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Economics exam

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If the current level of real GDP lies below potential GDP, then an appropriate fiscal policy would be to _____, which will shift the _____ curve to the _____.

increase government purchases AD, right

A decrease in energy prices will :

increase in short-run aggregate supply

Perfectly competitive firms will:

increase output up to the point that the marginal benefit of an additional unit of output is equal to the marginal cost.

A monopolist or an imperfectly competitive firm practices price discrimination primarily to;

increase profits

(Figure: Bicycles and Radishes I) Look at the figure Bicycles and Radishes I. It shows production possibility frontiers for two countries that produce only radishes and bicycles. The axes of both graphs are measured in equivalent units. Country A is now operating at point M, and country B is now operating at point N. Suppose country A discovered a new technology that greatly increased its ability to produce bicycles. This would:

increase the opportunity cost of producing radishes in country A

When overall price level rise over time, it is referred to as:

inflation

Roads, telephone lines, power facilities, and schools are examples of a nation's

infrastructure

`At the profit maximizing quantity of output in the figure, the farmer's total revenue is ________.

$90, $70, $20

If a one-year project costs $100,000 and is expected to return the firm $105,000, the rate of return of the project i

5%.

(Table Peanut Butter and Jelly Economy) A simple economy produces only peanut butter and jelly. Using the data in the attached table, in 2011, nominal GDP was _______ and real GDP was _______.

525, 450

The marginal output of the fourth worker is:

According to the accompanying figure, after an increase in government borrowing, the new equilibrium interest rate will rise from _______ and the amount of private savings wil ______.

6% to 8% rise

If real GDP doubles in 12 years, its average annual growth rate is approximately:

6%.

Enchante Inc., a designer clothing company, buys $400 worth of silk from a silk trader and $30 worth of accessories from AccessoriesRuS to produce each dress. If the value added by Enchante is equal to $200, then according to the value-added approach, the price of the designer dress should be:

630

(Table: Pizza Economy III) Considering 2010 as the base year, real GDP in 2011 was:

69,000

If the market price is $3.50, the profit-maximizing output is _________ units.

Using year 1 as the base year, the growth rate of real GDP from year 1 to year 2 is:

7.8%.

In the United States, consumer spending accounts for approximately what percentage of GDP?

70%

GDP is 12 trillion this year in a closed economy. Consumption is 8 trillion and government spending is 2 tr... trillion. What is the government budget balance?

A deficit of 1.5 trillion

A simultaneous rise in the productivity and nominal wages would shift the short-run aggregate supply curve to the:

left if the rise in nominal wages is larger than the rise in productivity

Contractionary fiscal policy causes the aggregate demand curve to shift to the ________ and is used to close a(n) __________ gap/

left; inflationary

Natural resources are:

less reliable indicators of productivity today than they were a century ago.

(Pizza economy II) Based on the accompanying table, GDP in this economy is:

16,000

(Scenario: Monetary Base and Money supply) How much is M1?

330 billion

(Table Peanut Butter and Jelly Economy) Nominal GDP in 2010 was:

400

If they spend all night writing computer programs, Laurence can write 10 programs while Carrie Anne can write 10. If they spend all night making sunglasses, Laurence can make 5 while Carrie Anne can make 5. We know that:

Laurence's opportunity cost of writing programs is less than that of Carrie Anne

An industry with a single firm producing a product for which there are no close substitutes and which in protected by barriers to entry is:

Oligopoly

OPEC is

Organization of Petroleum Exporting Countries, an international cartel made up of oil-producing countries, the cartel that was responsible for the large increases in crude oil prices in the 1970s.

(Figure: The perfectly competitive Firm II) look at the figure competitive Firm II. IF this firms MR curve is MR1. the firm will maximize profit by producing _______ units of output and its economy profit will be ________.

Q3 positive

An example of a government transfer is a(n):

Social Security payment.

Diminishing returns to physical capital means that when the amount of human capital per worker and the state of technology are held fixed, each increase in the amount of physical capital per worker leads to:

a smaller increase in the marginal product of labor.

(zoes bakery) zoes bakery will ... its price and ... its level of production

do nothing to; decrease

The figure shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. If the firm faces a market price of $, its total profit per day is:

$300

Assume there are no fixed costs and AC = MC. At the profit maximizing quantity of production for the monopolist, total revenue is _________, total cost is _________, and profit is __________.

$4,800,$1,600,$3,200

Suppose that this economy is in Equilibrium at E2. If there is an increase in government transfers, then:

AD2 will shift to the right, causing an increase in the price level and an increase in real GDP.

Look at the figure of the profit-maximizing firm. the figure shows cost curves for a firm operating in a perfectly competitive market. which of the following statements is true?

AFC is represented in this figure by the vertical distance between curve N and curve O at any level of output

Investment spending represents spending on:

productive physical capital.

All other things unchanged, a general increase in the amount of government borrowing will typically

shift the loanable funds demand curve to the right and increase interest rates.

If government increases income tax rates, the aggregate demand curve is likely to:

shift to the left.

For the monopolistically competitive wild-caught seafood market, the demand curve for any individual is ____________ , and there are ___________ producers of seafood.

the downward sloping: many

Human capital refers to:

the education or training which workers possess.

If government revenues in 2011 were $2.2 trillion and government outlays were $3.8 trillion:

the federal debt increased $1.6 trillion.

(Table: Kenya's Economy in 2010) Aggregate output per capita in Kenya at the beginning of 2010 was:

$775.

Suppose you use your entrepreneurial spirit and economics training to start your own business. In your first year of work, you are able to earn $58,000 in gross income. What is the total amount of social insurance taxes you owe the federal government?

$8,874.00

Exhibit: Money Creation The reserve requirement is 20%, and Leroy deposits his $1,000 check received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. 5. (Exhibit: Money Creation) How much can the bank loan based on the $1,000 deposit?

$800

Exhibit: Real GDP Suppose that in year 1 an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each.

$900; $1,077.50.

The rule of 70 is most useful in:

estimating the doubling time of real GDP for a given growth rate.

The U.S. dollar is defined as:

fiat money. because it was created by an act of law

the assumptions of perfect competition imply that

firms in the market accept the market price as given.

An expansionary fiscal policy:

may include decreases in taxes.

The poorest 40% of households in the United States:

pay negative income taxes because of tax credits and income assistance.

A cut in taxes will have a greater impact on aggregate demand if it is given to:

people with a high MPC

(Figure Aggregate Supply) If the economy is at point E, which of the following describes the likely adjustment process?

Nominal wages increase, and the short-run aggregate supply curve shifts left until actual and potential output are equal.

If there is an inflationary gap, which of the following accurately describes the adjustment to long-run equilibrium?

Nominal wages rise, and the short-run aggregate supply curve shifts left until the economy reaches long-run equilibrium

Why do Social Security and Medicare pose problems for the federal government budget?

Life expectancy of retirees is increasing.

