Most corporations do not pay back their debt.
If a firm is experiencing diminishing marginal returns to labor,
Negative externalities produce inefficiency but positive externalities do not.
To say that the housing market is in equilibrium means that
The highest annual inflation rate experienced in the United States during the past 50
years has been around
a. 3 percent
b. 9 percent
c. 14 percent
d. 27 percent
e. 1,000 percent
Since a long run consists of many short runs, the classical model is
a. incorrect every time we look at output data
b. accurate during the short run
c. paradoxically quite accurate in the long run; however, it is not very accurate in the
short run
d. our best guide to fluctuations in the economy
e. paradoxically quite accurate in the short run; however, it is not very accurate in the
long run
Under perfect competition,
If the marginal propensity to consume is 0.6 and investment spending declines by $50
billion, by how much will equilibrium output change?
a. -$125 billion
b. -$83.3 billion
c. -$50 billion
d. $83.3 billion
e. $125 billion
Macroeconomics studies the behavior of aggregates while microeconomics studies the
behavior of individual decision-making units.
In Figure 14-1 which area represents producer surplus?
Suppose that the following headlines appeared in a newspaper. Which would most
clearly represent a macroeconomic issue?
The economy’s long run aggregate supply curve
a. is horizontal, indicating that the economy always reaches full employment in the long
run.
b. is vertical at the full-employment level of output, indicating that the price level is
constant in the long run.
c. is horizontal, indicating that prices are constant in the long run.
d. is vertical at the full-employment level of output, indicating that the economy always
reaches full employment in the long run.
e. is vertical at the zero budget deficit level of output.
Specialization leads to greater production than is otherwise possible
In the classical model, we assume there is no ongoing inflation, so there is no need to
distinguish between the nominal interest rate and the real interest rate.
Demand deposits are liabilities to a bank because
a. the bank must pay interest on these accounts
b. we need some method of creating a balance
c. the bank must be willing to account for loans and bonds
d. the bank could potentially lose this money if loans are not repaid
e. the customers have the right to withdraw the funds from their checking accounts
In the short-run macro model, planned investment is defined as
a. plant and equipment purchases by business firms plus inventory changes
b. plant and equipment purchases by business firms plus new home construction
c. plant and equipment purchases by business firms
d. new home construction plus inventory changes
e. inventory changes
To have a rising standard of living, a nation’s stock of capital must
a. equal the amount of consumption in the country
b. grow faster than the population
c. be associated with a low rate of investment and high rate of consumption
d. grow slower than the population
e. decline to enable the production of essential consumption goods
If the marginal product of labor is positive and increasing, then the total product of
labor curve is
An example of a barrier to entry is
Technological change moves the economy upward along the existing production
function, thereby increasing productivity and living standards.