macro quiz 1
Scarce resources give rise to the concept of A. efficient markets. B. opportunity costs. C. laissez-faire. D. positive economics.
opportunity costs.
All of the following are held constant along a short-run aggregate supply curve except A. factor prices. B. output prices. C. nominal wages. D. capital stock.
output prices
Which of the following would shift the demand curve for new textbooks to the right? A. A decrease in the price of paper. B. A fall in the price of used textbooks. C. An increase in college enrollments. D. A fall in the price of new textbooks.
An increase in college enrollments.
A negative relationship between the quantity demanded and price is called the law of ______. A. demand B. diminishing marginal returns C. market clearing D. supply
demand
If your tuition is $5,000 this semester, your books cost $600, you can only work 20 rather than 40 hours per week during the 15 weeks you are taking classes at a job in which you make $15 per hour, and your room and board is $3,000 this semester (same as if not attending college). then your opportunity cost of attending college this semester is A. $5,600. B. $5,900. C. $10,100. D. $11,600.
$10,100.
When the Great Depression reached its trough in 1933, real GDP had fallen by ________ since the depression began in 1929. A. 5% B. 10% C. 30% D. 50%
30%
Which of the following will result in an increased price of milk? A. A shift to the right of the supply curve for milk. B. A shift to the right of the demand curve for milk. C. An increase in the number of milk suppliers. D. A decrease in the number of milk buyers.
A shift to the right of the demand curve for milk.
An increase in household saving is likely to increase consumption and aggregate demand. True False
False
In the short run Keynesian model, all prices are assumed to be flexible. True False
False
Public policy to eliminate a recessionary gap could involve an increase in taxes. A. True B. False
False
What do economists mean by the term "sticky wage"? A. It refers to the reluctance by employers to increase nominal wages during an inflationary period. B. It refers to a wage that is slow to adjust to its equilibrium level, creating sustained periods of shortage or surplus in the labor market. C. It refers to a breakdown in wage negotiations between employers and employee unions. D. It refers to a union negotiated wage.
It refers to a wage that is slow to adjust to its equilibrium level, creating sustained periods of shortage or surplus in the labor market.
Using the aggregate demand-aggregate supply model, predict what happens in the short run when the consumer confidence index falls as consumers become pessimistic about their economic prospects. A. The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases. B. The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases. C. The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase. D. The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease.
The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease.
Using the aggregate demand-aggregate supply model, predict what happens in the short run when the federal government enacts a cut in the personal income tax rates. A. The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases. B. The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases. C. The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase. D. The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease.
The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase.
The aggregate demand curve shifts due to changes in consumption expenditures, investment expenditures, government purchases, or net exports. A. True B. False
True
Using the aggregate demand-aggregate supply model, predict what happens in the short run when the federal government lowers the capital gains tax to stimulate investment. A. The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease. B. The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase. C. The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases. D. The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases.
The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase.
Using the aggregate demand-aggregate supply model, predict what happens in the short run if an increase in health insurance premiums paid by firms raises the cost of employing each worker. A. The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases. B. The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase. C. The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease. D. The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases.
The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases.
Using the aggregate demand-aggregate supply model, predict what happens in the short run when there is a general decrease in raw materials cost. A. The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases. B. The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases. C. The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase. D. The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease.
The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases.
Suppose the price of an important natural resource such as oil falls. What will be the effect on the short-run aggregate supply curve? A. There will be movement to the left, along the aggregate supply curve. B. The aggregate supply curve will shift to the left. C. There will be movement to the right, along the aggregate supply curve. D. The aggregate supply curve will shift to the right.
The aggregate supply curve will shift to the right.