The monetary aggregates from most liquid to least liquid are:

M1, M2 and M3

The foreign exchange market refers to

a collection of all purchases and sales of one currency for another, where exchange rates are determined

Which of the following is the explanation for why the Fed never buys U.S. Treasury bills directly from the federal government?

it could be a route to disastrous inflation

Assume that the economy depicted in Panel A is in short-run equilibrium with AD1 and SRAS1. If the economy is left to correct itself:

lower wages will result in a gradual shift from SRAS1 to SRAS2.

Because of the existence of a large number of similar but not identical substitutes in most communities, the market for chiropractors is best considered to be:

monopolistically competitive

Which of the following statements about the differences between monopoly and perfect competition is incorrect?

monopoly profits can continue to exist in the long run because the monopoly produces more and charges a higher price than comparable perfectly competitive industry.

In the long-run if all prices, including the nominal wage, rate doubled, then aggregate output supplied would

remain unchanged.

Over what range of output does the soybean grower experience constant returns to scale?

the third and fourth bushels

The Rule of 70 applies:

to any growth rate.

Some people argue that social insurance taxes should be increased to remedy the fiscal problems faced by Social Security. What is a potential unintended consequence of this proposed solution?

The unemployment rate may increase.

The federal government started running a budget surplus in 1998. By 2002, the budget surplus had turned into a budget deficit. Why do you think the budget deficit returned in 2002?

There was a increased military spending in response to the 9/11 terrorist attacks

A stock in a company is:

a share of ownership of a company held by a shareholder.

The market for breakfast cereal contains hundreds of similar products, such as Froot Loops, corn flakes and rice krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:

a standardized product

if the opportunity cost of production are constant, then the production possibility frontier is:

a straight line

In which of the following categories would the date of foreign currency with a forward repurchase agreement be included?

a swap

In the long run, wages and prices are considered to be:

flexible

Which of the following industries is most likely to be monopolistically competitive?

fresh bagel shops

which of the following industries is most likely to be monopolistically competitive?

fresh bagel shops

An analytical approach through which strategic choices can be assessed is called:

game theory

The study of behavior in situations of interdependence is called

game theory

A U.S. federal government budget deficit occurs when:

government outlays exceed revenue.

If a country runs a trade deficit, its investment spending is probably:

greater than its level of saving

in perfectly competitive markets, if the price is ... the firm will ...

greater than the minimum AVC; shut down

After 1873, the United States government:

guaranteed the value of a dollar in terms of gold

The government saves when it:

has a budget surplus.

If a bank has deposits of $100,000, cash on hand of $10,000 and $15,000 on deposit at the Federal Reserve, and the required reserve ratio is .20, then the bank:

has excess reserves of $5,500

In recent years, the growth in foreign-owned debt has:

helped the U.S economy by keeping the supply of loanable funds higher than it would be otherwise.

Because of monopoly, consumers experience _________ than with perfect competition.

higher prices

A movement from AD3 to AD1 could be caused by:

higher tax rates

we use the effective exchange rate calculation to tell us

how the overall international purchasing power of a nation has changed

The skills, training, and education possessed by workers that contribute to economic growth are known as:

human capital

Rising high school graduation rates are an example of an increase in:

human capital.

for a perfectly competitive firm in the short run:

if the firm produces the quantity at which P > ATC, then the firm is profitable

The market for melons in Russia IF the world price of melons is equal to E, Russia will

import H- I of melons

General Snacks is a typical firm in a market characterized by monopolistic competition. Initially, the market is in long-run equilibrium, and then there is an increase in the market demand for snacks. We expect that:

in the long run, new firms will enter the market

An economy is currently operating at an output level below its potential real GDP. If the government wishes use fiscal policy to bring the economy back to its potential real GDP, it will:

increase government spending

(Figure: Fiscal Policy Options) If the aggregate demand curve is AD', which of these choices is the most appropriate discretionary fiscal policy?

increase government spending and decrease income tax rates

Assume that marginal propensity to consume is 0.8, and potential output is $800 billion. If actual real GDP is $700 billion, which of the following policies would bring the economy to potential output?

increase government spending by 20 billion

If an economy is currently operating at an output level below its potential real GDP, if government wishes use fiscal policy to bring the economy back to its potential real GDP, it will:

increase government spending.

In the long run, an increase in AD will result in:

increase in the aggregate price level but no changes in the aggregate output level.

All other things unchanged, an increase in loanable funds demand would most likely be caused by a(n):

increase in the amount of government borrowing.

A tariff is most like to ___ prices and ___ consumption of the good or service being produced.

increase, decrease

(Table peanut butter and Jelly economy) A simple economy produces only peanut butter and jelly. Using the data in the attached table, from 2010 to 2011 real GDP _____ by ______ %

increased, 12.5

In the short run, a positive demand shock:

increases aggregate output and the aggregate price level

A government budget surplus would be contractionary because all of the following except that:

increases in government purchases at contractionary

In the long-run, an increase in AD will result in:

increases in the aggregate price level bout no changes in the aggregate output level

As an inflationary gap is eliminated through self-correcting adjustment, the equilibrium price level________ and the equilibrium real output _______/

increases; decreases

A manufacturing company that benefits from lower costs per unit as it grows is an example of a firm exhibiting

increasing returns to scale

Look at the figure Long-Run Average Cost. This firm has ______ in the output region from 0 to A.

increasing returns to scale

Using monetary policy to address a recessionary gap created by a supply shock involves _________ to _________.

increasing the amount of money; lower the unemployment rate

A monopolist responds to an increase in demand by _______ price and _________ output.

increasing: increasing

If some firms in a perfectly competitive industry are earning positive economic profits, then in the long run, the:

industry supply curve will shift to the right

Inventory investment is counted as investment because:

inventory is a source of future sales.

price in a perfectly competitive industry

is always equal to marginal revenue for the firm

The federal Reserve Bank of the United States is:

is not exactly part of the U.S government, but not really a private institution either

When a firm produces a small amount of output, the spreading effect:

is stronger than the diminishing returns effect.

Which of the following is most likely a macroeconomics question rather than a microeconomics question?

is the national unemployment rate rising or falling?

The main reason South Korea has grown so rapidly is that because it was so poor:

it could skip forward, or leapfrog, to use new-generation technology as it

Suppose that a doctor who lives alone hires the services of a maid and pays her 15,000 a year to clean his house. Suppose that he marries her the following year. Other things equal, which of the following would be true about the reported official GDP the following year?

it would fall

Given the information in the scenarios Monopolistically Competitive Firm, in the long run, this firm can expect that

its economic profit will decrease to zero

According to the U.S. Federal Tax Rates chart from the textbook (Figure 15.6), a person earning $100,000 in a given year is in the 28% tax bracket. How much will this individual owe in taxes for that year?

less than $28,000 but greater than $15,000

suppose a perfectly competitive firm can increase its profits by increasing its output. then it must be true that the firm's

marginal revenue exceeds marginal cost

At the long-run quantity of output, where the long-run average total cost curve is at its lowest point, it is tangent to the ______ of the corresponding short-run average total cost curve.

minimum

someone who has to make a choice involving whether to receive $100 now or $100 one year from now will probably choose ________, since there is a(n) ________ in waiting to use money

now; opportunity cost

Figure: Policy Alternatives) Assume that the economy depicted in Panel (a) is in short-run equilibrium at a real GDP level of Y1. Doing nothing and letting the economy correct itself

occurs in the long run when wages fall.

