Micro final

The present discounted value of a future payment can be calculated using which of the following formulas?

(Future payment) ÷ [(1 + Interest rate) N].

A bond is

A certificate acknowledging a debt and the amount of interest to be paid each year until repayment; an IOU.

A tax imposed on imported goods is

A tariff.

The opportunity cost of working is the

Amount of leisure time that must be given up in the process.

Capital gains are

An increase in the market value of an asset.

Depreciation of the dollar refers to

An increase in the price of foreign currency in terms of dollars.

Appreciation of the U.S. dollar can be caused by

Appreciation of the U.S. dollar can be caused by

The demand for labor and other factors of production typically decline in a recession because those factors

Are derived from the demand for final output, which also declines in a recession.

Exemptions and deductions included in the tax laws

Are designed to encourage specific economic activities.

If the marginal tax rate is too high, it can cause all of the following except

Businesses to produce more.

Specialization in production and then trading with other countries

Change the mix of output for each country and increase total world output.

If the government imposed a green tax on gasoline, the amount of air pollution should

Decrease as people switch to more fuel-efficient cars, find less fuel intensive alternatives, and drive less.

The supply of loanable funds is determined by all of the following except

Demand for loanable funds.

The demand for dollars in the foreign exchange market

Depends in part on the foreign demand for U.S. goods.

the risk premium is the

Difference in rates of return on safe and risky investments.

An increase in the price of the U.S. dollar in terms of euros will cause, ceteris paribus,

European goods to be cheaper to residents of the United States.

By altering market incentives, the government tries to shift

External costs to the producer

Comparative advantage in production is achieved by

Having a lower opportunity cost of producing a good relative to that of other countries

Which of the following generates demand for foreign currencies?

Imports of foreign goods by firms located in the United States.

The labor supply curve starts to bend backward once the

Income effect exceeds the substitution effect.

An emission charge

Increases private marginal cost and reduces output

A firm should hire an additional worker as long as the wage rate is

Less than or equal to the MRP.

Without trade, a country's consumption possibilities are

Limited to its domestic production possibilities.

If a greater portion of income is distributed to those in the highest income quintile, the

Lorenz curve sags below the diagonal line of absolute equality.

If a firm that pollutes wants to maximize profits, it will produce where

Marginal revenue and private marginal cost are equal.

If the wage rate increases, there will be a

Movement up the labor supply curve to the right

The effective tax rate is

Never higher than the nominal tax rate.

The exchange rate is the price of

One currency in terms of another.

The intersection of the demand for loanable funds and the supply of loanable funds determines the

Prevailing interest rate.

External costs occur because

Private costs do not reflect the full costs to society.

The U.S. federal income tax is classified as a

Progressive tax only.

Tradable pollution permits, when compared to command-and-control options, tend to

Provide the same amount of pollution abatement at a lower cost.

A primary purpose of tradable pollution permits is to

Reduce the cost of pollution control.

Financial intermediaries make the allocation of resources more efficient by Multiple Choice

Reducing search and information costs in the financial markets.

A tax is progressive if it takes a

Smaller fraction of income as income falls.

Dividends are

The amount of corporate profit paid out for each share of stock.

A beggar-thy-neighbor policy is

The imposition of trade barriers to increase domestic employment.

Market failure exists whenever

The market generates a suboptimal outcome of income distribution.

The advantage to a corporation of issuing bonds instead of stock is that

The owners keep control of the company.

The net balance of payments is

The sum of the current account balance and the capital account balance.

Social costs are

The total resource costs of an economic activity.

Exports minus imports define a country's

Trade balance.

The number of hours that a worker is willing to work is determined by the trade-off between the increasing

Value of leisure time and the decreasing marginal utility of income.

Taxes paid divided by total income is the

effective tax rate

An economy with nominal tax rates significantly higher than effective tax rates has

loopholes in the tax rate

As long as interest-earning opportunities exist, present dollars are worth

more than future dollars

The U.S. tax system as a whole is basically

proportional

in general, state and local taxes are

regressive

For an upward-sloping labor supply curve, the quantity of labor supplied varies directly, ceteris paribus, with

the wage rate