If the government estimates that the marginal cost of building a bridge is $100 million,
while the marginal benefit is $150 million, the marginal principle dictates that the
government should:
A) build the bridge.
B) never build the bridge.
C) wait until the marginal cost of building the bridge rises to above $150 million before
building the bridge.
D) wait until the marginal benefit of building the bridge drops to below $100 million
before building the bridge.
________ is another term for “offshoring.”
A) Outsourcing
B) Importing
C) Exporting
D) Insourcing
If in the third quarter of 2012 total investment spending was $4,768 billion and
depreciation was $3,292 billion, then the amount counted in GDP, which is known as
gross investment, would be
A) $1,476 billion.
B) $3,292 billion.
C) $4,768 billion.
D) $8,060 billion.
If consumers have an expectation of a product’s price increasing in the near future, they
will usually:
A) wait to see if the price really increases.
B) purchase more at the current price.
C) wait for the new price and compare.
D) none of the above
An open market purchase by the Fed
A) increases investment and increases output.
B) increases investment and decreases output.
C) decreases investment and increases output.
D) decreases investment and decreases output.
A contract:
A) specifies the term of exchange facilitating exchange between strangers.
B) increases the profitability of inventions encouraging firms to develop new products.
C) provides the public with reliable information about the performance of a firm.
D) increases the risk faced by entrepreneurs.
The short run aggregate supply curve assumes that in the short run:
A) the unemployment rate is equal to the natural rate of unemployment.
B) the inflation rate is zero, that is, the economy is stagflated.
C) prices are slow to adjust.
D) the economy does not experience supply shocks.
Which of the following will cause the price level to increase in the long run?
A) a decrease in the money supply
B) an increase in income taxes
C) a decrease in government spending
D) an increase in the interest rates
Recall the Application about the market for meteorites to answer the following
question(s).
According to the Application, people in Morocco bring meteorites picked up in the
desert to local dealers, who then sell them to the public through Websites. This process
is a description of
A) a market system.
B) a centrally planned economy.
C) a barter economy.
D) a bureaucratic system.
Corporate taxes:
A) were a more important source of government revenues in the previous decades.
B) are a more important source of government revenues today than in previous decades.
C) are and were never an important source of government revenue.
D) will be the most important source of government revenue in the next decade.
Following Keynes’ work in explaining the Great Depression, economists started to
make a distinction between:
A) nominal and real GDP.
B) recessions and booms.
C) GDP in the short run and in the long run.
D) positive and normative economics.
Which of the following individuals are hurt when the economy experiences
unanticipated inflation?
A) lenders
B) fixed income earners
C) savers
D) All of the above are hurt by unanticipated inflation.
We do notuse microeconomic analysis:
A) to make personal and managerial decisions.
B) to evaluate the merits of public policies.
C) to explain why the U.S. is in a recession.
D) to understand markets and predict changes.
If the Fed were to focus only on inflation:
A) the private sector would become less responsive to the Fed’s policies.
B) its capacity to fight recessions would be diminished.
C) its independence from political pressures would decrease.
D) its credibility would be reduced.
Refer to Figure 15.2. A movement from point c to point would be the result of the
A) unemployment rate being higher than the natural rate, causing wages to rise.
B) unemployment rate being higher than the natural rate, causing wages to fall.
C) natural rate being higher than the unemployment rate, causing wages to rise.
D) natural rate being higher than the unemployment rate, causing wages to fall.
When the economy slows down and real GDP falls, the type of unemployment that will
be directly affected is the:
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) natural rate of unemployment.
After the 1980s, which of the following assets paid interest?
A) checking accounts
B) time deposits
C) savings accounts
D) All of the above paid interest after the 1980s.
An import ban results in
A) a decrease in the supply of the product.
B) an increase in the product’s price.
C) a decrease in the quantity of the product bought and sold.
D) all of the above.