A monopoly is a seller of a product
A) with many substitutes.
B) without a close substitute.
C) with a perfectly inelastic demand.
D) without a well-defined demand curve.
Consumption spending is $5 million, planned investment spending is $8 million,
unplanned investment spending is $2 million, government purchases are $10 million,
and net export spending is $2 million. What is GDP?
A) $15 million
B) $23 million
C) $25 million
D) $27 million
In August 2011, Standard & Poor’s (S&P) changed its rating on U.S. Treasury bonds
from ________ based on the state of the federal government’s budget deficit.
A) “A” to “D”
B) “A” to “AAA”
C) “A+” to “B+”
D) “AAA” to “AA+”
Typically, the lower the level of income per person in a country, the lower the level of
spending per person on health care. This relationship between income and spending
indicates that health care is
A) a normal good.
B) an inferior good.
C) a luxury.
D) a necessity.
Contractionary monetary policy on the part of the Fed results in
A) an increase in the money supply, an increase in interest rates, and an increase in
GDP.
B) a decrease in the money supply, an increase in interest rates, and a decrease in GDP.
C) an increase in the money supply, a decrease in interest rates, and an increase in GDP.
D) a decrease in the money supply, a decrease in interest rates, and a decrease in GDP.
Which of the following would cause both the equilibrium price and equilibrium
quantity of potatoes (assume that potatoes are an inferior good) to decrease?
A) an increase in consumer income
B) a freeze that sharply reduces potato output
C) a decrease in consumer income
D) a technological advancement that results in a bumper crop of potatoes
Mortgages issued to borrowers whose credit histories include failures to make payments
on bills are known as ________ mortgages.
A) catastrophic
B) variable rate
C) subprime
D) Alt-A
Marginal cost is the
A) change in average cost when an additional unit of output is produced.
B) the additional output when total cost is increased by one dollar.
C) additional cost of producing an additional unit of output.
D) change in the price of inputs if a firm buys more inputs to produce an additional unit
of output.
When the Fed decided to buy long-term Treasury securities while selling an equal
amount of shorter-term treasury securities to keep long-term interest rates low, it was
following a strategy known as
A) securitization.
B) operation twist.
C) quantitative easing.
D) indirect finance.
Which of the following statements is true?
A) Monopolists are price makers. All other firms are price takers.
B) Unlike other industries, monopoly industries have high barriers to entry.
C) Only monopoly firms are granted patents and copyrights.
D) Unlike other firms, a monopolist’s demand curve is the same as the market demand
curve.
Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.
Which of the following will occur because of the automatic mechanism adjusting the
economy back to potential GDP?
A) Output will decrease.
B) Prices will increase.
C) Unemployment will rise.
D) Short-run aggregate supply will shift to the right.
The Internet has created a new category in the book selling market, namely, the “barely
used” book. How does the availability of barely used books affect the market for new
books?
A) The demand curve for new books shifts to the right.
B) The demand curve for new books shifts to the left.
C) The supply curve for new books shifts to the right.
D) The supply curve for new books shifts to the left.
Figure 30-11
The graph above depicts supply and demand for British pounds during a trading day,
where the quantity is millions of pounds. In order to support a fixed exchange rate of
$2.00 per pound, the U.S. central bank must
A) buy 0.6 million pounds per trading day.
B) sell 0.6 million pounds per trading day.
C) buy 1.2 million pounds per trading day.
D) sell 1.2 million pounds per trading day.
The Apple iPhone is sold in a box labeled “Made in China,” but a study by economists
at the Asian Development Bank found that the actual percentage of the price of the
iPhone accounted for by the only work done in China, which is assembly, is
A) 4 percent.
B) 12 percent.
C) 25 percent.
D) 65 percent.
If the U.S. government implements a tariff on Chinese tire imports, the price of
Chinese-made tires will ________, the quantity demanded will ________, and
consumer surplus will ________.
A) increase; decrease; decrease
B) increase; not change; increase
C) decrease; increase; not change
D) increase; decrease; increase
Forecasts by the Congressional Budget Office show spending on Social Security,
Medicare, and Medicaid rising from 9.9 percent of GDP in 2013 to ________ percent of
GDP in 2087, and by 2087 the federal government will be spending, as a fraction of
GDP, ________ on these three programs as it currently spends on all its programs.
A) 12.3 percent; more
B) 12.3 percent; half as much
C) 23.4 percent; more
D) 23.4 percent; half as much