The market structure characterized by a few interdependent firms and barriers to entry is called:

oligopoly

when all of a firm's inputs are doubled and this results in the firm's level of production more than doubling, a firm is operating:

on the downward-sloping portion of its LRATC curve

A negative demand shock can cause:

recessionary gap

To close an inflationary gap by employing fiscal policy, the government could:

reduce budget allocations to interstate highway maintenance

The government withdraws social insurance taxes from the paychecks of workers to:

reduce the incidence of elderly poverty.

Tariffs and Import quotas always

reduce total surplus as compared to free trade.

Crowding out negatively affects the economy by:

reducing private investment spending on physical capital

If the price level in the economy and the nominal wages both doubled, then real wages would:

remain unchanged

the short-run industry supply curve:

shows the total quantity supplied by all firms in an industry for each possible price when the number of producers is given

Which of the following is NOT included in investment spending in the national income accounts

the purchase of stocks and bonds by a business

Government borrowing will not crowd out private investment spending if:

unemployment is high and the fiscal expansion causes an increase in incomes and savings at each interest rate.

"Tuition at State University this year is $8,000." Which function of money does this statement best illustratted?

unit of account

An inflationary gap will be eliminated because there is _______ pressure on wages, causing the ______.

upward; short-run aggregate supply curve to shift to the left

The Human Development Index is:

used by the U.N. to compare nations by measures other than real GDP per capita.

Buford Bus manufacturing installs a new assembly line. As a result the output per worker increases. The output t buford:

will decrease ( the MC curve will shift down).

Financial assets:

are paper claims that provide the buyer of the claim future income from the seller of the claim.

From the standpoint of economic growth, banks are important to:

channel savings into investment.

A positive demand shock leads to:

higher prices and higher employment.

Exhibit: Money Creation The reserve requirement is 20%, and Leroy deposits his $1,000 check received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. 30. (Exhibit: Money Creation) By how much did the monetary base change?

Suppose that an innovation reduces a firm's fixed costs and reduces cost from ATC to ATC'. Before the innovation reduced the cost, the firm's maximum economic profit was:

What is the nash equilibrium for Jake and Zoe?

Jake prices low; zoe prices low

An inflationary gap can be closed with:

a decrease in government purchases

contractionary monetary policy

decreases aggregate demand

A decrease in energy prices will:

increase in short-run aggregate supply

The largest source of federal tax revenue is

personal income taxes

National savings is the sum of:

private savings plus the budget balance.

Among the liabilities of banks are:

deposits

A checking account with $500 is:

more liquid than a person's new car.

Which of the following is included in GDP?

the purchase of a ticket to a Rolling Stones concert

Consider an economy that only produces two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Real GDP this year using last year as the base year is:

$1,300.

Considering 2004 as the base year, given that total population was 1,140 in 2004 and 1,300 in 2005, real GDP per capita in 2004 was

$100

In the figure, the marginal cost when increasing production from 19 to 36 bushels of wheat is:

$11.76

(Exhibit: Assets and Liabilities of the Banking System) Suppose that the reserve ratio is 10% when the Fed buys $11,000 of U.S. Treasury bills from the banking system. If the banking system does NOT want to hold any excess reserves, _______ will be added to the money supply

$110,000

(Exhibit: Assets and Liabilities of the Banking System) If the reserve ratio is 9% and the banking system does NOT want to hold excess reserves, then will be added to the money supply.

$111,111

Look at the figure and table Variable, and Total Costs. In the figure, the marginal cost when increasing production from 51 to 64 bushels of wheat is:

$15.38

India is growing at a rate of 9% per year, and its real GDP per capita is about $3,500, while the United States is growing at a rate of 3% per year, and its real GDP per capita is about $47,000. Scenario: Growth Rates in Two Countries) About how much will India's real GDP per capita be in 20 years?

$19,600

The table shows cost data for a bicycle firm operating in the ... What is the total variable cost for this firm when the firm produces five bicycles.

$190

Exhibit: Money Creation The reserve requirement is 20%, and Leroy deposits his $1,000 check received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. 25. (Exhibit: Money Creation) How much of the deposit is the bank required to keep in reserves?

$200

If the MPC is 0.8 and the government spending decreases by $50 million, then equilibrium GDP will decrease by:

$250 million

(Exhibit: Assets and Liabilities of the Banking System) Suppose that the reserve ratio is 10% when the Fed sells $25,000 of U.S. Treasury bills to the banking system. If the banking system's does NOT want to hold any excess reserves,______ will be_______the money supply.

$250,000 subtracted from

Look at the figure A Profit-Maximizing Monopoly Firm. The firm's price per unit is:

$29

Scenario: Open Economy S=I In an open economy the GDP is $12 trillion this year. Consumption is $8 trillion, and government spending is $2 trillion. Taxes are $0.5 trillion. Exports are $1 trillion, and imports are $3 trillion. How much is investment spending?

$3 trillion

Scenario: Open Economy S = I In an open economy the GDP is $12 trillion this year. Consumption is $8 trillion, and government spending is $2 trillion. Taxes are $0.5 trillion. Exports are $1 trillion, and imports are $3 trillion. How much is a private saving?

$3.5 trillion

Annie has a bakery that specializes in birthday cakes, and her variable costs of producing cakes are shown in the table costs of Birthday Cakes. Assume that her fixed cost are $10. What is the average fixed cost of 2 cakes?

In the figure.... bushels of wheat is produced, the average fixed cost is ________, average variable cost is ________. and average total cost is _______.

$7.84, $11.76, $19.60

(tomato producers) At the profit-maximizing quantity of output in the figure, the farmer's total revenue is ... total cost is ... and profit is ...

$90; $70; $20

The rate of return on a business project is equal to:

(Revenue from project - cost of project)/ Cost of project) × 100

(Table: Pizza Economy III) Considering 2010 as the base year, given that total population was 1,140 in 2010 and 1,300 in 2011, , real GDP per capita between 2010 and 2011 grew as a rate of:

-50%

In 2015, how many euros would it take to by one pound?

.75

Most spread usually range from ___ on large contracts and ___ on small contracts.

0.01% 5%

If the marginal propensity to save is 0.1, then the government spending multiplier has a value of

If during 2010, the country of Sildavia recorded investment spending of $3 billion, government purchases of $3 billion, consumer spending of $7 billion, imports of $5 billion, government transfers of $1 billion, and exports of $3 billion. Sildavia's GDP in 2010 was:

11 billion

Using the table, what is the total federal income tax bill for someone who makes $67,000 per year?