Which of the following best explains the multiplier effect as a result of a $100 million increase in government spending on highways? A. To fund the government spending, more money must be printed. The resulting increase in money supply lowers interest rates which in turn stimulates consumption and investment spending. B. The initial change in spending will cause an increase in real GDP and it also becomes income to someone else. As a result, the government's tax revenue increases which in turn allows the government to further increase its spending. C. The government spending creates a demand for domestically produced goods and services which in turn increases income and higher incomes will lead to increased consumption which will increase demand further and income further etc D. The initial change in government spending creates a supply of jobs and stimulates production of domestically produced goods and service
The government spending creates a demand for domestically produced goods and services which in turn increases income and higher incomes will lead to increased consumption which will increase demand further and income further etc
An increase in the prices of natural resources will lead to a decrease in short-run aggregate supply. A. True B. False
True
Public policy used to offset severe economic downturns is called stabilization policy. True False
True
Which of the following will not cause a change in aggregate demand? A. an increase in consumer wealth B. an increase in the amount of investment demanded by firms at each price level C. an increase in an economy's price level D. an increase in the price level of a foreign economy
an increase in an economy's price level
What are the four sources of aggregate demand? A. consumption, private investment, taxes, and expenditures B. consumption, private investment, wage increases, and government expenditures C. consumption, private investment, expenditures, and net exports D. consumption, private investment, government purchases, and net exports
consumption, private investment, government purchases, and net exports
Which of the following always results in an increase in price and quantity? A. an increase in supply and a decrease in demand B. an increase in demand with no change in supply C. an increase in supply with no change in demand D. all of the above
an increase in demand with no change in supply
Aggregate demand is defined as A. the demand for goods and services generated by all sectors in the economy, holding price level constant. B. the relationship between the total quantity of goods and services demanded and the price level, all other determinants of spending unchanged. C. the relationship between the total quantity of goods and services demanded and the supply of factors of production, all other determinants of production unchanged. D. the relationship between the total quantity of goods and services demanded and the income level, all other determinants of spending unchanged.
the relationship between the total quantity of goods and services demanded and the price level, all other determinants of spending unchanged.
In sketching market supply and demand curves, which of the following is true? A. the vertical axis is Quantity, the horizontal axis Price, the upward sloping curve is Demand and the downward sloping curve is Supply B. the vertical axis is Quantity, the horizontal axis Price, the upward sloping curve is Supply and the downward sloping curve is Demand C. the vertical axis is Price, the horizontal axis Quantity, the upward sloping curve is Supply and the downward sloping curve is Demand D. the vertical axis is Price, the horizontal axis Quantity, the upward sloping curve is Demand and the downward sloping curve is Supply
the vertical axis is Price, the horizontal axis Quantity, the upward sloping curve is Supply and the downward sloping curve is Demand
A student observed that every time the temperature rises above 90 degrees, he forgets to take out the trash. Based on this observation he concluded that temperatures above 90 degrees result in temporary memory loss. In actuality, the student A. committed the fallacy of logic. B. committed the ceteris paribus error. C. was confusing causality. D. showed good reasoning relating to the relationship between temperatures and memory.
was confusing causality.
Which of the following statements is not correct? A. Economics is a behavioral science. B. In large measure, economics is the study of how people make choices. C. If poverty were eliminated, there would be no reason to study economics. D. Economic analysis can be used to explain how both individuals and
If poverty were eliminated, there would be no reason to study economics.
Suppose that government spending on defense rises by $50 billion. What happens to the aggregate demand curve? A. It shifts right by less than $50 billion at each price level. B. It shifts right by $50 billion or more at each price level. C. It shifts right by less than $50 billion at each price level. D. The aggregate demand does not shift; the aggregate supply curve shifts right by $50 billion at each price level.
It shifts right by $50 billion or more at each price level.
In a graph that shows the aggregate supply and aggregate demand curves, what are the variables on the axes of the graph? A. The price level measured by the implicit price deflator is on the horizontal axis and real GDP is on the vertical axis. B. The price level measured by the consumer price index is on the vertical axis and real GDP is on the horizontal axis. C. The price level measured by the implicit price deflator is on the vertical axis and real GDP is on the horizontal axis. D. The price level measured by the implicit price deflator is on the vertical axis and employment is on the horizontal axis.
The price level measured by the implicit price deflator is on the vertical axis and real GDP is on the horizontal axis.
How will a recession in the economies of our foreign trading partners affect U.S. aggregate demand? A. It will have no effect on our aggregate demand. B. U.S. aggregate demand will increase. C. U.S. aggregate demand will decrease. D. It depends on whether the U.S. offers financial aid to these countries.
