When the market estimate of a company’s riskiness increases the market adjusts by
For any change in net taxes, we can calculate the resulting change in equilibrium GDP
by using the following formula:
a. change in GDP = -MPC/(1 – MPC)
b. change in GDP = [-MPC/(1 – MPC)]x change in taxes
c. change in GDP = MPC x change in taxes
d. change in GDP = MPC/(1 – MPC)
e. change in GDP = [-MPC/(1 – MPC)] + change in taxes
The benefit to some consumer of the last unit of a good consumed is
If taxes rise $100 billion, disposable income will fall by $100 billion and consumption
spending will also fall by $100 billion.
If the price of bonds rises,
a. the Fed will decrease the money supply
b. the Fed will increase the money supply
c. the interest rate will rise
d. the interest rate will fall
e. inflation must be accelerating
How is the typical market basket determined for the Consumer Price Index (CPI)?
a. By the President
b. By the U.S. Congress
c. By a survey of the spending patterns of thousands of businesses
d. By a survey of the spending patterns of thousands of government agencies
e. By a survey of the spending patterns of thousands of households
Demand for goods in broader category definitions, such as “beverages”, is usually less
elastic than demand for more narrowly defined goods, such as “diet colas.”
The employment-population ratio is
a. percentage of the population unemployed
b. percentage of the population employed
c. the same as the unemployment rate
d. always greater than 1
e. percentage of the population employed by the private sector.
The aggregate demand curve slopes downward for the same reason that a
microeconomic demand curve slopes downward.
Trying to project total federal revenues and outlays over the next 50 years represents
educated guesses at best.
Which of the following is the Fed’s best strategy for dealing with shifts of the money
demand curve?
a. A neutralization response
b. Decrease the money supply
c. Maintain a constant money value target
d. Maintain a money supply target
e. Increase the interest rate
The aggregate supply curve describes the same relationship between price and quantity
as a microeconomic supply curve.
The track record of foreign assistance
a. is not very clear.
b. shows that it have been very successful in helping poor countries.
c. has enhanced the protection of private property rights in less developed countries.
d. has drastically reduced corruption in less developed countries.
e. has made most economists skeptical.
Both marginal revenue and marginal revenue product refer to the gains to the firm from
employing one additional worker.
Which of the following is the least liquid asset?
a. checkable deposits.
b. savings-type deposits.
c. traveler’s checks.
d. demand deposits.
e. cash.
Use the table below to find the marginal propensity to consume.
a. the marginal propensity to consume cannot be determined from the information given
b. 0.4
c. 0.5
d. 0.6
e. 0.8
The AD curve shifts rightward if taxes decrease.
A good is said to be a normal good when