One of the reasons why real GDP grows is that
A) prices increase.
B) governments collect more taxes.
C) capital grows as a result of investment.
D) imports increase.
E) people have more income.
The shape of a person’s indifference curves between two goods depends on
A) the prices of the two goods.
B) the person’s income.
C) the degree of substitutability between the two goods.
D) the level of satisfaction for the person.
E) the person’s income and the prices of the two goods.
Refer to the figure below to answer the following questions.
Figure 23.2.5
Refer to Figure 23.2.5. In Figure 23.2.5, the supply of loanable funds curve is SLF0 and
the demand for loanable funds curve is DLF0. An expansion that increases disposable
income and expected profit
A) shifts the supply of loanable funds curve rightward to curve SLF1 and does not shift
the demand for loanable funds curve.
B) shifts the supply of loanable funds curve rightward to curve SLF1, and shifts the
demand for loanable funds curve rightward to curve DLF1.
C) shifts the demand for loanable funds curve rightward to curve DLF1 and does not
shift the supply of loanable funds curve.
D) has no effect on either the demand for loanable funds curve or the supply of loanable
funds curve.
E) increases the inflation rate.
Consider Fact 28.4.2. Choose the correct statement.
A) The long-run Phillips curve does not change because a change in the expected
inflation rate does not shift the long-run Phillips curve.
B) The long-run Phillips curve shifts rightward.
C) The long-run Phillips curve shifts leftward.
D) The long-run Phillips curve was abolished and New Zealand now has only a
short-run Phillips curve.
E) The slope of the long-run Phillips curve changes when the expected inflation rate
falls.
Stagflation occurs when the economy experiences both a
A) rising price level and increasing real GDP.
B) falling price level and decreasing real GDP.
C) rising price level and decreasing real GDP.
D) falling price level and increasing real GDP.
E) low exports and low imports.
Refer to Figure 5.2.2 If the price falls from P1to P0, then the change in consumer
surplus is
A) A.
B) A + B.
C) A + B + C.
D) B + C.
E) A + B + D.
Some firms use large amounts of capital and small amounts of labour, while others use
small amounts of capital and large amounts of labour to
A) use surpluses of labour and capital and eliminate unemployment of these resources.
B) use the best available technology.
C) use the resources that are most readily available.
D) maximize profit.
E) maximize production.
The magnitude of the slope of the budget line is the
A) relative price of the good measured on the vertical axis.
B) relative price of the good measured on the horizontal axis.
C) absolute price of the good measured on the horizontal axis.
D) real price of the good measured on the vertical axis.
E) price of the good measured on the vertical axis.
Larry consumes only beer (B) and chips (C). His real income in terms of beer is
A) PC/Y.
B) PCPB.
C) Y/PC.
D) Y/PB.
E) PC/PB.
In a country with a working-age population of 20 million, 13 million are employed, 1.5
million are unemployed, and 1 million of the employed are working part-time, half of
whom wish to work full-time. The labour force participation rate is
A) 75.5 percent.
B) 72.5 percent.
C) 65 percent.
D) 57.5 percent.
E) 14.5 percent.
Complete the following sentence. Entrepreneurship is
A) defined as money.
B) traded on the stock market.
C) categorized as capital.
D) the human resource that organizes labour, land and capital.
E) categorized as the factor of production labour.
If enforcement is aimed at sellers of an illegal good, the
A) price and quantity bought decrease.
B) price and quantity bought increase.
C) price rises and quantity bought decreases.
D) price falls and quantity bought increases.
E) price change is uncertain and quantity bought decreases.
The two big economic questions
A) involve self-interest only.
B) involve only social interest.
C) involve neither self-interest nor social interest.
D) do not arise from scarcity.
E) involve both self-interest and social interest.
Use the figure below to answer the following question.
Figure 1A.2.6
Refer to Figure 1A.2.6. Consider the values for x and y given in the following table:
Which one of the graphs in Figure A1.13 represents the relationship between x and y?
A) (a)
B) (b)
C) (c)
D) (d)
E) (a) and (b)
Refer to Figure 12.3.1, which shows the cost curves and marginal revenue curve of a
firm in a perfectly competitive industry. In the short run, the firm will
A) exit from the industry.
B) break even.
C) make an economic profit.
D) incur an economic loss.
E) close down.
In a recession, typically
A) unemployment decreases.
B) the labour force participation rate increases.
C) the employment-to-population ratio decreases.
D) the employment-to-population ratio increases.
E) the labour force participation rate does not change.
The price indexes that are alternatives to the CPI are
A) the GDP deflator and the chained price index for consumption.
B) the chained price index for consumption and the CPI deflator.
C) the core GDP deflator and the CPI deflator.
D) the GDP deflator and the CPI deflator.
E) the unbiased CPI and the unbiased GDP deflator.
Suppose the tax rate on interest income is 25 percent, the real interest rate is 4 percent,
and the inflation rate is 4 percent. The real after-tax interest rate is
A) 0.5 percent.
