Figure 15-7
Suppose the Fed lowers its target for the federal funds rate. Using the static AD–AS
model in the figure above, this situation would be depicted as a movement from
A) A to B.
B) B to A.
C) C to B.
D) E to A.
E) C to D.
Which of the following is not counted in M1?
A) checking account balances
B) credit card balances
C) coins in circulation
D) currency in circulation
E) traveler’s check balances
In the United States,
A) the income tax system has little or no impact on the distribution of income.
B) the after-tax income distribution of income is more equal than the before-tax
distribution.
C) once a person is in poverty, it is very difficult for a person to get out of poverty.
D) the degree of income mobility is relatively low.
What is the difference between a firm’s marginal revenue and its marginal revenue
product?
A) Marginal revenue is the change in sales revenue from selling one more unit of output
while marginal revenue product is the profit earned from hiring one more worker.
B) Marginal revenue is the change in sales revenue from selling one more unit of output
while marginal revenue product is the change in total revenue from hiring one more
worker.
C) Marginal revenue is the increase in revenue when a firm raises its output price while
marginal revenue product is the increase in marginal product when a firm hires an
additional worker.
D) There is no difference between the two terms.
Figure 16-5
Suppose the firm represented in the diagram decides to use a two-part pricing strategy
such that it charges a fixed fee and a per-unit price equal to the competitive price. (This
is also called an optimal two-part tariff.) What is the total revenue it can expect to
collect from the fixed fee portion of the price?
A) $2,560
B) $5,760
C) $7,870
D) $10,240
Many people assume that if child workers in developing countries weren’t working in
factories, they would be in school. In fact, children in developing countries
A) split their time evenly between work and school.
B) usually have few good alternatives to work.
C) are only allowed to work if they have attended school up to age 15.
D) who work are relatively rare, as most do attend school full time.
The federal government debt equals
A) tax revenues minus government spending.
B) government spending minus tax revenues.
C) the accumulation of past budget deficits.
D) the total value of U.S. Treasury bonds outstanding.
In long-run equilibrium, compared to a perfectly competitive market, a
monopolistically competitive industry produces a ________ level of output and charges
a ________ price.
A) higher; lower
B) lower; lower
C) lower; higher
D) higher; higher
If people speculate that a run on one bank will cause a run on all banks in the financial
system, and this speculation proves accurate, then the financial system would
experience what is known as a
A) commodity crisis.
B) securitization meltdown.
C) bank panic.
D) institutional death spiral.
Scenario 1-4 Suppose a cigar manufacturer currently sells 1,500 cigars per week and
makes a profit of $3,000 per week. The plant foreman observes, “Although the last 500
cell cigars we produced and sold increased our revenue by $7,500 and our costs by
$7,000, we are only making an overall profit of $3,000 per week so I think we need to
cut back on production.”
Had the firm not produced and sold the last 500 cigars, would its profit be higher or
lower, and if so by how much?
A) Its profit will be $500 higher.
B) Its profit will be $1,000 higher.
C) Its profit will be $500 lower.
D) Its profit will be $1,500 lower.
Between September 2007 and March 2008 there was a substantial reduction in the
demand for housing. What action did the Fed take in response to the reduction in the
demand for housing?
A) The Federal Reserve decreased the required reserve rate.
B) The Fed conducted open market sales of Treasury securities.
C) The Federal Reserve cut the federal funds rate seven times.
D) The Federal Reserve raised the discount rate by 3 percentage points.
Technological advances have resulted in lower prices for digital cameras. What is the
impact of this on the market for traditional (non-digital) cameras?
A) The demand curve for traditional cameras shifts to the right.
B) The supply curve for traditional cameras shifts to the right.
C) The demand curve for traditional cameras shifts to the left.
D) The supply curve for traditional cameras shifts to the left.
Figure 2-5
If the economy is currently producing at point X, what is the opportunity cost of moving
to point W?
A) 3 million tons of steel
B) 19 million tons of steel
C) 5 million tons of paper
D) 9 million tons of paper
Figure 2-19
Which two arrows in the diagram depict the following transaction: Barney earns $250
for selling scissors and razors to Floyd’s Barber Shop.
A) J and M
B) K and G
C) K and M
D) J and G
Sequential games are often used to analyze which two types of business strategies?
A) whether to invest in research and development and whether to offer employees an
early retirement package
B) deciding to merge with another firm and deciding how much to spend on an
advertising campaign
C) deciding to end production of an unprofitable product and deciding to shut down
temporarily
D) deterring entry by another firm and bargaining between firms
A country in which a significant fraction of domestic production takes place in
foreign-owned factories and facilities is most likely a country where
A) GNP is much larger than GDP.
B) GDP is much larger than GNP.
C) GDP is equal to GNP.
D) GDP is not comparable to GDP.