A corporation is
A) the easiest type of business to set up.
B) the least expensive type of business to set up.
C) the most difficult type of business to set up.
D) the least profitable type of business to set up.
The interest rate that banks charge other banks for overnight loans is the
A) prime rate.
B) discount rate.
C) federal funds rate.
D) Treasury bill rate.
When an economy is at its natural rate of unemployment, which of the following will
be true?
A) The unemployment rate will be 0%.
B) The labor force participation rate will be 100%.
C) The unemployment rate will be greater than 0%.
D) Only structural unemployment as a result of technological change will exist in the
economy.
Which of the following is not an example of inflation causing a redistribution of income
because the inflation was unanticipated?
A) A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of
inflation per year, and the actual rate of inflation ends up being 7 percent per year.
B) A worker receives a raise in salary that is less than the rate of inflation, because
management under-predicted inflation.
C) Firms have to hire an extra worker to change prices in its store because of inflation.
D) A bank collects a lower amount of interest from a loan because inflation was
under-predicted.
If fixed costs do not change, then marginal cost
A) also remains constant.
B) equals the change in variable cost divided by the change in output.
C) equals the change in average variable cost divided by the change in output.
D) equals the change in average fixed cost divided by the change in output.
Table 18-1
Suppose $1 billion is available in the budget and Congress is considering allocating the
funds to one of the following three alternatives: 1) Subsidies for education, 2) Research
on Alzheimer’s or 3) Increased border security. Table 18-1 shows three voters’ rankings
of the alternatives.
Suppose a series of votes are taken in which each pair of alternatives is considered in
turn. If the vote is between allocating funds to research on Alzheimer’s and increased
border security
A) Ivy and Jasmine vote for Alzheimer’s research, Rose votes for increased border
security, and Alzheimer’s research wins.
B) Ivy and Rose vote for increased border security, Jasmine votes for Alzheimer’s
research, and increased border security wins.
C) Jasmine and Rose vote for Alzheimer’s research, Ivy votes for increased border
security, and Alzheimer’s research wins.
D) Jasmine and Ivy vote for increased border security, Rose votes for Alzheimer’s
research, and increased border security wins.
Figure 3-5
At a price of $15, the quantity sold
A) is 2 units.
B) is 4 units.
C) is 6 units.
D) cannot be determined.
A central bank like the Federal Reserve in the United States can help banks survive a
bank run by
A) printing money.
B) acting as a lender of last resort.
C) raising the discount rate.
D) increasing the required reserve ratio.
Which type of businesses earns the majority of profits in the United States?
A) corporations
B) partnerships
C) sole proprietorships
D) none of these
In an attempt to bring lenders and borrowers together following the financial crisis of
2008, the Federal Reserve made a large amount of new funds available to financial
markets. The Fed expected this to increase in the money supply and the total amount of
lending because of the multiplier effect, in which a given amount of new reserves
results in a multiple increase in
A) stockholders’ equity.
B) bank deposits.
C) long-term debt.
D) required reserves.
If credit card balances rise in the economy, then M1 will ________ and M2 will
________.
A) increase; increase
B) not change; increase
C) decrease; increase
D) not change; not change
E) increase; decrease
A profit maximizing monopoly’s price is
A) the same as the price that would prevail if the industry was perfectly competitive.
B) less than the price that would prevail if the industry was perfectly competitive.
C) greater than the price that would prevail if the industry was perfectly competitive.
D) not consistently related to price that would prevail if the market was perfectly
competitive.