Which of the following might lead a nation to engage in international trade?
a. Differences in natural endowments such as climate
b. Differences in skills of labor force
c. Differences in endowments of natural resources
d. All of the above are correct.
Most observers nowadays see monetary policy as much less important than fiscal
policy.
a. True
b. False
Last year, 1,000 cases of cough syrup were sold at $10; this year, 1,200 cases were sold
at $12. The most probable interpretation of these data is that the
a. supply and demand curves are shifting to the right.
b. supply and demand curves are shifting to the left.
c. supply curve has shifted to the left, with no change in demand.
d. demand curve has shifted to the right, with no change in supply.
An increase in the price level in the economies of U.S. trading partners will cause the
aggregate expenditures function in the United States to
a. shift up.
b. shift down.
c. get flatter.
d. get steeper.
The MPC can be used to predict the effect of a tax increase.
a. True
b. False
Which of the following makes invention and entrepreneurship more likely in today’s
economy?
a. increasing morality of inventors
b. government rules within society
c. positive marginal costs
d. positive marginal revenues
Charging firms that emit pollutants is one way to deal with pollution.
a. True
b. False
An increase in aggregate demand will reduce the unemployment rate only if the ensuing
inflation is anticipated.
a. True
b. False
The election campaign of George Bush to succeed Ronald Reagan as president was
a. hindered due to high levels of unemployment in 1988.
b. hindered by the increasing inflationary problems of the late 1980s.
c. helped by the budget surpluses generated in the last years of the Reagan
administration.
d. helped by the continuing low levels of unemployment and inflation in 1988.
From a society’s viewpoint, when all resources are fully employed, a decision to have
more of one thing means we must give up some of another thing.
a. True
b. False
Changes in government spending
a. are an indirect component of the expenditures schedule.
b. have a different multiplier effect than changes in business investment spending.
c. are a direct component of the expenditures schedule and have the same multiplier
effect as changes in business investment spending.
d. do not have an effect on spending if they are matched by tax changes.
Marginal utility has a negative slope. This is because of the
a. optimal purchase rule.
b. law of increasing costs.
c. law of diminishing marginal utility.
d. marginal rate of substitution.
If people begin to hold more cash, the money multiplier process will
a. increase in intensity.
b. remain the same.
c. decrease in actual size.
d. cause larger amounts of excess reserves.
Price discrimination allows a monopolist to make higher profits.
a. True
b. False
The poor are those who fall too far behind the average income. This refers to the ____
definition of poverty.
a. marginal
b. absolute
c. relative
d. threshold
Tele-Com, Inc., the nation’s largest cable TV company, tested the effect of a price
reduction for the Disney Channel. It lowered prices from $10.75 to $7.95 and found that
the number of customers more than doubled. This means the
a. demand curve for the Disney Channel shifted to the right.
b. supply curve of the Disney Channel shifted to the left.
c. demand for the Disney Channel is elastic in this price range.
d. demand for the Disney Channel is inelastic in this price range.
An overvalued currency, such as the Argentinean peso in 2001, is an indicator of a
balance of payments surplus.
a. True
b. False
The act of discovering a new production process would be called
a. invention.
b. innovation.
c. investment.
d. development.
A budget surplus exists when
a. Tax receipts < government expenditures + transfers.
b. Tax receipts > government expenditures + transfers.
c. Government expenditures − transfers > tax receipts.
d. Government expenditures > transfers + tax receipts.
Which of the following statements is false?
a. In a competitive market, the price mechanism encourages conservation of a
depletable resource.
b. As the price of a depletable resource rises, its known reserves often increase.
c. Prices of depletable resources have risen in the twentieth century primarily because
resource producers have exercised monopoly or oligopoly power.
d. Shortages of depletable resources occur primarily when governments or others
interfere with the price mechanism.
The major problem with direct controls as an environmental protection measure has
been
a. inept administrators.
b. corrupt judges.
c. illegal dumping.
d. legislation with no teeth.
The value of both exports and imports are added to the value of national product.
a. True
b. False
Figure 17-8
In Figure 17-8, which of the following points cannot be observed in the long run?
a. A
b. B
c. C
d. E
Figure 17-8
In Figure 17-8, which of the following movements would you associate with a
“negative supply shock”?
a. A to B
b. A to C
c. C to E
d. D to E
A recession can be expected to reduce inflation in the economy if the recession is
caused by a(n)
a. increase in aggregate demand.
b. increase in aggregate supply.
c. decrease in aggregate demand.
d. decrease in aggregate supply.
Which of the following is a transfer payment?
a. Work-study students receive wages transferred from the university budget.
b. A company pays the moving expenses for a transferred employee.
c. A student transfers to another college and receives a tuition rebate.
d. A student receives a tuition grant from the federal government.
Cities and towns mainly rely for revenue on
a. property taxes.
b. income taxes.
c. excise taxes.
d. payroll taxes.
The expected effects of a tighter monetary policy are
a. lower real interest rates.
b. exchange rate depreciation.
c. lower inflation.
d. All of the above are correct.
The Human Genome Project is a useful example of
a. private sector research and development.
b. government-conducted research.
c. household research.
d. a and b.
Which of the following observations is true?
a. TFC remains the same irrespective of units of output produced.
b. TVC remains the same irrespective of units of output produced.
c. TVC falls as the unit of output increases.
d. AFC increases as output increases further and further.