States?
A) Exports of goods = $725 billion
Imports of goods = $790 billion
Exports of services = $350 billion
Imports of services = $260 billion
B) Exports of goods = $625 billion
Imports of goods = $625 billion
Exports of services = $300 billion
Imports of services = $375 billion
C) Exports of goods = $550 billion
Imports of goods = $575 billion
Exports of services = $275 billion
Imports of services = $300 billion
D) All of the above will result in a trade surplus.
Which of the following would cause an increase in the supply of peanut butter?
A) a decrease in the price of grape jelly (assuming that peanut butter and grape jelly are
complements)
B) an increase in the price of peanut butter
C) an increase the price of a product that producers sell instead of peanut butter
D) an increase in the number of firms that produce peanut butter
Which of the following statements is true?
A) If transfer payments such as Social Security payments to the retired and disabled
were excluded from official statistics used to estimate the percentage of people with
incomes below the poverty line, the amount of poverty in the United States would be
much greater.
B) Because the federal income tax system is progressive, measuring poverty using
after-tax incomes results in a higher poverty rate than if poverty is measured using
before-tax incomes .
C) If non-cash benefits such as food stamps and rent subsidies were added to the
incomes of low-income families, poverty would be eliminated.
D) In the United States, income remaining after federal taxes are paid is more equally
distributed than income before taxes.
According to a Wall Street Journal article, hhgregg has differentiated itself from its
competition, particularly from large chain stores such as Best Buy,
A) by charging lower prices.
B) by providing better customer service.
C) by selling inferior products.
D) by offering discounts for cash sales.
Table 7-4 Output Per Hour of Work
Table 7-4 shows the output per hour of work for light bulbs and flash drives in Mexico
and in Canada. Fill in the following table with the opportunity costs of producing light
bulbs and flash drives for Mexico and Canada.
The long-run aggregate supply curve is ________, while the long-run Phillips curve is
________.
A) positively sloped; negatively sloped
B) vertical; negatively sloped
C) vertical; also vertical
D) positively sloped; positively sloped
The tragedy of the commons was avoided in the Middle Ages by
A) selling common grounds to individuals.
B) the local police who monitored entry into the commons.
C) social pressure to uphold traditionally accepted limits on family use of the commons.
D) the government which imposed a tax for the use of the commons.
Which of the following statements is true?
A) An increase in demand causes a change in equilibrium price; the change in price
does not cause a further change in demand or supply.
B) A decrease in supply causes equilibrium price to rise; the increase in price then
results in a decrease in demand.
C) If both demand and supply increase, there must be an increase in equilibrium price;
equilibrium quantity may either increase or decrease.
D) If demand decreases and supply increases, one cannot determine if equilibrium price
will increase or decrease without knowing which change is greater.