Refer to Figure 8-2. The economy is at full employment if
a. the quantity of labor supplied exceeds the quantity demanded
b. the quantity of labor demanded exceeds the quantity supplied
c. 130 million workers are employed
d. the real hourly wage is rising
e. we reach the maximum point on the production function
Any long-lasting tool that people use to produce goods and services is called
In order for a Pareto improvement to occur, someone must suffer a loss so that others
may benefit from the improvement.
If the marginal propensity to consume is 0.6, what is the value of the expenditure
multiplier?
a. 1.0
b. 1.6
c. 2.0
d. 2.5
e. 6.0
A firm’s labor demand curve shows the relationship between the
The classical model does a poor job of explaining the __________ because it assumes
that the __________ always clears.
a. long run; labor market.
b. long run; financial market.
c. short run; labor market.
d. short run; financial market.
e. short run; housing market.
The classical model is one of the best that economists have for capturing the rapidly
changing nature of the supply and demand for labor and ultimately for explaining
recessions.
Which of the following would be included in the Consumer Price Index but not in the
GDP Price Index?
a. The price of a used automobile
b. The price of a dinner in a U.S. restaurant
c. The price of a U.S.-manufactured stereo system
d. The price of an IBM computer
e. The price of a new Ford automobile
If the actual interest rate is below the equilibrium interest rate, the
a. Fed must intervene in financial markets to restore the interest rate to its equilibrium
value
b. price of bonds will increase
c. price of bonds will decrease
d. money supply will increase until the interest rate rises
e. money supply will decrease until the interest rate rises
Figure 7-1 shows the amounts of coal that a mining company could produce per week
by changing the number of workers while capital and technology remain constant. The
marginal product of employing the fourth worker is
Tariffs are government policies designed to encourage international trade.
What is the difference in the concepts of economic growth and economic expansion?
a. Both terms are used interchangeably and refer to quarterly increases in output.
b. Economic growth refers to the long-tun upward trend in output over a longer period
of time, usually more than a decade, which is measured as the average annual change in
output over the period. An expansion refers to a shorter time period during which output
increases quarter by quarter or year by year.
c. An expansion refers to the long-tun upward trend in output over a longer period of
time, usually more than a decade, which is measured as the average annual change in
output over the period. Economic growth refers to a shorter time period during which
output increases quarter by quarter or year by year.
d. Both terms are used interchangeably and refer to the long-tun upward trend in output
over a longer period of time, usually more than a decade, which is measured as the
average annual change in output over the period.
e. Economic growth is the term reserved for periods of prosperity in less developed
countries while expansion is the term reserved for developed industrial countries.