11) The above figures show the market for HD televisions. If cable television providers lower the price of providing HD cable service, which figure shows the effect of this change ? A) Figure A B) Figure B C) Figure C D) Figure D E) None of the figures represent this change. 12) The above figures show the market for HD televisions. If the […]

  8.1   Potential GDP 1) The Classical macroeconomic model proposes that A) government intervention is required to help the economy reach its potential. B) real GDP equals potential GDP as long as inflation equals zero. C) changes in the quantity of money are critical in driving economic growth. D) markets work efficiently to produce the best macroeconomic outcomes. E) socialism produces the most efficient economic […]

  4.5   Government Policies to Deal with Externalities 1) Who was the economist who first proposed that governments use taxes and subsidies to correct for externalities?  A) Ronald Coase B) A. C. Pigou C) Adam Smith D) David Hume 2) What does the phrase “internalizing an external cost” mean? A) limiting the extent to which domestic firms can outsource production B) prohibiting economic activities that […]

  29) Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve.   As a result A) both the equilibrium price and quantity of DVD players will decrease. B) the equilibrium price of DVD players will decrease; the equilibrium quantity may increase or decrease. C) the equilibrium price of […]

  21) The upward trend in the U.S. labor force participation rate the past 50 years is explained by A) the increase in the population. B) the increase in the male labor force participation rate. C) the increase in the number of discouraged workers. D) the increase in the female labor force participation rate. E) Both answers B and D are correct. 22) The total […]

  51) Which of the following is true? A) For an inferior good, when income increases, the demand curve shifts leftward. B) If the price of a substitute rises, the demand curve shifts leftward. C) If people expect the price of a good will rise in the future, the demand curve shifts leftward. D) An increase in population shifts the demand curve leftward. E) An […]

  14.3   Expenditure Multipliers 1) The expenditure multiplier explains how a change in A) real GDP leads to a change in autonomous expenditure. B) induced expenditure leads to a change in real GDP. C) autonomous expenditure leads to a change in real GDP. D) real GDP leads to a change in induced expenditure. E) induced expenditure leads to a change in autonomous expenditure. 2) The […]

    91. Which of the following statements is most likely true if Red Inc. has an operating leverage of 2.0 while Blue Corp. has an operating leverage of 1.4?  A. Red Inc. is selling its products for a higher sales price than Blue Corp. B. Red Inc.’s net income will be less sensitive to a change in sale volume than Blue Corp. C. Blue Corp.’s fixed costs in […]

  61) Exchange rate changes are A) not very volatile because of offsetting changes in demand and supply. B) very volatile because of government intervention in the market. C) not very volatile because of government intervention. D) very volatile because supply and demand changes reinforce each other. E) infrequent because the exchange rate rarely changes. 62) In the foreign exchange market, the exchange rate is […]

  211.AssumemostathleticapparelboughtbyU.S.consumersisimportedfromothernations.Ifallelseisconstant,anincreaseinthepriceofforeign-madeathleticapparelwillcausetheU.S. a.consumerpriceindexandGDPdeflatortoincreasebyexactlythesameamount. b.GDPdeflatortoincreasemorethantheconsumerpriceindex. c.consumerpriceindextoincreasemorethantheGDPdeflator. d.GDPdeflatortodecreaselessthantheconsumerpriceindex. 212.Ingeneral,ifaconsumergoodisproduceddomesticallyandconsumeddomestically,adecreaseinitspricewillhavewhichofthefollowingeffects? a.TheconsumerpriceindexwilldecreaserelativelymorethanwilltheGDPdeflator. b.TheconsumerpriceindexandtheGDPdeflatorwilldecreasebythesameamount. c.TheconsumerpriceindexwilldecreaserelativelylessthanwilltheGDPdeflator. d.OnecannotgeneralizeaboutthedecreaseintheconsumerpriceindexrelativetothedecreaseintheGDPdeflator. 213.Ingeneral,ifaconsumergoodisproduceddomesticallyandconsumeddomestically,anincreaseinitspricewillhavewhichofthefollowingeffects? a.TheconsumerpriceindexwillincreaserelativelymorethanwilltheGDPdeflator. b.TheconsumerpriceindexandtheGDPdeflatorwillincreasebythesameamount. c.TheconsumerpriceindexwillincreaserelativelylessthanwilltheGDPdeflator. d.OnecannotgeneralizeabouttheincreaseintheconsumerpriceindexrelativetotheincreaseintheGDPdeflator. 214.Thepriceofmilkincreasesdramatically,causinga0.5percentincreaseintheCPI.ThepriceincreasewillmostlikelycausetheGDPdeflatortoincreaseby a.morethan0.5percent. b.lessthan0.5percent. c.0.5percent. d.Noneoftheaboveiscorrect;thisparticularpriceincreasewillnotaffecttheGDPdeflator. 215.TheconsumerpriceindexandtheGDPdeflatoraretwoalternativemeasuresoftheoverallpricelevel.Which ofthefollowingstatementsaboutthetwomeasuresiscorrect? a.Thetwomeasuresareconstructeddifferently,buttheyalwaysindicatethesameinflationrate. b.Thesubstitutionbiasappliesequallytobothmeasures. c.AchangeinthepriceofKoreantelevisionsisreflectedintheU.S.consumerpriceindexbutnotintheU.S.GDPdeflator. d.Alloftheabovearecorrect. 216.IfthepriceofItalianshoesimportedintotheUnitedStatesincreases,then a.boththeGDPdeflatorandtheconsumerpriceindexwillincrease. b.neithertheGDPdeflatornortheconsumerpriceindexwillincrease. c.theGDPdeflatorwillincrease,buttheconsumerpriceindexwillnotincrease. d.theconsumerpriceindexwillincrease,buttheGDPdeflatorwillnotincrease. 217.IfthepriceofSpanisholivesimportedintotheUnitedStatesdecreases,then a.boththeGDPdeflatorandtheconsumerpriceindexwilldecrease. b.neithertheGDPdeflatornortheconsumerpriceindexwilldecrease. c.theGDPdeflatorwilldecrease,buttheconsumerpriceindexwillnotdecrease. d.theconsumerpriceindexwilldecrease,buttheGDPdeflatorwillnotdecrease. 218.AdecreaseinthepriceoflargetractorsimportedintotheUnitedStatesfromRussia a.leavestheGDPdeflatorunchangedbutdecreasestheconsumerpriceindex. b.decreasestheGDPdeflatorbutleavestheconsumerpriceindexunchanged. c.decreasesboththeGDPdeflatorandtheconsumerpriceindex. d.leavesboththeGDPdeflatorandtheconsumerpriceindexunchanged. 219.SupposethatU.S.miningcompaniespurchaseGerman-madeoretrucksatareducedprice.Byitself,whateffectwillthispurchasehaveontheGDPdeflatorandontheconsumerpriceindex? a.TheconsumerpriceindexandtheGDPdeflatorwillbothfall. b.TheconsumerpriceindexandtheGDPdeflatorwillbothbeunaffected. c.Theconsumerpriceindexwillfall,andtheGDPdeflatorwillbeunaffected. d.Theconsumerpriceindexwillbeunaffected,andtheGDPdeflatorwillfall. 220.Most,butnotall,athleticapparelsoldintheUnitedStatesisimportedfromothernations.Ifthepriceofathleticapparelincreases,theGDPdeflatorwill a.increaselessthanwilltheconsumerpriceindex. b.increasemorethanwilltheconsumerpriceindex. c.notincrease,buttheconsumerpriceindexwillincrease. d.increase,buttheconsumerpriceindexwillnotincrease.