Figure 4-4
Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that
this is a competitive market. At a price of $3
A) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is
inefficiently low.
B) producers should lower the price to $1 in order to sell the quantity demanded of
10,000.
C) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is
inefficiently low.
D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is
inefficiently high.
Actual real GDP will be above potential GDP if
A) firms are producing below capacity.
B) firms are producing at capacity.
C) firms are producing above capacity.
D) inflation is rising.
Table 8-13
Consider the data shown above for Vicuna, a country that produces only two products:
oranges and shirts.
Refer to Table 8-13. Real GDP for Vicuna for 2009 using 2011 as the base year equals
A) $4,620.
B) $5,100.
C) $5,650.
D) $5,850.
Figure 11-3
Refer to Figure 11-3. Technological change is shown in the figure above by the
movement from
A) B to C.
B) B to D.
C) B to E.
D) B to A.
Open market operations refer to the buying and selling of ________ by the ________ to
control the money supply.
A) Treasury securities; Treasury Department
B) Treasury securities; Federal Reserve
C) stocks and bonds; Treasury Department
D) stocks and bonds; Federal Reserve
When you open a checking account at Bank of America, Bank of America
A) has more reserves and more excess reserves.
B) has more reserves, but excess reserves remain unchanged.
C) has more deposits and less in excess reserves.
D) has more deposits, but excess reserves remain unchanged.
Figure 17-9
Refer to Figure 17-9. A follower of the new classical macroeconomics would argue that
________ like that pursued by Paul Volcker in 1979, would result in a movement from
C to A.
A) expansionary monetary policy
B) contractionary monetary policy
C) expansionary fiscal policy
D) contractionary fiscal policy
Which of the following is operating income?
A) explicit plus implicit costs
B) stockholders’ equity
C) revenue minus operating expenses
D) net profit
An increase in government purchases will increase aggregate demand because
A) government expenditures are a component of aggregate demand.
B) consumption expenditures are a component of aggregate demand.
C) the decline in the price level will increase demand.
D) the decline in the interest rate will increase demand.
Members of the European Union decided to adopt a single currency by what year?
A) 2008
B) 2005
C) 1999
D) 1992
Cassie’s Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent
$800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell
for $1,500 once she is finished. After having spent $800, Cassie discovers that she
would need some special period fabric that would cost her $200 in material and time in
order to complete the task. Alternatively, she can sell the quilt “as is” now for $900.
What is the marginal cost of completing the task?
A) $200
B) $500
C) $1,000
D) $1,000 plus the value of her time
Stagflation occurs when inflation ________ and GDP ________.
A) rises; rises
B) rises; falls
C) falls; rises
D) falls; falls
Figure 4-4
Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that
this is a competitive market. If the price of iced tea is $3, what changes in the market
would result in an economically efficient output?
A) The price would decrease, the quantity supplied would increase, and the quantity
demanded would decrease.
B) The quantity supplied would decrease, the quantity demanded would increase and
the equilibrium price would decrease.
C) The price would decrease, the demand would increase and the supply would
decrease.
D) The price would decrease, quantity demanded would increase and quantity supplied
would decrease.
Which of the following countries had the highest GDP per capita in 2012?
A) Qatar
B) United States
C) Japan
D) Norway
Steve Ballmer is the Chief Executive Officer of Microsoft as well as a member of
Microsoft’s board of directors. Ballmer is therefore classified as an
A) inside director.
B) outside director.
C) independent director.
D) unbiased director.
Labor productivity will increase if the ________ increases and ________.
A) quantity of capital per hour worked; technology improves
B) quantity of labor per unit of capital; technology improves
C) quantity of capital per hour worked; immigration increases while capital is fixed
D) quantity of labor per unit of capital; immigration increases while capital is fixed