An increase in supply of a product results when
A) taxes on the product are increased.
B) the companies that produce the product have higher materials costs.
C) technological innovations are introduced in the manufacturing process.
D) the government reduces subsidies on the product.
Figure 7.4
From Figure 7.4, crowding out occurs between:
A) points A and B.
B) points B and C.
C) points C and D.
D) points D and E.
Figure 4.6
Figure 4.6 illustrates a set of supply and demand curves for a product. When the
economy moves from point B to point A, there has been:
A) an increase in supply and an increase in demand.
B) an decrease in supply and an decrease in quantity demanded.
C) an increase in quantity supplied and an increase in demand.
D) an increase in quantity supplied and an increase in quantity demanded.
The market demand curve:
A) shows the relationship between the price of a good and the quantity that all
consumers together are willing to buy.
B) is drawn assuming that variables such as income and tastes are fixed.
C) is drawn assuming that the number of consumers is fixed.
D) all of the above.
Scenario 1: Imagine that an economy produces two goods, flashlights and fishing lures.
In 2011, the economy produced 70 flashlights and 40 fishing lures, and the prices of
flashlights and fishing lures were $5 and $12, respectively. In 2012, the economy
produced 85 flashlights and 50 fishing lures, and the prices of flashlights and fishing
lures were $7 and $15, respectively.Based on the information in Scenario 1, nominal
GDP in 2012 in this economy was
A) $830.
B) $1,025.
C) $1,090.
D) $1,345.
When output exceeds the full employment level of output, we expect that the:
A) wages and prices increase as the long-run aggregate supply curve shifts downward
over time.
B) wages and prices increase as the short-run aggregate supply curve shifts upward over
time.
C) wages and prices increase as the long-run aggregate supply curve shifts upward over
time.
D) wages and prices decrease as the short-run aggregate supply curve shifts downward
over time.
An increase in GDP per capita always results in an increase in real GDP per capita.
Recall the Application about the decline in honeybee colonies and its effect on the
price of ice cream to answer the following question(s). In the last few years
thousands of honeybee colonies have vanished, a result of bee colony collapse
disorder (CCD). Roughly one third of the U.S. food supply–including a wide
variety of fruits, vegetables, and nuts–depends on pollination from bees. The
decline of honeybees threatens $15 billion worth of crops in the United States.
According to this Application, the decline in honeybee colonies has impacted the supply
curve for ice cream, shifting the supply curve to the ________ due to a(n) ________ in
production costs.
A) right; increase
B) right; decrease
C) left; increase
D) left; decrease
When the manager of a department store attaches price tags on his products, he is using
money as a:
A) medium of exchange.
B) store of value.
C) unit of transfer.
D) unit of account.
An example of a good/service that has custom prices is:
A) oil.
B) labor.
C) steel rods.
D) gasoline.
What is the real value of money?
A) its face value
B) its compounded earnings in banks
C) the quantity of goods it can buy
D) the ability of shop at market prices
According to Keynes, the wild swings in investment spending are caused by:
A) the multiplier-accelerator model.
B) wild swings in the interest rates.
C) irrational behavior called “animal spirits.”
D) government fiscal policy.
When the consumption function is expressed as C = Ca + b (1-t)y, “b(1-t)” is the:
A) adjusted MPC.
B) income tax.
C) MPC.
D) multiplier.
The portion of unemployment that is due to the mismatch between skills and jobs is
called ________ unemployment.
A) frictional
B) discouraged-worker
C) structural
D) cyclical
Assuming there is no government or foreign sector, the formula for the multiplier is:
A) 1/(1 – MPC).
B) 1/MPC.
C) 1/(1 + MPC).
D) 1 – MPC.
Returns on Investment
Table 12.2
If Table 12.2 represents all the investments available to the economy, the nominal
interest rate is 4.5 percent and there is no inflation, what will be the level of investment
in the economy?
A) $200
B) $500
C) $600
D) $800