Albert, Betty, Christine and David are all very good students. When they hold their
study sessions, they often discuss very difficult concepts in great detail. Christine’s
roommate, Elizabeth, who takes completely different classes, still learns from the
discussions of the others. This is the case of a(n) ____, which ____ a ____.
a. public good; benefits; third party
b. externality; imposes a cost on; free rider
c. market failure; results from; third party
d. free rider; benefits from; third party
e. Externalities; benefits; third party
Exhibit 6-1 Business cycle
In Exhibit 6-1, the recovery phase of the business cycle can be represented by points: a.
CHOICE BLANK
b. C.
c. E.
d. C to E.
e. E to G.
“Crowding out” is the theory that an increase in our federal government’s budget deficit
will likely:
a. increase the national debt.
b. increase interest rates.
c. decrease borrowing by households and businesses
d. reduce the impact of the spending multiplier implies because of crowding out.
e. all of these.
A decrease in the number of dry cleaners in an area is represented by a(n):
a. downward movement along the dry cleaning supply curve.
b. upward movement along the dry cleaning supply curve.
c. leftward shift in the dry cleaning supply curve.
d. rightward shift in the dry cleaning supply curve.
e. vertical dry cleaning supply curve.
Rent control applies to about two-thirds of the private rental housing in New York City.
Economic theory suggests that a below-equilibrium price established by rent control:
a. creates a surplus of rental housing.
b. promotes a rapid increase in the future supply of housing.
c. results in poor service and quality deterioration of many rental units.
d. leads to a reduction in housing discrimination against minorities.
In the Keynesian aggregate expenditure model, the 45-degree line indicates:
a. amounts households plan to spend at each possible level of income.
b. amounts households plan to save at each possible level of income.
c. all income levels at which the planned spending of decision makers equals total
output.
d. all income levels at which the marginal propensity to consume is one.
Total surplus equals:
a. consumer surplus + producer surplus – deadweight loss.
b. consumer surplus – producer surplus – deadweight loss.
c. consumer surplus – producer surplus + deadweight loss.
d. consumer surplus + producer surplus.
Which of the following directs open market operations?
a. Board of Governors.
b. Federal Reserve Banks.
c. Federal Open Market Committee
d. Federal Advisory Council.
e. Member banks.
National income is equal to gross domestic product minus:
a. indirect business taxes.
b. depreciation.
c. personal taxes.
d. retained earnings.
e. consumption spending.
Exhibit 1A-6 Straight line
In Exhibit 1A-6, the slope of the straight line A-D is:
a. 0.
b. 1.
c. 1/2.
d. -1.