12,780

Suppose a bank receives a $5,000 deposit and the reserve ratio is 25%. The bank is required to keep in reserve

1250

The total current tax rate for Social Security and Medicare is:

15.3 %

GDP in the table is 94 billion

168 billion

Using the information in the table, when output equals three, average total cost equals:

(Table: Peanut Butter and Jelly Economy) Look at the table Peanut Butter and Jelly Economy. How much of the increase in nominal GDP between 2010 was due to inflation?

18.75%

GDP is 12 trillion this year in a closed economy. Consumption is 8 trillion and government spending is 2 trillion. Taxes are 0.5 trillion. How much is investment spending?

2 trillion

GDP is 12 trillion this year in a closed economy. Consumption is 8 trillion and government spending is 2 trillion. Taxes are 0.5 trillion. How much is national saving?

2 trillion

In an open economy the GDP is $12 trillion this year. Consumption is $8 trillion, and government spending is $2 trillion. Taxes are $0.5 trillion. Exports are $1 trillion, and imports are $3 trillion. How much is national saving?

2 trillion

In an open economy the GDP is 12 trillion this year. Consumption is 8 trillion and government spending is 2 trillion. Taxes are 0.5 trillion. Exports are 1 trillion and imports are 3 trillion. How much is the net capital inflow?

2 trillion

In an open economy the GDP is 12 trillion this year. Consumption is 8 trillion, and government spending is 2 trillion. Taxes are .05 trillion. Exports are 1 trillion and imports are 3 trillion.

2 trillion

Scenario: Technological Progress and Productivity Growth in Techland Holding technology and human capital fixed in Techland, increasing physical capital per worker from $25,000 to $100,000 would have led to a doubling of real GDP per worker, from $40,000 to $80,000 during the 1980 to 2010 period. However, not only did physical capital per worker increase from $25,000 to $100,000, but technological progress shifted the productivity curve upward so that the actual increase in real GDP per worker during the 1980 to 2010 period was from $40,000 to $320,000. (Scenario: Technological Progress and Productivity Growth in Techland) What was the growth rate of real GDP per capita in Techland attributable to increasing physical capital per worker during the 1980 to 2010 period?

2.0%

Look at the table the production possibilities for tractors and crude oil. The opportunity cost in the UNited states of producing 40 tractors ___ thousand barrels of crude oil.

In the country of sildavia, a market basket of goods and services cost $130 in 2003, $140 in 2004, and $160 in 2005. Based on this information and considering 2003 as the base year, inflation from 2003 to 2005 was:

23.07 %

If the MPC is 0.8 and the government spending decreases by 50 million, then equilibrium GDP will decrease by:

250 million

Given the information provided in this scenarios, the opportunity cost of producing a unit of wheat in country B is

3 toys

Suppose the banking system does NOT hold excess reserves and the reserve ratio is 20%. If Molly deposits $1000 cash in her checking account, the banking system can increase the money supply by:

3,000

GDP is 12 trillion this year in a closed economy. Consumption is 8 trillion and government spending is 2 trillion. Taxes are ... trillion.

3.5 trillion

Charlotte withdraws 8000 from her checkable bank deposit to pay tuition this semester. Assume that the reserve requirement is 20% and that banks do not hold excess reserves By how much will the money supply contract as aa result of the withdrawl?

32,000

Sweden has a real GDP per capita of $50,000, while Chile has a real GDP per capita of $250,000. If real GDP per capita in Sweden grows at a 2% rate and Chile's real GDP per capita grows at a 4% rate, how long will it take for real GDP per capita in the two nations to converge?

35 years

If during 2005, they country of sildavia recorded a GDP of $65 billion, interest payments of $15 billion, imports of $13 billion, profits of $7 billion, exports of $15 billion, and rent of $7 billion, wages during 2005 in Sildavia were

36 billion

The new orleans Saints have a monopoly on Saint logo baseball hats. The saints sell at most one hat to each customer and the table shows each customers willingness to pay. The marginal costs of producing a hat is 18. How many hats should the Saints produce , and what price should the organization charge to maximize its profits?

3; 24

Look at the table Labor and output. The marginal product of the fifth worker is:

4 trillion

In the figure.... bushels of wheat is produced, the average fixed cost is ________, average variable cost is ________. and average total cost is _______.

4.17, 16.67,20.83

At seven units of output, average fixed cost is approximately _____ and average variable cost is approximately _________.

40, 100

Look at the figure and table variable, fixed, and total costs. In the figure, when 51 bushels of wheat is produced, the average cost is ____, average variable cost _______, and average total cost is _______.

7.84, 11.76, 19.60

If the cost of a market basket is $150 in year 1 and $200 in year 2, the price index for year 1 using year 2 as the base is:

_____________ would be considered a mandatory outlay in your monthly budget.

A student loan payment

(Figure Technological Progress and Productivity Growth) If there is an increase in physical capital per worker (all other factors remaining unchanged) It would be indicated by a move from:

A to B

(Figure AD-SRAS Model II) When firms decrease their investment spending, which of the following will take place in the short run?

AD curve will shift to the left

the market for laptop sleeves Identify the are or areas of consumer surplus when a tariff raises the domestic price from the world price to p1

A+B

The domestic market for digital cameras total surplus before international trade is equal to the area:

A+B+C

(figure: fiscal policy II) Suppose that this economy is in equilibrium at E2. If there is a decrease in government transfers then .

AD2 will shift to the left, causing a decrease in the real GDP

If a firm faced the long-run average total cost curve shown in the figure and it expected to produce 100,000 units of the good in the long run, the firm should build the plant associated with:

ATC2

in the short run, a perfectly competitive firm produces output and incurs an economic loss if

AVC < P < ATC

If the circular flow model is in equilibrium ( the sum of money flows into each box is equal to the sum of the money flows out of that box), which of the following is likely to happen if there is an increase in consumer spending?

An increase in the nominal GDP

(Figure Technological Progress and Productivity Growth) Which of the following changes in real GDP would be most likely to result over time from the deterioration of the nation's infrastructure?

B to A

(Figure: Technological Progress and Productivity Growth) If there is significant technological (all other factors remaining unchanged), it would be best indicated by a move from:

B to A

(Figure: Technological Progress and Productivity Growth) Which of the following changes in real GDP would be most likely result over time from the deterioration of the nation's infrastructure?

B to A

According to the table, the country with the largest decrease in the debt-to-GDP ratio over the time period is:

Belgium

According to the table, the country with the lowest average yearly budget deficit over the time period is:

Belgium

Which of the following is true concerning the monetary base in the United States?

Bank reserves are part of the monetary base.

Which of the following is NOT true about bank runs? A) They may start as a result of a rumor that a bank is in financial trouble. B) Many banks' depositors try to withdraw their funds due to fears of a bank failure. C) Bank runs typically only happen to small banks with few financial assets. D) Banks runs often lead to a loss of faith in other banks, causing additional bank runs

Bank runs typically only happen to small banks with few financial assets

Which of the following would NOT fit the economist's definition of money?

