If an excise tax is imposed on shoes,
The production possibilities frontier is useful for demonstrating both scarcity and
productive inefficiency.
According the AS/AD model, in the long run, expansionary monetary policy will
a. increase both real GDP and the price level.
b. decrease both real GDP and the price level.
c. decrease the price level and leave real GDP unchanged.
d. increase the price level and leave real GDP unchanged.
e. increase real GDP and reduce the price level.
The fact that a single-price monopolist must lower its price to sell more output explains
why price exceeds marginal revenue.
The model of monopolistic competition assumes that
Consider two labor markets in which jobs are equally attractive in all respects other
than the wage rate. All workers are equally able to do either job. Initially, both labor
markets are perfectly competitive. If a union organizes workers in one of the markets,
then wage rate will tend to
Which of the following will increase both money supply and money demand in the
short run?
a. An open market sale of bonds by the Fed
b. An open market purchase of bonds by the Fed
c. An increase in government purchases
d. A decrease in taxes
e. An increase in autonomous consumption
Equilibrium GDP
a. is not affected by nominal wage adjustments
b. represents the level of output at which public welfare is maximized
c. in the long run is equal to the average of the short-run GDP equilibria
d. is influenced by long-run adjustments in the labor market
e. falls if aggregate demand increases
Federal revenue as a percentage of GDP dropped significantly in the early 2000s
because
a. of increased transfer payments due to the recession.
b. of decreased transfer payments due to the recession.
c. of tax-rate decreases passed by the Bush administration and Congress as well as
recessionary impacts.
d. of tax-rate increases passed by the Bush administration and Congress as well a
recessionary effects.
e. of tax-rate increases passed by the Bush administration .
If inflation is correctly anticipated, in a transaction between borrowers and lenders,
inflation
a. will not reduce purchasing power of the money paid back
b. will redistribute purchasing power from borrowers to lenders
c. will not redistribute purchasing power
d. will redistribute purchasing power from to lenders to borrowers
e. cannot be taken into consideration when a loan is negotiated
Figure 2-1 illustrates the trade-off for a particular student between time spent studying
per week and income per week from working part-time. If this student does not study at
all, how much income can they earn?
Figure 2-1
In the short-run macro model, if aggregate expenditure is less than GDP, output will
a. decline as firms cut production to stop the buildup of inventories
b. decline as firms increase their prices to stop the buildup of inventories
c. increase as firms increase production to try to stop depletion of inventories
d. increase as firms cut their prices to try to stop depletion of inventories
e. remain unchanged indefinitely unless government takes action