When firms reduce their target level of inventories, equilibrium expenditure ________
and real GDP ________.
A) increases; decreases
B) decreases; increases
C) decreases; decreases
D) increases; increases
E) decreases; does not change
In real business cycle theory, ________ are the main source of economic fluctuations.
A) unexpected changes in government expenditure
B) random fluctuations in investment
C) random fluctuations in productivity
D) unexpected changes in the full-employment quantity of labour
E) changes in the quantity of money
Use the figure below to answer the following questions.
Figure 26.3.1
Refer to Figure 26.3.1. Short-run macroeconomic equilibrium real GDP in Econoworld
is
A) $360 billion.
B) $400 billion.
C) $440 billion.
D) $480 billion.
E) $520 billion.
Use the figure below to answer the following question.
Figure 13.4.4
Refer to Figure 13.4.4. Consider a market with a perfect price-discriminating
monopolist. If the light grey area shows the consumer surplus and the dark grey area
shows the producer surplus, which graph correctly represents this firm?
A) (a)
B) (b)
C) (c)
D) (d)
E) none of the graphs
Use the information below to answer the following questions.
Fact 28.4.1 Eurozone Unemployment Hits Record High As Inflation Rises
Unexpectedly
Eurozone unemployment rose to 10.7 percent. At the same time, Eurozone inflation
unexpectedly rose to 2.7 percent a year, up from the previous month’s 2.6 percent a
year.
Consider Fact 28.4.1. A very high unemployment rate can be accounted for by the
Phillips curve model by all of the following except
A) a movement down along the short-run Phillips curve if there is no change in the
natural unemployment rate.
B) a rightward shift of the short-run Phillips curve if the natural unemployment rate
increases.
C) a rightward shift of the long-run Phillips curve if the natural unemployment rate
increases.
D) a movement up along the long-run Phillips curve if the natural unemployment rate
increases.
E) All of the above give explanations for a high unemployment rate.
You have the choice to go skiing during spring break, staying at the university to study,
or spending the week visiting your family. If you decide to go skiing, the opportunity
cost of the holiday is
A) staying at the university to study because you need to improve your grades.
B) staying at the university because your parents are paying your tuition.
C) staying at the university or spending the week visiting your family, depending on
what you would have done otherwise.
D) nothing because you enjoy skiing.
E) visiting your family because not visiting means that you will feel guilty.
Refer to Figure 1A.2.1. If x decreases from 5 to 4, y
A) decreases from 4 to 3.
B) decreases from 4 to 3 1/2.
C) decreases from 4 to 2.
D) increases from 4 to 5.
E) increases from 3 1/2 to 4.
David has an income of $60 to buy movie tickets and bus tickets. The price of a movie
ticket is $12 and the price of a bus ticket is $4. What is the relative price of a bus ticket
in terms of movie tickets?
A) 2 movie tickets
B) 15 movie tickets
C) $3
D) 1/3 movie ticket
E) $6
Elena owns a Canada Savings Bond with a a price of $5,000, which pays $500 per year.
The price of the bond rises in the bond market to $7,500. What is the new interest rate
on the bond?
A) 5 percent
B) 6.67 percent
C) 10 percent
D) 20 percent
E) 500 percent
Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in the
quantity demanded from 10,500 to 9,500 units. In this range of demand, the price
elasticity of demand is
A) 14.
B) 7.
C) 1,000.
D) 1.
E) 0.7.
The total utility from owning three skirts is equal to
A) total income divided by the price of one skirt.
B) total income divided by the amount spent to buy the three skirts.
C) the sum of the marginal utility from the first skirt plus the marginal utility from the
second skirt plus the marginal utility from the third skirt.
D) three times the marginal utility from the first skirt.
E) the total amount spent to buy the three skirts.
A country opens up to trade. In an import industry,
A) domestic producers lose and domestic consumers gain.
B) domestic consumers lose and domestic producers gain.
C) the government loses and domestic consumers gain.
D) domestic producers lose and the government gains.
E) none of the above
If the natural unemployment rate rises
A) the long-run Phillips curve shifts rightward and the short-run Phillips curve does not
change.
B) the long-run Phillips curve shifts leftward and the short-run Phillips curve does not
change.
C) the short-run Phillips curve shifts rightward and the long-run Phillips curve does not
change.
D) the short-run and long-run Phillips curves both shift leftward.
E) the short-run and long-run Phillips curves both shift rightward.
Which type of cost does not change as the quantity of output produced changes?
A) average total cost
B) marginal cost
C) average fixed cost
D) total fixed cost
E) Both C and D are correct.
In calculating GDP, all of the following are excluded except
A) the value of intermediate goods.
B) the value of all homes built in the year in question.
C) the value of used goods.
D) purchases of stocks and bonds.
E) subsidies from the government.
Complete the following sentence. Economic models
A) do not answer questions about the economic world.
B) include most of the details of the economic world.
C) describe some aspect of the economic world, but include only those features needed
for the purpose at hand.
