Suppose that for a given good, demand decreases and supply decreases at the same
time. If demand decreases by a greater amount than supply decreases, then equilibrium
price __________ and equilibrium quantity __________ for that good.
a. rises; rises
b. rises; falls
c. falls; rises
d. falls; falls
Exhibit 14-2
The economy moves from point 1 to 2 to 3 to 4 to 5 to 6 to 7. Is this consistent with
one-shot declines originating on the supply-side of the economy combined with
continued increases in aggregate demand?
a. No, continued supply-induced inflation would be more likely to move the economy
from point 1 to 2 and then in a northwesterly direction from point 2.
b. No, continued supply-induced inflation would be more likely to move the economy
from point 1 to 3 to 5.
c. No, continued supply-induced inflation would be more likely to move the economy
from 1 to 2 and then in a southwesterly direction from point 2.
d. Yes.
If variable X rises as a result of variable Y falling, then X and Y have an inverse
relationship.
a. True
b. False
Exhibit 3-16
If there are empty seats for a basketball game at the price P*, the situation is best
depicted on graph
a. (1), with P* = P1.
b. (2), with P* = P3.
c. (3), with P* = P2.
d. (3), with P* = P3.
e. (4), with P* = P1.
Which of the following is consistent with the law of demand?
a. People substitute higher-priced goods for higher-quality goods.
b. People substitute some higher-priced goods for other higher-priced goods.
c. People substitute lower-priced goods for higher-priced goods.
d. People substitute some lower-priced goods for other lower-priced goods.
A taxpayer pays __________ tax rate on additional income if the income tax structure is
progressive, __________ tax rate on additional income if the income tax structure is
proportional, and __________ tax rate on additional income if the income tax structure
is regressive.
a. a higher; a lower; the same
b. a higher; the same; a lower
c. a lower; a higher; the same
d. the same; a lower; a higher
e. the same; a higher; a lower
Which of the following bank assets declined in value in the mid-2000s?
a. subprime loans
b. mortgage-backed securities
c. collateralized debt obligations
d. nontraditional loans
e. all of the above
If a business firm in Country A produces a good but does not sell it in that same year,
that good will not be counted in Country A’s GDP.
a. True
b. False
The yield on a bond is the
a. annual coupon payment divided by the price paid for the bond.
b. coupon rate divided by the price paid for the bond.
c. annual coupon payment divided by the face value of the bond.
d. same as the interest rate on the bond.
e. a and d
The economy is in equilibrium, TP = TE, and Real GDP is $4,000 billion. The MPC is
0.60, the multiplier is operative, and idle resources exist at each expenditure round.
Autonomous investment spending rises by $13 billion. As a result, the __________
curve shifts __________, inventory levels unexpectedly __________, business firms
__________ the quantity of goods and services they produce, and Real GDP
__________ by __________.
a. TE, downward, rise, increase, rises, $32.5 billion
b. TE, upward, fall, increase, rises, $101.5 billion
c. TE, upward, fall, decrease, rises, $32.5 billion
d. TE, upward, fall, increase, rises, $32.5 billion
e. TP, upward, fall, increase, rises, $101.5 billion
Exhibit 3-6
If an increase in the price of good Y causes the demand for good X to shift from D1 to
D2, goods X and Y are
a. normal goods.
b. inferior goods.
c. substitutes.
d. complements.
e. neutral goods.
Exhibit 5-4
If television studio executives choose to charge a price of PB to view the taping of all
shows, they will find that there is a shortage of tickets to view the taping of show
___________ and a surplus of tickets to view the taping of show ______________.
a. A; C
b. C; A
c. B; A
d. B; C
Consumers receive more consumers’ surplus when tariffs exist than when they do not
exist.
a. True
b. False