The least-cost rule for firms states that in the long run, firms will
If the interest rate increases, the money demand curve
a. shifts to the right.
b. shifts to the left.
c. neither shifts nor changes slope.
d. gets steeper.
e. becomes horizontal.
If the dollar-peso exchange rate is 0.01 dollars per peso, what is the rate of pesos per
dollar?
a. 1 peso/dollar
b. 10 pesos/dollar
c. 0.1 peso/dollar
d. 1,000 pesos/dollar
e. 100 pesos/dollar
Patents stimulate innovation by
Who are likely to earn higher incomes, doctors or nurses, and why?
During the current year, Jessica sold her house, built two years ago, to Kim for
$175,000. Kim then sold the house to Dave for $185,000. How much does GDP
increase due to these transactions?
a. $370,000
b. $175,000
c. $185,000
d. $360,000
e. $10,000
Firms are assumed to
Which of the following annual real GDP growth rates would be needed just to maintain
output per capita in the United States?
a. 10.0 percent
b. 2.5 percent
c. 1.0 percent
d. 7.0 percent
e. 3.5 percent
The local labor market for lawn-mowing workers is initially in equilibrium. These
workers are also able to clean swimming pools and have no preference for one job over
the other. If the wage rate for pool cleaning rises, which of the following would occur in
the lawn-mowing labor market?
According to the law of increasing opportunity cost,
To determine the total change in deposits as a result of an injection of reserves, we must
a. sum the number of loans a bank has made
b. multiply the injection of reserves by 10
c. multiply the number of loans by the expenditure multiplier
d. sum the reserves of each bank
e. multiply the injection of reserves by the demand deposit multiplier
Which of the following is an open market purchase?
a. When private individuals sell government bonds
b. When the Fed sells government bonds
c. When private individuals purchase government bonds
d. When bond dealers buy government bonds from the fed
e. When the Fed buys government bonds
Suppose that a monopoly is earning economic profits in the short run. As a result,
The largest component of aggregate expenditure is
a. consumption spending
b. investment spending
c. government purchases
d. net exports
e. a virtual tie between consumption spending and government purchases
In the classical model, fiscal policy is both ineffective and unnecessary.
Which of the following explains why individuals must make choices?
In the short-run macro model, the change in inventories will
a. equal output minus aggregate expenditures
b. trigger a price change
c. equal investment minus depreciation
d. equal sales minus investment
e. be matched by an equal and opposite change in the subsequent period
Refer to Figure 14-5. If the Fed wishes to reduce the interest rate, it will
a. shift the demand curve to the right
b. shift the demand curve to the left
c. shift the supply curve of money to the right
d. shift the supply curve of money to the left
e. simply set a lower market interest rate