The present value of $300 received 5 years in the future would be calculated as which
of the following when the interest rate is 5%?
A) 300/(1.5)5
B) 300/(1.05)5
C) 300 1.5 5
D) 5.05/300
If the consumption function is defined as C = 5,500 + 0.9Y, what is the marginal
propensity to consume?
A) 0.1
B) 0.9
C) 5.5
D) 6.1
The velocity of money is defined as
A) the average number of times each dollar is used to purchase goods and services.
B) .
C) the total number of times each dollar is used to purchase goods and services.
D) P Y.
Owners of a corporation share in the profits of the firm
A) by selling any bonds or stocks owned and realizing a capital gain.
B) through coupon payments on that firm’s bonds.
C) through dividend payments on shares of that firm’s stock.
D) by raising the interest rate on bonds.
A voluntary export restraint is an agreement negotiated by two countries that places
________ that can be imported by one country from another country.
A) a tax on goods
B) a minimum quantity of a good
C) quality standards on goods
D) a numerical limit on the quantity of a good
If a hospital knows that an insurance company will pay for most of a patient’s bill, the
hospital has more of an incentive to require additional medical procedures and tests,
even if the patient may not require them. This is an example of
A) moral hazard.
B) the principle-agent problem.
C) asymmetric information.
D) adverse selection.
If the number of unemployed workers is 19 million, the number in the working-age
population is 500 million, and the unemployment rate is 4%, how many workers are in
the labor force?
A) 1 million
B) 20 million
C) 475 million
D) 481 million
Growth in the United States from 1800 to 1900 can be characterized as
A) positive and increasing.
B) positive and flat.
C) positive and decreasing.
D) negative.
The price of ________ in terms of ________ is referred to as the real exchange rate.
A) foreign goods; foreign services
B) domestic goods; the domestic currency
C) domestic goods; domestic services
D) domestic goods; foreign goods
If planned aggregate expenditure is greater than total production,
A) actual inventories will equal planned inventories.
B) firms will experience an unplanned decrease in inventories.
C) GDP will decrease.
D) the economy is in equilibrium.
Increasing marginal opportunity cost implies
A) that the more resources already devoted to any activity, the payoff from allocating
yet more resources to that activity increases by progressively smaller amounts.
B) that the more resources already devoted to any activity, the benefits from allocating
yet more resources to that activity decreases by progressively larger amounts.
C) that rising opportunity costs makes it inefficient to produce beyond a certain
quantity.
D) the law of scarcity.
If the dollar depreciates against the Indian rupee,
A) Indian imports to the U.S. become less expensive.
B) U.S. exports to India become less expensive.
C) U.S. exports to India become more expensive.
D) The value of Indian imports to the United States does not change.
Trade restrictions are often motivated by a desire to save domestic jobs threatened by
competition from imports. Which of the following counter-arguments is made by
economists who oppose trade restrictions?
A) Statistics show that trade restrictions actually do not save jobs.
B) Consumers pay a high cost for jobs saved through trade restrictions.
C) Trade restrictions have a limited impact because most Americans prefer domestic
goods over imports.
D) Trade restrictions benefit consumers in the short run but not in the long run.
Changes in the federal funds rate usually result in
A) changes in both short-term and long-term interest rates with more of an effect on
short-term interest rates.
B) changes in both short-term and long-term interest rates with more of an effect on
long-term interest rates.
C) changes in both short-term and long-term interest rates with equal effect on both.
D) no change in both short-term and long-term interest rates.
Which of the following statements is true?
A) A long-run competitive equilibrium can only be achieved in constant-cost industries.
B) When an industry achieves a long-run competitive equilibrium, industry output will
not change in the future.
C) A long-run competitive equilibrium outcome is not economically efficient.
D) When an industry reaches a long-run competitive equilibrium, the typical firm in the
industry breaks even.