Bonds

The basic equation of national income accounting is GSP = C +I +G +X -IM. When the government uses fiscal policy to make changes to taxes and transfers, this policy primarily affects:

When the governemnt imposes a tarriff on imported oranges, the price of oranges in South Africa rises from Pw to P1 and the volume of imports falls to

C2-Q2

look at the figure The market for laptop sleeves Identity the area or areas of government tax revenue when a tariff raises the domestic price from the world price to p1.

Which of the following is not an assumption that economists make when using the model of perfect competition?

Each firm sets its price equal to its average total cost

Two firms, firm A and firm B, have identical cost curves. Firm A operates in perfect competition and firm B operates in monopolistic competition. In the long run, what can we say about the price and output that each firm charges?

Firm A's price will be lower than firm B's price, and firm A's output will be greater than firm B's output

If your professor wins the lottery:

GDP is not affected

The convergence hypothesis fits the data only when the factors that affect growth are held equal across oss countries. These factors include all of the following EXCEPT:

GDP per capita.

A long-run equilibrium is illustrated at the profit-maximizing price ______in panel ______.

H,B

Which of the following is NOT considered one of the three chief characteristics of money?

It is a highly illiquid asset.

____________ a mandated federal program that funds health care for retired persons.

Medicare is

If Mrs.Crest worked all day at the front desk, she could answer 60 phone calls. If she worked all day with patients, she could clean the teeth of 20 patients. Which of the following is true?

Ms.Crest has a comparative advantage in answering phones

(Figure AD-AS model) If the economy is at point X, which of the following describes the likely adjustment to long-run equilibrium?

Nominal wages fall, and the short-run aggregate supply curve shifts right until the economy reaches long-run equilibrium.

In autarky, the price of oranges in south africa is P1. When the economy is open to trade, the price falls to Pw and the change in total surplus is:

O+P

In the short run, a perfectly competitive firm produces output and earns zero economic profit if:

P=ATC

In the short run, a perfectly competitive firm produces output and earns an economic profit if:

P>ATC

In The Wealth of Nations when Adam Smith discussed "a sort of wagon-way through the air," he was referring to:

Paper money

Assume that the MPC =0.8 and the government spending by 100 billion, financing this spending with a 100 billion tax increase. Which of the following will be the likely effect of this action

Real GDP will expand by 100 billion

Suppose that the MPC= 0.8 and the government cuts taxes by 40 billion. Which of the following will be the likely effect?

Real GDP will increase by 160 trillion

In panel B of the figure Firms in monopolistic competition, the profit-maximizing quantity of output is determined by the intersection at point;

(figure Monopoly Model) When the firm is in equlibrium its profit is the area of rectangle

SPDB

When the firm is in equilibrium ( that is, maximizing its economic profit) its profit is the area of rectangle:

SPDB

If there is a sudden increase in commodity prices, this will lead to a shift in the:

SRAS curve to the left resulting in a lower aggregate output

(Figure AS-AS Model II) if productivity increases, which of the following will take place?

SRAS curve will shift to the right

Suppose that the U.S government doubles its spending on health care. Which of the following is most likely to occur?

The aggregate demand curve shifts right, output increases, and prices increase

The owners of the gas stations in town are trying to set up a cartel that will raise the price of gasoline. Which of the following will increase the chances that the cartel will fail because of cheating by the owners?

The gas stations vary in terms of the services that they provide

Suppose that political instability in the Middle East temporarily interrupts the supply of oil to the United States. Which of the following is most likely to occur?

The short-run aggregate supply curve shifts left, output decreases, and prices increase.

Some people argue that social insurance taxes should be increased to remedy the fiscal problems faced by Social Security. What is a potential problem with this proposed solution?

This solution might only be a temporary fix, as it does not address the fundamental issue of a growing elderly population and a shrinking working population

In panel C of the figure Firms in Monopolistic Competition, economic loss per unit is:

the market for computers in the figure consumer surplus without international trade would be area or areas

W+X

Crowding out is a phenomenon:

Where an increase in the government's budget deficit causes overall investment spending to fall.

The market for computers in the figure producer surplus with international trade would be area or ares

X+Y+Z

Look at the figure The market for roses In the figure producer surplus with international trade would be area or areas:

Should average citizens be concerned with the government's budget?

Yes, because the government's yearly budget decisions have immediate and future implications for levels of taxation and the provision of public good

Which of the following is not a barrier to entry?

a ban on certain kinds of advertising

An example of a double coincidence of wants is:

a car mechanic who wants a TV finding an owner of an electronics store who wants a car repaired

A movement along the aggregate demand curve is caused by a:

a change in the aggregate price level

since the mid-1990s the Argentine peso has NOT experienced

a currency union

(Figure Monetary Policy and the AD-SRAS model) If the economy is in a inflationary gap at the point h, it can move to point i as result of:

a decrease in the money supply

Figure: Circular Flow Model 2) If the circular flow model is in equilibrium (the sum of money flows into each box is equal to the sum of the money flows out of that box), which of the following is likely to happen if there is a decrease in export?

a decrease in the nominal GDP

a deficit of $1.5 trillion

A loan is:

a liability for the borrower and an asset for the lender.

Commodity-backed money is:

a medium of exchange with no intrinsic value

A positive demand shock will result from

a move by the federal reserve to lower the interest rate

(Figure: Productivity) An improvement in technology with everything else remaining unchanged is shown on the diagram as:

a movement from B to C

unexpectedly rising commodity prices lead to:

a negative supply shock

When an economy experiences stagflation, it is usually caused by a:

a negative supply shock.

The value of which of the following would be counted in GDP?

a new car sold by a car dealer

(Figure AD-AS) Suppose the economy is producing the output level Yp and a negative demand shock shifts at the AD1 curve to AD3. The economy now has:

a recessionary gap; can be closed by ecpasinary fiscal policy.

It took India more than 40 years to exhibit high economic growth after it gained independence from British rule in 1947. This faster rate of growth resulted from

a reduction in the burden of corruption.

Which of the following financial assets belongs to M2, but not to M1?

a savings account

A firm that is in a oligolopy knows that its _______ affect its __________ and that the _________ of its rivals will affect it.

actions; rivals; reactions

An inflationary gap occurs if:

actual real GDP is greater than potential output

If prices are constant, but there is an increase in the value of financial assets:

aggregate demand shifts to the right

In an inflationary gap

aggregate output is greater than potential output.

Suppose that the economy is operating at potential output and there is an increase in the money supply. Which of the following best describes the adjustment process that will follow?

aggregate output will rise above potential output, nominal wages will rise, and the SRAS will shift leftward

Which of the following will shift the short-run aggregate curve to the right?

an economy-wide decrease in commodity prices

Which of the following will shift the short-run aggregate supply curve to the right?

an economy-wide decrease in commodity prices

Which of the following would shift the production function upward?

an improvement in technology

GDP per capita is:

an incomplete measure of a country's standard of living.

