1) Nearly all modern economists support the idea of a monetary rule.
2) in the long run a pure monopolist must produce at that output where average total
cost is at a minimum.
3) the increasing wealth of the united states has reduced the relevance of economics.
4) Hiring the least-costly combination of resources ensures that profits will be
maximized.
5) labor productivity = worker-hours/real gdp.
6) The following information. Assume that by devoting all its resources to the
production of X, nation Alpha can produce 40 units of X. By devoting all its resources
to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y.
Refer to the above information. Alpha would prefer terms of trade at, or close to, 1X =
2/3Y.
7) the substitution effect suggests that when consumers judge product quality by price,
they will substitute high-priced products for low-priced products.
8) after all long-run adjustments have been completed, a firm in a competitive industry
will produce that level of output where average total cost is at a minimum.
9) mexican importers are suppliers of pesos in the foreign exchange market.
10) The theory that R&D expenditures as a percentage of firms’ sales first rise, reach a
peak, and then fall with increases in industry concentration is called the inverted-U
theory of R&D.
11) According to the time-value of money concept, people prefer to receive a given sum
of money later rather than sooner.
12)
refer to the above diagrams. firm b’s average revenue curve coincides with its marginal
revenue curve.
13) Kara’s Kettles, Inc. has developed a new and improved type of cookware. Alex, a
typical consumer, will necessarily purchase Kara’s new product if his MU/P for the new
cookware exceeds that of competing products.
14) The public debt is the accumulation of all deficits and surpluses that have occurred
through time.
15) the invisible hand refers to the many indirect controls that the federal government
imposes in a market system.
16) Assuming a firm is selling its output in a purely competitive market, its resource
demand curve can be determined by:
A.multiplying total product by product price.
B.multiplying marginal product by product price.
C.dividing total revenue by marginal product.
D.comparing marginal product with various possible input prices.
17) The aggregate demand curve:
A.is upsloping because a higher price level is necessary to make production profitable
as production costs rise.
B.is downsloping because production costs decline as real output increases.
C.shows the amount of expenditures required to induce the production of each possible
level of real output.
D.shows the amount of real output that will be purchased at each possible price level.
18) Suppose an investor is considering investing in three different assets. One asset is
equally likely to earn 10, 14 or 20 percent per year. Another is likely to earn 15 percent
per year 75% of the time and 25 percent per year 25% of the time. The final asset is
equally likely to earn 15 or 20 percent per year.
(a)What are the expected rates of return for each of the assets?
(b)Based on your results in (a), which asset is the investor likely to choose?
(c)Suppose the beta values for each asset were 1.0, 2.0 and 0.75 and the investor is risk
averse. Now which asset is he likely to choose?
19) In which of the following U.S. cities is one of the twelve Federal Reserve Banks
located?
A.New York City
B.Seattle
C.Miami
D.Denver
20) approximately what percentage of local government expenditures go to finance
education?
a.36
b.44
c.53
d.69
21) dvd players and dvds are:
a.complementary goods.
b.substitute goods.
c.independent goods.
d.inferior goods.
22) The key policy target in the Taylor rule is the:
A.money supply.
B.Federal funds interest rate.
C.average tax rate.
D.full-employment budget.
23)
Refer to the above diagram in which line AB is the United States production possibility
curve and AC is its trading possibilities curve. The international exchange ratio between
beef and cheese (terms of trade):
A.is the absolute value of slope of line AB
B.is the absolute value of slope of line AC
C.could lie anywhere between the absolute value of the slopes of lines AB and AC
D.cannot be determined on the basis of this information
24)
Refer to the above diagram, in which Qf is the full-employment output. The shift of the
aggregate demand curve from AD1 to AD2 is consistent with:
A.an expansionary fiscal policy.
B.a major recession.
C.a contractionary fiscal policy.
D.severe demand-pull inflation.
25) in terms of absolute volume of imports and exports, the world’s leading trading
nation is:
a.france.
b.japan.
c.the united states.
d.south korea.
26) If aggregate demand increases and aggregate supply decreases, the price level:
A.will decrease, but real output may either increase or decrease.
B.will increase, but real output may either increase or decrease.
C.and real output will both increase.
D.and real output will both decrease.
27) (Last Word) Has the effect of oil prices increases on the economy been diminished?
Cite evidence to support the case for a diminished effect.
28) What is a balance-of-payments deficit? What is a balance-of-payments surplus?
29) Discuss the problems with policies to limit catch size and the use of the total
allowable catch (TAC) policy.
30) (Consider This) How did economist Irving Fischer explain interest to a masseur?
31) The increasing importance of durable goods has made our economy more
vulnerable to cyclical fluctuations. Explain and evaluate.
32) What are the major criticisms of the Laffer Curve and supply-side economics?
33) What are the three major characteristics of the twelve Federal Reserve Banks?