If the consumption function is defined as C = 7,250 + 0.8Y, what is the value of the
multiplier?
A) 0.2
B) 0.8
C) 1.25
D) 5
Figure 1-2
Calculate the area of the triangle A.
A) $1.3 million
B) $2.6 million
C) $3.4 million
D) $5.2 million
An average tax rate is calculated as
A) total taxable income taxes paid.
B) total taxable income · taxes paid.
C) taxes paid · total taxable income.
D) (total taxable income – taxes paid) · taxable income.
Which of the following transactions would be included in the official calculation of
GDP?
A) A student buys a used textbook at the bookstore.
B) Firestone sells $2 million worth of tires to General Motors.
C) You wash and wax your father’s car as a favor to him.
D) You buy a new iPod.
E) You illegally download music off the Internet to put on your new iPod.
If the quantity demanded for a good rises as income rises, then the income elasticity of
demand for this good is ________ than 0, and the good is ________ good.
A) greater; an inferior
B) less; a normal
C) less; an inferior
D) greater; a normal
If consumers purchase fewer of those products that increase most in price and more of
those products that decrease in price as compared to the CPI basket, then
A) changes in the CPI accurately reflect the true rate of inflation.
B) changes in the CPI understate the true rate of inflation.
C) changes in the CPI overstate the true rate of inflation.
D) changes in the CPI are unrelated to the true rate of inflation.
Which is the largest component of aggregate expenditure?
A) planned investment expenditures
B) consumption expenditures
C) government expenditures
D) net export expenditures
An organization of producers that limits the amount of a good produced is known as a
A) free market organization.
B) guild.
C) collective.
D) co-op.
Which of the following describes how a positive externality affects a competitive
market?
A) The externality causes a difference between the private benefit from consumption
and the social benefit.
B) The externality causes a difference between the private benefit from production and
the social cost of production.
C) The externality causes quantity demanded to exceed quantity supplied.
D) The externality causes a difference between the social cost of production and the
social cost of consumption.
The price of admission to Walt Disney World
A) can vary by your age and address.
B) is the same for everyone.
C) is kept low to attract customers, but Disney earns most of its profits by selling tickets
to rides and attractions inside the park.
D) is kept low to attract customers, but prices of rides and attractions inside the park
vary by your age, address and other factors.
________ usually increase(s) when the U.S. economy is in a recession and decrease(s)
when the U.S. economy is expanding.
A) Consumer spending
B) Planned investment
C) Net Exports
D) Unplanned investment
Figure 5-6 Figure 5-6 shows the market for
measles vaccinations, a product whose use generates positive externalities.What does
D2 represent?
A) the social welfare curve
B) the demand curve reflecting social benefit
C) the demand curve reflecting private benefit
D) the positive externalities curve
Red Stone Creamery currently hires 5 workers. When it added a 6th worker, its output
actually fell. Which of the following statements is true?
A) The marginal product of the sixth worker must be negative.
B) The average product of the sixth worker is negative.
C) The sixth worker is not as skilled as the fifth worker.
D) The total product becomes negative.
Figure 13-4
Figure 13-4 shows short-run cost
and demand curves for a monopolistically competitive firm in the market for designer
watches.
What is the area that represents the total variable cost of production?
A) 0P0aQa
B) 0P1bQa
C) P0abP1
D) P1bdP3
Which of the following equations correctly measures GDP in an economy?
A) GDP = C + I + G + X
B) GDP = C + net I + G + NX
C) GDP = C + I + G + NX
D) GDP = C + G + I – taxes