The ________ shows the relationship between the price level and quantity of real GDP
demanded.
A) consumer price index
B) aggregate expenditure line
C) 45-degree line
D) aggregate demand curve
Suppose the demand for milk is relatively inelastic. What happens to sales revenue if
the government imposes a price floor above the free market equilibrium price in the
market for milk?
A) Sales revenue falls.
B) Sales revenue rises.
C) Sales revenue remains unchanged.
D) It cannot be determined without information on prices.
A firm can fund an expansion of its operations by
A) issuing bonds.
B) buying stock.
C) paying dividends.
D) loaning money.
Why is the multiplier for contractionary fiscal policy smaller in an open economy?
A) Contractionary fiscal policy reduces the deficit, which raises the interest rate, which
raises the foreign exchange value of the dollar, which increases net exports.
B) Contractionary fiscal policy increases the deficit, which raises the interest rate,
which reduces the foreign exchange value of the dollar, which increases net exports.
C) Contractionary fiscal policy reduces the deficit, which reduces the interest rate,
which reduces the foreign exchange value of the dollar, which increases net exports.
D) Contractionary fiscal policy reduces the deficit, which reduces the interest rate,
which reduces the foreign exchange value of the dollar, which decreases net exports.
Figure 15-10
What is the area that represents consumer surplus under a monopoly?
A) the triangle P0P1F
B) the triangle P0P2E
C) the trapezium P1P2EF
D) the rectangle P1P3HF
Suppose a negative externality exists in a market. If transactions costs are low and
parties are willing to bargain, then, according to the Coase theorem,
A) an equitable solution can be reached only if property rights are assigned to the
victims of pollution and not the polluters.
B) an equitable solution can be reached only if property rights are assigned to polluters
and not to the victims of pollution.
C) an efficient solution can be reached regardless of the initial assignment of property
rights.
D) government intervention is necessary to reach an efficient and equitable solution.
Because knowledge capital is nonexcludable and nonrival, firms have an incentive to
________ the research and development of other firms.
A) make bids on
B) not use
C) ignore
D) free ride on
Under the Bretton Woods system, central bankers could obtain foreign currency loans
from the
A) U.S. Treasury Department.
B) World Trade Organization.
C) International Monetary Fund.
D) Bank of England.
If the quantity of jelly beans supplied is represented by the equation QS = -20 +4P then
the corresponding price of jelly beans is represented by the equation
A) P = 0.5QS + 80.
B) P = 0.25QS + 5.
C) P = 4QS – 80.
D) P = 2.5 – 4QS.
When net capital flows are negative,
A) capital inflows are less than capital outflows.
B) net foreign investment is negative.
C) capital outflows are less than capital inflows.
D) A and B are both correct.
In the United States, government policies with respect to monopolies and collusion are
embodied in
A) the U.S. Constitution.
B) common law, which the United States adopted from English law.
C) the Supreme Court.
D) antitrust laws.
Figure 17-2 Figure 17-2
shows the marginal revenue product for Becca’s Baubles, a producer of hand-beaded
bracelets.
Suppose the market price of bracelets falls to $2. What happens to the curve given in
the diagram?
A) Nothing, because labor’s productivity has not changed.
B) There will be a movement along the curve.
C) The curve shifts to the left.
D) We cannot answer the question without knowing if Becca would want to hire more
workers.