Econ 224 Final homework 1-5
A decrease in the price of creamer will increase the equilibrium price and decrease the equilibrium quantity in the market for coffee. True False
False
A decrease in the price of sugar will shift the supply curve for cookies to the right. True False
True
Refer to Table 13-8. What is the marginal cost of producing the fifth unit of output? a. $70 b. $4 c. $40 d. $50
a. $70
Suppose that when the price of good X increases from $800 to $850, the quantity demanded of good Y increases from 65 to 70. Using the midpoint method, the cross-price elasticity of demand is about a. 1.2, and X and Y are substitutes. b. 0.1, and X and Y are substitutes. c. −1.2, and X and Y are complements. d. −0.1, and X and Y are complements.
a. 1.2, and X and Y are substitutes.
Suppose a basket of goods and services has been selected to calculate the CPI and Year 1 has been selected as the base year. In Year 1, the basket's cost was $50; in Year 2, the basket's cost was $52; and in Year 3, the basket's cost was $55. The value of the CPI in Year 3 was a. 110.0. b. 105.0. c. 90.9. d. 104.0.
a. 110.0.
A manufacturer produces 400 units when the market price is $10 per unit and produces 600 units when the market price is $12 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about a. 2.2. b. 2.0. c. 200. d. 0.45.
a. 2.2.
Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75 and, as a result, the quantity of bags demanded increases from 600 to 800. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is a. 2.33. b. 0.43. c. 2.89. d. 0.35.
a. 2.33.
Refer to Figure 13-2. Which of the curves is most likely to represent average fixed cost? a. A b. B c. C d. D
a. A
Which of the following is an example of barter? a. A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet. b. A doctor performs surgery on a patient whose insurance pays 100% of the bill. c. A parent gives a teenager a $10 bill in exchange for her babysitting services. d. A homeowner gives an exterminator a check for $50 in exchange for extermination services.
a. A barber gives a plumber a haircut in exchange for the plumber fixing the barber's leaky faucet.
Which of the following is the most correct statement about the relationship between inflation and unemployment? a. In the short run, falling inflation is associated with rising unemployment. b. In the long run, falling inflation is associated with falling unemployment. c. In the long run, falling inflation is associated with rising unemployment. d. In the short run, falling inflation is associated with falling unemployment.
a. In the short run, falling inflation is associated with rising unemployment.
A bank has an 8 percent reserve requirement, $10,000 in deposits, and has loaned out all it can, given the reserve requirement. a. It has $800 in reserves and $9,200 in loans. b. It has $8,000 in reserves and $2,000 in loans. c. It has $80 in reserves and $9,920 in loans. d. It has $1,250 in reserves and $8,750 in loans.
a. It has $800 in reserves and $9,200 in loans.
Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand to make the money she needs. Your mother is paying for all of the ingredients. She currently is charging 25 cents per cup, but she wants to adjust her price to earn the $50 faster. If you know that the demand for lemonade is elastic, what is your advice to her? a. Lower the price to increase total revenue. b. There isn't enough information given to answer this question. c. Raise the price to increase total revenue. d. Leave the price at 25 cents and be patient.
a. Lower the price to increase total revenue.
Which of the following statements is correct? a. Who bears the burden of a tax depends on the price elasticities of supply and demand. b. A tax levied on sellers always will be passed on completely to buyers. c. Government can decide who ultimately pays a tax. d. A tax levied on buyers will never be partially paid by sellers.
a. Who bears the burden of a tax depends on the price elasticities of supply and demand.
Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see a. a decrease in the demand for energy drinks. b. an increase in the demand for energy drinks. c. no change in the demand for energy drinks. d. a decrease in the supply of energy drinks.
a. a decrease in the demand for energy drinks.
When marginal cost is less than average total cost, a. average total cost is falling. b. average variable cost must be falling. c. average total cost is rising. d. marginal cost must be falling.
a. average total cost is falling.
A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100, a. average variable cost is $3. b. average fixed cost is $10. c. average total cost is $5. d. average total cost is $4.
a. average variable cost is $3.
Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is a. elastic. b. zero. c. unit elastic. d. inelastic.
a. elastic.
