Which combination of government policies would be most likely to increase labor
supply?
a. Increasing income tax rates and cutting transfer payments to the needy
b. Decreasing income tax rates and cutting transfer payments to the needy
c. Decreasing income tax rates and increasing subsidies to businesses for hiring certain
kinds of workers
d. Increasing income tax rates and cutting subsidies to business
e. Cutting transfer payments to the needy and increasing subsidies to business
If the price level is falling, the economy is experiencing
a. creeping inflation
b. stagflation
c. disinflation
d. inflation
e. deflation
The opportunity cost of a particular economic activity
a. is the same for each individual considering the activity
b. can differ among different individuals considering the activity
c. excludes the monetary cost of the activity
d. equals the money cost of the activity minus its time cost
e. has the same time cost for each individual considering the activity
Which of the following is an accurate description of the U.S. inflation rate since 1950?
a. The rate has always been below 4 percent.
b. Inflation was low in the 1970s.
c. Episodes of high inflation occurred in the 1970s and early 1980s.
d. Inflation rates were very high in the 1960s.
e. Episodes of high inflation occurred in the 1990s.
Betsy graduates from college, where she earned $3,000 a year working part-time, and
takes a job as a third grade teacher, where she now earns $30,000 per year. About the
same time she received her first paycheck, her bicycle was stolen. With her old income
she would have purchased a new bike but with her new income she purchased a new
car. Therefore,
a. bicycles are a normal good for Betsy
b. automobiles are an inferior good for Betsy
c. automobiles are a normal good for Betsy
d. Betsy’s supply curve for automobiles is upward-sloping
e. bicycles and automobiles are complementary goods for Betsy
Refer to Figure 15-3. Which of the following most likely caused the shifts from AE1 to
AE2, and from AD1 to AD2?
a. A decrease in the money supply
b. An increase in government purchases
c. An increase in investment spending
d. A decrease in autonomous consumption
e. A decrease in taxes.
The aggregate demand curve tells us equilibrium real GDP at any price level.
If the interest rate dropped, what would be the effect on spending?
a. Spending on automobiles would decrease.
b. Business spending on new capital would decrease.
c. Spending on consumer durables would decrease.
d. Business spending on new factories would increase.
e. Spending on new homes would decrease.
Suppose the marginal propensity to consume is 0.75. If government purchases increase
by $100 billion and the extra expenditure is financed with a net tax of $100 billion, by
how much will output change?
a. -$400 billion
b. $100 billion
c. $400 billion
d. $0
e. -$100 billion
Individuals face opportunity costs because
a. the minimum wage is too low
b. technology is improving too quickly
c. time and funds are scarce
d. government cutbacks are widespread, except possibly among society’s most affluent
households
e. welfare gives individuals an incentive to stay at home
The Federal Reserve district borders follow exclusively state borders.
Federal Reserve regulations apply
a. to all banks in the United States
b. only to member banks
c. only to private commercial banks
d. only to national banks
e. only to state banks