When the expenditure schedule is too low, the result is a(n)
a. unemployment surplus.
b. inflationary gap.
c. recessionary gap.
d. budgetary gap.
Average revenue is slightly higher than price.
a. True
b. False
A country that must inhibit imports should give preference to
a. quotas over tariffs because quotas are less likely to distort trade patterns between
nations.
b. tariffs over quotas because, unlike quotas, tariffs offer no special benefits to
inefficient exporters.
c. export subsidies over quotas or tariffs because export subsidies can protect a nation’s
domestic producers.
d. an embargo wherever possible because an embargo can serve as a political weapon in
addition to being a “trade stopper.”
The slope of the aggregate demand curve illustrates that as the price level rises,
a. real GDP demanded decreases.
b. real GDP demanded increases.
c. the aggregate demand curve shifts rightward.
d. the aggregate demand curve shifts leftward.
An export subsidy helps reduce the selling price of a product by allowing individual
producers to charge less and still cover all of their production costs.
a. True
b. False
In the long run under monopoly,
a. the MC curve will lie to the left of the output at which AC and AR meet.
b. MC = MR = P.
c. MC = MR = AR.
d. the MC curve will lie to the right of the output at which AC and AR meet.
A home appliances supplier offers substantial discounts to customers if they buy several
of the firm’s products. When bought together, these items cost considerably less than the
sum of the prices of the items if they were bought separately. Which pricing
arrangement is being discussed here?
a. Price dealing
b. Tacit collusion
c. Bundling
d. Skimming
In the past, the Department of Transportation allowed airline mergers that gave the
merged airlines market shares of 79 and 82 percent, respectively, in their hub cities. The
concept the DOT used to allow mergers where there was obvious concentration was
most likely
a. the good trust principle.
b. contestability.
c. the efficient market principle.
d. the monopolistic competition principle.
Policy should create an environment in which the economy can expand its productive
capacity rapidly, because that is the ultimate source of higher living standards. This task
is the realm of
a. growth policy.
b. stabilization policy.
c. labor policy.
d. inflation policy.
Which market is most likely to witness such actions and reactions as frequent
new-product introductions, free samples, and aggressive advertising campaigns?
a. Oligopoly
b. Perfect competition
c. Monopoly
d. Monopolistic competition
The Phillips curve explains the trade-off between inflation and unemployment.
a. True
b. False
The interest rate is determined by
a. the supply and demand of loanable funds.
b. the supply and demand of land.
c. the supply and demand of marginal land.
d. None of the above is correct.
Figure 17-3
Given the situation in graph (1) in Figure 17-3, what can be expected to change in graph
(1) when the economy’s self-correcting mechanism operates?
a. aggregate demand increases
b. aggregate demand decreases
c. aggregate supply increases
d. aggregate supply decreases
Total profit equals
a. TR − TC.
b. average profit times total output.
c. total sales revenue minus total cost.
d. All of the above are correct.
According to the “law” of demand, we would expect
a. the demand curve to be negatively sloped.
b. the demand curve to be positively sloped.
c. the total quantity demanded by the market to move in the same direction as price.
d. marginal utility to increase as quantity demanded increases.
The tax cut of 2001 turned out to be well-timed because it caused a
a. rightward shift of the aggregate demand curve.
b. rightward shift of the aggregate supply curve.
c. leftward shift of the aggregate demand curve.
d. leftward shift of the aggregate supply curve.
For a major country with extensive capital flows, what is the effect of an increase in
interest rates?
a. a currency depreciation and increased net exports
b. a currency depreciation and reduced net exports
c. a currency appreciation and increased net exports
d. a currency appreciation and reduced net exports
When a firm leaves a perfectly competitive industry,
a. the individual demand curves facing remaining firms shift towards the point of
minimum average cost in the long run.
b. short-run industry equilibrium is re-established at a new point along the original
short-run industry supply curve.
c. the short-run industry supply curve shifts to the right.
d. at the new long-run equilibrium, the remaining firms in the industry will each receive
a higher profit.
The multiplier is increased when income taxes are included.
a. True
b. False
Roughly what percentage of Americans were officially considered poor in 2012?
a. 2 percent
b. 9 percent
c. 15 percent
d. 22 percent
All economic transactions involve only buyers and sellers; no third parties are involved.
a. True
b. False
The degree to which an economic system approaches a market economy depends on the
degree to which
a. economic choices are made through the free interaction of buyers and sellers in the
marketplace.
b. there are monopolies in the marketplace.
c. people have a high standard of living.
d. advanced technology is used.
About _____% of Americans between the ages of 25 and 60 will experience at least one
year below the official poverty line.
a. 3%
b. 10%
c. 27%
d. 40%
The Federal Deposit Insurance Corporation insures
a. savings accounts against unlawful transfer into checking accounts.
b. bank deposits against the failure of an individual bank.
c. that the bank will maintain sufficient required reserves.
d. bank buildings and property against fire and theft.
Assume that a company has several male workers who do not give their full
cooperation to female supervisors making them less effective as supervisors.
Economists would refer to this type of situation as ____.
a. statistical discrimination
b. discrimination by fellow workers
c. discrimination by employers
d. non-discrimination
With a monopoly, the total surplus is lower than it would be with a perfectly
competitive industry.
a. True
b. False
In a properly functioning economy, money costs approximate opportunity costs.
a. True
b. False
A perfectly contestable market is one which a firm can enter and exit without losing its
investment.
a. True
b. False
Give a short concise definition for the following terms and explain their relationship to
the study of economics.
a. marginal physical product
b. marginal revenue product
c. law of diminishing returns
d economies of scale
If the Fed buys a U.S. Treasury bill from a member of the public, the banking system
has
a. less reserves and the money supply tends to fall.
b. more reserves and the money supply tends to fall.
c. less reserves and the money supply tends to grow.
d. more reserves and the money supply tends to grow.
The use of pollution charges to reduce pollution confronts the problem of
a. free riders who avoid revealing benefits from abatement.
b. determining specific individual damages and appropriate charges associated with
pollutants.
c. necessarily lowering the price of the products.
d. requiring no agency to administer the tax.