For any given year, the CPI is the price of the basket of goods and services in the a. given year divided by the price of the basket in the base year, then multiplied by 100. b. given year divided by the price of the basket in the previous year, then multiplied by 100. c. previous year divided by the price of the basket in the given year, then multiplied by 100. d. base year divided by the price of the basket in the given year, then multiplied by 100.
a. given year divided by the price of the basket in the base year, then multiplied by 100.
The CPI differs from the GDP deflator in that a. increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the CPI but not in the GDP deflator. b. the CPI is a price index, while the GDP deflator is an inflation index. c. substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator. d. increases in the prices of domestically produced goods that are sold to the U.S. government show up in the CPI but not in the GDP deflator.
a. increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the CPI but not in the GDP deflator.
In the circular-flow diagram, a. labor flows from households to firms. b. profit flows from households to firms. c. services flow from households to firms. d. goods flow from households to firms.
a. labor flows from households to firms.
Average total cost is increasing whenever a. marginal cost is greater than average total cost. b. marginal cost is less than average total cost. c. marginal cost is increasing. d. total cost is increasing.
a. marginal cost is greater than average total cost.
Goods with many close substitutes tend to have a. more elastic demands. b. price elasticities of demand that are unit elastic. c. income elasticities of demand that are negative. d. less elastic demands.
a. more elastic demands.
Because of the free-rider problem, a. private markets tend to undersupply public goods. b. poverty can easily be eliminated through private charity. c. the federal government spends too many resources on national defense and not enough resources on medical research. d. firework displays provided by private markets have become increasingly popular.
a. private markets tend to undersupply public goods.
An increase in the money supply will a. reduce interest rates, increasing investment and aggregate demand. b. increase interest rates, decreasing investment and aggregate demand. c. increase interest rates, increasing investment and aggregate demand. d. reduce interest rates, decreasing investment and increasing aggregate demand.
a. reduce interest rates, increasing investment and aggregate demand.
Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the a. supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20. b. demand curve will shift upward by $20, and the price paid by buyers will decrease by $20. c. supply curve will shift downward by $20, and the effective price received by sellers will increase by $20. d. demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20.
a. supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20.
Core CPI is a. the CPI excluding food and energy. b. the CPI including only food and energy. c. the CPI including only food, clothing, and energy. d. the CPI excluding food, clothing, and energy.
a. the CPI excluding food and energy.
The primary determinant of a country's standard of living is a. the country's ability to produce goods and services. b. the average age of the country's labor force. c. the country's ability to prevail over foreign competition. d. the total supply of money in the economy.
a. the country's ability to produce goods and services.
When computing the opportunity cost of attending a concert you should include a. the price you pay for the ticket and the value of your time. b. the value of your time, but not the price you pay for the ticket. c. neither the price of the ticket nor the value of your time. d. the price you pay for the ticket, but not the value of your time.
a. the price you pay for the ticket and the value of your time.
Private companies are most likely to invest in medical research if a. they will produce a specific product for which they may receive a patent. b. others will benefit from their discoveries. c. they will produce general knowledge. d. there is no government intervention in the market for medical products.
a. they will produce a specific product for which they may receive a patent.
Under rent control, landlords can cease to be responsive to tenants' concerns about the quality of the housing because a. with shortages and waiting lists, they have no incentive to maintain and improve their property. b. with rent control, it becomes the government's responsibility to maintain rental housing. c. with rent control, the government guarantees landlords a minimum level of profit. d. they become resigned to the fact that many of their apartments are going to be vacant at any given time.
a. with shortages and waiting lists, they have no incentive to maintain and improve their property.
The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog bed can be sold for a price of $65. The Three Amigo's total costs are a. $7,500. b. $25,000. c. $67,500. d. $32,500.
b. $25,000.
Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be a. $200 if she sells 5 candles. b. $500 if she sells 25 candles. c. $1,000 if she sells 100 candles. d. $20 regardless of how many candles she sells.
b. $500 if she sells 25 candles.
