Econ
A graph Question... If the monopoly firm is NOT allowed to price discriminate, then dead weight loss amounts to
$1,000
The equilibrium surplus is
$200
If the MPC of an economy is .90 and the economy has a horizontal aggregate supply curve, then an increase in investment spending of $50 million will increase total income by
$500 million
If the MPC=.85 then the government purchases multiplier is about
6.67
It would be possible for the consumer to reach i2 if
All of the above would be correct. The price of Y decreases The price of X decreases Income Increases
Which of the following shifts aggregate demand to the right
An increase in the money supply.
The price elasticity of demand measures
Buyers' responsiveness to a change in the price of a good.
Optimal choice on the consumers budget constraint will be point
C or answer choice B
Assume that the supply of gas is relatively inelastic and the supply of wheat is relatively elastic. Compared to the decline in quantity from a similar percentage tax on wheat, we would expect a tax on gasoline to cause the quantity of gas produced to
Change less
Which of the following scenarios best illustrates the concept of cyclical unemployment
Marian loses her job because of a recession
Discouraged workers are included in the
NOT in the labor force category
The amount of Tax revenue associated with the tax is equal to
P3 A C P1
Let P=price; MR = marginal revenue; and MC = marginal cost. For a profit-maximizing monopolist,
P>MR=MC
In which of the following cases is the Coase theorem most likely to solve the externality?
Richard is annoyed because his roommate smokes.
To define a monopoly, we cite the following characteristic/characteristics:
The firm is the sole seller of its product
Which of the following would NOT shift the demand curve for mp3 players?
a decrease in the price of mp3 players
The CPI measures
average change in prices paid by urban consumers for a typical market basket of consumer goods and services
Nominal GDP is another term for
current dollar GDP
If people begin to hold more cash, the money multiplier process will
decrease in intensity
Paper money in the United States is
entirely fiat money
A free-rider problem exists for any good that is NOT
excludable
When a banker accepts a deposit of $1,000 in cash and puts $200 aside as required reserves and then makes a loan of $800 to a new borrower, this set of transactions
increases money supply by $800
A negative externality will cause a private market to produce
more than is socially desirable
Increases in government spending or tax cuts normally
move interest rates higher.
Public goods are both
nonrival and nonexcludable
The Tragedy of the Commons
occurs most often with common resources
Research into new technologies
provides positive externalities because it creates knowledge others can use
The aggregate supply curve slopes upward because firms
purchase inputs whose prices rise as output rises
Which of the following items is NOT included in gross private domestic investment
purchases of common stock
From 2008-2009 the Federal reserve created a very large increase in the money supply. According to the short-run phillips curve this policy should have
raised inflation and reduced unemployment
In periods of generally rising prices
real GDP will grow slower than nominal GDP
In 2009 congress and President Obama approved tax cuts and increased government spending. According to the short-run Phillips curve these policies should have
reduced unemployment and raised inflation.
The slope of the budge constraint is determined by the
relative price of commodities represented on the axes
Suppose that a tax is placed on DVDs. If the seller ends up paying the majority of the tax we know that the
supply curve is more inelastic than the demand curve
The government buys new weapons systems. The manufactures of weapons pay their employees. The employees spend this money on goods and services. The firms from which the employees buy the goods and services pay their employees. This sequence of events illustrates
the multiplier effect.
The unemployment rate is equal to
the number of unemployed divided by the labor force
A price floor is not binding if
the price floor is lower than the equilibrium market price
An increase in expected inflation shifts
the short-run phillips curve right.
Suppose the Fed is trying to reduce inflation. Fed's policy is most effective
when aggregate supply is very steep