According to economists Robert Lucas and Thomas Sargent, the apparent short-run
trade-off between unemployment and inflation in the 1950s and 1960s was the result of
A) unexpected changes in monetary policy.
B) expected changes in monetary policy.
C) unexpected changes in fiscal policy.
D) expected changes in fiscal policy.
Cost-plus pricing is a reasonable way to determine the optimal price when
A) marginal cost and average cost are roughly equal.
B) fixed cost and variable costs are roughly equal.
C) fixed costs vary.
D) fixed costs are high.
Increases in government spending result in ________ in the short run, and permanent
increases in government spending result in ________ in the long run.
A) partial crowding out; partial crowding out
B) partial crowding out; complete crowding out
C) complete crowding out; complete crowding out
D) complete crowding out; partial crowding out
In early 2008, the housing crisis and rising oil prices increased the risk of recession in
the United States. What fiscal policy action was taken by Congress and the president to
counter these events?
A) The Federal Reserve cut its target for the federal funds rate.
B) There was an increase in government spending on defense and unemployment
compensation.
C) Taxpayers were given rebates on taxes they already paid.
D) Income taxes were raised to reduce the federal budget deficit and reduce interest
rates.
Which of the following are goals of monetary policy?
A) maximizing the value of the dollar relative to other currencies, economic growth,
and high employment
B) price stability, maximizing the value of the dollar relative to other currencies, and
high employment
C) price stability, economic growth, and high employment
D) price stability, economic growth, and maximizing the value of the dollar relative to
other currencies
Figure 3-8
The graph in this figure illustrates an initial competitive equilibrium in the market for
apples at the intersection of D1 and S1 (point A). If there is an increase in the wages of
apple workers and an increase in the price of oranges, a substitute for apples, the
equilibrium could move to which point?
A) none of the points shown
B) B
C) C
D) E
A(n) ________ in private expenditures as a result of a(n) ________ in government
purchases is called crowding out.
A) increase; decrease
B) decrease; decrease
C) decrease; increase
D) increase; increase
Figure 15-4 Figure
15-4 shows the demand and cost curves for a monopolist.
What is the amount of the monopoly’s profit?
A) $2,700
B) $4,200
C) $10,400
D) $12,600
Securities dealers that trade stocks and bonds outside exchanges comprise the
A) foreign exchange market.
B) over-the-counter market.
C) NASDAQ market.
D) outlet market.
A form of implicit collusion where one firm in an oligopoly announces a price change
which is matched by other firms in the same industry is
A) “follow the leader” pricing.
B) price leadership.
C) retaliation pricing.
D) “tit-for-tat” pricing.
Which of the following is an examples of spending on factors of production in the
circular flow model?
A) Tuan purchases a cappuccino at the student union.
B) Laurence rents a car to drive to a wedding in San Diego.
C) Yvette pays $50 to join a softball league.
D) The “Lucky Ducky” casino buys a new craps table for the casino floor.
Suppose the government cuts taxes. We would expect interest rates to ________ and the
dollar to ________ in foreign exchange markets.
A) rise; appreciate
B) rise; depreciate
C) fall; depreciate
D) fall; appreciate
At a product’s equilibrium price
A) anyone who needs the product will be able to buy the product, regardless of ability
to pay.
B) the federal government will provide the product to anyone who cannot afford it.
C) not all sellers who are willing to accept the price will find buyers for their products.
D) any buyer who is willing and able to pay the price will find a seller for the product.
All of the following would be considered explicit costs of operating a business except
A) rent paid to a landlord.
B) bonuses paid to employees.
C) a normal rate of return for investors.
D) corporate income taxes.
The additional cost to a firm of producing one more unit of a good or service is the
A) minimum cost.
B) total cost.
C) opportunity cost.
D) marginal cost.
The statement “This Dell laptop costs $1,200” illustrates which function of money?
A) medium of exchange
B) unit of account
C) store of value
D) standard of deferred payment