If wages or prices of other inputs change, the aggregate supply curve will shift to
another position.
a. True
b. False
Being a monopolist in the market
a. guarantees a positive short-run profit.
b. guarantees a positive long-run profit.
c. does not contradict with the rule that profit is maximized where MR = MC.
d. All of the above are correct.
The slope of the demand curve conveys all the useful information about elasticity.
a. True
b. False
The basic principle that explains the demand for a factor of production is the
a. principle of marginal productivity.
b. Hotelling principle.
c. principle of opportunity cost.
d. Ramsey pricing principle.
A firm in short-run equilibrium always earns positive profits if
a. AC > P > AVC.
b. AR > AC.
c. MR = MC.
d. AC > MC.
In the national income accounts, the symbol G represents the
a. government production of goods and services.
b. volume of goods and services purchased by the federal government.
c. value of goods and services purchased by the federal government.
d. value of goods and services purchased by all levels of government.
One major reason why the purchasing power parity theory does not always predict
exchange rates accurately is that the theory focuses on trade in
a. monies.
b. goods and services.
c. stocks and bonds.
d. physical assets.
Which of the following lags makes stabilization policy more problematic?
a. expenditure lags
b. recognition lags
c. policy lags
d. All of the above.
Which retail operation would have the highest costs per book sold?
a. a small independent bookstore
b. a large retail bookstore chain
c. an Internet seller of books
d. All would have the same costs.
Critics of macroeconomic stabilization policies argue that
a. economists are unable to influence policy.
b. stabilization policies often do more harm than good.
c. stabilization theory has no practical effect.
d. policy makers need practical advice, not theory.
Stocks are riskier for buyers because there is no commitment to pay dividends.
a. True
b. False
A theory is a deliberate simplification or abstraction of factual relationships.
a. True
b. False
An excess burden is present when taxpayers alter their behavior on account of taxation.
a. True
b. False
Monetarism resembles Keynesian thinking in that they both
a. emphasize supply and ignore demand.
b. integrate supply-side analysis into their models.
c. emphasize demand side effects.
d. emphasize the importance of fiscal policy.
The entry of firms into a perfectly competitive industry causes the supply curve to
a. increase its slope.
b. decrease its slope.
c. move toward the right.
d. move toward the left.
The recession of 2007-2009 was the most severe economic downturn in the U.S. since
the
a. 1930s.
b. 1950s.
c. 1970s.
d. 1980s.
A firm uses workers and seed to grow lettuce. Its lettuce output rises from 100 tons to
200 tons when the number of workers increases from 25 to 75. Its production process
shows
a. decreasing returns to scale.
b. diminishing returns to labor.
c. increasing long-run average cost.
d. decreasing short-run average variable cost.
Many detrimental externalities occur because
a. persons do not pay the full social cost of using a resource.
b. persons do not pay the full private cost of using a resource.
c. companies do not pay the market price for natural resources.
d. companies pay more than the full social cost of using a resource.
Deregulation has dramatically decreased airline safety.
a. True
b. False
Abstraction can lead to gross distortions of pertinent facts.
a. True
b. False
A currency appreciation
a. reduces aggregate demand and increases aggregate supply.
b. reduces aggregate demand and aggregate supply.
c. increases aggregate demand and reduces aggregate supply.
d. increases aggregate demand and aggregate supply.
A commodity is ____ if it is used up when someone consumes it.
a. marginal
b. scalable
c. depletable
d. replaceable
A period in which the price level is rising is experiencing
a. inflation.
b. reflation.
c. deflation.
d. deconstruction.
A demand curve can be thought of as
a. a graphical display of “market potential.”
b. a graphical representation of the information in a demand schedule.
c. showing how much people want to buy.
d. a forecasting tool.
e. All of the above are correct.
If Taiwanese workers can produce all goods at lower wages than American workers,
then
a. Americans can still gain by trading with Taiwan.
b. Americans can only lose if they import from Taiwan.
c. Taiwan can only lose if it trades with America.
d. there are no gains from trade that are possible in this case.
e. Americans should be self-sufficient.
A comprehensive income tax with few loopholes is efficient because labor
a. supply is very little affected by taxation.
b. demand is very little affected by taxation.
c. supply is highly responsive to taxation.
d. demand is highly responsive to taxation.
To protect the environment, governments in the United States have mainly used
a. legally enforceable direct controls on pollution.
b. taxes on goods whose production creates pollution.
c. direct taxes on emissions.
d. discretionary guidelines suggested to polluting firms.
If on a given product indifference curve a firm is using an insufficient (nonoptimal)
amount of one of its inputs
a. output will be below optimal.
b. the MRP of the input will be below its price.
c. costs will not be minimal.
d. relative input prices need to change.
Economic behavior is always rational.
a. True
b. False
How do critics of discretionary stabilization policy view frequent changes in spending
and tax policy?
a. The changes make the economy smoother, although it may not look that way to
individual firms.
b. The changes make life more difficult and hectic for Congress and the Fed.
c. The changes smooth out the business cycle, making planning easier.
d. The changes cause more instability in the economy and make planning more difficult.
It required less labor time to buy a college education in 1995 than it did in 1965.
a. True
b. False
Agraria sends wheat to Cyberia in exchange for computers and technology goods. This
is an example of
a. unidirectional trade.
b. joint venture.
c. barter.
d. monetary exchange.
Any factor that shifts the demand curve to the left but does not affect the supply curve
will lower the equilibrium price and raise the equilibrium quantity.
a. True
b. False