Suppose the economy is in a recessionary gap. Which of the following fiscal policy options is likely to increase real GDP by the largest amount?

an increase in government purchases

(Figure: Shift of the Aggregate Demand Curve) A movement from AD1 to AD2 may have been the result of

an increase in government spending.

An increase in the short-run aggregate supply curve may be caused by:

an increase in productivity.

Each of the following is an expansionary fiscal policy except

an increase in tax rates

Holding everything else constant, when the government uses an expansionary policy in the presence of a deficit, it will result in

an increase in the equilibrium interest rate in the loanable funds market.

A beneficial technological change enhance the production of cranberries. At the same time scientists discover the health benefits of cranberries. This will result in

an increase in the equilibrium quantity and an uncertain impact on the equilibrium price of cranberries

(Figure: Crowding Out) The demand for loanable funds curve D LF 1 will shift to D LF 2 when there is:

an increase in the government budget deficit.

If the demand for loanable funds curve shifts to the right, then it will result in:

an increase in the interest rate and the total amount of borrowing in the funds market

If the circular flow model is in equilibrium ( the sum of money flows into each box is equal to the sum of the money flows out of that box), which of the following is likely to happen is there is an decrease in imports?

an increase in the nominal GDP

If the supply of loanable funds curve shifts to the right, then it will result in:

an increase in the total amount of borrowing and a fall in the interest rate.

If the circular flow model is in equilibrium (the sum of money flows into each box is equal to the sum of the money flows out of that box), which of the following is likely to happen if there is a decrease in consumer spending?

an increase in the unemployment rate

(Figure: An Increase in Aggregate Demand) At the Y2 level of real GDP

an inflationary gap exists equal to the difference between y2 and Yp.

(Figure AD-AS) Consider an economy that is producing an output level of Y1. This economy is in:

an inflationary gap, which can be closed by contractionary fiscal policy

Producing a short-run level of aggregate output that exceeds the economy's potential output results in:

an upward adjustment in nominal wages

(Figure The profit maximizing firm) Look at the figure the profit maximizing firm. The figure shows cost curves for a firm operating in a perfectly competitive market. Curve M must cross curve N and O

at their minimum points

Look at the figure Short-Run Costs. The vertical difference between curve B and curve C at output is

average fixed cost

If marginal cost is less than average cost, then:

average total cost is decreasing

a perfectly competitive industry is said to be efficient because the

average total cost of production of the industry's output is minimized

If the federal reserve conducts an open-market purchase

bank reserves increase and the money supply increases

If the Fed conducts an open-market purchase:

bank reserves increase and the money supply increases.

Taken collectively, people in nations that engage in international trade are not likely to:

be made worse off

The tabel Spring Water shows the demand and cost data for a firm in monopolistically competitive industry producing drinking water from underground springs. If the industry were perfect competition, the profit-maximizing output would be ... cases.

between 7 and 8 cases

If a firm is producing at point C on the ATC2 but anticipates increasing output to 225,000 units in the long run, the firm will build a ____ plant and have ______.

bigger; diseconomies of scale

If a firm producing at point C of the ATC2 but anticipates increasing output to 225,000 units in the long-run, the firm will build a _____ plant and have ___________.

bigger; diseconomies of scale

Thelma and Louise are arrested and put in jail for murder. Given the payoff matrix in the figure, ther Nash equilibrium behavior for Thelma and Louise is:

both Thelma and Louise to confess

If either regions increase their output of corn, the profits of both are affected as shown in the payoff matrix. The NASH equilibrium combination is for.:

both the United States and the European Union to produce a high output.

(United states and European Union) The nash equilibrium combinations is for:

both the united states and the european union to produce a high output

If either region increases its output of corn, the profits of both are affected as shown in the payoff matrix. The optimal combination is for

both the united states and the european union to produce a low output

In the classic prisoners' dilemma with two accomplices in crime, the Nash equilibrium is for:

both to confess

(Table: Currency Values I) The U.S dollar appreciated against the

british pound and the indian rupee

What is the most appropriate way to compare budget deficits/surpluses across time?

calculating figures as a portion of gross domestic product (GDP)

If a perfectly competitive firm is producing a quantity where MC > MR, then profit:

can be increased by decreasing production

If a firm operating within monopolistic competition is producing a quantity that generates Mc < MR, then the marginal decision rule tells us that profit:

can be increased by increasing production

(Figure guns and Butter) Look at the figure Guns and Butter. The combination of guns and butter at point H:

cannot be attained, given the level of technology and the factors of production available

Discretionary fiscal policy refers to

change in government spending or taxes to close a recessionary or inflationary gap

Monetary policy attempts to affect the overall level of spending in the economy through:

changes in the quantity of money or the interest rate

Compared to a perfectly compettive industry, a monopolist:

charges a higher price

A government might want to increase aggregate demand to:

close a recessionary gap

This firm has _______ in the output region from A to B.

constant returns to scale

This firm has ____________ in output region from A to B.

constant returns to scale

... almost always take the market price as given, or as considered ... but this is often not true of ...

consumers and producers; price-takers; firms that produce a differentiated product

A derivative is

contract derived from a spot market rate

A spot contract is a(n)

contract for the immediate exchange of currencies.

If the economy is at equilibrium at Y1 and P1. the government should use _________ fiscal policy to shift the aggregate demand curve to the _______.

contractionary: left

The top 1% of households in the United States:

contribute nearly 40% of all federal income tax revenues.

The demand curve for a firm operating within a monopolistically competitive industry is:

downward sloping

A sudden and pronounced loss of value of of ones national currency against others is known as:

currency crisis

In Equilibrium the expected future spot rate is equal to the :

currency forward rate

Which of the following is a component of BOTH the monetary base and the money supply?

currency in circulation

Figure: An Increase in Aggregate Demand) Because of the pressures existing at the short-run equilibrium at Y2 and P2

curve will shift to the left.

A recessionary gap will be eliminated because there is _______ pressure on wages, causing the _______.

downward; short-run aggregate supply curve to shift rightward

The idea of diminishing returns to an input in production suggests that if a local college adds more custodians, the ..... labor for the custodial staff will ______.

decrease

(Figure: Short and Long run Equilibrium II) If the economy is at equilibrium at E1 the appropriate policy to return the economy to potential output would be a

decrease in government spending

In the market for local coffee, the price will _____ and the quantity will _____ if new coffee shops open and consumers' incomes decrease due to a recession.

decrease; be indeterminate

Suppose the dry-cleaning market is monopolistically competitive and economically profitable this year. In the long run, the demand for any one firm's dry-cleaning services will ... as more firms enter the industry, causing profits to ...

decrease; fall to zero

Since the United states imports a large quantity of textiles from Asia, the overall wages of U.S trade workers hsa ______ while the price of textiles in the United States has ____

decreased decreased

If the current level of real GDp lies above potential GDP, then an appropriate fiscal policy would be to ______, which will shift the AD curve to the _______.

decreases government purchases, left

Which federal budget category's portion of total government outlays has decreased since 1960?

defense

Fiscal policy involves

deliberate changes in taxation and/or government spending.