The following table lists the per gallon prices of gas and milk for the months of April, May, and June. Assume that the typical consumer buys 60 gallons of gas and 4 gallons of milk each month, and that April is the base period. Refer to Table 24-3. What is the consumer price index for May? a. 123 b. 167 c. 60 d. 132
b. 167
Refer to Table 13-2. At which number of workers does diminishing marginal product begin? a. 4 b. 2 c. 3 d. 1
b. 2
Refer to Table 11-1. Suppose the cost to build the park is $24 per acre. How many acres should the park be to maximize total surplus from the park in Springfield? a. 4 acres b. 3 acres c. 1 acre d. 2 acres
b. 3 acres
Refer to Table 2-2. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600? a. 400 socks b. 300 socks c. 200 socks d. 100 socks
b. 300 socks
Refer to Table 28-4. If the local government imposed a minimum wage of $7 in Productionville, how many people would be unemployed? a. 0 b. 5,000 c. 2,000 d. 10,000
b. 5,000
If the MPC = 4/5, then the government purchases multiplier is a. 20. b. 5. c. 4/5. d. 5/4.
b. 5.
Which of the following goods is rival and excludable? a. An uncongested nontoll road b. A congested toll road c. A congested nontoll road d. An uncongested toll road
b. A congested toll road
The inflation rate you are likely to hear on the nightly news is calculated from the a. Dow Jones Industrial Average. b. CPI. c. GDP deflator. d. unemployment rate.
b. CPI.
For which of the following goods is the income elasticity of demand likely highest? a. Housing b. Diamonds c. Water d. Hamburgers
b. Diamonds
Which of the following is an example of an implicit cost? a. Wages paid to workers b. The owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm c. Interest paid on the firm's debt d. Rent paid by the firm to lease office space
b. The owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm
Which of the following is not included in either M1 or M2? a. Money market mutual funds b. U.S. Treasury bills c. Demand deposits d. Small time deposits
b. U.S. Treasury bills
If the consumer price index was 96 in Year 1, 100 in Year 2, and 102 in Year 3, then the base year must be a. Year 1. b. Year 2. c. Year 3. d. the base year cannot be determined from the given information.
b. Year 2.
Refer to Figure 6-9. In this market, a minimum wage of $7.00 is a. nonbinding and creates neither a labor shortage nor unemployment. b. binding and creates unemployment. c. binding and creates a labor shortage. d. nonbinding and creates a labor shortage.
b. binding and creates unemployment.
A surplus results when a a. nonbinding price floor is removed from a market. b. binding price floor is imposed on a market. c. nonbinding price floor is imposed on a market. d. binding price floor is removed from a market.
b. binding price floor is imposed on a market.
Price ceilings and price floors that are binding a. are imposed because they can make the poor in the economy better off without causing adverse effects. b. cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price. c. are desirable because they make markets more efficient and more fair. d. can have the effect of restoring a market to equilibrium.
b. cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price.
If the demand for donuts is elastic, then a decrease in the price of donuts will a. decrease total revenue of donut sellers. b. increase total revenue of donut sellers. c. There is not enough information to answer this question. d. not change total revenue of donut sellers.
b. increase total revenue of donut sellers.
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the a. number of physicals performed stays the same. b. quantity demanded of physicals increases, and the quantity supplied of physicals decreases. c. demand curve for physicals shifts to the right. d. supply curve for physicals shifts to the left.
b. quantity demanded of physicals increases, and the quantity supplied of physicals decreases.
Frictional unemployment is inevitable because a. there is a federal minimum-wage law in the U.S. b. sectoral shifts are always happening. c. some people do not want to be employed. d. unions are very popular in the U.S.
b. sectoral shifts are always happening.
For a good that is a luxury, demand a. tends to be inelastic. b. tends to be elastic. c. cannot be represented by a demand curve in the usual way. d. has unit elasticity.
b. tends to be elastic.
A problem that the Fed faces when it attempts to control the money supply is that a. the Fed does not have a tool that it can use to change the money supply by either a small amount or a large amount. b. the Fed does not control the amount of money that households choose to hold as deposits in banks. c. the 100-percent-reserve banking system in the United States makes it difficult for the Fed to carry out its monetary policy. d. the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools.
b. the Fed does not control the amount of money that households choose to hold as deposits in banks.
Refer to Figure 4-9. All else equal, an increase in the use of laptop computers for note-taking would cause a move from a. x to y. b. y to x. c. Sa to Sb. d. Sb to Sa.
b. y to x.