U.S. aggregate demand will decrease.
Suppose the U.S. is in a recession while foreign countries that trade with the U.S. are not. How will this affect the U.S.? A. U.S. imports will FALL, U.S. exports will RISE and U.S. aggregate demand will FALL B. U.S. imports will FALL, U.S. exports will RISE and U.S. aggregate demand will RISE C. U.S. imports will RISE, U.S. exports will FALL and U.S. aggregate demand will FALL D. U.S. imports will FALL, U.S. exports will FALL and U.S. aggregate demand will remain UNCHANGED
U.S. imports will FALL, U.S. exports will RISE and U.S. aggregate demand will RISE
Which of the following is a positive economics question? A. Will the level of teenage unemployment increase if the minimum wage is increased? B. Should the minimum wage be set at one-half the average manufacturing wage to guarantee individuals a decent standard of living? C. Wouldn't it be more equitable if the minimum wage increased automatically with the cost of living? D. Wouldn't it be better to try to increase people's wages through job-training programs rather than by requiring employers to pay minimum wages?
Will the level of teenage unemployment increase if the minimum wage is increased?
Which of the following would result in a MOVEMENT ALONG the demand curve? A. a change in tastes B. a change in income C. a change in costs of production D. a change in demand
a change in costs of production
The primary difference between a change in demand and a change in the quantity demanded is: A. a change in demand is a movement along the demand curve, and a change in quantity demanded is a shift in the demand curve. B. a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve. C. both a change in quantity demanded and a change in demand are shifts in the demand curve, only in different directions. D. both a change in quantity demanded and a change in demand are movements along the demand curve, only in different directions.
a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve.
The primary difference between a change in supply and a change in the quantity supplied is: A. a change in quantity supplied is a shift in the supply curve, and a change in supply is a movement along the supply curve. B. both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions. C. a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve. D. a change in supply is a movement to the left along the supply curve and a change in quantity supplied is a movement to the right along the supply curve.
a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.
Which of the following would not change the demand for automobiles? A. a change in the price of gasoline B. a change in the cost of steel C. a change in the price of motorcycles D. a change in tastes
a change in the cost of steel
The equilibrium price in a market is established subject to the all other things unchanged condition (ceterius paribus) and, therefore, very well may change due to: A. a change in the price of the good. B. a change in the quantity of the good. C. a change in the price of resource inputs used to produce the good. D. any of the above.
a change in the price of resource inputs used to produce the good.
To eliminate an inflationary gap, policy-makers may pursue A. an expansionary policy that reduces the price level. B. a contractionary policy that decreases aggregate demand. C. a non-intervention policy that leaves aggregate demand unaffected and increases aggregate supply. D. an intervention policy that increases aggregate supply and decreases aggregate demand.
a contractionary policy that decreases aggregate demand.
The 'great' recession of 2007-09, like the great depression was, in the simplest terms, caused by A. an increase in the level of prices B. an increase in unemployment C. a decline in output D. a decline in aggregate demand E. a decline in inflation
a decline in aggregate demand
A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price. A. an increase; an increase B. an increase; a decrease C. a decrease; an increase D. a decrease; a decrease
a decrease; a decrease
If a demand curve shifts to the left, then: A. the equilibrium price would go up and the equilibrium quantity would go down. B. the equilibrium price would go down and the equilibrium quantity would go up. C. a lower equilibrium price and quantity would result. D. a higher equilibrium price and quantity would result.
a lower equilibrium price and quantity would result.
A change in the price level, all other things unchanged, causes A. a movement along the aggregate demand curve. B. a shift of the aggregate demand curve. C. both a movement along the aggregate demand curve and a shift in the curve. D. no change in the value of assets held in the form of money.
a movement along the aggregate demand curve.
Health insurance should be provided to every citizen in a wealthy nation such as the United States. This statement is best described as A. a positive statement. B. a normative statement. C. a marginal statement. D. an implication of an efficient market.
a normative statement.
