Which of the following goods and services would be excluded from the CPI?
a. Legal services
b. Used cars
c. French wines sold in the U.S.
d. Restaurant meals
e. Shares of stock in U.S. corporations
The relationship between the marginal product of labor (MP), the product price (P), and
marginal revenue product of labor (MRP) in a perfectly competitive market is
Which of the following might result in an underestimation of GDP?
a. Significant underground activity such as trade in illegal drugs
b. Sales of used cars
c. Many intermediate goods
d. Imported goods
e. Exported goods
One explanation for the existence of wage differentials in the long run is that
Because there are positive externalities from higher education,
All of the following help define market structure, except one. Which is the exception?
Assuming that households do not change their cash holdings and banks loan out all of
their excess reserves, if the required reserve ratio (RRR) is 20 percent and the Fed
purchases $2,000 worth of bonds from banks, how much money will be eventually
created?
a. $1,800
b. $2,000
c. $10,000
d. $18,000
e. $20,000
The vertical long-run Phillips curve
a. implies that the Fed cannot influence the unemployment rate in the long run.
b. implies that the Fed can influence the unemployment rate in the long run.
c. implies that the Fed can influence both the unemployment rate and the inflation rate
in the long run.
d. implies that the Fed can reduce the unemployment rate in the long run only at the
expense of higher inflation rate.
e. none of the above.
Society has to establish priorities among its goals because of
Since the demand curve faced by a monopolistically competitive firm is downward
sloping,
If the Fed responds to an increase in government spending with the goal of stable prices
and output, which of the following would be the result?
a. A larger multiplier effect than normal
b. Partial crowding out
c. An increase in consumption and investment spending
d. No crowding out
e. Complete crowding out
Refer to Figure 15-7. If the economy is currently at a price level of 120 and real GDP is
$6.5 trillion, an increase in taxes will, in the short run,
a. shift the aggregate demand curve rightward, increasing both the price level and real
GDP
b. shift the aggregate demand curve leftward, decreasing both the price level and real
GDP
c. shift the aggregate supply curve upward, increasing the price level and decreasing
real GDP
d. shift the aggregate supply curve downward, decreasing the price level and increasing
real GDP
e. have no effect on aggregate demand because of crowding out
Which of the following is a way in which a government could encourage spending on
research and development?
a. Increase the tax rate on capital gains
b. Enhance patent protection
c. Decrease funding to universities
d. Increase the tax on corporate profits
e. Increase the budget deficit
If average fixed cost exceeds average variable cost, a firm should shut down in the short
run.
If there is an excess supply of the domestic currency at a fixed exchange rate,
a. the currency will undergo a devaluation
b. the currency will appreciate
c. the country must switch to a floating exchange rate
d. the central bank must buy up that excess supply or the exchange rate will fall
e. the central bank must be up that excess supply or the exchange rate will rise
Economic efficiency requires that Pareto improvements still be possible.
Which of the following may be sacrificed when pursuing growth policies?
a. Environmental regulations and air quality
b. Anti-monopoly, pro-competitive legislation
c. Safety net programs such as food stamps
d. All of the above
e. Technological progress
Pareto improvements that require the use of side payments typically are easy to
coordinate and tend to enhance economic efficiency.
In Figure 7-4, marginal product of labor is positive for levels of employment
The knowledge that students gain while in college is referred to by economists as
human capital.