In what way is the result of an excise tax imposed on either demanders or suppliers
similar to the result of a price ceiling?
a. The amount that consumers pay for the good will be less than they previously paid
b. The amount of the good that will be traded in the market will be less than previously
traded
c. both price ceilings and excise taxes create excess demand
d. The amount that consumers pay for the good will be greater than they previously paid
e. both price floors and excise taxes create excess supply
Money is the means of payment in the economy. Examples of money include
a. currency, checking account balances, and credit card limits
b. ATM cards, checking account balances, and currency
c. travelers’ checks and credit card limits
d. currency, stocks, and travelers’ checks
e. currency, travelers’ checks, and personal checks
The largest component of aggregate expenditure is
a. consumption spending
b. investment spending
c. government purchases
d. net exports
e. a virtual tie between consumption spending and government purchases
The opportunity cost of any activity can be measured by the
a. value of the best alternative to that activity
b. price (or monetary costs) of the activity
c. level of technology
d. time needed to select among various alternatives
e. fringe benefits associated with the activity
In the long run
a. both supply and demand shocks have permanent effects on real GDP.
b. real GDP can remain below potential.
c. real GDP can remain above potential.
d. both supply and demand shocks have no effect on real GDP.
e. supply shocks have permanent effects on real GDP but demand shocks have no
effect.
The aggregate supply curve
a. indicates the markup at which firms are willing to supply a given level of output
b. is derived from equilibrium conditions in the money market
c. has a positive slope because an increase in real GDP causes an increase in the cost of
resources
d. is found by summing up the supply curves of all the firms in an economy
e. illustrates how a change in the price level affects total output
Dennis is an excellent typist. However, because he has been unable to adapt to his
company’s new computer system, he has lost his job. He is currently seeking another
secretarial position, but it is likely that he will have to acquire new skills to become
employable as a secretary again. Dennis would best be described as
a. frictionally unemployed
b. seasonally unemployed
c. structurally unemployed
d. cyclically unemployed
e. not in the labor force
Everything else equal, an increase in the supply of loanable funds will
a. lower the interest rate and reduce investment spending
b. lower the interest rate and increase investment spending
c. increase the demand for funds
d. increase the interest rate and reduce investment spending
e. increase the interest rate and increase investment spending
A decrease in demand for a normal good could be caused by a(n)
a. increase in price
b. decrease in price
c. decrease in consumer incomes
d. increase in consumer incomes
e. increase in production costs
Open market sales of bonds by the Federal Reserve drain reserves from the banking
system and shift
a. the allocation of wealth between bonds and stocks
b. the economy toward a trough in the business cycle
c. the money supply curve leftward
d. reserves to nonmember banks
e. the demand for money curve leftward
Refer to Figure 8-1. If the labor market is in equilibrium, there is no
a. unemployment
b. frictional unemployment
c. structural unemployment
d. seasonal unemployment
e. cyclical unemployment
Because resources are scarce, if society produces more of one commodity, it has to
sacrifice some amount of another commodity. The amount sacrificed is
a. a normative problem
b. the out-of-pocket cost
c. the opportunity cost
d. the lost profit
e. the total factor productivity
The Phillips curve
a. illustrates the economy’s production possibilities
b. measures the Fed’s willingness to stick with a particular interest rate target
c. represents the Fed’s choices between inflation and unemployment
d. demonstrates the need for a zero inflation rate
e. explains the natural rate of unemployment
An increase in both equilibrium price and quantity could be produced by a(n)
a. decrease in supply, with demand constant
b. increase in supply, with demand constant
c. decrease in demand, with supply constant
d. increase in demand, with supply constant
e. rise in resource prices