Which of the following statements is consistent with the views of Joseph Schumpeter?
A) Research and development by competitive firms is responsible for most
technological changes.
B) An economy benefits from firms having market power because these firms are more
likely to be able to commit funds for research and development.
C) Enforcement of antitrust laws is necessary to promote competition among firms.
D) A lack of competition discourages firms from developing new technologies.
If a firm wanted to know whether the demand for its product was elastic, unit-elastic, or
inelastic, then the firm could
A) survey competitors and ask them what they think demand elasticity is for the
product.
B) talk to its customers.
C) change price a little bit and observe what happens to total revenue.
D) not do anything as there is no way to find an elasticity value.
Figure 28-2
At which point is the unemployment rate equal to the natural rate of unemployment?
A) A
B) B
C) C
D) There is insufficient information on the graph to answer this question.
________ would be the source of a “real” business cycle.
A) Technology shocks
B) Anticipated changes in monetary policy
C) Unanticipated changes in monetary policy
D) all of the above
Figure 2-14
Which two arrows in the diagram depict the following transaction: Barney earns $250
for selling scissors and razors to Floyd’s Barber Shop.
A) J and M
B) K and G
C) K and M
D) J and G
Figure 18-4
Rank the above panels in terms of most unequal income distribution to least unequal
income distribution.
A) Panel A, Panel B, Panel C
B) Panel B, Panel C, Panel A
C) Panel A, Panel C, Panel B
D) Panel C, Panel B, Panel A
A recession tends to cause the federal budget deficit to ________ because tax revenues
________ and government spending on transfer payments ________.
A) increase; rise; falls
B) increase; fall; rises
C) decrease; rise; falls
D) decrease; fall; rises
Figure 18-1
The depreciation of the dollar is represented as a movement from
A) B to A.
B) D to C.
C) B to C.
D) A to C.
E) A to B.
Figure 10-3
The Bobsey twins, Laurel and Hardy, both enjoy watching romantic comedies and
science fiction movies. Based on the diagrams above what can you conclude about their
movie preferences?
A) They have identical movie preferences.
B) Laurel enjoys romantic comedies more than Hardy.
C) Laurel enjoys science fiction movies more than Hardy.
D) The diagrams do not provide any information about relative preferences.
Which one of the following is not considered a financial intermediary?
A) a bank
B) a pension fund
C) an insurance company
D) a credit counselor
If planned aggregate expenditure is above potential GDP and planned aggregate
expenditure equals GDP, then
A) actual inventory investment will be less than planned inventory investment.
B) actual inventory investment will be greater than planned inventory investment.
C) the economy is in an expansion.
D) the economy is at full employment.
A newspaper story on the effect of higher milk prices on the market for ice cream
contained the following:
“As a result [of the increase in milk prices], retail prices for ice cream are up 4 percent
from last year. . . . And ice cream consumption is down 3 percent.”
Source: John Curran, “Ice Cream, They Scream: Milk Fat Costs Drive Up Ice Cream
Prices,” Associated Press, July 23, 2001. Based on the information given, what is the
price elasticity of demand for ice cream?
A) 0.75 (in absolute value)
B) 1.33 (in absolute value)
C) 12%
D) We do not have enough information to calculate the elasticity.
An increase in the equilibrium quantity of a product will result
A) when the quantity supplied of the product exceeds the quantity demanded.
B) when there is an increase in supply and an increase in demand for the product.
C) when there is an increase in supply and a decrease in demand for the product.
D) when there is a decrease in demand and a decrease in the cost of inputs used to make
the product.
Part of the spending on the Caldecott Tunnel project in northern California came from
the American Reinvestment and Recovery Act, which is an example of ________ aimed
at increasing real GDP and employment.
A) discretionary fiscal policy
B) an automatic stabilizer
C) contractionary fiscal policy
D) a transfer payment
A bank’s largest liability is its
A) short-term borrowing.
B) long-term debt.
C) deposits of its customers.
D) shareholder equity.
The short-run aggregate supply curve has a(n) ________ slope because as prices of
________ rise, prices of ________ rise more slowly.
A) positive; final goods and services; inputs
B) infinite; final goods and services; inputs
C) positive; inputs; final goods and services
D) infinite; inputs; final goods and services
Table 12-4
Table 12-4 shows the short-run cost data of a perfectly competitive firm. Assume that
output can only be increased in batches of 20 units.
If the market price is $45, the firm will produce
A) 60 units.
B) 80 units.
C) 100 units
D) 120 units
A situation in which each firm chooses the best strategy given the strategies chosen by
other firms is called a
A) Nash equilibrium.
B) dominant strategy.
C) collusion.
D) pay-off matrix.