Which of the following is an example of a negative externality?
Suppose Mike and Renee are the only two people in a very simple economy and that
they produce and exchange two goods, soda and pretzels. Which of the following might
cause a recession in this simple economy?
a. Mike gets the idea that Renee wants more soda, which Mike produces.
b. Renee gets the idea that Mike wants more pretzels, which she produces.
c. Mike gets the idea that Renee wants less soda, which he produces.
d. Renee gets the idea that Mike wants less soda, which he produces.
e. The production of pretzels being equal to the production of soda.
John Maynard Keynes was the author of
a. An Economic History of the Great Depression.
b. The General Theory of Employment, Interest, and Money.
c. The Wealth of Nations.
d. The Principles of Political Economy and Taxation.
e. Macroeconomic Policy.
Refer to Figure 17-2. If the dollar price of the guilder is $0.70, we would expect
a. Dutch exports to be very attractive to Americans
b. a recession in the United States
c. a decrease in the exchange rate until it achieves equilibrium at $0.50 per guilder
d. the demand curve for guilders to shift to the right
e. the supply of guilders curve to shift to the left.
If the marginal product of labor falls, the marginal cost of output
Assume that the publishing industry produces novels and textbooks, as shown in the
production possibilities frontier in Figure 2-9. Between points F and G, the opportunity
cost of ten more novels equals __________. Between points G and H, the opportunity
cost of ten more novels equals __________.
Figure 2-9
If the required reserve ratio is 0.05 and the Fed sells a $2,000 bond directly to an
individual who pays for it with a check, what will happen to the money supply?
a. The money supply will increase by $2,000.
b. The money supply will decrease by $2,000.
c. The money supply will increase by $100.
d. The money supply will decrease by $100.
e. The money supply will decrease by $200.
During the contraction phase of the business cycle
a. employment and output are both rising
b. employment and output are both at a peak
c. employment and output are both at their lowest
d. employment and output are both falling
e. employment is falling and output is rising
The role of prices in a market economy is to
Economic growth
a. involves both benefits and costs
b. is beneficial to the economy only if it arises from population growth
c. is beneficial to the economy only if it arises from technological change
d. involves costs that usually outweigh the benefits
e. imposes costs because it requires a movement along the production possibilities
frontier
When there are many buyers and sellers, no significant barriers to entry, and a
differentiated product, the market structure is called