Better insurance benefits increase the incentive of some individuals to work. This statement is best described as A. a positive statement. B. an example of the ceteris paribus assumption. C. a normative statement. D. a comparative economics statement.
a positive statement.
The amount of education that one has is an important factor in the determination of his or her wage rate. This is best described as A. a positive statement. B. an example of the fallacy of composition. C. a normative statement. D. an example of marginalism.
a positive statement.
If the government sets out to help low-income people by establishing a maximum amount for rent: A. a price floor has been set and a shortage of rental units may occur. B. a price ceiling has been set and a shortage of rental units may occur. C. in the long run more rental units will appear. D. poor people will definitely be helped.
a price ceiling has been set and a shortage of rental units may occur.
Demand is defined as: A. an amount that is purchased at a specific price, given supply. B. a schedule that establishes the price of a good. C. a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged. D. the amount that will be bought at a specific price
a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged.
Suppose the economy is initially in long-run equilibrium. Which of the following events leads to a decrease in the price level and real GDP in the short run? A. a decrease in health insurance premiums paid by firms raises the cost of employing labor B. an increase in government transfer payments C. an increase in the cost of a key input such as oil D. a sharp fall in stock market prices
a sharp fall in stock market prices
Suppose the economy is initially in long-run equilibrium. Which of the following events leads to an increase in the price level and a decrease in real GDP in the short run? A. a decrease in health insurance premiums paid by firms raises the cost of employing labor B. an increase in government transfer payments C. an increase in the cost of a key input such as oil D. a sharp fall in stock market prices
a sharp fall in stock market prices
A decrease in supply means: A. a shift to the left of the entire supply curve. B. moving downward (to the left) along the supply curve with lower prices. C. less will be demanded at every price. D. more will be supplied at every price.
a shift to the left of the entire supply curve.
The concept of the invisible hand is important because A. it underlies belief in free markets B. is suggests that market systems are efficient C. is leads to laissez faire D. all of the above
all of the above
The reasons to study economics include which of the following? A. to be an informed citizen B. to understand society C. to learn a way of thinking D. all of the above
all of the above
Why study economics? A. to learn a way of thinking B. to understand society C. to be an informed citizen D. all of the above
all of the above
There is equilibrium in the market when: A. there is no shortage. B. there is no surplus. C. price is established where the supply curve and the demand curve intersect. D. all of the above are true.
all of the above are true.
Aggregate demand is the total value of real GDP that A. all sectors of the economy are willing to purchase at various average price levels, all other things unchanged. B. all sectors of the economy are willing to sell at various average price levels, all other things unchanged. C. consumers are willing to purchase at various average price levels, all other things unchanged. D. consumers are willing to purchase at various national income levels, all other things unchanged.
all sectors of the economy are willing to purchase at various average price levels, all other things unchanged.
To eliminate a recessionary gap, policy-makers may pursue A. an expansionary policy that increases aggregate demand. B. a contractionary policy that increases aggregate demand. C. a non-intervention policy that leaves aggregate supply unaffected and increases aggregate demand. D. an intervention policy that decreases aggregate supply and increases aggregate demand.
an expansionary policy that increases aggregate demand.
A decrease in the price of a good will, all other things unchanged, result in: A. an increase in demand. B. an increase in supply. C. an increase in the quantity demanded. D. more being supplied.
an increase in the quantity demanded.
It is true that the equilibrium quantity will always go up if supply: A. and demand both increase. B. increases and demand decreases. C. and demand both decrease. D. decreases and demand remains unchanged.
and demand both increase.
Inflation and unemployment A. are the focus of normative economics. B. are a focus of microeconomics. C. are a focus of positive economics. D. are a focus of macroeconomics.
are a focus of macroeconomics.
The relationship between the value and price of a stock suggests that: A. the equilibrium price of a stock strikes a balance between those who think the stock is worth more and those who think it's worth less at the current price. B. it is the market's best guess regarding the expected value of the company's future profits. C. stocks are overvalued. D. both A and B are true.
both A and B are true.
A market is a set of arrangements where: A. buyers and sellers can get together and buy and sell. B. buyers compete with sellers. C. sellers compete with buyers. D. A and C are true, but B is not true.
buyers and sellers can get together and buy and sell.
