Explain how and why economic events in the U.S. affected the economies of Thailand,
South Korea, and Indonesia and vice-versa.
Part of the normal aftermath of a period of excessive aggregate demand is
a. improvement in the quality of life.
b. reflation.
c. real GDP growth.
d. stagflation.
e. All of the above.
Purchasers of corporate bonds lend money to a corporation.
a. True
b. False
The main examples of macroeconomic coordination failures are
a. profit declines.
b. relative price changes.
c. recessions and depressions.
d. consumer taste changes.
Oligopolistic firms that practice sales revenue maximization will produce
a. more and charge less than a profit maximizer.
b. less and charge more than a profit maximizer.
c. more and charge more than a profit maximizer.
d. less and charge less than a profit maximizer.
How does the multiplier for a change in government spending compare to the multiplier
for a change in taxes?
a. It is smaller.
b. It is the same.
c. It is larger.
d. It cannot be calculated.
If the interest rate on saving is 5 percent per period, then the true opportunity cost of
being paid $100 next period instead of this period is
a. $5.
b. $105.
c. less than $5 if people suffer from a “defective telescopic faculty.”
d. more than $5 if people suffer from a “defective telescopic faculty.”
Some medical authorities announced in the late 1980s that an acne medicine named
Retin-A also had previously unknown wrinkle-reducing properties. An economist
would expect to find that, after this announcement, the price of Retin-A ____ and the
quantity sold ____.
a. rose; fell
b. rose; rose
c. fell; fell
d. fell; rose
Until about 1983, almost all of the U.S. national debt stemmed from
a. financing wars.
b. bank failures.
c. development assistance programs.
d. tax cuts.
When GDP is less than total spending, GDP will fall.
a. True
b. False
Which of the following was not a lesson from the 2007-2009 financial crisis?
a. Regulatory failures were the result of weaknesses across the regulatory structure.
b. The financial system operated with too much leverage.
c. The business cycle no longer applies to economic analysis.
d. Monetary policy alone may not be sufficient to stabilize aggregate demand.
Discrimination can come from many groups of people, including employers and fellow
employees.
a. True
b. False
If, after careful analysis, an economist concludes that there has been a market failure,
which of the following possible corrective actions might the economist favor? Why?
a. prohibiting the activity
b. charging fees for continuing the activity
c. requiring that the public be informed of the activity
d. government purchase of the item for the public
In the event of a detrimental externality which affects the public interest, government
action is the only solution.
a. True
b. False
Average revenue is equal to
a. TR/Q.
b. (P Q)/P.
c. TR Q
d. All of the above are correct.
Earnings of some highly skilled or highly specialized persons can be classified as
economic rents.
a. True
b. False
For collusion to make sense, the payoff matrix must be a
a. positive-sum game.
b. zero-sum game.
c. negative-sum game.
d. negative-positive-sum game.
A stimulus to aggregate demand will normally pull prices up but cause a reduction in
output.
a. True
b. False
If a person owns 2,000 shares in a corporation which has issued 200,000 shares of
stock, that person owns ____ of the company and is entitled to ____ of the dividends.
a. 1 percent; 1 percent
b. 2 percent; 2 percent
c. 10 percent; 10 percent
d. 20 percent; 20 percent
Voluntary programs are dependable ways to protect the environment.
a. True
b. False
The “law” of diminishing returns is also referred to as
a. the “law” of diminishing returns to scale.
b. the “law” of variable input proportions.
c. diminishing average physical product.
d. the “law” of decreasing cost.
The Bush tax cuts
a. reduced tax rates for the upper brackets and increased tax rates for lower income
taxpayers.
b. reduced tax rates for the upper brackets and held constant tax rates for lower income
taxpayers.
c. reduced tax rates for the upper brackets and decreased tax rates for lower income
taxpayers.
d. held constant tax rates for the upper brackets and decreased tax rates for lower
income taxpayers.
e. Increased tax rates for the upper brackets and decreased tax rates for lower income
taxpayers.
Interest rate differentials can cause rapid fluctuations in short-run exchange rates.
a. True
b. False
In 2013, per capita real GDP was roughly half its value in 1960.
a. True
b. False
Figure 12-3
In Figure 12-3, demand curve CAD represents a market in which oligopolists will
match the price changes of rivals and demand curve EAB represents a market in which
oligopolists will ignore the price changes of rivals. According to the kinked demand
model, the relevant demand curve will be
a. demand curve CAB.
b. demand curve CAD.
c. demand curve EAD.
d. demand curve EAB.
Figure 20-1
Which of the diagrams in Figure 20-1 shows the situation of an individual firm that
hires labor in a perfectly competitive market?
a. A
b. B
c. C
d. D
Subprime mortgages frequently featured small or zero down payments.
a. True
b. False
Combining various goods and services into a convenient grouping is called
a. conglomeration.
b. blending.
c. congregation.
d. agglomeration.
e. aggregation.
John Maynard Keynes was the author of the book, The Economics of Welfare, which
first addressed environmental problems in terms of externalities.
a. True
b. False
If a technological breakthrough reduces input quantities needed to produce some item,
a. cost of production will be increased.
b. the price of the product will rise.
c. the price of the product will fall.
d. quantity demanded of the product will fall.
Countries that are unable to produce goods as efficiently as other countries will never
be able to trade.
a. True
b. False
Figure 11-8
Given the average cost curve shown in Figure 11-8 for dry cleaning, where Q1 is the
quantity demanded in a small town, and Q2 for a larger town, you would expect dry
cleaning to be a monopoly
a. in a small town, but not a large one.
b. in both large and small towns.
c. in a large town, but not a small one.
d. only if the process is patented.
International capital flows tend to reduce the impact of fiscal policy.
a. True
b. False
In general, an increase in wages will lead to some reaction in line with
a. the income effect but not the substitution effect.
b. the substitution effect but not the income effect.
c. both the income and substitution effect.
d. neither the income effect nor the substitution effect.