D) answer questions that arise from normative statements.
E) were first developed in the 1970s.
Which of the following does not affect the size of the monetary base?
A) the amount of notes issued by the Bank of Canada
B) the amount of loans issued by chartered banks
C) the amount of coins issued by the Canadian Mint
D) the amount of chartered bank deposits at the Bank of Canada
E) none of the above
Marginal utility equals
A) total utility divided by price.
B) total utility divided by the total number of units consumed.
C) the slope of the total utility curve.
D) the inverse of total utility.
E) the area below the demand curve but above market price.
Refer to Figure 9.1.2. Which budget line has the lowest relative price for carrots?
A) AD
B) BD
C) CD
D) The relative price is equal for all three budget lines.
E) Cannot be determined without studying the indifference curves.
Suppose income increases. Choose the correct statement.
A) The equilibrium price of turnips falls if a turnip is an inferior good.
B) The equilibrium price of turnips rises if a turnip is an inferior good.
C) The equilibrium quantity of turnips decreases if a turnip is an inferior good.
D) The supply of turnips decreases whether or not a turnip is an inferior good.
E) Both A and C
In the long run, the firm in monopolistic competition
A) faces a perfectly elastic demand.
B) produces more than the quantity at minimum ATC.
C) produces less than the quantity at minimum ATC.
D) produces the quantity at minimum ATC.
E) makes an economic profit.
A used truck has a sticker price of $21,000. Arthur decided that he would pay no more
than $19,500 for this truck. He bought the truck for $19,250. Arthur obtained a
consumer surplus of
A) $21,000.
B) $19,500.
C) $19,250.
D) $1,750.
E) $250.
The short run refers to a time period
A) of one year or less.
B) in which all factors of production are variable.
C) in which all factors of production are fixed.
D) in which some factors of production are variable, but at least one factor of
production is fixed.
E) in which all factors of production are variable, but the technology is fixed.
The burden of tax on sellers is greater the more
(1) elastic is demand.
(2) inelastic is demand.
(3) elastic is supply.
(4) inelastic is supply.
A) (2) only
B) (1) and (3)
C) (1) and (4)
D) (2) and (3)
E) (2) and (4)
If A and B are complements in production and the price of A falls, the supply of B
A) increases, and the price of B rises.
B) increases, and the price of B falls.
C) decreases, and the price of B falls.
D) decreases, and the price of B rises.
E) does not change.
Refer to Table 27.3.1. The multiplier
A) is 5.
B) is 2.5.
C) is 4.
D) is 1.8.
E) cannot be determined without more information.
All of the following statements are correct except
A) firms coordinate economic activity when they can perform a task more efficiently
than markets can.
B) Nobel Laureate Ronald Coase stated that firms cannot be more efficient than
markets.
C) markets can coordinate production.
D) firms are often more efficient than markets as coordinators of economic activity
because they can achieve lower transactions costs, economies of scale, economies of
scope, and economies of team production.
E) outsourcing is an example of market coordination.
A textbook publisher is in monopolistic competition. If the firm spends nothing on
advertising, it can sell no books at $100 a book, but for each $10 cut in price, the
quantity of books it can sell increases by 20 books a day. The firm’s total fixed cost is
$2,400 a day. Its average variable cost and marginal cost is a constant $20 per book. If
the firm spends $1,200 a day on advertising, it can increase the quantity of books sold
at each price by 50 percent. If the publisher advertises, its profit maximizing price per
book is
A) $40.
B) $50.
C) $60.
D) $70.
E) $20.
In 2011, Tim’s Gyms needs to finance the building of a new gym. Suppose Tim secures
this financing from a bank, and the bank receives ownership if Tim fails to make
payments. This type of funding is
A) a mortgage obtained in the loan market.
B) a stock issued in the bond market.
C) a bond issued in the bond market.
D) a mortgage obtained in the stock market.
E) a stock issued in the loan market.
An assumption of the neoclassical growth theory is that
A) people earn a subsistence real wage in the long run.
B) technological advances are the result of chance.
C) the marginal product of all types of capital increases as more capital is accumulated.
D) discoveries are a public capital good.
E) encouraging international trade increases economic growth.
Before starring as Tony Stark in Iron Man, Robert Downey Jr. had played in 45 movies
that had average first-weekend box office revenues of a bit less than $5 million. Iron
Man grossed $102 million in its first weekend. The success of Iron Man ________ the
opportunity cost of hiring Robert Downey Jr. Movie producers now have ________
incentive to hire Robert Downey Jr.
A) increases; less
B) decreases; less
C) decreases; more
D) increases; more
E) decreases; zero
The four-firm concentration ratio tells us the percentage of ________ for the four
largest firms in an industry.
A) employment
B) accounting profit
C) economic profit
D) the value of sales
E) physical output
Households will choose to save more if
A) expected future income decreases.
B) current disposable income increases.
C) current disposable income decreases.
D) Both A and B are correct.
E) Both A and C are correct.