In the long run:
A. all costs are variable costs.
B. all costs are fixed costs.
C. variable costs equal fixed costs.
D. fixed costs are greater than variable costs.
What does TARP stand for?
A. Toxic Asset Rescue Program.
B. Troubled Asset Relief Program.
C. Tarnished Asset Revenue Program.
D. Tinged Asset Reimbursement Program.
Other things equal, if the required reserve ratio was lowered:
A. banks would have to reduce their lending.
B. the size of the monetary multiplier would increase.
C. the actual reserves of banks would increase.
D. the Federal funds interest rate would rise.
Which is true for a purely competitive firm in short-run equilibrium?
A. The firm is making only normal profits.
B. The firm’s marginal cost is greater than its marginal revenue.
C. The firm’s marginal revenue is equal to its marginal cost.
D. A decrease in output would lead to a rise in profits.
Which statement is correct?
A. Monopolist firms tend to be more internally efficient than competitive firms because
they have a single goal of profit maximization.
B. Monopolist firms are sheltered from competitive forces and such an environment
makes them subject to X-inefficiency.
C. Monopolist firms are in industries with low barriers to entry that tend to lower the
cost of producing products.
D. Competitive firms tend to be more efficient than monopolist firms because they
maximize per-unit profits, not total profits.
Generally speaking, the greater the amount of financial wealth people hold in the form
of near-monies, the:
A. greater is their willingness to spend out of their money incomes.
B. less is their willingness to spend out of their money incomes.
C. greater is the transactions demand for money.
D. less is the asset demand for money.
The sale of a used automobile would not be included in the GDP for the current year
because it is a:
A. nonmarket transaction.
B. nonproduction transaction.
C. noninvestment transaction.
D. public transfer payment.
In effect tariffs on imports are:
A. special taxes on domestic producers.
B. subsidies to domestic consumers.
C. subsidies to foreign producers.
D. subsidies for domestic producers.
The first Federal antitrust law, passed by Congress in 1890, was the:
A. Clayton Act.
B. Federal Trade Commission Act.
C. Celler-Kefauver Act.
D. Sherman Act.
A decrease in the price of digital cameras will:
A. cause the demand curve for memory cards to become vertical.
B. shift the demand curve for memory cards to the right.
C. shift the demand curve for memory cards to the left.
D. not affect the demand for memory cards.
Inelastic demand displays:
A. little price stretch.
B. little quantity stretch.
C. considerable price stretch.
D. considerable quantity stretch.
Suppose a powerful labor union negotiates a wage for its members above the
equilibrium wage rate in a previously nonunionized market. A likely result of this is
that:
A. the union will have difficulty recruiting new members.
B. union members will be able to work more overtime than before.
C. this firm will make up for the higher wage rate by expanding output.
D. not everyone who wants to work at the new wage will be able to find jobs.
The higher the rate of unemployment:
A. the larger the GDP gap.
B. the smaller the GDP gap.
C. the higher the level of actual GDP.
D. the higher the level of potential GDP.
What reason for wage differentials would best explain why superstar athletes in a
professional sport are paid significantly more than regular athletes?
A. Noncompeting groups.
B. Compensating differences.
C. Market imperfections.
D. Principal-agent problems.
Economic systems differ according to what two main characteristics?
A. Ownership of resources and methods of coordinating economic activity.
B. Quantity of output produced and who receives the output.
C. Who produces the output and what technology is used to produce it.
D. The system of government and the quantity of natural resources available.
Government programs that replace earnings lost when people retire or are temporarily
unemployed would be considered to be:
A. noncash transfers.
B. an earned-income tax credit.
C. part of public assistance programs.
D. part of social insurance programs.
Refer to the above table. Before taxes and transfers:
A. the highest 20 percent of households received 46.0 percent of income.
B. the highest 20 percent of households received 54.8 percent of income.
C. the lowest 20 percent of households received 70 percent of income.
D. the lowest 20 percent of households received 4.9 percent of income.
Refer to the above graph. If a monopsonist bargains with an inclusive union, as shown,
the wage rate will be:
A. Wy.
B. Wx.
C. Wz.
D. Cannot be determined.
The major problem facing the economy is high unemployment and weak economic
growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to
pursue a policy to increase the rate of economic growth. Which policy changes by the
Fed would reinforce each other to achieve that objective?
A. Selling government securities and raising the discount rate.
B. Selling government securities and lowering the discount rate.
C. Buying government securities and lowering the discount rate.
D. Buying government securities and raising the reserve ratio.
It is the custom for paper mills located alongside the Layzee River to discharge waste
products into the river. Operators of hydroelectric generating plants on the river find
they must clean up the river’s water before it flows through their equipment.
The above situation is an example of:
A.an external economy.
B.a spillover cost.
C.the exclusion principle.
D.a spillover benefit.
Which nation has greatly increased its role in international trade in recent years?
A. Zaire
B. Iran
C. Peru
D. China
The long run is characterized by:
A. the relevance of the law of diminishing returns.
B. at least one fixed input.
C. insufficient time for firms to enter or leave the industry.
D. the ability of the firm to change its plant size.
Refer to the above graph. Venezuela has a very small number of extremely wealthy
households and an extremely large number of very poor households. If the United
States is represented by Lorenz curve (C) above, which curve would represent
Venezuela?
A. a
B. b
C. c
D. d
The macroeconomist would most likely study:
A. the effects of changing beer prices on the market for pretzels.
B. the effects of an increased income tax on a typical household’s purchase of goods.
C. the effects of a reduction in income tax rates on the nation’s total output.
D. how consumers in Gary, Indiana, respond to lower gasoline prices.
The multiple by which the commercial banking system can expand the supply of money
is equal to the reciprocal of:
A. the MPS.
B. its actual reserves.
C. its excess reserves.
D. the reserve ratio.
An increase in the money supply is likely to decrease:
A. prices.
B. nominal income.
C. money demand.
D. interest rates.
Government purchases in national income accounts would include expenditures for
payments of:
A. Social Security checks to retirees.
B. salaries for current U.S. military officers.
C. public assistance for welfare recipients.
D. public assistance for military veterans.
If actual reserves in the banking system are $50,000, excess reserves are $5000, and
checkable deposits are $225,000, then the monetary multiplier is:
A. 10.
B. 4.
C. 5.
D. 2.
Refer to the above production possibilities curves. Curve (a) is the current curve for the
economy. Other things being equal, society’s current choice of point P on curve (a) will:
A. allow it to achieve more rapid economic growth than would the choice of point N.
B. entail a slower rate of economic growth than would the choice of point N.
C. entail the same rate of growth as would the choice of point N.
D. be unobtainable because it exceeds the productive capacity of the economy.
An aggregate supply curve shows the:
A. level of real domestic output that will be produced at each possible price level.
B. level of real domestic output that will be purchased at each possible price level.
C. price level at which real domestic output will be purchased.
D. price level at which real domestic output will be in equilibrium.