If income is unequally distributed in an economy, increases in GDP may not raise
well-being in an economy.
A perfectly competitive firm’s marginal revenue curve is downward sloping.
If you purchase a share of stock from your friend who initially purchased the stock
three years ago, your purchase of the stock represents a transaction in the secondary
financial market
In a market with positive externalities, the market equilibrium quantity will be less than
the efficient equilibrium quantity.
The United States would gain from the elimination of tariffs and quotas even if other
countries do not reduce their tariffs and quotas.
Dell Computers allows potential consumers to customize personal computers to their
desires. Dell’s strategy is successful because offering bundles that more exactly meets a
consumer’s preference allows Dell to extract more consumer surplus.
Scarcity is a problem that will eventually disappear as technology advances.
Which of the following would cause the equilibrium price of apple juice to decrease
and the equilibrium quantity of apple juice to increase?
A) a decrease in the price of apples
B) an increase in the price of apples
C) an increase in the price of orange juice, a substitute for apple juice
D) a decrease in the price of granola bars, a complement for apple juice
Figure 3-1
If the product represented is a normal good, a decrease in income would be represented
by a movement from
A) A to B.
B) B to A.
C) D1 to D2.
D) D2 to D1.
In an experiment that employed the dictator game,economists at Cornell University
gave student “allocators” the option of dividing $20 in only two ways (a) $18 for
themselves and $2 to another student, or (b) $10 for themselves and $10 to another
student. What was one result from this experiment?
A) Most allocators chose to give themselves $18 and $2 to the other students.
B) Most of the students who were not allocators did not like having someone else make
decisions for them.
C) A majority of the female allocators chose option (a); a majority of the male
allocators chose option (b).
D) Most of the allocators apparently valued acting fairly.
A natural monopoly is most likely to occur in which of the following industries?
A) the pharmaceutical industry because the development and approval of new drugs
through the Food and Drug Administration can take more than 10 years
B) the diamond mining and marketing industry because one firm can control a key
resource
C) the software industry because of the importance of network externalities
D) an industry where fixed costs are very large relative to variable costs
Table 2-9
Table 2-9 shows the number of labor hours required to produce a wristwatch and a
pound of rice in Japan and Thailand. If the two countries specialize and trade, who
should export wristwatches?
A) There is no basis for trade between the two countries.
B) Japan
C) Thailand
D) They should both be importing wristwatches.
During the Great Depression, economists first began studying the relationship between
A) changes in GDP and changes in interest rates.
B) changes in aggregate expenditures and changes in GDP.
C) changes in nominal GDP and changes in real GDP.
D) changes in stock prices and changes in price controls.
Most of the pressure for a monetary growth rule has disappeared because since 1980,
A) the relationship between movements in the money supply and movements in real
GDP and the price level have become much stronger.
B) the relationship between movements in the money supply and movements in real
GDP and the price level have become much weaker.
C) the relationship between movements in interest rates and movements in real GDP
and the price level have become much stronger.
D) the relationship between movements in interest rates and movements in real GDP
and the price level have become much weaker.
Figure 26-3
In the figure above, when the money supply shifts from MS1 to MS2, at the interest rate
of 3 percent households and firms will
A) buy Treasury bills.
B) sell Treasury bills.
C) neither buy nor sell Treasury bills.
D) want to hold more money.
Which policy tool allows the Federal Reserve the greatest control over monetary
policy?
A) the discount rate
B) open market operations
C) the reserve requirement
D) lender of last resort
Which of the following statements about positive economic analysis is true ?
A) Positive analysis uses an economic model to estimate the costs and benefits of
different course of actions.
B) There is much less disagreement among economists over normative economic
analysis than over positive economic analysis.
C) There is much more disagreement among economists over positive economic
analysis than over normative economic analysis.
D) Unlike positive economic analysis, normative economic analysis can be tested.
Under pressure from Japan, the United States and Europe, China announced it switched
from pegging the yuan against the dollar to linking the value of the yuan to a ‘basket’ of
currencies. The result of this change was
A) the value of the yuan increased slightly relative to the dollar.
B) the value of the yuan has become very responsive to changes in demand and supply
in the foreign currency market.
C) the value of the yuan has increased dramatically and is beginning to remove the
trade imbalance between the United States and China.
D) the value of the yuan has decreased dramatically and has further spurred Chinese
exports.
Of the following high-income countries, which has the highest number of CT scanners
per 1 million population?
A) Canada
B) Japan
C) the United Kingdom
D) the United States
The Fed’s two main monetary policy targets are
A) the money supply and the inflation rate.
B) the money supply and the interest rate.
C) the interest rate and real GDP.
D) the inflation rate and real GDP.
Figure 18-2
Figure 18-2 shows a demand curve
and two sets of supply curves, one set more elastic than the other. If the government
imposes an excise tax of $1.00 on every unit sold, the producer’s burden of the tax
A) is Pa– Pdunder either supply curve.
B) is P- Peunder either supply curve.
C) is Pa– Pdif the supply curve is S0 and P- Peif the supply curve is S1.
D) is Pc– Pdif the supply curve is S0 and Pc– Peif the supply curve is S1.
Economists ________ that price controls are desirable.
A) are in agreement
B) are reluctant to state
C) never believe
D) only recently agree
What are the five variables that will shift the demand curve?
What is odd pricing? Why do some merchants use odd pricing?
Why would a company continue to operate for many years while never once turning a
profit rather than shut down immediately? Using revenue and cost analysis, explain
when the company would shut down.
What is the relationship among the current account, the financial account, and the
balance of payments?
In the term “real GDP,” what does “GDP” stand for and what does it measure? What
does “real” indicate?
Suppose a doctor can earn an additional $25,000 in revenue per year by keeping her
office open on Sundays. At what additional cost would keeping the office open on
Sundays not be considered economically rational?