For a given quantity, the total profit of a perfectly competitive firm is equal to the
vertical distance between the firm’s total revenue curve and its total cost curve.
A real appreciation of the dollar is caused by either a nominal appreciation of the dollar,
a rise in the foreign price level, or a fall in the U.S. price level.
Ceteris paribus, an increase in the government’s budget deficit will increase the current
account deficit.
The real-world money multiplier is greater than the simple money multiplier (1/RR).
If the demand curve for a product shifts to the left and the supply curve for the product
shifts to the left, the equilibrium quantity will decrease.
Your checking account balance is included in your bank’s assets.
In economics, the term “free market” refers to a market where no sales tax is imposed
on products sold.
Figure 4-3 Figure 4-3 shows Kendra’s
demand curve for ice-cream cones.
If the market price is $3.50, what is the maximum number of ice cream cones that
Kendra will buy?
A) 1
B) 2
C) 3
D) 4
The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and
machine-made cigars for $2.50 each. What is the opportunity cost of buying a
hand-rolled cigar?
A) 4 machine-made cigars
B) 1/4 of a machine-made cigar
C) $10.00
D) $2.50
If the United States has a net export surplus, which of the following must be true?
A) The balance on the financial account must equal the balance on the current account.
B) Net foreign investment must be positive as well.
C) Domestic private saving must be greater than net foreign investment.
D) Domestic public saving must be greater than net foreign investment.
Table 2-20
Table 2-20 shows the number of labor hours required to produce a wristwatch and a
pound of rice in Japan and Thailand.
What is Thailand’s opportunity cost of producing one pound of rice?
A) 60 wristwatches
B) 20 wristwatches
C) 5 wristwatches
D) 0.05 units of a wristwatch
Which type of businesses earns the majority of revenues in the United States?
A) corporations
B) partnerships
C) sole proprietorships
D) none of these
Most economists believe that a small amount of the gap between the wages of white
males and the wages of other groups is due to discrimination. Which of the following
factors is not another factor that explains part of this gap?
A) differences in education
B) geographic location
C) differences in experience
D) differing preferences for jobs
Figure 12-1
If the firm is producing 200 units,
A) it breaks even.
B) it is making a loss.
C) it should cut back its output to maximize profit.
D) it should increase its output to maximize profit.
The slope of a typical isoquant is negative because to produce a given output, a
producer
A) will use more of one input only if it uses more of another.
B) can use less of one input only if the productivity of that input increases
C) can use less of one input only if it uses more of another.
D) will use more of one input only if the price of that input falls.
Table 20-3
Assume the market basket for the consumer price index has three products : Cokes,
hamburgers, and CDs – with the following values in 2006 and 2013 for price and
quantity: The Consumer Price Index for 2013 equals
A) 75.
B) 93.
C) 108.
D) 121.
A decrease in the equilibrium quantity for a product will result
A) when the quantity demanded for the product exceeds the quantity supplied.
B) when there is a decrease in supply and a decrease in demand for the product.
C) when there is an increase in supply and a decrease in demand for the product.
D) when there is a decrease in demand and a decrease in the number of firms producing
the product.
Does expansionary fiscal policy directly increase the money supply? Isn’t it true that the
president and Congress fight recessions by spending more money?
The federal budget was in deficit from 1931 to 1939, except in the year 1937. Given
this fact, how do you explain E. Cary Brown’s statement, “Fiscal policy, then, seems to
have been an unsuccessful recovery device in the ‘thirties-not because it did not work,
but because it was not tried.”
If the rate of inflation in the economy is steady at 5 percent per year, how does the
short-run Phillips curve predict that the unemployment rate will be changing, if at all?
Does your answer change if inflation in the economy is 0 percent? Illustrate your
answer with a Phillips curve.
What is the difference between retained earnings and dividends?
Under what conditions should a competitive firm shut down in the short run?
Using an aggregate demand graph, illustrate the impact of an increase in the price level
on aggregate demand.
Table 15-4
