Ceteris paribus, an increase in the government budget deficit increases interest rates in
the United States and causes a real appreciation of the dollar.
To successfully price discriminate, a firm must ensure that there are no opportunities for
arbitrage.
The public choice model asserts that the self-interest of policymakers is likely to cause
them to take actions that are inconsistent with the preferences of voters, even where
those preferences are clear.
Corporate managers and shareholders always have the same goals.
Globalization is the process of countries imposing trade restrictions on other countries.
The total cost schedule shows the relationship between different amounts of inputs and
the resulting level of output.
In the United States, domestic investment is greater than national saving.
The payment received by suppliers of entrepreneurial skills is called wages.
When there is a positive externality in a free market, too much of the good is produced
and consumed.
Inflation usually increases during a recession and decreases during an expansion.
In the short run, a firm might choose to produce rather than shut down even if its
market price is less than its average total cost of production.
Most of the countries of Africa are considered newly industrializing countries.
The sales revenue a seller receives from the sale of an additional unit of goods is called
the marginal benefit.
Shortage means the same thing as scarcity.
Figure 17-3
InPanel A, at low wages (segment i),
A) the substitution effect outweighs the income effect.
B) the income effect outweighs the substitution effect.
C) the substitution effect offsets the income effect.
D) labor suppliers demand more leisure as wages increase.
A recent study indicated that “Stricter college alcohol policies such as raising the price
of alcohol, or banning alcohol on campus, decreases the number of students who use
marijuana.” This indicates that the cross-price elasticity between alcohol and marijuana
is positive.
In which of the following situations might you expect expansionary monetary policy to
reduce the unemployment rate?
A) if expectations are rational
B) if changes in monetary policy are unanticipated
C) if actual inflation is higher than expected
D) if actual inflation is lower than expected
Table 2-4 Production Choices for Dina’s Diner
Assume Dina’s Diner only produces sliders and hot wings. A combination of 40 sliders
and 25 hot wings would appear
A) along Dina’s production possibilities frontier.
B) inside Dina’s production possibilities frontier.
C) outside Dina’s production possibilities frontier.
D) at the vertical intercept of Dina’s production possibilities frontier.
Which of the following does not arise from price discrimination?
A) an increase in producer surplus
B) an increase in consumer surplus
C) an increase in quantity sold
D) an increase in profits
Which of the following transactions would be included in the official calculation of
GDP?
A) A student buys a used textbook at the bookstore.
B) Firestone sells $2 million worth of tires to General Motors.
C) You wash and wax your father’s car as a favor to him.
D) You buy a new iPod.
E) You illegally download music off the Internet to put on your new iPod.
How does a decrease in value of a country’s currency relative to other currencies affect
its balance of trade?
A) A decrease in value of a country’s currency relative to other currencies raises
imports, reduces exports, and reduces the balance of trade.
B) A decrease in value of a country’s currency relative to other currencies reduces
imports, raises exports, and reduces the balance of trade.
C) A decrease in value of a country’s currency relative to other currencies reduces
imports, raises exports, and increases the balance of trade.
D) A decrease in value of a country’s currency relative to other currencies raises
imports, reduces exports, and increases the balance of trade.
A decrease in the discount rate ________ bank reserves and ________ the money
supply if banks respond appropriately to the change in the rate.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
Figure 4-1 Figure 4-1 shows Arnold’s demand curve for
burritos.
Arnold’s marginal benefit from consuming the third burrito is
A) $1.25.
B) $1.50.
C) $2.50.
D) $6.00.
As a business type, corporations ________ in the United States.
A) earn the majority of profits
B) are the most common
C) are the least common
D) are subject to the least amount of taxes
Which of the following cause the unemployment rate as measured by the Bureau of
Labor Statistics to overstate the true extent of joblessness?
A) inflation
B) discouraged workers
C) counting people as employed who are working part time, although they would prefer
to be working full time
D) unemployed persons falsely report themselves to be actively looking for a job
Protectionism is the use of ________ to protect domestic firms from foreign
competition.
A) military force
B) trade barriers
C) cheap labor
D) dumping
Table 4-2
The table above lists the highest prices five consumers are willing to pay for a concert
ticket. If the price of one ticket is $50
A) everyone will buy a ticket.
B) consumer surplus will be maximized.
C) Violet’s consumer surplus is $2.
D) no one will buy a ticket.
Explain how the economy moves back to full employment from recession. Be sure to
detail what happens to short-run aggregate supply, unemployment, equilibrium GDP
and the price level.
Does globalization promote economic growth, and how does globalization affect the
welfare of a given country’s citizens?
Since real GDP is adjusted for inflation and nominal GDP is not, nominal GDP must
always be higher than real GDP. Do you agree or disagree? Why?
What are the implications of the quantity theory of money for monetary policy and
price stability?
What is the main difference between a single-payer health care system and socialized
medicine?
If your income is $40,000 and you pay taxes of $4,650, what is your average tax rate?
Show your work.
Suppose you obtain a fixed rate mortgage during a period of relatively high inflation.
During the next ten years, inflation falls. Are you a winner or a loser due to inflation?
Explain why.