Figure 5-3
Figure 5-3 represents the market for medical services with and without insurance, and
the effect of a third-party payer system on the demand for medical services.
Refer to Figure 5-3. With insurance and a third-party payer system, what price do
consumers pay for medical services?
A) $40
B) $55
C) $65
D) >$65
When exchange rates are ________, we say that the country’s exchange rate is fixed.
A) determined in the market
B) set by a country’s central bank
C) determined by supply and demand
D) relatively stable
In comparison to a government that runs a balanced budget, when the government runs
a budget deficit,
A) the equilibrium interest rate will fall.
B) business investment will fall.
C) household savings will fall.
D) none of the above
Because ________ in the government budget deficit increase the real interest rate,
budget deficits can ________ firm investment.
A) increases; increase
B) decreases; increase
C) decreases; decrease
D) increases; decrease
The Federal Reserve can directly affect its monetary policy ________, which then
affect its monetary policy ________.
A) goals; targets
B) goals; tools
C) targets; goals
D) targets; tools
Scenario 1-1
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit
of $10,000 per week. A manager at the plant observes, “Although the last 400 t-shirts
we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are
still making an overall profit of $10,000 per week so I think we’re on the right track. We
are producing the optimal number of t-shirts.”
Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic
term for the incremental cost of producing the last 400 t-shirts?
A) marginal cost
B) operating cost
C) explicit cost
D) Any of the above terms are correct.
Which of the following has a tendency to raise the unemployment rate?
A) implementing a minimum wage in an economy
B) reducing unemployment insurance in an economy
C) offering wages at the market-clearing rate
D) reducing labor unions membership in an economy
All of the following are assumptions made by the dynamic model of aggregate demand
and aggregate supply except
A) aggregate demand and potential real GDP decrease continuously.
B) the aggregate demand curve shifts to the right during most periods.
C) potential real GDP increases continuously.
D) the short-run aggregate supply curve shifts to the right except during periods when
workers and firms expect higher wages.
In the United States in 2012, the percentage of people with some form of health
insurance was about
A) 17%.
B) 29%.
C) 54%.
D) 84%.
Which of the following best describes how banks create money?
A) Banks charge higher interest rates on loans than they pay on deposits.
B) Banks charge fees for providing financial advice.
C) Banks create checking account deposits when making loans from excess reserves.
D) Banks make loans from reserves.
Into which category of aggregate expenditure would each of the following transactions
fall?
a. Sandra MacMillian purchases a new Ford Focus.
b. The city of Richardson buys 5 new garbage trucks.
c. Adrian Garcia buys a newly constructed townhome.
d. A consumer in Latvia orders an iPhone from Apple.
e. Ford Motor Company buys 300 new iPhones from Apple.