A change in demand cannot be caused by a change in:
a. tastes.
b. population.
c. the prices of other goods.
d. expectations of future prices.
e. the price of the good itself.
Which of the following is not a market failure?
a. A lack of competition in some markets.
b. Prices determined in competitive markets, which consumers, as individuals, have no
control over.
c. The presence of externalities in some markets.
d. A lack of public goods desired by a majority of citizens.
e. Income inequality.
Assume that eggnog and cookies are complements. If the price of eggnog goes up, what
happens to the demand for cookies?
a. Demand for cookies increases.
b. Demand for cookies decreases.
c. Demand for cookies remains unchanged.
d. The shift in demand will depend on the original price of cookies.
Gym Corporation reported the following information at December 31, 2014:
A) Calculate Gym Corporation’s total assets. B) Calculate Gym Corporations’ net
income for 2014. C) Calculate Gym Corporation’s total stockholders’ equity at the end
of 2014.
Andrea Burris lost her job in a company layoff 5 months ago. She would take a job if
one was offered, but she has given up looking for work until the economy improves.
She is:
a. a member of the civilian labor force who is employed.
b. a member of the civilian labor force who is unemployed.
c. a member of the civilian labor force who is underemployed.
d. a discouraged worker who is not a member of the labor force.
e. now structurally unemployable.
Under the rational expectations hypothesis, which of the following is the most likely
short-run effect of a move to expansionary monetary policy?
a. A higher general level of prices but no change in real output
b. A higher general level of prices and an expansion in real output
c. No change in the general level of prices and a reduction in real output
d. No change in either the general level of prices or real output
The aggregate demand curve:
a. would be little affected by a technological advancement.
b. shifts to the right when spending decreases.
c. shifts to the left when there is a decrease in taxes.
d. cannot move independently of the aggregate supply curve.
e. shifts to the right when there is an expectation that future income will fall.
Suppose the Fed sells $100 million of U.S. securities to the security dealers. If the
reserve requirement is 20 percent, the currency holdings of the public are unchanged,
and banks have zero excess reserves both before and after the transaction, the total
impact on the money supply will be a:
a. $100 million decrease.
b. $500 million increase.
c. $500 million decrease.
d. $100 million increase.
After the terrorist attacks on September 11, 2001, the United States began devoting
substantial resources toward the War on Terrorism, homeland security, and relief efforts.
As long as our resources were being used efficiently, the production possibilities curve
would suggest that:
a. we will have to give up the production of other goods that could have been produced
with these resources.
b. we will be able to produce the same amount of other goods as before.
c. the military spending will result in an outward shift in the production possibilities
curve but that the relief effort will result in an offsetting inward shift.
d. we will be unable to devote the resources necessary toward these efforts unless there
is an improvement in technology.
If a sizable number of workers were switched from full-time to half-time employment,
then the official unemployment rate would:
a. rise.
b. fall.
c. remain unchanged.
d. react unpredictably.
Exhibit 2-5 Production possibilities curve
In Exhibit 2-5, movement between which of the following points represents an increase
in economic efficiency?
a. A to C.
b. C to D.
c. D to B.
d. A to B.
e. A to D.
When making a rational decision which requires the consideration of costs and benefits
involved, the opportunity cost of a decision is often not taken into consideration when
indeed it should be.
Only socialist economies need to answer the What, How, and For Whom questions.
The aggregate supply curve is horizontal in the intermediate range.
Assuming the economy is in a recession, Keynesian economists predict that lower
wages will shift the short-run aggregate supply curve rightward.
If actual real GDP is greater than the equilibrium level of real GDP (i.e., the aggregate
expenditures function is below the 45-degree line), what happens to restore equilibrium
to the economy?
Tentcoreported the following amounts in various statements included in its 2014 annual
report. (All amounts are stated in millions of dollars.)
(1) Prepare a Statement of retained earnings for the year ended December 31, 2014.
(2) Assume that Tentco presents a statement of stockholders’ equity rather than a
statement of retained earnings in its annual report. Explain how the information differs
between the two statements.
If the economy is experiencing an inflationary gap, Keynesian economists advocate
allowing flexible wages to shift the short-run aggregate supply curve (SRAC) upward
and restore full employment.
Discuss the three fundamental economic questions that all nations must address.