Price controls: A. always increase economic efficiency. B. always lead to more equitable results. C. can result in inequitable outcomes. D. all of the above statements are true
can result in inequitable outcomes.
The Latin phrase economists use that means all else equal is A. ceteris paribus. B. cogito ergo sum. C. carpe diem. D. caveat emptor.
ceteris paribus.
To isolate the impact of one single factor, economists invoke the assumption of A. inductive reasoning. B. Ockham's razor. C. ceteris paribus. D. post hoc, ergo propter hoc.
ceteris paribus.
A change in the aggregate quantities of goods and services demanded at each price level is called a A. change in aggregate demand. B. change in the aggregate quantity of goods and services demanded. C. determinant of aggregate demand. D. revealed expenditure on aggregate demand.
change in aggregate demand.
A change in the aggregate quantity of goods and services supplied at every price level is called a A. change in short-run aggregate supply. B. change in long-run aggregate supply. C. change in short-run aggregate quantity of output supplied. D. determinant of short-run aggregate supply.
change in short-run aggregate supply.
Economics is best defined as the study of A. financial decision making. B. how consumers make purchasing decisions. C. choices made by people faced with scarcity. D. inflation, unemployment, and economic growth.
choices made by people faced with scarcity.
According to the concept of the invisible hand A. competitive free market systems are always efficient B. competitive free market systems are always equitable (fair) C. competitive free market systems are efficient under certain conditions D. competitive free market systems will never be efficient
competitive free market systems are efficient under certain conditions
The bulk of the nation's output is produced by: A. partnerships. B. proprietorships. C. corporations. D. none of the above.
corporations.
A market shortage occurs if the quantity: A. demanded is greater than the quantity supplied. B. demanded is less than the quantity supplied. C. demanded is equal to the quantity supplied. D. supplied is greater than the quantity demanded.
demanded is greater than the quantity supplied.
Price ceilings which lead to shortages will impose costs on society because they: A. will lead to long waiting lines. B. may result in black market prices, which are higher than the market-determined price would be. C. lead to a smaller quantity offered on the market. D. do all of the above.
do all of the above.
Those who make economic policy concerning price controls often do so in order to: A. establish a more equitable result based on normative judgements. B. raise revenues to support the activities of government. C. change the facts on which economic theory is built. D. do all of the above.
establish a more equitable result based on normative judgements.
The use of government purchases, transfer payments, and taxes to influence the level of economic activity is called A. monetary policy. B. fiscal policy. C. congressional policy. D. Federal Government policy.
fiscal policy.
According the idea of Laissez Faire A. the invisible hand is irrelevant B. markets lead to equilibrium C. governments should not intervene in markets without a good economic reason D. government must intervene in markets, always
governments should not intervene in markets without a good economic reason
A decrease in the price of eggs, all other things unchanged, will result in a(n): A. increase in the demand for eggs. B. increase in the supply of eggs. C. greater quantity of eggs supplied. D. greater quantity of eggs demanded.
greater quantity of eggs demanded.
An economic analysis of the short run is useful to explain A. how deviations of real GDP from potential output can and do occur. B. how deviations of nominal GDP from potential output can and do occur. C. why the long-run aggregate supply curve is vertical. D. how an economy's maximum output is determined.
how deviations of real GDP from potential output can and do occur.
The short run in macroeconomic analysis is a period A. in which wages and some other prices do not respond to changes in economic conditions. B. in which full wage and price flexibility and market adjustment have been achieved. C. of less than 12 months. D. in which all macroeconomic variables are fixed.
in which wages and some other prices do not respond to changes in economic conditions.
A shift of a demand curve to the right, all other things unchanged, will: A. increase equilibrium price and quantity. B. decrease equilibrium price and quantity. C. decrease quantity and increase price. D. increase quantity and decrease price.
increase equilibrium price and quantity.
