Figure 5-3
In the absence of any government intervention, the private market
A) underproduces by Qo– Qm units.
B) overproduces by Qo– Qm units.
C) overproduces by Q– Qm units.
D) underproduces by Q– Qm units.
If the Federal Reserve targets the money supply, and the money demand curve shifts to
the left, then the Fed
A) cannot maintain the money supply target.
B) can maintain the money supply target, but at a lower interest rate.
C) can maintain the money supply target, but at a higher interest rate.
D) can maintain the money supply target with no change in the interest rate.
Figure 4-8 Figure 4-8 shows the market for
apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000
per month. With rent control, the quantity supplied is 200 apartments. Suppose
apartment owners ignore the law and rent this quantity for the highest rent they can get.
What is the highest rent they can get per month?
A) $1,000
B) $1,500
C) $2,000
D) $2,300
Which of the following contributed to the downfall of the Soviet Union in 1991?
A) public dissatisfaction with low living standards and political repression
B) producing higher-quality goods than were desired by consumers
C) the rapidly increasing standard of living
D) the lack of a strong dictator who can coordinate economic activities
Which of the following criteria should be used to evaluate if government intervention in
a market for the purpose of environmental protection is justified?
A) Does the intervention program reduce pollution to zero using the least costly
method?
B) Is the intervention program economically efficient?
C) Does the intervention program make the amount of economic surplus as large as
possible?
D) Is the damage to the environment from government intervention as small as
possible?
Which of the following would cause the short-run aggregate supply curve to shift to the
right?
A) an increase in the price level
B) a decrease in inflation expectations
C) a technological advance
D) an increase in interest rates
A central bank like the Federal Reserve in the United States can help banks survive a
bank run by
A) printing money.
B) acting as a lender of last resort.
C) raising the discount rate.
D) increasing the required reserve ratio.
Which of the following statements about an entrepreneur is true?
A) purchases other factors of production in the output market
B) develops the vision for the firm and funds the producing unit
C) sells his entrepreneurial services in the output market
D) does not face personal risk
Foreign direct investment occurs when a Chinese corporation
A) purchases stock issued in China.
B) opens a new Chinese factory.
C) purchases 1,000 shares of stock issued by an American company.
D) opens a new factory in France.
Figure 13-2
Ceteris paribus, a decrease in productivity would be represented by a movement from
A) SRAS1 to SRAS2.
B) SRAS2 to SRAS1.
C) point A to point B.
D) point B to point A.
Figure 28-1
Suppose that the economy is currently at point A on the short-run Phillips curve in the
figure above, and the unemployment rate at A is the natural rate. If the economy was to
move to point B, which of the following must be true?
A) The economy is producing a level of GDP equal to potential GDP.
B) Aggregate demand must have increased.
C) Equilibrium GDP at point B must be below potential GDP.
D) The Fed conducted expansionary policy to cause the move.
E) The Fed purchased treasury bills to cause the move.
If the social cost of producing a good or service exceeds the private cost,
A) a positive externality exists.
B) the sum of consumer surplus and producer surplus is maximized.
C) the market achieves economic efficiency.
D) a negative externality exists.