Scenario 14-2 Imagine that Kristy deposits $10,000 of currency into her checking
account deposit at Bank A and that the required reserve ratio is 20%.
As a result of Kristy’s deposit, Bank A can make a maximum loan of
A) $2,000.
B) $8,000.
C) $10,000.
D) $50,000.
Delaware and North Dakota have identical state gasoline taxes of 23.0 cents per gallon.
When added to the federal gasoline tax of 18.4 cents per gallon, the total tax on one
gallon of gasoline in these two states is 41.4 cents. On October 8, 2013, the average
price of one gallon of regular gasoline was $3.309 in Delaware and $3.394 in North
Dakota. Briefly explain whether this is an example of price discrimination. Assume that
the gasoline being sold is identical in both states.
Sources: gaspricewatch.com and gasbuddy.com.
For each watch that Switzerland produces, it gives up the opportunity to make 50
pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate
it produces. Which of the following is true about the comparative advantage between
the two countries?
A) Switzerland has the comparative advantage in chocolate.
B) Switzerland has the comparative advantage in watches.
C) Germany has the comparative advantage in watches and chocolate.
D) Germany has the comparative advantage in watches.
Table 12-3
Arnie sells basketballs in a perfectly competitive market. Table 12-3 summarizes
Arnie’s output per day (Q), total cost (TC), average total cost (ATC) and marginal cost
(MC).What will Arnie’s output be and how much profit will he earn if the market price
of basketballs is $5.00?
A) Q = 1; profit = -$10.
B) Q = 3; profit = -$7.50
C) Q = 0; profit = -$10.00
D) Price and profit cannot be determined from the information given.
The aggregate demand curve shows the relationship between the ________ and
________.
A) inflation rate; quantity of real GDP demanded
B) real interest rate: quantity of real GDP supplied
C) nominal interest rate; quantity of real GDP demanded
D) price level; quantity of real GDP demanded
What can the Federal Reserve do to reduce the natural rate of unemployment?
A) nothing
B) follow expansionary monetary policy that will increase inflation
C) follow expansionary monetary policy that will reduce inflation
D) follow contractionary monetary policy that will increase inflation
Which of the following would be classified as fiscal policy?
A) The federal government passes tax cuts to encourage firms to reduce air pollution.
B) The Federal Reserve cuts interest rates to stimulate the economy.
C) A state government cuts taxes to help the economy of the state.
D) The federal government cuts taxes to stimulate the economy.
E) States increase taxes to fund education.
The provision of the Patient Protection and Affordable Care Act (ACA) which states
that, with limited exceptions, every resident of the United States must have health
insurance that meets certain basic requirements is the ________ provision.
A) employer mandate
B) state health exchanges
C) individual mandate
D) regulation of health insurance
Figure 4-8
Figure 4-8 shows the market for beer. The
government plans to impose a unit tax in this market. The price buyers pay after the tax
is
A) $7.
B) $20.
C) $22.
D) $27.
If the economy is producing ________, unemployment is at its natural rate.
A) at potential GDP
B) above potential GDP
C) at an inflation rate of zero
D) at an unemployment rate of zero
Figure 11-18
A curve that connects points a, d and e is called
A) an input-output curve.
B) a total cost line.
C) an expansion path.
D) an indifference line.
In a report made to the U.S. Congress in 2001, the National Academy of Sciences
cautioned that if fuel economy encourages the production of smaller and lighter cars,
“Some additional traffic fatalities would be expected.” This statement suggests that
A) U.S. auto manufacturers are more concerned about producing fuel efficient cars to
compete with their Japanese and South Korean rivals than about consumer safety.
B) there is a tradeoff between safety and fuel economy.
C) society should value safety more highly than fuel economy.
D) society should value fuel economy more highly than consumer safety because of the
long term environment benefits generated by less gasoline use.
A financial security that represents a promise to repay a fixed amount of funds is a
A) share of stock.
B) coupon.
C) dividend.
D) bond.
When the government wants to give an exclusive right to one firm to produce a product,
it
A) imposes a tariff on imports of the product.
B) imposes a quota on imports of the product.
C) grants a patent or copyright to an individual or firm.
D) uses antitrust laws to keep other firms from entering the market.
Traditionally, Wall Street investment banks had been organized as partnerships, but by
2000 they had converted to being publicly traded companies. As partnerships, the
principal-agent problem is ________ because there is ________ separation of
ownership from control.
A) reduced; much
B) reduced; little
C) increased; much
D) increased; little
The additional utility that George receives from consuming one more slice of pizza is
called
A) average utility.
B) marginal utility.
C) total utility.
D) diminishing utility.