An increase in demand, all other things unchanged, will result in a(n) ________ in the equilibrium price and a(n) ________ in the equilibrium quantity. A. increase; increase B. decrease; decrease C. decrease; increase D. increase; decrease
increase; increase
Dramatic reductions in costs of producing computers in the 1980's and equally dramatic increases in demand for computers resulted in A. increases in quantity of computers and in the price of computers. B. increases in quantity of computers and reductions in the price of computers. C. decreases in quantity of computers and decreases in the price of computers. D. decreases in quantity of computers and increases in the price of computers.
increases in quantity of computers and reductions in the price of computers.
The study of economics A. is a very narrow endeavor. B. is a way of analyzing decision-making processes caused by scarcity. C. is concerned with proving that capitalism is better than socialism. D. focuses on how a business should function.
is a way of analyzing
All of the following statements is true about the short-run aggregate supply curve except A. it is a graphical representation of the relationship between production and the price level. B. it is a result of the stickiness or inflexibility of some prices and wages. C. it is upward-sloping. D. it is drawn holding price level constant.
it is drawn holding price level constant.
A price ceiling will have no effect if: A. it is set above the equilibrium price. B. the equilibrium price is above the price ceiling. C. set below the equilibrium price. D. it creates a shortage.
it is set above the equilibrium price.
The short-run aggregate supply shows the amount of real GDP that will be A. made available at various price levels. B. purchased at various price levels. C. purchased at various national income levels. D. made available at various national income levels.
made available at various price levels.
A ceiling price set in the policy of rent controls: A. will be set at a price above the equilibrium price. B. may result in some people who rent out units to leave the business because they cannot cover costs. C. will lead to rental units being higher in quality because landlords are guaranteed a high price. D. will create a surplus of housing.
may result in some people who rent out units to leave the business because they cannot cover costs.
Studying how a student allterm-18ocates his/her time between school and video games is an example of A. macroeconomics. B. microeconomics. C. industrial organization. D. descriptive economics.
microeconomics.
The U.S. economy can be characterized as A. socialism B. pure capitalism C. mixed economy D. command economy
mixed economy
A formal statement of a theory is known as a(n. A. model. B. positive statement. C. empirical measure. D. causal statement.
model.
Federal Reserve policies meant to influence the level of economic activity is called A. banking and finance policy. B. financial market policy. C. monetary policy. D. congressional policy.
monetary policy.
A maximum price set below the equilibrium price is a: A. demand price. B. supply price. C. price floor. D. price ceiling.
price ceiling.
In he 'standard' supply and demand graph, which of the following is correct A. price goes on the horizontal axis while quantity goes on the vertical axis B. quantity goes on the horizontal axis while price goes on the vertical C. the upward sloping curve is demand D. the downward sloping curve is income
quantity goes on the horizontal axis while price goes on the vertical
If economists say, "the price is too high," they mean that: A. quantity demanded is greater than quantity supplied. B. quantity supplied is greater than quantity demanded. C. the equilibrium price exceeds the current price. D. the price of a good will tend to increase.
quantity supplied is greater than quantity demanded.
If demand and supply both shift to the right, then: A. both price and quantity will go up. B. price will go down and quantity will go up. C. quantity will go down and price will go up. D. quantity will go up, but price could go up, down, or stay the same
quantity will go up, but price could go up, down, or stay the same
All other things unchanged, an appreciation of the dollar against the yen say, from the perspective of the U.S. A. reduces U.S. exports to Japan, increases U.S. imports from Japan and weakens aggregate demand and output in the U.S. B. reduces U.S. exports to Japan, reduces U.S. imports from Japan and weakens aggregate demand and output in the U.S. C. increases U.S. exports to Japan, increases U.S. imports from Japan and strengthens aggregate demand and output in the U.S. D. increases U.S. exports to Japan, reduces U.S. imports from Japan and strengthens aggregate demand and output in the U.S.
reduces U.S. exports to Japan, increases U.S. imports from Japan and weakens aggregate demand and output in the U.S.
Supply is best defined as the: A. relationship between the quantity of a good or service buyers are able to purchase and the independent variables that determine quantity. B. relationship between the quantity of a good or service buyers are willing to purchase and the independent variables that determine quantity. C. relationship between the quantity of a good or service sellers are willing to offer for sale and the independent variables that determine quantity. D. quantity of a good or service sellers are willing and able to offer for sale at a specific price.
relationship between the quantity of a good or service sellers are willing to offer for sale and the independent variables that determine quantity.
