From an initial long-run equilibrium, if aggregate demand grows more slowly than
long-run and short-run aggregate supply, then Congress and the president would most
likely
A) increase the required reserve ratio and decrease government spending.
B) decrease government spending.
C) decrease oil prices.
D) decrease taxes.
E) lower interest rates.
Which of the following accurately describes the impact of the rule of law on a country’s
economic growth rate?
A) Countries with a strong rule of law have faster economic growth.
B) Countries with a weak rule of law have faster economic growth.
C) Countries that enforce property rights through lawsuits have slower economic
growth.
D) Countries where favoritism and bribery are common have stronger rates of growth.
Figure 28-9
A follower of the new classical macroeconomics would argue that ________ like that
pursued by Paul Volcker in 1979, would result in a movement from C to A.
A) expansionary monetary policy
B) contractionary monetary policy
C) expansionary fiscal policy
D) contractionary fiscal policy
The basic economic problem of ________ has always existed and will continue to exist.
A) scarcity
B) efficiency
C) inflation
D) recession
Table 2-19
Table 2-19 shows the output per month of two people, Wilma and Betty. They can either
devote their time to making marble statues or making marble benches.
Which of the following statements istrue?
A) Wilma has a comparative advantage in making both products.
B) Betty has a comparative advantage in making both products.
C) Betty has a comparative advantage in making statues and Wilma in making benches.
D) Betty has a comparative advantage in making benches and Fred in making statues.
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
Figure 24-1
Ceteris paribus, an increase in the price level would be represented by a movement
from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
Figure 2-4 Figure 2-4 shows
various points on three different production possibilities frontiers for a nation. Consider
the following movements:
a. from point V to point W
b. from point W to point Y
c. from point Y to point Z Which of the movements listed above represents
advancements in technology with respect to only plastic production?
A) a, b, and c
B) b and c only
C) b only
D) c only
Emma is a road construction worker. During the winter months, Emma finds it more
difficult to get work. The unemployment Emma experiences in the winter is
A) structural.
B) cyclical.
C) seasonal.
D) functional.
Table 4-8
Table 4-8 shows the demand and supply schedules for the low-skilled labor market in
the city of Westover.
If a minimum wage of $9.50 an hour is mandated, what is the quantity of labor
demanded?
A) 380,000
B) 370,000
C) 360,000
D) 10,000
If the United States is a “net borrower” from abroad,
A) the United States must be exporting more than it is importing.
B) net capital flows must be negative.
C) domestic saving is less than domestic investment.
D) net foreign investment must be positive.
Table 16-3
Julie plans to start a pet-sitting service. She surveyed her neighborhood to determine the
demand for this service. Assume that each person surveyed demands only one hour of
pet sitting services per period. Table 16-3 above shows a portion of her survey results.
Suppose Julie’s marginal cost of providing this service is constant at $7 and she charges
$7. What is the value of the consumer surplus enjoyed by her customers?
A) $39
B) $28
C) $11
D) $0
When the economy enters into a recession, your employer is ________ to reduce your
wages because ________.
A) unlikely; output and input prices generally fall during recession
B) unlikely; lower wages reduce productivity and morale
C) likely; output prices always fall during recession
D) likely; aggregate demand is vertical in the long run
The term that is used to refer to a situation in which one party to an economic
transaction has less information than the other party is
A) inefficient market hypothesis.
B) moral hazard.
C) information disparity.
D) asymmetric information.
What is a primary market?
A) a market where primary inputs like steel are sold
B) a market where you can sell any bonds you own as a private investor
C) a market where a newly issued claims are sold to initial buyers by the borrowing
firm
D) a market where you can sell any stocks you own as a private investor
Over longer periods of time, increases in oil prices provide firms with incentives to
explore and recover oil. What does this indicate about the long run price elasticity of
supply for oil?
A) The elasticity coefficient is likely to be higher in the long run than in the short run.
B) The elasticity coefficient is likely to be lower in the long run than in the short run.
C) The elasticity coefficient approaches 0 in the long run as supplies are depleted.
D) The elasticity coefficient is unstable in the long run because oil supplies may be
depleted.
Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He
asks his friend, Carmen, if she’d like to join him in setting up a partnership to start the
business. What is one disadvantage in joining the partnership that Carmen should
consider?
A) Carmen should realize that profits in the partnership will be reduced by dividend
payments to shareholders.
B) Carmen should realize that, as an owner of the business, she will be personally
responsible for the debts of the business.
C) Carmen should realize that the profits of the business will also be taxed as dividend
income, so she faces the potential for double taxation of that business income.
D) Carmen should realize that the Jeremy will have complete control over the business
because it was his idea.
Why do economists care about aggregate expenditures?
Explain why OPEC is caught in a prisoner’s dilemma?
Table 19-7
Suppose that a simple economy produces only four goods and services: iPods, t-shirts,
bottled water, and oranges. Calculate nominal GDP for this simple economy.
Assuming a market price of $4, fill in the columns in the following table. What is the
profit-maximizing level of production? What are the two ways to determine the
profit-maximizing level of production?
What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit
elastic?