A profit-maximizing, single-price monopoly must lower its price in order to sell more
output.
If autonomous consumption is $1,000, the MPC is 0.75, net taxes are $500, investment
spending is $800, and government purchases equals $500, and NX = $0, what is
equilibrium GDP?
a. $1,800
b. $1,925
c. $2,566.7
d. $7,200
e. $7,700
Human capital is the equipment and machinery used directly by workers.
A rise in the interest rate tends to
a. reduce many kinds of spending
b. stimulate investment in high-profit industries
c. cause bond prices to increase
d. encourage confidence in the Fed’s control over the economy
e. suggest a downturn in the economy is coming within 6 months
The recession of 1982 was largely caused
a. on purpose by the Federal Reserve’s decision to raise interest rates to combat
inflation.
b. on purpose by the Federal Reserve’s decision to cut interest rates to combat inflation.
c. by accident as a result of the Reagan era tax cuts.
d. by dramatically rising oil prices.
e. on purpose by the Reagan Administration’s decision to raise interest rates to combat
inflation.
If the Federal Reserve purchases a $2,000 bond from a bond dealer who deposits the
check in a bank, what changes will occur on that bank’s balance sheet?
a. Reserves, demand deposits, total assets, and total liabilities will all increase by
$2,000.
b. Reserves and assets will increase by $2,000; demand deposits and total liabilities will
decrease by $2,000.
c. Reserves and total assets will decrease by $2,000; demand deposits and total
liabilities will increase by $2,000.
d. Reserves and total liabilities will decrease by $2,000; demand deposits and total
assets will increase by $2,000.
e. Reserves and assets will increase by $2,000; demand deposits and total assets will
decrease by $2,000.
Of the following products, which is most standardized?
Due to the multiplier effect, a decrease in investment spending
a. is greater than the resulting decrease in GDP
b. has a minimal impact on the economy
c. causes the money supply to increase
d. leads to an even larger decrease in output
e. results in increased autonomous consumption
A perfectly competitive firm’s marginal revenue
The official measure of unemployment may underestimate actual unemployment
because
a. people may lie when reporting they are looking for jobs
b. the treatment of involuntary part-time workers and discouraged workers is
misleading
c. the population sample employed by the Labor Department is too small to be
representative
d. some individuals who should be receiving unemployment benefits do not receive
them
e. individuals who are unable to work are not included
Because households have limited incomes, they must
In the loanable funds market, if the government is running a deficit
a. it is a supplier of funds as it is taking in more than it is spending
b. it is a demander of funds as it is taking in more than it is spending
c. it is a supplier of funds as it is spending more than it is taking in
d. it is neither be a supplier or demander
e. it is a demander of funds as it is spending more than it is taking in.
If you borrow money at a nominal interest rate of 5 percent and the inflation rate is 10
percent, what real interest rate will you pay?
a. -5 percent
b. 0.5 percent
c. 2 percent
d. 5 percent
e. 10 percent
A local labor market for lawn-mowing workers is initially in equilibrium. If researchers
develop a new inexpensive grass seed that provides a lush, slow-growing lawn, which
of the following will occur in the short run?
Under a managed float,
a. a central bank allows the forces of supply and demand to determine the exchange rate
b. a nation can have neither a trade deficit nor a trade surplus
c. a nation “pegs” its price level to a foreign currency
d. a nation “pegs” its price level at some fixed value
e. a central bank intervenes in the foreign exchange market to stabilize its exchange rate
In the short-run macro model, what is the relationship between income and investment
spending?
a. It is positive and stable.
b. It is positive but unstable.
c. It is negative and stable.
d. It is negative but unstable.
e. There is no relationship between the two variables.
Jenni can change a car’s oil in 10 minutes and clean a bathroom in 20 minutes. Rob can
change a car’s oil in 20 minutes and clean a bathroom in 10 minutes. Therefore,
A monopolist that does not price discriminate will set the output level where
Under a managed float,
a. currency traders “buy low and sell high”
b. a central bank attempts to stabilize an exchange rate
c. national governments use fiscal policy to prevent inflation
d. managers allow product prices to float in response to supply and demand shifts
e. governments attempt to harmonize their tax policies.