A decrease in the supply of money shifts the aggregate:

demand curve to the left.

During the 1929-1939 period in the United States:

nominal GDP declined but real GDP increased.

Foreign exchange contracts, such as futures, swaps, and options are collectively known as

derivatives

OPEC is:

described by all of these answer choices

(Table: Hypothetical Relationship) The accompanying table represents a hypothetical relationship between physical capital per worker and the growth rate of productivity. This economy is experiencing:

diminishing returns to physical capital per worker.

The official unemployment rate ignores

discouraged workers who have given up looking for a job

A firm finds thats its long-run average total cost increase as it produces more output. This firm is experiencing: q

diseconomies of scale

A firm that has diminishing returns in the management's ability to use and disseminate information as it increases production in the long run best represents:

diseconomies of scale

A firm that has diminishing returns in the management's ability to use and disseminate information as it increases production in the long run is an example of:

diseconomies of scale

Which of the following would accurately characterize the portion of a firm's profit paid to the owner of one share of its stock?

dividend

If a nation is its own currency and decides to use another nation's currency as its own circulating currency, this is known as :

dollarization

if the united states placed largest tariffs on all textiles, then

domestic producer surplus would increase

The most important source of oligopoly in an industry is

economics of scale

A university that benefits from lower costs per enrolled as it builds more buildings and enrolls more students is an example of a service provider with:

economies of scale

It is common in large beer breweries for the long-run average total cost to decline as output increases. This indicates that many breweries operate under:

economies of scale

when an increase in the firm's output reduces its long-run average total cost, it achieves:

economies of scale

Because tourist demand for airline flights is relatively ________, small ________ in ticket price will result in relatively ________ in additional tourists.

elastic ;reductions; large increases

Which of the following statements regarding entry barriers is correct?

entry barriers exist in monopoly and oligopoly markets

If a monopolistically competitive firm is in long-run equilibrium, then price __________.

equals average total cost

The role of the government can explain growth differences among countries. All of the following are government action that contribute to differences in growth EXCEPT:

excessive government intervention in business practices and licensing

a term that categorizes patterns of exchange rate behavior is known as

exchange rate regimes

GDP tends to understate our economic well being because it:

excludes the value of leisure.

A period of rising real GDP is

expansion

Goods that are produced domestically but sold abroad are:

exports.

If at the current interest rate, the demand for money is 100 billion and the supply of money is 200 billion, then the interest rate will:

fall

if the the growth rate of GDP is above its historical average, then there is a tendency for the unemployment rate to

fall

(haircuts) we expect that the market price will ... and the output of a typical firm will ...

fall; fall

Between points A and B the marginal product of labor is

falling

When diseconomies of scale occur, the:

long-run average cost curve rises.

Economies and diseconomies of scale are associated with the:

long-run average total cost and the long run

the curve that illustrates the relationship between output and average total cost when the fixed cost has been chosen to minimize average total cost for each level of output is the:

long-run average total cost curve

Throughout the twentieth century, nations in Latin America experienced disappointing growth rates primarily due to:

low rates of national savings, political instability, and little emphasis on education.

The aggregate demand curve would shift to the left for all the following reasons EXCEPT:

lower labor productivity.

To close a recessionary gap by employing fiscal policy, the government could:

lower the corporate income tax rate

To increase the money supply, the central bank could:

lower the discount rate, make open-market purchases, lower reserve requirements

Amtrak is a publicly owned company that provides rail service. This means that Amtrak's prices tend to be ________ than if it were a private company, and the quality of service tends to be ________ than if it were a private company.

lower, worse

many furniture stores run "going out of business" sales but never go out of business. In order for the shut-down decision to be the appropriate one, the rice of furniture must be ... then the ... average cost.

lower; minimum

The largest money aggregate is

m2 because it contains currency in circulation, all bank deposits, other deposits and deposit-like assets

If both aggregate output and the aggregate price level increase:

nominal GDP will increase faster than real GDP

All of the following are responsibilities of the Fed EXCEPT: ll of the following are responsibilities of the Fed EXCEPT: A) control the monetary base. B) mint bills and coins. C) oversee and regulate the banking system. D) set the discount rat

mint bills and coins

When a bank deposit is withdrawn and kept as currency, bank reserves decrease and the:

monetary base does not change

The interest effect states that as the aggregate price level rises, holding everything else constant, people demand:

more money which causes the interest rate to rise and investment to fall

A $100 million increase in government spending increases equilibrium GDP by:

more than $100 million

According to the text, productivity is driven by all of the following EXCEPT:

natural resources

A natural disaster that destroys part of a country's infrastructure is a type of _________and therefore shifts the _________ to the ________

negative supply shock; short-run aggregate supply curve; left

Thelma and Louise are arrested and put in jail for murder. Given the payoff matrix in the figure, the optimal behavior for Thelma and Louise is for:

neither Thelma nor Louise to confess

Look at the prisoner's dilemma for thelma and louise. Thelma and Louise are arrested and put in jail for murder. Given the payoff matrix in the figure, the optimal behavior for Thelma and Louise is for:

neither Thelma nr louise to confess

In the model of perfect competition:

no individual or firm has enough power to have any impact on price

For the colorado beef industry to be classified as perfectly competitive, ranchers in colorado must have ... on prices and beef bust be a ... product

no noticeable effect; standardized

If it looks like a bank won't meet the Federal Reserve Bank's reserve requirement, normally it will first turn to the:

other member banks and borrow at the federal funds rate

The Land you own has the only known sources of aloe needed to make anti-itch lotion. In this case, your monopoly results from which of the following?

ownership of scarce inputs

Contractionary fiscal policy would most likely be used to shift aggregate demand in ______ from _____.

panel (a) AD2 to AD1

(Figure shift in Demand and Supply) The figure shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating a tomato a day prevents aging. Which panel best describes how this will affect the market for tomatoes.

panel C

(Figure shifts in demand and supply) Suppose the population increases. Which panel best describes how this will affect the market for apples?

panel C

(Figure Shifts of the AD-AS Curves) An increase in wages in the short run is illustrated by:

panel d

In economic the short run is defined as:

period in which some inputs are considered to be fixed in quantity

Which of the following would an economic policy maker rank as the most preferred type of shock?

positive supply shock

In the past, most of the cars sold in the United States were produces by the Big Three auto companies. General Motors would announce its prices for the new model year first, and then the other companies would match it. This practice was an example of:

price leadership

A perfectly competitive firm is a:

price-taker

Economists are optimistic that growth can continue in the face of resource scarcity because:

prices of scarce resources rise and provide incentives to find alternative energy

(Figure: Crowding Out) The supply of loanable funds curve SLF1 shifts to SLF2. This shift implies that:

private savings have increased

t) The supply of loanable funds curve SLF1 shifts to SLF2. This shift implies that

private savings have increased.

