In the short-run macro model, adjustment toward equilibrium is facilitated by price
changes.
Price-fixing agreements among competing firms are a violation of the Sherman
Antitrust Act.
The order of Soviet dictator Joseph Stalin to farmers in the 1930s to produce capital
equipment rather than food
a. was based on government support payments for agriculture.
b. relied on foreign assistance.
c. was an illustration of the capital formation method.
d. was an illustration of the brute force method of breaking the poverty cycle, and it was
a very successful policy.
e. was an illustration of the brute force method of breaking the poverty cycle, and it
meant starvation for millions of farmers.
If all opportunities for Pareto improvements have been exhausted,
If the Federal Reserve sells $1,000 in bonds and the required reserve ratio is 0.1
(assume banks hold no excess reserves) what will be the total change in reserves at all
banks?
a. $10,000
b. $1,000
c. -$10,000
d. -$1,000
e. -$1,100
Periodic fluctuations in GDP are called business cycles.
If the MPC is 0.75, what is the value of the government purchases multiplier?
a. -1.33
b. 3.0
c. -3.0
d. 4.0
e. -4.0
A bank’s balance sheet shows
a. information about the riskiness of its loans
b. the amount of money loaned to each individual borrower
c. the amount of cash in the hands of the public
d. the number of checking accounts it maintains
e. the bank’s assets and liabilities
Kara is a construction worker. Because of adverse weather during the winter, she has
been laid off from her job. She is available for work and has even sought work with
other construction companies. Kara is
a. experiencing frictional unemployment
b. experiencing seasonal unemployment
c. experiencing structural unemployment
d. experiencing cyclical unemployment
e. not in the labor force at this time
If the marginal product of labor rises, the marginal cost of output
According to classical economists,
a. full employment means zero unemployment
b. as long as markets clear, no government action is needed to ensure full employment
c. even if all markets clear, government action is needed to correct labor market
imperfections if the economy is to reach full employment
d. as long as markets clear and government provides jobs to those who need them, the
economy will be at full employment
e. even if markets clear, cyclical unemployment will still persist in the long run
In a market system, resources are allocated by
Which of the following would cause the consumption function to shift down?
a. A decrease in disposable income
b. A decrease in taxes
c. An increase in taxes
d. An increase in the marginal propensity to consume
e. None of the above