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One major reason for the law of demand is that
a. one price changing requires at least one other price to change in the opposite
direction.
b. people substitute relatively lower-priced goods for relatively higher-priced goods.
c. a higher price never reduces quantity demanded by enough to lower total revenue.
d. people are willing to produce more units at a higher price.
When P = $65, the quantity demanded of a good is 80 units, and the quantity supplied
of the good is 40 units.For every $10 increase in the price of this good, quantity
demanded falls by 10 units and quantity supplied rises by 10 units.The equilibrium
price of this good is ___________and the equilibrium quantity of this good is
_________ units.
a. $55; 30
b. $75; 50
c. $75; 70
d. $85; 50
e. $85; 60
When the economy is in short-run equilibrium,
a. there are increases in inventory.
b. there are decreases in inventory.
c. total expenditures equal total production.
d. people want to buy more than will be produced.
The Board of Governors of the Federal Reserve is part of a larger policy-making group
called the
a. Senate Banking Committee.
b. Federal Deposit Insurance Corporation.
c. American Banking Association.
d. Federal Open Market Committee.
Critics of government frequently assert that special interest groups favor transfer
policies rather than economic growth policies.
a. True
b. False
A person has a comparative advantage in the production of a good when they can
produce the product at a(n) ________ opportunity cost compared to another person.
a. higher
b. increasing
c. lower
d. equal
When foreign real national income rises, domestic Real GDP falls, ceteris paribus.
a. True
b. False
Milton Friedman argued that the economy is not in long-run equilibrium if the expected
inflation rate __________ the actual inflation rate.
a. is less than
b. is greater than
c. equals
d. a and b
If the U.S. government imposes a more restrictive import quota on Japanese video
gaming systems, the ____________ curve for Japanese video gaming systems in the
U.S. will shift ___________.
a. supply; leftward
b. supply; rightward
c. demand; leftward
d. demand; rightward
Which set of changes is definitely predicted to lower Real GDP in the short run?
a. The money supply rises and labor productivity rises.
b. The U.S. dollar depreciates and wage rates fall.
c. The U.S. dollar appreciates and labor productivity rises.
d. Foreign real national income falls and wage rates rise.
e. none of the above
If households purchase $60,000 worth of consumer goods and firms produce $50,000
worth of consumer goods, then
a. inventory changes are -$10,000.
b. inventory changes are +$10,000.
c. new capital goods expenditures (by firms) are $10,000.
d. consumer goods expenditures are $10,000.
Exhibit 9-5
Imagine an AD curve intersecting an SRAS curve at Point K on graph (1).Which
point(s) would this correspond to on graph (2)?
a. A or B
b. C
c. D or E
d. F
e. G
Which of the following statements is false?
a. For purposes of computing GDP, the purchases of new residential housing are
considered investment although it is undertaken by the household sector.
b. Consumption includes spending on durable goods but not spending on services.
c. Investment includes fixed investment but not inventory investment.
d. b and c
Situation 37-2
Dan and Ann live in the same community and both can participate in two activities,
producing and stealing. Both Dan and Ann realize that they are better off producing and
not stealing from each other than producing and stealing from each other.They agree
not to steal from each other.There is no enforcer of their agreement to not steal.It is
likely that
a. Dan and Ann are in a prisoner's dilemma setting.
b. Dan is in a prisoner's dilemma setting but Ann is not.
c. Ann is in a prisoner's dilemma setting but Dan is not.
d. neither Dan nor Ann is in a prisoner's dilemma setting.
MV in the equation of exchange is also defined as
a. national income.
b. total expenditures.
c. personal income.
d. Real GDP.
When one commercial bank borrows from another commercial bank, it pays the
__________ rate.
a. discount
b. bank interest
c. federal funds
d. prime
e. none of the above