Refer to Table 28-4. If the local government imposed a minimum wage of $4 in Productionville, how many people would be unemployed? a. 10,000 b. 2,000 c. 0 d. 3,000
c. 0
Suppose that the adult population in the country of Atlantis is 115 million. If 80 million people are employed and 5 million are unemployed, then a. 35 million are not in the labor force. b. 35 million are in the labor force. c. 30 million are not in the labor force. d. 75 million are in the labor force.
c. 30 million are not in the labor force.
Refer to Table 24-3. What is the inflation rate for May? a. 10% b. 60.1% c. 67.2% d. -4.1%
c. 67.2%
Which of the following is an example of crowding out? a. A decrease in private savings increases interest rates, causing investment to fall. b. An increase in taxes increases interest rates, causing investment to fall. c. An increase in government spending increases interest rates, causing investment to fall. d. A decrease in the money supply increases interest rates, causing investment to fall.
c. An increase in government spending increases interest rates, causing investment to fall.
The average fixed cost curve a. always rises with increased levels of output. b. declines as long as it is above marginal cost. c. always declines with increased levels of output. d. declines as long as it is below marginal cost.
c. always declines with increased levels of output.
The natural rate of unemployment is the a. unemployment rate that would prevail with zero inflation. b. rate associated with the highest possible level of GDP. c. amount of unemployment that the economy normally experiences. d. difference between the long-run and short-run unemployment rates.
c. amount of unemployment that the economy normally experiences.
Refer to Figure 4-4. The movement from point A to point B on the graph is caused by a. a decrease in input prices. b. an advance in production technology. c. an increase in the price of the good. d. a decrease in the price of the good.
c. an increase in the price of the good.
In a system of 100-percent-reserve banking, a. loans are the only asset item for banks. b. banks do not accept deposits. c. banks do not influence the supply of money. d. banks can increase the money supply.
c. banks do not influence the supply of money.
When a union bargains successfully with employers, in that industry, a. wages decrease and unemployment increases. b. both wages and unemployment decrease. c. both wages and unemployment increase. d. wages increase and unemployment decreases
c. both wages and unemployment increase.
The money supply increases when the Fed a. buys bonds. The increase will be larger, the larger is the reserve ratio. b. sells bonds. The increase will be larger, the larger is the reserve ratio. c. buys bonds. The increase will be larger, the smaller is the reserve ratio. d. sells bonds. The increase will be larger, the smaller is the reserve ratio.
c. buys bonds. The increase will be larger, the smaller is the reserve ratio.
If the cross-price elasticity of two goods is negative, then the two goods are a. normal goods. b. inferior goods. c. complements. d. necessities.
c. complements.
To be counted as "employed" in the U.S. labor force statistics, a person a. must be working for pay but does not have to be working full time. b. does not have to be working for pay if they are working for a family business but must be employed full time. c. does not have to be working for pay if they are working for a family business and does not have to be working full time. d. must be working for pay and be working full time.
c. does not have to be working for pay if they are working for a family business and does not have to be working full time.
In the CPI, goods and services are weighted according to a. how long a market has existed for each good or service. b. the number of firms that produce and sell each good or service. c. how much consumers buy of each good or service. d. the extent to which each good or service is regarded by the government as a necessity.
c. how much consumers buy of each good or service.
Refer to Figure 2-3. The opportunity cost of obtaining 40 additional dryers by moving from point D to point C is a. 40 washers. b. 20 washers. c. impossible to calculate because the economy cannot move from point D to point C. d. 0 washers.
c. impossible to calculate because the economy cannot move from point D to point C.
Assume the MPC is 0.625. Assume there is a multiplier effect and that the total crowding-out effect is $12 billion. An increase in government purchases of $30 billion will shift aggregate demand to the a. right by $36 billion. b. left by $36 billion. c. right by $68 billion. d. left by $60 billion.
c. right by $68 billion.
Cyclical unemployment refers to a. the portion of unemployment created by job search. b. changes in unemployment due to changes in the natural rate of unemployment. c. short-run fluctuations around the natural rate of unemployment. d. the portion of unemployment created by wages set above the equilibrium level.
c. short-run fluctuations around the natural rate of unemployment.
Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the a. demand for bicycle assembly workers will increase. b. supply of bicycles will shift to the right. c. supply of bicycles will shift to the left. d. firm must increase output to maintain profit levels.
c. supply of bicycles will shift to the left.
Refer to Figure 4-7. At a price of $35, there would be a a. surplus of 200 units. b. shortage of 400 units. c. surplus of 400 units. d. surplus of 600 units.
c. surplus of 400 units.
A rational decisionmaker a. ignores the likely effects of government policies when he or she makes choices. b. takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions. c. takes an action only if the marginal benefit of that action exceeds the marginal cost of that action. d. ignores marginal changes and focuses instead on "the big picture."
c. takes an action only if the marginal benefit of that action exceeds the marginal cost of that action.
If the price of Italian shoes imported into the United States increases, then a. both the GDP deflator and the consumer price index will increase. b. neither the GDP deflator nor the consumer price index will increase. c. the consumer price index will increase, but the GDP deflator will not increase. d. the GDP deflator will increase, but the consumer price index will not increase.
c. the consumer price index will increase, but the GDP deflator will not increase.
Timothy decides to spend four hours playing video games rather than attending his classes. His opportunity cost of playing games is a. nothing, since he valued playing video games more than attending classes. b. the value of his time playing video games minus the value of attending classes. c. the value of the knowledge he would have received had he attended his classes. d. the $50 he could have earned if he had worked at his job for those four hours.
c. the value of the knowledge he would have received had he attended his classes.
If a price ceiling is not binding, then a. the market will be less efficient than it would be without the price ceiling. b. there will be a surplus in the market. c. there will be no effect on the market price or quantity sold. d. there will be a shortage in the market.
c. there will be no effect on the market price or quantity sold.
When conducting an open-market sale, the Fed a. buys government bonds, and in so doing decreases the money supply. b. sells government bonds, and in so doing increases the money supply. c. sells government bonds, and in so doing decreases the money supply. d. buys government bonds, and in so doing increases the money supply.
c. sells government bonds, and in so doing decreases the money supply
Cindy's Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes). The firm's total cost is a. $200. b. $300. c. $100. d. $500.
d. $500.
If the MPC is 0.8 and there are no crowding-out or accelerator effects, then an initial increase in aggregate demand of $120 billion will eventually shift the aggregate demand curve to the right by a. $480 billion. b. $216 billion. c. $150 billion. d. $600 billion.
d. $600 billion
Refer to Table 2-3. Which of the following combinations of corn and wheat is not currently attainable but would be attainable if there was an improvement in overall production technology? a. 1,600 bushels of corn and 300 bushels of wheat b. 1,200 bushels of corn and 800 bushels of wheat c. 400 bushels of corn and 1,800 bushels of wheat d. 1,000 bushels of corn and 2,200 bushels of wheat
d. 1,000 bushels of corn and 2,200 bushels of wheat
If the MPC is 3/5 then the multiplier is a. 1.67, so a $100 increase in government spending increases output by $166.67. b. 4, so a $100 increase in government spending increases aggregate demand by $400. c. 1.5, so a $100 increase in government spending increases output by $150. d. 2.5, so a $100 increase in government spending increases aggregate demand by $250.
d. 2.5, so a $100 increase in government spending increases aggregate demand by $250.
Refer to Figure 28-1. If the government imposes a minimum wage of $8, then how many workers will be unemployed? a. 7,000 b. 3,000 c. 0 d. 4,000
d. 4,000
Which of the following shifts aggregate demand to the left? a. An increase in the money supply b. An increase in the price level c. A decrease in the price level d. A decrease in the money supply
d. A decrease in the money supply
Which of the following would shift the demand curve for gasoline to the right? a. A decrease in the expected future price of gasoline b. A decrease in the price of gasoline c. An increase in the price of cars, a complement for gasoline d. An increase in consumer income, assuming gasoline is a normal good
d. An increase in consumer income, assuming gasoline is a normal good
Who among the following is a free rider? a. Grover sends his five children to a private school rather than to the public school in his neighborhood. b. Oscar goes to Elmo's house to watch a football game on the local commercial television channel. c. Bert takes the commuter rail to work, but he purchases the discounted monthly passes rather than buying tickets each day. d. Ernie listens to National Public Radio, but does not contribute to any fundraising efforts.
d. Ernie listens to National Public Radio, but does not contribute to any fundraising efforts.
