Tax cuts on business income ________ aggregate demand.
A) would decrease
B) would increase
C) would not change
D) may increase or decrease
Suppose the demand curve for a product is represented by a typical downward-sloping
curve. Now suppose the demand for this product decreases. Which of the following
statements
accurately predicts the resulting decrease in price?
A) The more elastic the supply curve, the greater the price increase.
B) The more elastic the supply curve, the smaller the price decrease.
C) The increase in price is not affected by the elasticity of the supply curve.
D) The decrease in price will always be proportional to the magnitude of the demand
shift.
When a U.S. investor buys a bond issued in a foreign country,
A) the balance on the capital account decreases.
B) the balance on the current account decreases.
C) the balance on the financial account decreases.
D) the balance of trade decreases.
Figure 5-6
Figure 5-6 shows the market for measles vaccinations, a product whose use generates
positive externalities. What is the economically efficient output level?
A) Q1
B) Q1 + Q2
C) Q2 – Q1
D) Q2
Firms that are price takers
A) must lower their prices to increase sales.
B) are able to sell a fixed quantity of output at the market price.
C) can raise their prices as a result of a successful advertising campaign.
D) are able to sell all their output at the market price.
Which of the following is most liquid?
A) a mutual fund share
B) a government bond
C) a corporate bond
D) a dollar bill
Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He is
considering setting up his business as a corporation. What is one advantage to Jeremy
of setting up his business as a corporation?
A) By setting up the business as a corporation, Jeremy would not face double taxation.
B) By setting up the business as a corporation, Jeremy would have the ability to share
risk with shareholders.
C) By setting up the business as a corporation, Jeremy would have both ownership and
control over the business.
D) All of the above would be advantages of setting up his business as a corporation.
If marginal cost is zero, with an optimal two-part tariff
A) total revenue is maximized.
B) consumers maximize their surplus
C) the firm does not have to charge a fixed-fee portion.
D) firms may not maximize profit.
Article Summary. Unlike in many nations, when the financial crisis hit in 2008 the
Polish economy continued to grow, but due to a current slowdown in exports and
domestic demand, Poland is expecting a large outflow of workers. Unemployment
was expected to grow to 14 percent in Poland in 2013, and according to Krystyna
Iglicka, a demographer at Lazarski University in Warsaw, “Poles have always
treated emigration as a way of improving their lot.” Despite earning relatively low
salaries in Western European countries, on average just over €2,000 (about
$2,660) a month according to the National Bank of Poland, this is still four times
more than workers would earn on average by staying in Poland. Iglicka predicts
that between 500,000 and 800,000 Poles will emigrate from Poland over the next
five years.
Source: Jan Cienski, “Poland braces for fresh exodus of workers,” Washington
Post, January 22, 2013.
If, after the outflow of workers in Poland, it now takes more capital per hour worked to
get the same amount of GDP per hour worked, this indicates ________ the per-worker
production function in Poland.
A) a movement up
B) a movement down
C) an upward shift of
D) a downward shift of
The Federal Reserve System’s four monetary policy goals are
A) low government budget deficits, low current account deficits, high employment, and
a high foreign exchange value of the dollar.
B) low rate of bank failures, high reserve ratios, price stability, and economic growth.
C) price stability, high employment, economic growth, and stability of financial
markets and institutions.
D) price stability, low government budget deficits, low current account deficits, and low
rate of bank failures.
Assume that after the record year for U.S. farm income in 2013, farmers are expected to
break even in 2014. This means that at the quantity being produced in 2014,
A) MC = AVC.
B) MR = MC.
C) MR = ATC.
D) AVC = ATC.
Which of the following is not a tool the Fed uses to manage the money supply?
A) open market operations
B) setting the discount rate
C) expanding and contracting deposit insurance
D) setting reserve requirements for deposits in the banking system
Prices of smartphones (assume that this is a normal good) have fallen in recent years.
Over this same period, the price of the components used to produce smartphones has
also fallen and consumer incomes have risen. Which of the following best explains the
falling prices of smartphones?
A) The supply curve for smartphones has shifted to the right while the demand curve
for smartphones has shifted to the left.
B) The demand curve for smartphones has shifted to the right more than the supply
curve has shifted to the right.
C) The demand curve and the supply curve for smartphones have both shifted to the
left.
D) The supply curve for smartphones has shifted to the right more than the demand
curve has shifted to the right.
In order for a labor supply curve to be backward bending at high wages
A) leisure must be an inferior good.
B) the substitution effect of a wage increase must be greater than the income effect.
C) workers must have an irrational response to wage increases.
D) the income effect of a wage increase must be greater than the substitution effect.