The key idea of the aggregate expenditure model is that in any particular year, the level
of GDP is determined mainly by
A) investment spending.
B) export spending.
C) government spending.
D) the level of aggregate expenditure.
A firm’s net worth is calculated as
A) the difference between a firm’s revenues and explicit costs.
B) the difference between a firm’s revenues and implicit costs.
C) the difference between a firm’s assets and liabilities.
D) the difference between a firm’s liabilities and outstanding equities.
Potential GDP is also referred to as
A) realized GDP.
B) full-employment GDP.
C) politico-economic GDP.
D) balanced-budget GDP.
Cyclical unemployment is the result of
A) a persistent mismatch between the skills and characteristics of workers and the
requirements of the jobs.
B) the search process of matching workers with jobs.
C) the ups and downs in inflation.
D) a slowdown in the economy.
A patent or copyright is a barrier to entry based on
A) ownership of a key necessary raw material.
B) large economies of scale as output increases.
C) government action to protect a producer.
D) widespread network externalities.
The Fed seeks to promote stability of financial markets because
A) they want to lift the self-esteem of workers.
B) Congress directed them to do so by the Employment Act of 1946.
C) resources are lost when there is not an efficient matching of savers and borrowers.
D) unstable markets result in increased efficiency.
All of the following are components of aggregate expenditure except
A) consumption spending.
B) net export spending.
C) actual investment spending.
D) government spending.
A firm increased its production and sales because the firm’s manager rearranged the
layout of his factory floor. This is an example of
A) investment in human capital.
B) economies of scale.
C) positive technological change.
D) inspired management.
Which of the following is an example of a positive externality?
A) banning the sale of candy in elementary schools
B) planting trees along a sidewalk which add beauty and creates shade
C) forbidding the use of cell phones in public
D) prohibit street parking in all residential neighborhoods
Of the $840 billion American Recovery and Reinvestment Act stimulus package which
was enacted in 2009, approximately ________ took the form of tax cuts and ________
took the form of increases in government expenditures.
A) one-half; one-half
B) three-fourths; one-fourth
C) one-tenth; nine-tenths
D) one-third; two-thirds
If the demand for letters written by Abraham Lincoln is higher than the demand for
letters written by John Wilkes Booth, what would have to be true for the market
equilibrium prices for these letters to be equal?
A) The supply of Lincoln letters would have to be less than the supply of Booth letters.
B) The supply of Booth letters would have to be less than the supply of Lincoln letters.
C) The supply of Lincoln letters and the supply of Booth letters would have to be equal.
D) If the demand for Lincoln letters is greater than the demand for Booth letters, the
market equilibrium price for Lincoln letters will always be greater than the market
equilibrium price for Booth letters.
Which of the following is one explanation as to why the aggregate demand curve slopes
downward?
A) Increases in the price level lower the interest rate and decrease consumption
spending.
B) Increases in the price level lower the interest rate and decrease investment spending.
C) Increases in the U.S. price level relative to the price level in other countries lowers
net exports.
D) Increases in the price level raise real wealth and lowers consumption spending.
Government intervention in agricultural markets in the U.S. began
A) during World War II to ensure that enough food was available for domestic
consumption.
B) after World War I in order to assist farmers to adjust from a war-time economy to a
peace-time economy.
C) during the Great Depression.
D) during the Korean War.
If stricter immigration laws are imposed and many foreign workers in the United States
are forced to go back to their home countries,
A) the long-run aggregate supply curve will shift to the right.
B) the long-run aggregate supply curve will shift to the left.
C) we will move up along the long-run aggregate supply curve.
D) we will move down along the long-run aggregate supply curve.
In an open economy, the government purchases multiplier will be
A) larger as the marginal propensity to import decreases.
B) smaller as the marginal propensity to import decreases.
C) smaller as the marginal propensity to tax decreases.
D) larger as the marginal propensity to consume decreases.