For any value of the MPC (marginal propensity to consume), the formula for the
expenditure multiplier is
a. 1/(1 – MPC)
b. 1/MPC
c. 1/(MPC – 1)
d. (1 + MPC)/MPC
e. 1/(1 + MPC)
A nation’s comparative advantage
a. can almost always be traced to its natural resources
b. is often based on its natural resources
c. is often based on barriers to international trade
d. is reflected in the shape of its demand curve for imported goods
e. is a result of increasing marginal returns
Which of the following would be included in the consumption component of GDP?
a. Movie ticket sales
b. Purchase of a new home
c. Purchase of used clothes
d. Purchase of a baseball card collection at a yard sale
e. Purchase of a chain saw at an auction
In Figure 16-2, if Korea produces two fewer radios, then how many more calculators
could it produce?
Figure 16-2
Number of workers needed to produce one unit of each of the following goods:
a. 12
b. 2
c. 1
d. 4
e. 6
What condition must be met in order for total spending to equal total output?
a. The sum of saving and government purchases must equal the sum of planned
investment and net taxes.
b. The sum of saving and net taxes must equal the sum of planned investment and
government purchases.
c. The sum of saving and planned investment must equal the sum of government
purchases and net taxes.
d. Saving must equal net taxes.
e. The sum of saving and net taxes must equal planned investment minus government
purchases.
Suppose each of the following news items appears on the evening news. Which one
would most likely cause consumption spending to increase?
a. ‘œLayoffs reach record high’
b. ‘œGovernment to increase taxes with the start of the next quarter’
c. ‘œStock market drops 10%’
d. ‘œGovernment to issue tax rebates at the end of next month’
e. ‘œBankruptcies increase 20% over the last six months’
For which of the following items is demand likely to be the most price elastic?
Assume that the labor market for auto mechanics is initially in equilibrium. Which of
the following would lead to an increase in both the wage rate and employment for auto
mechanics?
Which of the following will decrease the amount of a good that is traded in the market?
Full employment occurs when
a. everyone has a job
b. everyone who wants a job has one
c. there is no frictional unemployment
d. there is no cyclical unemployment
e. there is no structural, frictional, and seasonal unemployment
The aggregate production function is the relationship between the
a. total cost of labor and the quantity of output in the economy
b. total cost of labor and the total real cost of inputs
c. quantity of labor employed in the economy and the total quantity of output produced
d. cost of labor and the supply of labor
e. quantity of labor and the quantity of capital
The organization responsible for creating and regulating the U.S. money supply is
a. the Department of Commerce
b. the Council of Economic Advisers
c. the U.S. Mint
d. the Federal Reserve System
e. the Department of the Treasury
In the short run under perfect competition, an individual firm should increase output as
long as