The current debate about fiscal and monetary policy tends to focus on
a. which policy is less destabilizing.
b. which policy is more effective.
c. whether the Fed can control the money supply.
d. which policy works more quickly.
Which of the following is not a public good?
a. a coastal lighthouse
b. national defense
c. a flood-control levee
d. the latest Walt Disney movie
A factor increasing the popularity of monetarism in the late 1970s was the
a. ease with which the Fed controlled the money supply.
b. excellent performance of the economy in the 1970s.
c. the fear of budget deficits and growing federal debt.
d. the predictable behavior of velocity until about 1980.
Which of the following is the most closed economy?.
a. Germany
b. Canada
c. Mexico
d. the United States
Firms in a perfectly contestable market will earn higher profits than firms in markets
that are not perfectly contestable.
a. True
b. False
Figure 14-2
In Figure 14-2, which movement would represent an improvement for all individuals?
a. A to B
b. C to AC
c. D to B
d. A to D
A man may be preferred to a woman by an employer who will make a substantial
investment in the training of the employee because
a. most employers are sexist and think that women belong in the home caring for
children.
b. as a group women tend to have a weaker attachment to the labor force than men.
c. employers have observed that women are less productive than men on most jobs.
d. employers are afraid women will disrupt the workplace by distracting the male
employees.
International trade tends to lower the value of the multiplier because
a. imports fall as GDP increases.
b. net exports fall as GDP increases.
c. net exports tend to rise as GDP increases.
d. exports fall as GDP increases.
Government action can usually perfectly correct the market’s shortcomings.
a. True
b. False
A perfectly elastic demand curve for a firm
a. is represented by a vertical line.
b. means that with every unit price increase there will be a unit decrease in demand.
c. is formulated by P Q = a constant, for all prices and quantities.
d. indicates that any increase in price will eliminate all purchases of its product.
The Keynesian view of the world is that the
a. self-correcting mechanism is unreliable.
b. benefits of fighting unemployment are high and the costs are low.
c. short-run Phillips curve is relatively flat.
d. All of the above are correct.
A restriction of imports that is accomplished by a quota normally
a. can be accomplished also by a tariff.
b. cannot be replicated exactly by imposing a tariff.
c. can be accomplished also by an export subsidy.
d. can be accomplished also by negotiations within GATT.
In what year did the housing bubble burst?
a. 2000
b. 2006
c. 2008
d. There was no such event.
An excise tax
a. is a sales tax on the purchase of a particular good or service.
b. is a tax on the profits earned from the sale of an asset.
c. represents a surcharge on corporate profits beyond the normal corporate tax rate.
d. is a tax on income-earning rental property.
Which of the following situations is the most common? Men and women
a. doing the same job and getting equal pay.
b. doing the same job and getting unequal pay.
c. doing very different kinds of work and consequently having different earnings.
d. randomly distributed across occupations with average earnings about equal.
A negative cross elasticity indicates that two goods are complements.
a. True
b. False
An expansionary fiscal policy will lead to
a. higher interest rates, an appreciated dollar, and reduced net exports.
b. higher interest rates, an appreciated dollar, and increased net exports.
c. reduced interest rates, an appreciated dollar, and reduced net exports.
d. reduced interest rates, an appreciated dollar, and increased net exports.
During the financial crisis of 2007-2009, why did the Federal Reserve begin to utilize
various types of unconventional monetary policy?
a. the federal funds rate had already been increased as much as possible
b. the discount rate had already been increased as much as possible
c. the federal funds rate had already been reduced to zero
d. the discount rate had already been reduced to zero
Contractionary monetary policy shifts the reserve supply schedule inward.
a. True
b. False
Figure 7-8
Of the graphs in Figure 7-8, which represents fixed cost?
a. 1
b. 2
c. 3
d. 4
If income rises, most consumers will increase the quantity demanded of an inferior
good.
a. True
b. False
Studies have shown that in the 1980s the wage gap between college-educated workers
and those with high school education or less
a. decreased dramatically.
b. decreased slightly.
c. remained unchanged.
d. widened dramatically.
The United States typically experiences a large surplus of milk annually. This is caused
by
a. a price ceiling in the market.
b. not enough demand for milk.
c. a price floor in the market.
d. overproduction of milk by the cows.
A horizontal demand curve is perfectly elastic because a change in price will induce an
infinite change in quantity demanded.
a. True
b. False
Figure 11-4
Physicians have two types of patients: private patients who pay directly or with
insurance, and Medicaid patients whose care is paid for by the state. Physicians must
lower prices to attract more private patients, but they can add unlimited Medicaid
patients at a constant price. The situation facing Dr. Casey is depicted in Figure 11-4.
Units of medical service (say, number of patients number of visits) are measured on the
horizontal axis. How many units of medical service will Dr. Casey deliver?
a. OA
b. OB
c. OC
d. OD
The aggregate supply curve is
a. a schedule showing the relationship between the price level and the quantity of real
GDP supplied.
b. usually upward sloping.
c. relatively flat at low levels of resource utilization.
d. All of the above are correct.
Standby passengers on airlines who pay low rates for seats benefit from the low price.
How are the airlines affected?
a. They lose, because the standby passengers do not cover the full cost of the seats.
b. They gain, because the additional revenue covers the “fixed costs” of the flight.
c. They lose, because the gain of the passengers must necessarily come at the expense
of the airline.
d. They benefit as long as the additional revenue from the passengers exceeds the
marginal cost.
e. Uncertain, because economic theory says nothing about this sort of situation.
Labor productivity times hours of work equals
a. per capita GDP.
b. capital stock.
c. population.
d. GDP.
Speculators serve no useful function in a market.
a. True
b. False
There is much world concern over the deteriorating condition of the Pyramids and other
historical structures in Egypt. While people of all nations enjoy visiting these structures,
there has been little financial support for preservation coming from within Egypt or
from elsewhere. Economists would describe this as an example of
a. an externality.
b. a public good.
c. a free rider problem.
d. imperfect information.
Under a relative concept of poverty, poverty
a. doesn’t really exist.
b. is higher in rich countries than in poor countries.
c. can never be wholly eliminated by public policy.
d. declines as technology advances.
A subsidy to firms intended to reduce pollution in an industry would
a. shift the LRAC curve upward.
b. have the same impact on the firm as a tax.
c. likely drive some existing firms from the industry.
d. likely have the paradoxical effect of increasing pollution in the industry in the long
run.
One reason why gold and silver have served as money is that they
a. are easy to produce.
b. are easy to duplicate.
c. are durable.
d. All of the above are correct.