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If a consumer can buy four DVDs for $44 and five DVDs for $50, then the marginal
cost of the fifth DVD is:
A) $10.
B) $50.
C) $11.
D) $6.
Figure 2.4 Joe runs a business and needs to decide how many hours to stay open.
Figure 2.4 illustrates his marginal benefit of staying open for each additional hour.
Suppose that Joe's marginal cost of staying open per hour is $24. How many hours
should Joe stay open?
A) 3 hours
B) 4 hours
C) 5 hours
D) 6 hours
The multiplier in an open economy will decrease if:
A) the marginal propensity to consume increases.
B) the marginal propensity to import decreases.
C) either the marginal propensity to import or the marginal propensity to save
decreases.
D) the marginal propensity to import increases.
We define equilibrium as the point where:
A) planned spending equals output.
B) investment equals depreciation.
C) planned spending equals depreciation.
D) planned spending equals C+ I + G.
A government sometimes creates an excess supply of a product by setting a minimum
price at which the product may be sold to consumers. This is sometimes called a
A) price ceiling.
B) price floor.
C) tax.
D) subsidy.
Figure 4.1
Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per
week at Fratelli's Italian Restaurant. Assuming Mary and Tom are the only consumers in
the market, what is the market quantity demanded at a price of $10?
A) 2
B) 4
C) 6
D) 8
Which of the following is not a function of the Federal Reserve?
A) issue new Treasury bonds
B) conduct monetary policy
C) provide a system of check collection and clearing
D) regulate banks
An increase in inflationary expectations that causes an increase in the growth rate of
firms' prices shifts the:
A) aggregate supply curve to the left.
B) aggregate demand curve to the left.
C) aggregate supply curve to the right.
D) aggregate demand curve to the right.
The demand for money that arises because holding money over short periods is less
risky than holding stocks or bonds is called the
A) transactions demand for money.
B) liquidity demand for money.
C) opportunity cost demand for money.
D) speculative demand for money.
A small change in a variable is
A) an average change.
B) a ceteris paribus change.
C) an efficient change.
D) a marginal change.
Assuming an upward-sloping short-run aggregate supply curve, a decrease in taxes
results in ________ in output and ________ in prices in the short run.
A) an increase; an increase
B) a decrease; an increase
C) a decrease; no change
D) no change; a decrease
Which of the following increases the price of the dollar relative to the Mexican peso?
A) an increase in the supply of dollars
B) an increase in the demand for pesos
C) an increase in the demand for dollars
D) a decrease in the supply of pesos
Recall the Application about the causes of the Argentinean financial crisis to answer the
following question(s). During the late 1980s, Argentina suffered from hyperinflation. As
part of its financial reforms, Argentina pegged its currency to the U.S. dollar, making
pesos "convertible" into dollars. The financial and other institutional reforms worked
well in the early 1990s, but then problems developed. As the dollar appreciated sharply
on world markets after 1995, Argentina began to suffer from a large trade deficit
because its currency was pegged to the dollar. Then in 1999, Brazil devalued its
currency, putting additional pressure on neighboring Argentina. Eventually, Argentina
was forced to default on its international debt in 2002 and freeze bank accounts, and a
severe depression ensued.
According to this Application, during the late 1980s, Argentina pegged its currency to
the U.S. dollar. After 1995, the U.S. dollar appreciated sharply on world markets. Since
the Argentinean peso was pegged to the U.S. dollar, the appreciation of the dollar
essentially caused
A) a severe revaluation of the peso relative to the dollar.
B) the peso to also appreciate sharply on world markets.
C) a sharp devaluation of the dollar relative to the peso.
D) the peso to appreciate relative to the dollar, but depreciate on world markets.
