“A decrease in the price of digital cameras will decrease the demand for camera film.”
This statement is an example of a positive economic statement.
Japan has a single-payer health care systemin which the government provides national
health insuranceto all Japanese residents.
If the market price is at equilibrium, the producer surplus is minimized.
A quasi-public good is similar to a public good in that one person’s consumption of the
quasi-public good does not reduce the amount available for everyone else.
One reason why many low-income countries experience low rates of growth is because
of poor public education and health.
The ability to engage in product differentiation is one of the factors a manager or owner
of a firm can control in order to create value for consumers.
Saving exceeds domestic investment in Japan, which generates a financial account
deficit in Japan’s balance of payments.
The Fed can simultaneously reduce the inflation rate and stimulate growth through
lowering interest rates.
Efficiency wage is another name for the minimum wage.
Consider a manufacturing operation that uses specialized machinery and labor to
produce its output. In this case, the input that is not fixed in the short run is labor.
A perfectly competitive firm in long-run equilibrium produces output at the lowest
possible average total cost.
An increase in the price of grape juice causes an increase in the marginal revenue
product of labor used to produce grape juice.
A decrease in population shifts the production possibility frontier outwards over time.
For the last few decades, the labor force participation rates of men have ________, and
the labor force participation rates of women have ________.
A) risen; risen
B) fallen; fallen
C) risen; fallen
D) fallen; risen
Table 15-4
Shakti Inc. has been granted a patent for its Arnica toothache balm. Table 15-4 shows
the demand and the total cost schedule for the firm.
What is the economically efficient output level?
A) 5 units
B) 6 units
C) 7 units
D) 8 units
If households choose to take some fraction of each check they deposit and hold it as
currency, then the simple deposit multiplier ________ the real-world multiplier.
A) is greater than
B) is less than
C) is equal to
D) bears no relationship to
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 monopoly price. What is
the revenue collected from the fixed fee portion of the price?
A) $10,240
B) $7,870
C) $2,560
D) $1,440
Figure 2-6
If the economy is currently producing at point C, what is the opportunity cost of
moving to point B?
A) 10 thousand wrenches
B) 13 thousand hammers
C) 30 thousand wrenches
D) 23 thousand hammers
All of the following are assumptions made by the dynamic model of aggregate demand
and aggregate supply except
A) aggregate demand and potential real GDP decrease continuously.
B) the aggregate demand curve shifts to the right during most periods.
C) potential real GDP increases continuously.
D) the short-run aggregate supply curve shifts to the right except during periods when
workers and firms expect higher wages.
Table 7-3
Mateo and Celeste produce custom saddles and spurs. Table 7-3 lists the number of
saddles and pairs of spurs Mateo and Celeste can each produce in one month. Select the
statement that accurately interprets the data in the table.
A) Mateo has an absolute advantage in making saddles and Celeste has an absolute
advantage in making spurs.
B) Mateo has an absolute advantage in making spurs and Celeste has an absolute
advantage in making saddles.
C) Mateo has an absolute advantage in making spurs.
D) Celeste has an absolute advantage in making saddles.
New growth theory states that increases in ________ capital will result in ________ at
the ________ level.
A) knowledge; increasing returns to scale; firm
B) physical; decreasing returns to scale; firm
C) knowledge; decreasing returns to scale; economy
D) knowledge; increasing returns to scale; economy
Which of the following is true regarding the productivity slowdown in the United States
during the mid-1970s?
A) The productivity slowdown occurred despite a rising quality of labor.
B) The productivity slowdown was unique to the United States, as foreign countries
experienced unprecedented rates of growth during that time.
C) High oil prices raised the costs of doing business for markets worldwide, and
reduced output worldwide as well.
D) The move toward a “new economy” ended in the early 1970s, resulting in less
technological progress in the United States during the mid-1970s.
Which of the following is not an advantage of starting a new business as a corporation?
A) separation of ownership and business liability
B) enhanced ability to raise funds
C) ability to share risks
D) possibility of double taxation
As the economy nears the end of an expansion, interest rates usually ________ and
wages raise more ________ than prices.
A) rise; rapidly
B) rise; slowly
C) fall; rapidly
D) fall; slowly
Table 2-18
Table 2-18 shows the output per week of two people, Minnie and Mickey. They can
either devote their time to making hats or making umbrellas. What is Mickey’s
opportunity cost of making an umbrella?
A) 1/5 of a hat
B) 5 hats
C) 10 hats
D) 50 hats
Explain why expansionary monetary policy would not result in reduced unemployment
rates if workers and firms have rational expectations.
How will an increase in federal government spending without an increase in taxes affect
real GDP and the price level in the short run in a closed economy and in an open
economy?
Would a larger multiplier lead to longer and more severe recessions or shorter and less
severe recessions? Briefly explain.
What is meant by the term “internalizing an externality”? How does a Pigovian tax or
subsidy internalize an externality?
Given Table 12-7 below, fill in the values of the marginal propensity to save (MPS) and
the marginal propensity to consume (MPC). Show that MPC + MPS = 1. Table 12-7
What is a monopsony?
Would a larger multiplier lead to longer and more severe recessions or shorter and less
severe recessions? Briefly explain.
There are many cattle ranchers in the world, and there are also many McDonald’s
restaurants in the world. Why, then, does a McDonald’s restaurant face a
downward-sloping demand curve while a cattle rancher faces a horizontal demand
curve?
What actions should the Fed take if it believes the economy is about to fall into
recession?