The principle that states that the cost of something is equal to what is sacrificed to get it
is known as the:
A) marginal principle.
B) principle of opportunity cost.
C) principle of diminishing returns.
D) reality principle.
Suppose a new use for aluminum has been discovered, making aluminum more
expensive. In a market system:
A) the aluminum roof producers may choose to look for other substitutes for aluminum.
B) aluminum producers will choose to increase production of aluminum.
C) auto manufacturers will find it in their best interest to use more aluminum.
D) A and B are correct.
A straight line graph shows:
A) one variable.
B) the constant relationship between two variable.
C) the relationships among any number of variables.
D) none of the above.
In the long run, output is determined by:
A) the size of the capital stock.
B) the size of the labor force.
C) the state of technology.
D) all of the above.
What impact would the Fed’s raising the interest rate have on any inflationary pressure
in the economy?
A) An increase in interest rates decreases the money demand, which could slow
increases in the price level.
B) An increase in interest rates increases the money supply, which could cause the price
level to increase.
C) An increase in interest rates decreases the exchange rate, which causes net exports to
rise, generating inflation.
D) An increase in interest rates increases real GDP, which creates inflation in an
economy.
Figure 4.5 illustrates a set of supply and demand curves for hamburgers. A decrease in
demand and a decrease in quantity supplied are represented by a movement from
A) point c to point a.
B) point a to point c.
C) point to point c.
D) point d to point .
There is a negative relationship between two variables if
A) they move in opposite directions.
B) they move in the same direction.
C) one variable changes and the other does not.
D) neither variable moves.
Assuming all excess reserves are loaned out, currency holdings by the public are zero,
and a reserve ratio of 20 percent, an initial deposit of $6,000 will lead to a total increase
in deposits of
A) $12,000.
B) $24,000.
C) $30,000.
D) $36,000.
All else constant, if the economy in experiences a deflation, then:
A) demand for money increases.
B) demand for money decreases.
C) the quantity demanded for money increases.
D) the quantity demanded for money decreases.
The real value of money ________ as the price level falls.
A) remains the same
B) decreases
C) increases
D) none of the above
Suppose bad weather in Florida unexpectedly results in a much smaller citrus crop than
had been projected. This would tend to cause the labor supply curve for citrus pickers to
A) shift to the right, causing the labor demand curve to shift to the right.
B) shift to the left, causing the labor demand curve to shift to the left.
C) remain unchanged, and the wage rate would tend to increase.
D) remain unchanged, and the wage rate would tend to decrease.
Recall the Application about the success of the 2009 stimulus package to answer the
following question(s).
According to the Application, economist John B. Taylor found that the aid to state and
local governments which were a part of the 2009 stimulus package were used primarily
to
A) increase spending on goods and services.
B) increase spending on transfer programs, but spending on goods and services
declined.
C) increase spending on transfer programs, goods, and services.
D) increase spending on infrastructure, but spending on transfer programs declined.
Table 2.1
Kaitlyn and Larissa have formed a dog bathing and grooming business business. The
number of dogs they can bathe or groom in any given day is depicted in Table 2.1. The
opportunity cost of grooming the third dog in a day is bathing ________ dog(s).
A) 3
B) 4
C) 5
D) 18
Even though a high portion of the public debt is held by older and wealthy individuals
or institutions, the debt is paid for by increased taxes on
A) only those holding the actual debt.
B) all taxpayers.
C) those who invest in the stock market.
D) purchasers of gasoline and luxury items.
Deciding how products of a society are distributed among the citizens in an economy
answers the economic question of:
A) Who consumes the products produced?
B) What will be produced?
C) Where will the products produced be consumed?
D) How will we produce it?
Complete price stability would be the result of
A) inflation.
B) deflation.
C) hyperinflation.
D) an inflation rate of zero.
Figure 14.5 Refer to Figure 14.5. If the money supply decreases from to :
A) money demand must increase for the money market to return to equilibrium.
B) the market interest rate will fall to 6%.
C) the market interest rate will increase to 10%.
D) the money market will return to equilibrium only if the money supply is decreased to
its original level.