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The short-run aggregate supply curve shows the various amounts of real output that
producers are willing to
a. sell at different profit levels.
b. sell at different price levels.
c. buy at different income levels.
d. buy at different price levels.
The most important responsibility of the Fed is to
a. clear checks.
b. supervise member banks.
c. serve as fiscal agent for the U.S. Treasury.
d. control the money supply.
Exhibit 3-4
A price of $2 in the market will result in a
a. shortage of 10 units.
b. surplus of 10 units.
c. surplus of 5 units.
d. shortage of 5 units.
Which of the following statements represents a correct and sequentially accurate
economic explanation?
a. Good X is an inferior good and good Y is a substitute for X. Income rises, the
demand for X falls, the price of X falls, and the demand for Y rises.
b. Good X is an inferior good and good Y is a substitute for X. Income rises, the
demand for X falls, the price of X falls, and the demand for Y falls.
c. Good X is an inferior good and good Y is a substitute for X. Income falls, the demand
for X rises, the price of X rises, and the demand for Y falls.
d. Good X is an inferior good and good Y is a substitute for X. Income rises, the
quantity demanded of X rises, the price of X rises, and the demand for Y falls.
e. none of the above
A politician running for political office does not speak in general terms, does not try to
move to the middle of the political spectrum, and does not take polls, therefore it
follows that
a. the median voter model is wrong.
b. rational ignorance does not exist.
c. the free-rider problem does not exist.
d. voter turnout is likely to rise.
e. none of the above
As the price level falls, real wage ____________and people choose to work
___________.
a. rises; more
b. rises; less
c. falls; more
d. falls; less
Last year, Danielle bought a bond for $10,000 that promises to pay $1,150 a year. This
year, a person who buys a bond for $10,000 receives $1,210 a year. If Danielle were to
sell her (old) bond, its price would be approximately
a. $9,504.
b. $10,522.
c. $11,211.
d. $9,115.
Special interest groups are subsets of the general population that
a. attempt to influence government officials for the benefit of the general population.
b. choose to be rationally ignorant because they are interested only in things that the
government is not concerned with.
c. are on the fringes of the political spectrum.
d. a and c
e. none of the above
The economy is initially in long-run equilibrium. Expectations are adaptive, prices and
wages are flexible, and there is an unanticipated increase in aggregate demand. In the
short run, the price level will be __________ than it was in long-run equilibrium and
Real GDP will be __________ than it was in long-run equilibrium.
a. higher; lower
b. lower; higher
c. lower; lower
d. higher; higher
Under a fixed exchange rate system, if the dollar price of a Mexican peso is below its
equilibrium level, the peso is said to be
a. depreciable.
b. undervalued.
c. overvalued.
d. appreciable.
e. none of the above
One reads in the newspaper: "Today the president and Congress enacted a law which
adds new requirements that child care providers must meet before they can offer their
services for sale." As a result, an economist would predict that
a. the supply of child care services will increase, thus lowering the price of child care
services.
b. the supply of child care services will be unaffected by the stiffer requirements and
therefore the price of child care services will not change.
c. the demand for child care services will fall because people who buy child care
services do not want stiffer requirements placed on child care providers.
d. the supply of child care services will decrease, thus raising the price of child care
services.
e. none of the above
Exhibit 3-12
-----------------------------Quantity Supplied --------------------------------------
Assume that Aline, Bentley, Calvin, and Daniel are the only sellers in this market. Fill
in blanks (A) and (B) respectively with the market quantity supplied at each given
price.
a. 12.25; 14.75
b. 49; 59
c. 37; 45
d. 39; 49
e. none of the above
Scientists prefer to advance irrefutable theories, rather than refutable theories.
a. True
b. False
Exhibit 2-4
As more fax machines are produced, the opportunity cost of producing them
a. increases.
b. decreases.
c. remains constant.
d. first decreases and then increases.
The nominal wage is $40 an hour and the price level as measured by a price index is
2.00. If the nominal wage falls to $30 and the price index declines to 1.50, according to
the worker misperception explanation of the upward-sloping SRAS curve, workers will
initially perceive the
a. real wage as something greater than $20.
b. real wage as something less than $20.
c. real wage as $20.
d. nominal wage as something more than $30.
e. nominal wage as something less than $30.
Suppose the government sets a price floor that is above the equilibrium price for a given
good. It can be said that at the price floor,
a. although sellers are selling all of the product that they desire at this price, the
consumers are not able to buy all that they desire.
b. although consumers are purchasing all of the product that they desire at this price, the
sellers are not selling all that they desire.
c. both sellers and buyers are satisfied with the quantity that is being exchanged.
d. both sellers and buyers are exchanging the equilibrium quantity of this good.
e. b and d
Supply of a food item increases by more than the demand for the food item increases.
One thing for certain is that
a. the price of the food item rises.
b. income elasticity of demand is less than 0.
c. the supply curve is price inelastic.
d. real income falls as a result.
e. none of the above
