The reserve demand schedule is drawn on a graph that has the quantity of reserves on
the horizontal axis and
a. the price level is on the vertical axis.
b. the federal funds rate is on the vertical axis.
c. the price of bonds is on the vertical axis.
d. income is on the vertical axis.
One disadvantage of corporations is the double taxation of income to the owners.
a. True
b. False
The United States has had a long history of work time lost due to worker strikes. This
trend has
a. increased over time.
b. decreased over time.
c. stayed relatively constant during the past century.
d. been less of a problem compared to other countries such as Japan.
Discounting allows comparisons of
a. money values and physical values.
b. interest payments on borrowed funds and interest payments on loaned funds.
c. money values received at different times.
d. the quantities of outputs produced by different types of capital goods.
Figure 11-3
In Figure 11-3, which of the following is true, whether or not the monopolist is
maximizing profits?
a. MR < P
b. MC = P
c. MC < AC
d. MR = P
When demand for goods and services is high, firms are more likely to hire more
workers.
a. True
b. False
If the United States imposed a 25 percent tariff on imports of minivans, the effect would
be to
a. raise the price and reduce the quantity of imports.
b. raise the price and the quantity of imports.
c. lower the price and the quantity of imports.
d. raise the quantity and reduce the price of imports.
As of December 2010+, the largest single component of M2 consists of
a. checkable deposits at banks.
b. cash, coins, and other currency.
c. savings deposits.
d. gold and silver in commodity accounts.
An economic recession in the United States would shift the demand for foreign
currencies outward, that is, increase demand.
a. True
b. False
The United States is an example of a mixed economy.
a. True
b. False
Do all valuable items have price tags?
a. No, because some valuable items have no opportunity cost.
b. Yes, because everything has its price.
c. Yes, because price is the measure of opportunity cost.
d. No, some have no explicit price on them.
e. Yes, because only items that can be sold in markets have value.
Table 7-4
Table 7-4 shows a production relationship. Assuming the capital stock is fixed at three
units and the cost per day of labor is $65, what is the most labor that it is efficient to
hire if the product price is $1 per unit?
a. 2
b. 3
c. 4
d. 5
For an efficient outcome, MR must exceed MC.
a. True
b. False
The marginal cost of serving an additional user of a public good is zero.
a. True
b. False
Julia knows the price elasticity of movie rentals is 3. She knows, therefore, that if she
raises her price from $2 to $2.50, her rentals will drop by approximately
a. 150 percent.
b. 100 percent.
c. 75 percent.
d. 33 percent.
The economic impact of the multiplier is ____, and then becomes ____.
a. slow, faster
b. small, tiny
c. large, smaller
d. small, larger
The product supplied by a monopoly firm has
a. a few substitutes.
b. no close substitutes.
c. a large number of substitutes.
d. two or three close substitutes.
The actual control of the Federal Reserve System resides in the
a. Congress of the United States.
b. member banks.
c. Senate Banking Committee.
d. Board of Governors.
The supply curve for land is perfectly elastic.
a. True
b. False
In 2005, the median income of renters was $26,317 and the median income of
homeowners was $50,505. If imputed rent were added to household income or rent
became deductible, the personal income tax would become
a. more progressive.
b. more regressive.
c. about proportional.
d. less progressive.
One benefit of U.S. society that helped foster entrepreneurship was free public high
school education.
a. True
b. False
A change in input prices has no impact on the budget line.
a. True
b. False
In 2012, the median income of U.S. families was about $86,000.
a. True
b. False
The market for toothpaste is a good example of perfect competition.
a. True
b. False
When a firm’s fixed cost rises, its total profit curve shifts
a. up at every output level.
b. down at every output level.
c. left at every profit level.
d. right at every profit level.
Assume that the federal government wishes to counteract inflation with a policy that
has the smallest impact on the federal budget. Which of the following would you
recommend?
a. Increase transfer payments.
b. Increase government purchases.
c. Decrease government purchases.
d. Decrease transfer payments.
e. Increase personal income taxes.
A sudden decrease in consumers’ wealth-resulting, for example, from a stock market
crash-would initially cause a(n)
a. downward movement along the consumption function.
b. downward shift of the consumption function.
c. upward movement along the consumption function.
d. upward shift of the consumption function.
If bankers decide to keep a lower fraction of deposits on reserve, the money supply will
a. decrease.
b. increase.
c. remain unchanged.
d. move more quickly through the economy.
In cases of natural monopolies, society would be better off with many firms competing
with each other.
a. True
b. False
An optimal decision is one that chooses the most desirable from among all possibilities
that are available.
a. True
b. False