1) modern economic growth is defined as increases in real gdp over time.
2) When the Fed auctions reserves through the term auction facility, the interest rate is
set by the rate offered by the lowest bidder whose bid is accepted.
3) The world is losing about 2 percent of its forest coverage every year.
4) A demand curve for a public good is determined by summing horizontally the
individual demand curves for the public good.
5) the federal government in 2006 enacted limits on “pain and suffering” awards on
medical malpractice lawsuits against physicians.
6) if price and total revenue are directly related, demand is inelastic.
7)
refer to the above diagram for a nondiscriminating monopolist. from society’s point of
view it would be desirable to have the monopolist produce a larger output than m.
8) The M2 money supply equals M1 minus small time deposits plus Money Market
Mutual Fund balances held by individuals.
9) The demand for labor is a derived demand whereas the demand for capital is not.
10) which of the following is not an economic cost?
a.wages.
b.rents.
c.economic profits.
d.payments made to the entrepreneur for organizing production.
11) The level of aggregate expenditures in the private closed economy is determined by
the:
A.expenditures of consumers and businesses.
B.intersection of the saving schedule and the 45-degree line.
C.equality of the MPC and MPS.
D.intersection of the saving and consumption schedules.
12) A single commercial bank must meet a 25 percent reserve requirement. If the bank
has no excess reserves initially and $5,000 of cash is deposited in the bank, it can
increase its loans by a maximum of:
A.$1,250.
B.$120,000.
C.$5,000.
D.$3,750.
13) an explicit cost is:
a.omitted when accounting profits are calculated.
b.a money payment made for resources not owned by the firm itself.
c.an implicit cost to the resource owner who receives that payment.
d.always in excess of a resource’s opportunity cost.
14) the main characteristics of a public good are:
a.nonrivalry and nonexcludability.
b.nonexcludability and rising costs of production.
c.nonrivalry and large external costs.
d.production at constant cost and rising demand.
15) if price (p) and quantity (q) are directly related, this means that:
a.a change in q will alter p, but a change in p will not alter q.
b.if p increases, q will decrease.
c.if p increases, q will also increase.
d.an increase in p will cause q to change, but the direction in which q changes cannot be
predicted.
16) Depletion of fish stocks through overfishing is a good example of the:
A.public good problem.
B.moral hazard problem.
C.tragedy of the commons.
D.the Coase theorem.
17) In the aggregate expenditures model, technological progress will shift the
investment schedule:
A.downward and increase aggregate expenditures.
B.downward and decrease aggregate expenditures.
C.upward and increase aggregate expenditures.
D.upward and decrease aggregate expenditures.
18) the theory of consumer behavior assumes that consumers attempt to maximize:
a.the difference between total and marginal utility.
b.total utility.
c.average utility.
d.marginal utility.
19)
refer to the above diagram. at output level q total fixed cost is:
a.0beq
b.bcde
c.0beq – 0afq
d.0cdq
20) The foreign purchases effect suggests that a decrease in the U.S. price level relative
to other countries will:
A.shift the aggregate demand curve leftward.
B.shift the aggregate supply curve leftward.
C.decrease U.S. exports and increase U.S. imports.
D.increase U.S. exports and decrease U.S. imports.
21) What is the economic rationale for liability rules and lawsuits? What are the
limitations with this approach?
22) Evaluate the argument: Restricting imports from other nations will save U.S. jobs.
23) Given the data in the graph
below, which nation should specialize in steel production and which nation in wheat
production? Why?
24) How did the Clayton Act of 1914 strengthen and clarify the intent of the Sherman
Act of 1890?
25) Explain the idea of the tragedy of the commons.
26) David Beckham, a prominent soccer player, is considering signing on for another
two years with his current soccer club. The team managers, however, face a salary cap
of $60 million for their team and have already contracted players for a total of $53
million. Beckham, used to earning $12 million a year, has been offered to play for $7
million this year and $16 million in his second year. The current interest rate is 6.5%.
Should he agree to the contract?
27) Define the Taylor rule.