In a competitive market, when price is below the equilibrium price, there will be pressure for the price to: A. fall. B. stay the same. C. rise. D. change only if demand and/or supply change
rise.
Positive economics is an approach to economics that A. seeks to understand behavior and the operation of systems while making judgments about their usefulness to society. B. analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe preferred courses of action. C. seeks to understand behavior and the operation of systems without making value judgments. D. examines the role of government in the economy.
seeks to understand behavior and the operation of systems without making value judgments.
All other things unchanged, an increase in personal income tax rates will A. shift the aggregate demand curve to the right. B. shift the aggregate demand curve to the left. C. make the aggregate demand curve flatter. D. make the aggregate demand curve steeper.
shift the aggregate demand curve to the left.
All other things unchanged, an increase in exports relative to imports will A. cause a movement upward along a given aggregate demand curve. B. cause a movement downward along a given aggregate demand curve. C. shift the aggregate demand curve to the right. D. shift the aggregate demand curve to the left.
shift the aggregate demand curve to the right.
All other things unchanged, an increase in government spending will A. shift the aggregate demand curve to the right. B. shift the aggregate demand curve to the left. C. make the aggregate demand curve flatter. D. make the aggregate demand curve steeper.
shift the aggregate demand curve to the right.
A supply curve that is upward sloping means that: A. demand is being ignored. B. consumers will buy less at lower prices. C. suppliers will want to sell more at higher prices. D. suppliers will want to sell less at higher prices.
suppliers will want to sell more at higher prices.
Opportunity cost is A. that which we forgo, or give up, when we make a choice or a decision. B. a cost that cannot be avoided, regardless of what is done in the future. C. the additional cost of producing an additional unit of output. D. the additional cost of buying an additional unit of a product.
that which we forgo, or give up, when we make a choice or a decision.
In the short run, the equilibrium price level and the equilibrium level of total output are determined by the intersection of A. the aggregate demand, the short-run aggregate supply and the long-run aggregate supply curves. B. the short-run aggregate supply and the long-run aggregate supply curves. C. the aggregate demand and the short-run aggregate supply curves. D. the aggregate demand and the long-run aggregate supply curves.
the aggregate demand and the short-run aggregate supply curves.
The government expenditure multiplier is given by A. the change in government expenditure divided by the change in investment B. the change in government expenditure divided by the change in real gdp C. the change in real gdp divided by the change in government expenditure D. the change in consumption divided by the change in real gdp
the change in real gdp divided by the change in government expenditure
The rise and fall of real GDP over the course of the business cycle suggests that A. the economy is always at full employment. B. the economy may not always be in long-run equilibrium. C. the economy is always at its potential output level. D. wage and price stickiness ensures that the economy moves from a peak to a trough.
the economy may not always be in long-run equilibrium.
The intersection of the supply and demand curves indicates: A. the equilibrium solution in the market. B. a surplus that will cause the price to fall. C. a shortage that will cause the price to rise. D. the quantity demanded exceeds the quantity supplied.
the equilibrium solution in the market.
A persistent shortage may occur if: A. the government imposes a price ceiling. B. a price floor is imposed. C. demand keeps falling. D. all of the above occur.
the government imposes a price ceiling.
Which of the following is the best definition of macroeconomics? A. the study of how individuals and societies make choices when faced with scarcity B. the study of how how societies answer what to produce, how to produce it and who gets it, focusing on the role of markets and prices C. the study of the determinants of a country's output, overall level of prices and inflation, unemployment, growth, interest rates and the role of fiscal and monetary policy. D. the study of the whole economy
the study of the determinants of a country's output, overall level of prices and inflation, unemployment, growth, interest rates and the role of fiscal and monetary policy.
It's certain that the equilibrium price will fall when: A. the supply curve and the demand curve both shift to the right. B. the supply curve shifts to the right and the demand curve shifts to the left. C. supply and demand both increase. D. supply decreases and demand stays the same.
the supply curve shifts to the right and the demand curve shifts to the left.
