The purchase by a household in China of a CD produced in the United States is
included in U.S.
A) consumption expenditures.
B) investment expenditures.
C) government purchases.
D) net exports.
Consumption is $5 million, planned investment spending is $8 million, government
purchases are $10 million, and net exports are equal to $2 million. If GDP during that
same time period is equal to $23 million, what unplanned changes in inventories
occurred?
A) There was an unplanned increase in inventories equal to $2 million.
B) There was no unplanned change in inventories.
C) There was an unplanned decrease in inventories equal to $2 million.
D) There was an unplanned decrease in inventories equal to $19 million.
Figure 2-10
In the circular flow diagram, market K represents
A) households.
B) product markets.
C) firms.
D) factor markets.
Which of the following will lead to a decrease in the equilibrium interest rate in the
economy?
A) an increase in the price level
B) a sale of government securities by the Fed
C) a decrease in GDP
D) an increase in the discount rate
E) an increase in the reserve requirement
If a supply curve is a horizontal line, supply is said to be
A) perfectly inelastic.
B) unit-elastic.
C) inelastic.
D) perfectly elastic.
Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What
happens in the market for sushi if the Surgeon General announces that a majority of the
raw fish that is imported to make sushi contains high levels of toxic mercury?
A) D decreases, S no change, P and Q decrease
B) S decreases, D no change, P increases, Q decreases
C) D and S decrease, P and Q decrease
D) D no change, S increases, P decreases, Q decreases
Figure 7-4 Figure 7-4 represents the
market for medical services with and without insurance, and the effect of a third-party
payer system on the demand for medical services.
With insurance and a third-party payer system, what price do doctors receive for
medical services?
A) $25
B) $40
C) $55
D) >$55
Facing stiff competition, Hendrix College, a small liberal arts institution in Conway,
Ark., decided two years ago to bolster its academic offerings, promising students at
least three hands-on experiences outside the classroom, including research, internships
and service projects. Although it raised tuition and fees by 29 percent, enrollment in the
freshman class rose by 37 percent.
Source: Jonathan D. Glater and Alan Finder, “In New Twist on Tuition Game,
Popularity Rises With the Price,” New York Times, December 12, 2006
Based on the information above, the demand for Hendrix College education is
A) unit-elastic.
B) perfectly elastic.
C) relatively inelastic.
D) More information is needed to answer the question.
Figure 13-8 Figure 13-8 shows cost and
demand curves for a monopolistically competitive producer of iced-tea. What is the
profit-maximizing output level?
A) 22 cases
B) 24 cases
C) 30 cases
D) 38 cases
What is potential GDP?
A) It is the level of real GDP in the long run.
B) It is the difference between current GDP and maximum GDP.
C) It is the level of real GDP in the short run.
D) It is the level of GDP at which inflation is constant.
In economics, the optimal level of pollution is
A) zero.
B) the level for which the total benefit from reducing the pollution is the greatest.
C) the level for which the marginal benefit from reducing the pollution is the greatest.
D) the level for which the net benefit from reducing the pollution is the greatest.
Ceteris paribus, an increase in the current or actual rate of inflation will cause
A) the short run Phillips curve to shift upward.
B) the unemployment rate to decrease (a movement along the short run Phillips curve).
C) the long run Phillips curve to shift leftward.
D) expectations of future inflation rates to be revised downward.
If rational workers and firms know that the Federal Reserve is following a
contractionary monetary policy, they will expect inflation to ________ and will adjust
wages so that the real wage ________.
A) increase; remains unchanged
B) decrease; remains unchanged
C) decrease; increases
D) increase; decreases
Who operates and controls a corporation in its day-to-day activities?
A) the board of directors
B) stockholders
C) employees
D) management
Thailand’s experience with pegging the baht to the dollar failed because the baht was
________ relative to the dollar, and China’s experience with pegging the yuan to the
dollar has run into difficulties because the yuan has been ________ relative to the
dollar.
A) overvalued; overvalued
B) undervalued; overvalued
C) undervalued; undervalued
D) overvalued; undervalued
Under the Bretton Woods system, U.S. dollars were redeemable for ________ only if
the dollars were presented by a foreign central bank.
A) silver
B) foreign currency
C) gold
D) U.S. Treasury bonds
Wendell can sell five motor homes per week at a price of $22,000. If he lowers the price
of motor homes to $20,000 per week he will sell six motor homes. What is the marginal
revenue of the sixth motor home?
A) $10,000
B) $12,000
C) $20,000
D) $22,000
If a monopolist’s marginal revenue is $25 a unit and its marginal cost is $25, then
A) to maximize profit, the firm should increase output.
B) to maximize profit, the firm should decrease output.
C) to maximize profit, the firm should continue to produce the output it is producing.
D) Not enough information is given to say what the firm should do to maximize profit.