Jonah lives in a small town where there is only one Mexican restaurant. Which of the
following is likely to be true about the price elasticity of demand for meals at the
Mexican restaurant?
A) Demand is likely to be perfectly inelastic.
B) Demand is likely to be perfectly elastic.
C) Demand is likely to be relatively elastic.
D) Demand is likely to be relatively inelastic.
John Maynard Keynes argued that if many households decide at the same time to
increase saving and reduce spending,
A) this may benefit the economy in the short run, but not in the long run.
B) the economy will benefit in the short run and benefit by an even greater amount in
the long run.
C) this will have a major negative impact on the economy in both the short run and in
the long run.
D) this may benefit the economy in the long run, but could be counterproductive in the
short run.
You are made better off in which of the following situations?
A) you borrow 10,000 pesos, you earn income in dollars, the dollar depreciates against
the peso, you must pay back the loan in pesos
B) you borrow $10,000, you earn income in pesos, the dollar depreciates against the
peso, you must pay back the loan in dollars
C) you borrow $10,000, you earn income in pesos, the dollar appreciates against the
peso, you must pay back the loan in dollars
D) you borrow 10,000 pesos, you earn income in pesos, the dollar depreciates against
the peso, you must pay back the loan in pesos
During the Chinese experience with pegging the yuan to the dollar, the yuan was
undervalued. As a result,
A) there was a surplus of yuan on the market that the Chinese government had to
purchase to maintain the peg, depleting China’s reserves of dollars.
B) there was a surplus of dollars on the market that the Chinese government had to
purchase to maintain the peg.
C) the prices of Chinese exports were higher than they would have been without the
peg.
D) the equilibrium value of the yuan was below the pegged value of the yuan.
A firm that is the only seller of a good or service that does not have a close substitute is
called
A) a monopoly.
B) an oligopolist.
C) a market maker.
D) a price maker.
According to the “rational expectations” school of thought in macroeconomics, the
short-run Phillips curve is ________ in face of anticipated changes in monetary policy.
A) negatively sloped
B) positively sloped
C) vertical
D) horizontal
Decreasing government spending ________ the price level and ________ equilibrium
real GDP.
A) decreases; increases
B) increases; decreases
C) increases; increases
D) decreases; decreases
If planned aggregate expenditure is less than total production,
A) actual inventories will equal planned inventories.
B) firms will experience an unplanned increase in inventories.
C) GDP will increase.
D) the economy is in equilibrium.
The law of diminishing marginal returns
A) explains why the average total cost and marginal cost curves are U-shaped in the
short run.
B) explains why the average total cost, average fixed cost and the marginal cost curves
are U-shaped in the short run.
C) causes average total costs to rise at a decreasing rate as output increases.
D) causes the difference between average total cost and average variable cost to get
smaller as output increases.
Jayanthi moves her yoga studio from her home to a space she rents in Oakland,
California. Holding everything else constant, as a result of this move
A) her explicit cost falls and her implicit cost rises.
B) her implicit cost falls and her explicit cost rises.
C) her economic cost rises.
D) her opportunity cost rises.
If demand is perfectly inelastic, the absolute value of the price elasticity of demand is
A) zero.
B) less than one.
C) more than one.
D) equal to the absolute value of the slope of the demand curve.
If the Federal Reserve decided to include virtual money like Bitcoins in its measure of
the money supply, what would be the effect on M1 or M2?
A) M1 would rise.
B) M1 would fall.
C) M1 would rise and M2 would remain constant.
D) M2 would rise but M1 would remain constant.
A person’s wealth
A) is a measure of how much money the person has.
B) equals the value the person’s assets minus his or her liabilities.
C) is measured independent of his or her current and expected future income.
D) All of the above are correct.
Between 1990 and 2012, which of these leading industrial countries of the world had
the highest average annual growth rate in GDP per capita?
A) the United States
B) Germany
C) Japan
D) Canada