A bank has a 10 percent reserve requirement, $36,000 in loans, and has loaned out all it can, given the reserve requirement. a. It has $3,600 in deposits. b. It has $32,400 in deposits. c. It has $39,600 in deposits. d. It has $40,000 in deposits.
d. It has $40,000 in deposits.
If the money multiplier is 3 and the Fed buys $50,000 worth of bonds, what happens to the money supply? a. It decreases by $100,000. b. It decreases by $200,000. c. It increases by $100,000. d. It increases by $150,000.
d. It increases by $150,000.
Which of the following statements is valid when the market supply curve is vertical? a. An increase in market demand will not increase the equilibrium price. b. An increase in market demand will increase the equilibrium quantity. c. Supply is perfectly elastic. d. Market quantity supplied does not change when the price changes.
d. Market quantity supplied does not change when the price changes.
Which is the most accurate statement about trade? a. Trade helps rich nations and hurts poor nations. b. Trading for a good can make a nation better off only if the nation cannot produce that good itself. c. Trade makes some nations better off and others worse off. d. Trade can make every nation better off.
d. Trade can make every nation better off.
A city street is a. a public good when it is congested, but it is a common resource when it is not congested. b. always a public good, whether or not it is congested. c. always a common resource, whether or not it is congested. d. a common resource when it is congested, but it is a public good when it is not congested.
d. a common resource when it is congested, but it is a public good when it is not congested.
A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000, a. average total cost is $2.50. b. average total cost is 50 cents. c. average variable cost is $2. d. average fixed cost is 50 cents
d. average fixed cost is 50 cents
A shortage results when a a. binding price ceiling is removed from a market. b. nonbinding price ceiling is removed from a market. c. nonbinding price ceiling is imposed on a market. d. binding price ceiling is imposed on a market.
d. binding price ceiling is imposed on a market.
When the Fed decreases the discount rate, banks will a. borrow more from the Fed and lend less to the public. The money supply decreases. b. borrow less from the Fed and lend more to the public. The money supply increases. c. borrow less from the Fed and lend less to the public. The money supply decreases. d. borrow more from the Fed and lend more to the public. The money supply increases.
d. borrow more from the Fed and lend more to the public. The money supply increases.
Monetary policy a. must be described in terms of money-supply targets. b. must be described in terms of interest-rate targets. c. cannot be accurately described in terms of the interest rate or in terms of the money supply. d. can be described either in terms of the money supply or in terms of the interest rate.
d. can be described either in terms of the money supply or in terms of the interest rate.
A circular-flow diagram is a model that a. helps to explain how consumers and the government interact with one another. b. explains how countries trade with each other. c. incorporates all aspects of the real economy. d. helps to explain how the economy is organized.
d. helps to explain how the economy is organized.
A difference between explicit and implicit costs is that a. explicit costs do not require a direct monetary outlay by the firm, whereas implicit costs do. b. explicit costs must be greater than implicit costs. c. implicit costs must be greater than explicit costs. d. implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.
d. implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.
Suppose an increase in interest rates causes rising unemployment and falling output. To counter this, the Federal Reserve would a. increase government spending. b. decrease government spending. c. decrease the money supply. d. increase the money supply.
d. increase the money supply.
The Federal Reserve a. is only responsible for controlling the money supply. b. is part of the executive branch of government. c. was created in 1896. d. is the central bank of the United States.
d. is the central bank of the United States.
Josh is a full-time college student who is not working or looking for a job. The Bureau of Labor Statistics counts Josh as a. employed. b. unemployed. c. marginally attached worker. d. not in the labor force.
d. not in the labor force.
A television broadcast is an example of a good that is a. social. b. private. c. excludable. d. not rival in consumption.
d. not rival in consumption.
Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should a. sell the ticket because the marginal benefit exceeds the average cost. b. not sell the ticket because the marginal benefit is less than the marginal cost. c. not sell the ticket because the marginal benefit is less than the average cost. d. sell the ticket because the marginal benefit exceeds the marginal cost.
d. sell the ticket because the marginal benefit exceeds the marginal cost.
