Suppose that a natural disaster substantially increases the cost of producing cheese. We
would predict that the equilibrium quantity of cheese will ________ and the
equilibrium price of cheese will ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
If the government is required to balance the budget and the economy is in a recession
and experiencing an expanding budget deficit, the government must:
A) raise taxes.
B) decrease spending.
C) A and B are correct.
D) neither A nor B
Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is
$10, we would expect that
A) demand will decrease until quantity demanded equals quantity supplied.
B) supply will increase until quantity demanded equals quantity supplied.
C) price will increase until quantity demanded equals quantity supplied.
D) there will be no change in the price since the market is in equilibrium.
A country that experiences population growth (holding K constant) will experience
growth in real GDP per capita.
A person who is currently actively looking for a job, but has not found a job is
classified by the BLS as:
A) unemployed.
B) employed.
C) not in the labor force.
D) under 16.
Individuals who have stopped looking for work after an active search because of the
lack of transportation or lack of affordable child care, etc. are classified as ________
workers.
A) non-contributing
B) nonfunctional
C) marginally attached
D) very lazy
The basic idea of the fiscal multiplier is that an initial increase in government spending
will have a:
A) more than a one-to-one impact on the budget deficit.
B) more than a one-to-one impact on long run aggregate supply.
C) more than a one-to-one impact on short run aggregate supply.
D) more than a one-to-one impact on aggregate demand.
An increase in the capital stock:
A) can increase output, even if it is not accompanied by an increase in the labor force.
B) provides valuable services directly, but not indirectly.
C) can increase output, but only if it is accompanied by an increase in the labor force.
D) cannot increase output, even if it is accompanied by an increase in the labor force.
The number of people classified as employed is 550,000 and the number of people in
the labor force is 700,000. The total number of people classified as unemployed is:
A) 200,000.
B) 110,000.
C) 150,000.
D) 1.5 million.
In a market economy, what encourages firms to develop new products and production
processes?
A) contracts
B) insurance
C) patents
D) accounting rules
Increasing the stock of capital while holding the labor force constant will ________
output at a(n) ________ rate.
A) increase; increasing
B) increase; decreasing
C) decrease; increasing
D) decrease; decreasing