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will:

produce at profit

in the short run, if P > ATC, a perfectly competitive firm

producers output and earns an economic profit

If the labor unions lose memberships and become less popular, then:

production costs will fall, SRAS will shift to the right, increasing equilibrium GDP and lowering the aggregate price level

If membership falls in labor unions and unions become less popular, then:

production costs will fall, SRAS will shift to the right, increasing equilibrium GDP and lowering the aggregate price level

The short-run aggregate supply curve may shift to the right if:

productivity increases.

Mandatory outlays:

require changes in existing laws if those outlays are to be altered

The austiersy measure imposed on Greece in 2011:

requires refers to Greece's large public sector in an attempt to decrease its debt and help

(Figure: An increase in Aggregate Demand) The short-run equilibrium at Y2 and P2 .

results in an inflationary gap

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to ______ domestic consumption to ________ and domestic production to ________.

rise fall rise

An inflationary gap is automatically closed by _________ wages that shift the ______.

rising: SRAS curve leftward

An inflationary gap is automatically closed by _______ wages that shift the ______.

rising; SRAS curve leftward

Which of the following would NOT be considered to be one of the four main types of financial assets?

robots on an assembly line

The savings-investment spending identity says that:

savings and investment spending are always equal for the economy as a whole.

In a simple closed economy, all investment spending must come from:

savings.

If each cabinetmaker could be hired at no cost, how many workers would your firm employ?

seven

The figure monopolistic competition VI illustrates a firm in the ...; in the... demand and marginal revenue curves will shift to the...

short run; long run; right

An inflationary gap causes:

short-run aggregate supply to gradually decrease.

A business cycle is:

short-run alteration between economic upturns and downturns

If a Florida strawberry wholesaler operates in a perfectly competitive market, that wholesaler will have a ________ share of the market, and consumers will consider her strawberries to be ________. Therefore, ________ advertising will take place in this market.

small: standardized; little, if any

Investment spending is:

spending on productive physical capital.

The average total cost curve has a U-shape because the ______ effect is dominant at low levels of output, and the _________effect is dominant at high levels of output.

spreading; diminishing returns

(Figure: Policy Alternatives) If the economy is in equilibrium at Y1 at panel a it is experiencing

stagflation

A share in the ownership of a company held by a shareholder is considered a(n):

stock

In international finance, speculation involves,

taking a risk by purchasing or selling a foreign currency asset, holding it in anticipation of a rate increase

Which of the following index includes smaller companies, often in the technology sector?

the NASDAQ

The wealth effect explains why:

the aggregate demand curve slopes downward since changes in aggregate price levels change the purchasing power of peoples' assets.

If in an open economy, a country imports more than it exports and the government budget deficit increases:

the change in interest rates is ambiguous, but the amount of borrowing will increase

Value added in national income accounts refers to:

the difference in the final price and the value of inputs purchased

You own a small deli that produces sandwiches, soups, and other items for customers in your town. Which of the following ... input for the production function at your deli.

the dining room where customers eat their meals

If a euro costs 1.25 and it costs 1.50 tomorrow, what has happened to the dollar-euro exchange rate?

the dollar has depreciated and the euro has appreciated

Included in GDP would be:

the dollar value of a new car exported during the period.

All of the following are examples of bank regulations designed to prevent bank runs EXCEPT: A) reserve requirements. B) deposit insurance. C) the Federal funds rate. D) capital requirements.

the federal funds rate

In the long run:

the firm has time to change the level of all inputs

The difference between the spot contract and a forward contract is that

the former is a contract to be settled immediately, and the latters is a contract to be settled at a future agreed-upon date

There can be an opportunity for covered interest arbitrage if

the forward/spot rate difference is either larger or smaller in percentage terms than difference in the interest rate on two currencies

Which of the following policies will shift the AD curve to the left?

the government increases tax rates in the economy

Potential output is:

the level of real GDP that the economy would produce if all prices, including nominal wages, were fully flexible.

All of the following are reasons the average worker in the United States today produces more than her or his counterpart a century ago EXCEPT that:

the modern worker works longer hours.

Look at the table production possibilities for machinery and petroleum. The table shows the number of units of machinery each country would have to forgo in order to produce additional petroleum, assuming constant costs at its current level of production. Based on the information on the table, it is true that:

the opportunity cost of machinery is less in the united states than in mexico

If the U.S interest rate is 4% per year and the U.K interest is 9% per year, which of the following statements is TRUE?

the pound will depreciate 5% in one year

Suppose you manage a corner grocery store. IF peanut butter is an inferior good, what do you suppose would happen to the price and quantity sold of peanut butter as income fall during an economic recession?

the price and quantity would both increase

Changes in aggregate demand can be caused by changes in:

the stock of physical capital

Long-run growth is represented by:

the sustained upward trend in the economy's overall output per person that generates higher incomes and a higher standard of living for its members

A marginal tax rate is:

the tax rate paid on a worker's next dollar of income.

According to the table, the country with the highest average yearly budget deficit over the time period as a percentage of the yearly increase in GDP is:

the united states

In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one hour, Japan can produce 30 tons of steel or 275 automobiles. This information implies that:

the united states has a comparative advantage in the production of automobiles

An oligopoly is characterized as an industry in which:

there are a few firms, each producing a differentiated or similar product.

If the economy is at equilibrium above potential output:

there is an inflationary gap; and contractionary fiscal policy is appropriate

Banks don't lend out all of the funds placed in their hands by depositors because:

they have to satisfy any depositor who wants to withdraw funds

The table shows how many cabinets your firm can produce with different numbers of workers. After which worker does the firm begin to experience diminishing returns to labor.

third

For Heidi, the marginal cost of producing one additional photograph equals the change in _____ divided by the change in the _____ of photographs.

total cost, number of photographs

Total revenue is a firm's

total output times the price at which it sells that output.

An open economy

trades goods and services with other economies

when it is possible to trade two separate currencies for a common third currency, economists refer to profit opportunities as:

triangular arbitrage

The cost associated with variable inputs are _________, costs and the costs associated with _______ inputs are ________ costs.

variable; fixed ;fixed

Computers started to become more common in the 1970s in America. From this time until the mid-1990s

very little happened to productivity.

The short-run aggregate supply curve is positively sloped because:

wages are sticks or don't readily adjust to changes in economic conditions in the short run.

The interest rate effect of a change in the aggregate price level occurs:

when a higher price level decreases the purchasing power of money resulting in an increase in interest rate

Diminishing returns to physical capital suggests that:

when the physical amount of human capital per worker and the state of technology are fixed, successive increases in the amount of physical capital per worker lead to a smaller increase in productivity.

If the firm shown in the figure monopolistic competitor produces as its profit-maximizing level, it will produce:

with excess capacity, since that output level is on the downward-sloping portion of the ATC curve

The Market for computers In the figure producer surplus, without international trade would be area or ares

The model of monopolistic competition can characterize the market for plumbing services in a city. This market is initially in long-run equilibrium, but then there is an increase in demand for plumbing services. We expect that in the long run. the economic profits of typical firms in the industry.

Economics exam

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