Exhibit 2-7
Which of the following statements is true?
a. Points B and D are more efficient than points A and C.
b. If the economy’s PPF is represented by PPF1, points A and B are productive efficient,
while C and D are unattainable.
c. If the economy’s PPF is represented by PPF2, points C and D are productive efficient,
while A and B are unattainable.
d. both a and c
Amy’s opportunity cost of going to the movies is
a. the price of the ticket.
b. zero, if she has a free pass to the movie.
c. the price of the ticket plus the value to Amy of what she would have chosen to do
with her time had she not chosen to go to the movies.
d. both b and c
It is possible for the absolute price of a good to rise at the same time that the good’s
relative price is falling.
a. True
b. False
If the economy is self-regulating and in an inflationary gap,
a. wages and prices will fall.
b. wages will rise, but prices will fall.
c. wages and prices will rise.
d. wages will fall, but prices will rise.
e. neither wages nor prices will change.
Exhibit 17-3
Assume that the starting point on the production function is point A.After an increase in
the quantity of capital, there would be a ______________________ which would shift
the LRAS curve from LRAS1 to _______________ resulting in _______________..
a. movement along the production function to point C; LRAS2; economic growth
b. shift upward of the production function to point B; LRAS2; economic growth
c. movement along the production function to point C; LRAS3; a shrinking economy
d. shift upward of the production function to point B; LRAS3; a shrinking economy
In a two-country world, an increase in foreign input prices, ceteris paribus,
a. shifts the SRAS curve leftward, causing the price level to increase.
b. shifts the SRAS curve leftward, causing the price level to decrease.
c. shifts the SRAS curve rightward, causing the price level to increase.
d. shifts the SRAS curve rightward, causing the price level to decrease.
e. does not affect the SRAS curve or the price level.
An economy doubles in size every 35 years if it maintains a steady annual growth rate
of about __________ percent.
a. 4.0
b. 2.8
c. 3.5
d. 2.0
According to public choice theory, low voter turnouts may be the result of cost-benefit
calculations on the part of voters.
a. True
b. False
What is the reason for the law of increasing opportunity costs?
a. There is no reason: it is just one of the laws of economics.
b. Resources have varying abilities and those with lower opportunity costs of producing
a good will be used to produce it before resources with higher opportunity costs
produce it.
c. The price of a good rises as more of it is demanded.
d. As more of a good is produced, the taxes applied to the production of the good rise.
e. c and d
The term outsourcing is used to describe work done for a company by individuals
working for another company in a different country.
a. True
b. False
“Expansionary fiscal policy is needed to increase Real GDP — at least in the short
run.”The economist who said this most likely believes that
a. the tax multiplier is larger than the government spending multiplier.
b. the AS curve is vertical.
c. there will be a great deal of crowding out connected with a rise in government
spending.
d. the AS curve is upward-sloping.
e. c and d