B) 3.5 percent.
C) 4.0 percent.
D) 2.0 percent.
E) -0.5 percent.
In a natural monopoly, the long-run average cost curve
A) is downward sloping in the relevant range of output levels.
B) is horizontal in the relevant range of output levels.
C) is upward sloping in the relevant range of output levels.
D) may be either upward sloping or downward sloping in the relevant range of output
levels.
E) lies below the marginal cost curve.
Use the table below to answer the following question.
Table 1A.2.1
The data in Table 1A.2.1 shows that
A) x and y have a negative relationship.
B) x and y have a positive relationship.
C) there is no relationship between x and y.
D) there is first a negative and then a positive relationship between x and y.
E) there is first a positive and then a negative relationship between x and y.
The problem of scarcity exists
A) only in economies that lack incentives.
B) only in economies that have incentives.
C) in all economies.
D) only when people are unemployed.
E) now but will be eliminated with economic growth.
Suppose we observe a rise in the price of good A and a decrease in the quantity of good
A bought and sold. Which one of the following is a likely explanation?
A) The law of supply is violated.
B) The demand for A decreased.
C) The demand for A increased.
D) The supply of A increased.
E) The supply of A decreased.
Which one of the following goods exhibits nonexcludability?
A) a cheeseburger
B) the Internet
C) rides on the U.S. Space Shuttle
D) cable TV
E) air traffic control
Refer to Figure 26.3.1. Consider statements (1) and (2) and select the correct answer.
(1) The economy of Econoworld is experiencing an above full-employment
equilibrium.
(2) SAS will automatically shift rightward as the economy adjusts to long-run
equilibrium.
A) (1) is true; (2) is false.
B) (2) is true; (1) is false.
C) (1) and (2) are false.
D) (1) and (2) are true.
E) (1) is true; (2) is true if unemployment is below the natural rate.
Which of the following quotations illustrates economic growth?
A) “The firm should lower the price it charges for widgets and gadgets.”
B) “The firm should sell more gadgets, even if it means less widget sales.”
C) “The more and more gadgets the firm produces, the bigger the fall in widget
production.”
D) “If the firm invests more in capital equipment, it can expand production next year.”
E) “The firm has been able to lower costs due to its extensive experience in building
widgets.”
Suppose that the price elasticity of demand for bottled water in Sackville, New
Brunswick is 1.5, while the price elasticity of demand for bottled water in Prince Albert,
Saskatchewan is 0.93. This implies that the demand in Sackville is ________ and
demand in Prince Albert is ________.
A) unit elastic; unit elastic
B) perfectly elastic; inelastic
C) inelastic; elastic
D) elastic; inelastic
E) elastic; unit elastic
If the present value of $100 received one year from now is $80, what is the annual
interest rate?
A) 8 percent
B) 10 percent
C) 20 percent
D) 25 percent
E) 50 percent
In real business cycle theory, the supply of labour
A) increases if the real interest rate falls.
B) increases if the real interest rate rises.
C) increases if the demand for labour decreases.
D) is not influenced by changes in the real interest rate.
E) increases if the demand for loanable funds decreases.
For a consumer to maximize utility from a given income,
A) the marginal utility from each good must be maximized.
B) the total utility from each good must be maximized.
C) the marginal utilities of all goods and services consumed must be equal.
D) the marginal utility per dollar from all goods and services consumed must be equal.
E) the amount of each good consumed per dollar must be equal.
The Coase theorem applies when transactions costs are
A) low and property rights exist.
B) low and property rights do not exist.
C) high and property rights exist.
D) high and property rights do not exist.
E) low and there are no externalities.
Consider Table 23.2.2. If planned investment increases by $1.0 trillion at each real
interest rate, what is the new equilibrium real interest rate?
A) 7 percent a year
B) 5 percent a year
C) 6.5 percent a year
D) 6.0 percent a year
E) There is no new equilibrium real interest rate.
When the cost of making income transfers is recognized, we recognize the big tradeoff
between
A) efficiency and fairness.
B) marginal benefit and marginal cost.
C) value and marginal benefit.
D) producer surplus and consumer surplus.
E) deadweight loss and utilitarianism.
Common resources are overused because
A) the marginal private benefit of operating a boat is the quantity of fish a boat can
catch.
B) the social benefits outweigh the private benefits.
C) the marginal private benefit will always exceed the marginal social cost.
D) external costs are not considered.
E) social costs are controlled by production quotas.
The relationship between two variables that are negatively related is shown graphically
by a line that
A) slopes upward to the right.
B) is horizontal.
C) slopes downward to the right.
D) is vertical.
E) is below the x-axis and to the left of the y-axis.
Which of the following equations describes a straight line with a y-intercept of -2 and a
slope of -5?
A) y = -5 – 2x
B) y = -2
C) y = -2 – 5x
D) y = -5x
E) x = -2 – 5y