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