A public good is
a. always depletable and excludable.
b. always depletable and often excludable.
c. never depletable and always excludable.
d. never depletable and always nonexcludable.
If the U.S. purchases oil from Venezuela, what is the effect in the foreign exchange
market?
a. It will increase demand for U.S. dollars.
b. It will decrease demand for U.S. dollars.
c. It will increase supply of U.S. dollars.
d. It will decrease supply of U.S. dollars.
Mrs. Dodge has $8 million in income and pays no income taxes. Her income is most
likely
a. capital gains.
b. interest on corporate bonds.
c. interest on municipal bonds.
d. offset by mortgage interest.
The typical movement of the aggregate supply curve resulting from an increase in
productivity is that it
a. shifts inward and becomes flatter.
b. shifts inward.
c. shifts outward.
d. becomes flatter.
e. becomes steeper.
Theoretically, when a currency depreciates one can predict that
a. the price level will rise and real GDP will rise.
b. the price level will fall and real GDP will fall.
c. real GDP will rise, but price change is not predictable.
d. the price level will rise, but real GDP change is not predictable.
Figure 20-6
In Figure 20-6, which point represents equilibrium at the lowest exchange rate?
a. E
b. F
c. G
d. H
Which of the following is a direct tax?
a. excise tax
b. tax on corporate profits
c. property tax
d. sales tax
A “backstop resource” is a close substitute for a depletable resource that is available in
almost unlimited supply but at a higher cost. Shale oil is a backstop resource for crude
oil. Which of the following statements is correct?
a. The production of shale oil is likely to increase over time even if crude oil is still
available.
b. Shale oil is unlikely to be produced until all the crude oil has been depleted.
c. The existence of shale oil as a backstop resource will discourage firms from seeking
new reserves of crude oil.
d. In the future, shale oil is likely to be produced at the same time as crude oil and to
sell for a lower price.
The fall of actual GDP below the level of potential GDP is a signal that the economy is
in a recession.
a. True
b. False
The entry of new firms into a monopolistically competitive industry will cause the
long-run equilibrium price to rise.
a. True
b. False
An argument that has been advanced to explain high teenage unemployment is
a. lack of job experience.
b. limited education.
c. a minimum-wage requirement higher than their marginal revenue products.
d. all of the above.
Under a pure system of laissez faire, the government would not do which of the
following?
a. prosecute criminals
b. provide national defense
c. punish those involved in conspiracies to fix prices
d. establish minimum wages
From 1979 to 2011, which country had the highest growth rate of GDP per hour of
work?
a. Singapore
b. United Kingdom
c. France
d. Japan
Figure 22-5
From the graph in Figure 22-5 (curves show output per unit of labor input), one can
infer that
a. Japan has an absolute advantage in TVs and computers, but a comparative advantage
only in TVs.
b. Japan has only a comparative advantage in TVs.
c. Japan has an absolute advantage in both TVs and computers, but a comparative
advantage only in computers.
d. China has a comparative advantage in computers.
Sales maximization by a firm most often serves the interests of the firm’s
a. stockholders.
b. creditors.
c. managers.
d. unskilled laborers.
A perfectly competitive firm is a “price taker” because it cannot sell its product for
more than the market price.
a. True
b. False
Over long periods of time, M2 velocity has been relatively constant.
a. True
b. False
Taken as a whole, antipoverty programs may actually put a poor family in a position in
which the family becomes worse off if its earnings rise.
a. True
b. False
Concentration ratios have not been studied much in the last century.
a. True
b. False
If the demand curve is vertical, the elasticity is
a. 1.0.
b. 0.0.
c. 0.5.
d. infinite.
Older Americans living on a pension and therefore on a fixed income, tend to be made
a. better off when prices rise.
b. better off when inflation rates rise.
c. worse off when prices rise.
d. worse off when prices fall.
Although checking deposits are considered money, they are actually
a. fictitious numbers in persons’ checkbooks.
b. backed by commodities like gold.
c. not very useful for making payments.
d. bookkeeping entries in bank balance sheets.
A sizable appreciation of the U.S. dollar in the mid-1980s
a. raised U.S. exports and imports.
b. raised U.S. exports and reduced imports.
c. reduced U.S. exports and imports.
d. reduced U.S. exports and raised imports.
The labor supply curve starts to bend backward at the point where
a. the total utility of leisure exceeds the total disutility of labor.
b. the marginal utility of additional income becomes zero.
c. the income effect comes to dominate the substitution effect.
d. the substitution effect comes to dominate the income effect.
Fractional reserve banking has three crucial features: bank profitability, bank discretion
over the money supply, and bank exposure to runs.
a. True
b. False
A recession in the United States will tend to cause recessions in other countries because
as U.S. GDP falls, U.S.
a. tariffs will automatically rise.
b. exports will rise.
c. imports will fall.
d. exports will fall.
During most of the 1990s, average hours worked per week ____, then, after 2000,
started to ____.
a. rose steadily; level off
b. remained virtually constant; drop slowly.
c. were on the upswing; fall slowly.
d. continued to decline; level off
Which of the following carries out the distribution process by rationing goods on the
basis of preferences and relative incomes?
a. Administered system
b. Government
c. Price system
d. Central planning
It is necessary for the Federal Reserve to regulate the money supply because
a. banks tend to act in a counter-cyclical manner with regard to the money supply.
b. banks are not profit-oriented, and tend to be unresponsive to the needs of business.
c. left to itself, the banking system will create a gyrating money supply that will be
destabilizing.
d. left to itself, the banking system will not be able to increase or decrease the money
supply.
Price elasticity of demand can be written as percentage change in Q divided by
percentage change in P.
a. True
b. False
When demand for a product is very inelastic, the burden of a tax falls mainly on
a. producers.
b. consumers.
c. tax collectors.
d. people who drop out of the market.