In the alcohol industry, both wine and spirits are considered to be substitutes for beer.
A decrease in the number of firms in a market will cause supply to increase.
Assume that price is greater than average variable cost. If a perfectly competitive firm
is producing at an output where price is $114 and the marginal cost is $102, then the
firm is probably producing more than its profit-maximizing quantity.
In the United States, the typical person who has lost his or her job finds another one in a
few months except during severe recessions.
A quota is a numerical limit on the quantity of a good that can be imported.
The natural rate of unemployment is the rate that exists when the economy is producing
at potential GDP.
A study by Edward Prescott found that the ________ marginal tax rates in the United
States relative to Europe resulted in a ________ quantity of labor supplied in the United
States.
A) higher; larger
B) lower; larger
C) higher; smaller
D) lower; smaller
Household spending on goods and services is known as
A) consumption spending.
B) planned investment spending.
C) government purchases.
D) net exports.
In a small economy, gross investment in 2013 is $1,500, consumption spending is
$6,000, net investment is $200, government spending is $1,500, exports are $2,000 and
imports are $1,000. What is GDP for this economy in 2013?
A) $10,700
B) $10,300
C) $10,200
D) $10,000
Article Summary. Seeking ways to improve education, Garrett Johnson has
organized technology competitions called hackathons where participants such as
students, teachers, and engineers build applications designed to improve
secondary and higher education systems. These applications can include ways for
teachers to improve skills, more productive study habits for students, improving
school safety, or any number of ideas related to education. Several hackathons
have been planned for around the country, including a virtual hackathon, entry is
free, and each contest will award $5,000 in prizes to the winners. Source: Nancy
Dahlberg, “Hackathon tackling education reform this week,” Miami Herald,
October 7, 2013.
The article addresses education reform by way of newly designed applications. If any of
these apps lead to a more skilled and better trained public, the economy would
experience
A) an increase in human capital.
B) an increase in the supply of labor.
C) an increase in comparable worth.
D) a decrease in compensating differentials.
If inflation in Russia is higher than it is in the United States,
A) the purchasing power of the ruble in buying Russian goods will rise relative to the
dollar.
B) the value of the dollar will rise in the long run.
C) the value of the ruble will rise in the long run.
D) Both A and C are correct.
Steven Cheung examined the relationship between beekeepers and apple growers.
Cheung noted that: “Pollination contracts usually include stipulations regarding the
number and strength of … [bee] colonies, the rental fee per hive, the time of
delivery…the protection of bees from pesticides, and the strategic placing of hives.”
Cheung suggests that the relationship between beekeepers and apple growers is an
example of
A) the Coase Theorem.
B) how excessive legal costs can prevent economic efficiency from being achieved.
C) negative externalities.
D) government intervention improving economic efficiency.
Suppose that when the price of hamburgers decreases, the Landry family decreases their
purchases of chicken nuggets. To the Landry family
A) hamburgers and chicken nuggets are complements.
B) hamburgers and chicken nuggets are inferior goods.
C) hamburgers and chicken nuggets are normal goods.
D) hamburgers and chicken nuggets are substitutes.
The discount rate is
A) the interest rate banks charge each other for overnight loans.
B) the interest rate banks charge their best customers.
C) the interest rate the Fed charges to banks for loans from the Fed.
D) the interest rate the U.S. Treasury pays on Treasury Bills.
If one U.S. dollar could be exchanged for one Canadian dollar in 1970, and one U.S.
dollar can now be exchanged for 1.13 Canadian dollars, which of the following is true?
A) The U.S. dollar lost value against the Canadian dollar.
B) The Canadian dollar lost value against the U.S. dollar.
C) The Canadian dollar gained value against the U.S. dollar.
D) Both A and C are true.
When the BEA calculates real GDP using the average of prices in the current year and
the year preceding it, and this average changes from year to year, this is called
calculating GDP using
A) chained-weighted prices.
B) fixed-weight prices.
C) current-year prices.
D) fixed base-year prices.
In the United States, out-of-pocket spending on health care per person
A) has been rising since 1965.
B) has been falling since 1965.
C) has remained fairly steady since 1965.
D) fell from 1965 through 1995, then began to rise from 1995 to the present.
Growth in aggregate demand will
A) cause deflation.
B) increase unemployment.
C) move the economy to a higher point on the short-run Phillips curve.
D) cause the short-run Phillips curve to shift to the left.
What is meant by productive efficiency? How does a perfectly competitive firm achieve
productive efficiency?
What does it mean for a country to have a comparative advantage in producing a
product?
Briefly explain the command-and-control approach in dealing with an externality such
as pollution. Give an example of the U.S. government using the command-and-control
approach to deal with the pollution problem.
What is meant by “tax incidence”?
What is a corporate bond and what does it specify?
If you own a bond with a seven percent coupon rate and new bonds are paying five
percent, what will happen to your bond’s market price?
Table 19-23
2007 2013
Suppose that a very simple economy produces three goods: pizzas, haircuts, and
backpacks. Suppose the quantities produced and their corresponding prices for 2007
and 2013 are shown in the table above. Use the information to compute real GDP in the
year 2007 and 2013. Assume that 2007 is the base year. Is output higher in 2013 or
2007? Why?
