Ongoing inflation means the Fed must respond to
a. an upward-shifting AS curve
b. a downward-shifting AS curve
c. changing interest rate targets
d. a depression
e. a lower real interest rate
If the demand curve facing a firm shifts outward, then
“Output fell 2 percent last quarter” is an example of a positive economic statement.
Which of the following is an implicit cost?
Mutually beneficial international trade between two countries depends on
a. each country having an absolute advantage in the production of a different good
b. one country being worse (requiring more resources) than the other in the production
of every good
c. at least one country having a zero opportunity cost in the production of at least one
good
d. one country being relatively better at producing a good (which makes the other
country relatively worse at it)
e. one country being relatively better at producing all goods
Figure 7-2 shows how much a firm could produce with various amounts of labor
holding capital and technology constant. What is the marginal product of labor between
20 and 30 units of labor?
In the short run, the price level
a. will decrease if unit costs and markups both increase throughout the economy
b. will remain stable if unit costs increase throughout the economy
c. is unimportant in macroeconomics
d. will increase if unit costs increase throughout the economy
e. is determined by the Fed
The CPI includes the prices of
a. goods and services purchased by American consumers
b. goods and services purchased by all consumers (both foreign and domestic)
c. goods and services purchased by the government
d. investment goods purchased by businesses
e. exports purchased by foreign buyers
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
If Americans buy 100 million British pounds at an equilibrium exchange rate of $2 per
pound, how many dollars are they supplying?
a. $2 million
b. $50 million
c. $2
d. $200 million
e. $100 million
The Federal Reserve
a. issues new government bonds to finance budget deficits
b. issues bonds for the U.S. Treasury
c. buys and sells already-existing bonds
d. increases the money supply by selling bonds
e. raises and lowers tax rates and disburses money for government purchases and
transfer payments
Suppose that Trey spends all of his income on vacation trips and textbooks. If the price
of a trip is $200 and the price of a textbook is $50, then the slope of his budget line
(assuming vacation trips are measured on the vertical axis) would be
Which of the following describes the relationship between net exports and imports?
a. Net exports = imports + exports
b. Net exports = exports – imports
c. Net exports = imports – exports
d. Imports = net exports – exports
e. Imports are not related to net exports
One reason why there may be a bias against free trade is that
a. transportation costs are too high
b. absolute advantage may outweigh comparative advantage
c. those who benefit from trade have little incentive to lobby for it
d. the terms of trade may be too high
e. people prefer importing to exporting
Figure 5-8 shows the demand schedule for hockey pucks. At which price is demand the
most price elastic?
Of the following markets, which is most likely to be monopolistically competitive?
Which of the following is always true for a perfectly competitive firm?
In the long run,
a. large government budget deficits cause productivity to increase, thereby leading to
inflation
b. large government budget deficits drive down interest rates and reduce investment
spending
c. large government budget surpluses mean reductions in the money supply
d. changes in the government budget deficit have no effect on the capital stock
e. large government budget deficits drive up interest rates and reduce investment
spending
If demand is elastic, then