101) Refer to Figure 28-4. The economy begins in equilibrium at E0. Now consider an expansion of the money supply. The initial effect is A) a shift of the AD curve to AD1 and an increase in real GDP to Y1. B) a shift of the AS curve to AS1 and a decrease in real GDP to Y2. C) a shift of the AD […]

  71) The United States’ growing trade deficit reflects a number of factors which exclude: A) increased imports from China. B) a seemingly insatiable consumer demand for imported goods. C) the enormous cost of military operations in the Middle East. D) the services trade surplus. E) record goods sales to developing countries. 72) The fastest-growing sector of world trade includes: A) travel and entertainment. B) […]

  18.3   Game Theory   1) The tool that economists use to analyze the mutual interdependence of oligopolies is A) economies of scale. B) the four-firm concentration ratio. C) game theory. D) the HHI. E) the efficient scale.   2) Game theory is the tool that economists use to analyze strategic behavior, which is behavior that takes into account the ________ behavior of others and […]

  Multiple Choice – Section 01A: The Economist as Scientist 1.Thefieldofeconomicsistraditionallydividedintotwobroadsubfields, a.nationaleconomicsandinternationaleconomics. b.consumereconomicsandproducereconomics. c.privatesectoreconomicsandpublicsectoreconomics. d.microeconomicsandmacroeconomics. 2.Microeconomicsisthestudyof a.howmoneyaffectstheeconomy. b.howindividualhouseholdsandfirmsmakedecisions. c.howgovernmentaffectstheeconomy. d.howtheeconomyasawholeworks. 3.Macroeconomicsisthestudyof a.individualdecisionmakers. b.internationaltrade. c.economy-widephenomena. d.marketsforlargeproducts. 4.Amicroeconomist—asopposedtoamacroeconomist—mightstudy a.theeffectofanationalhealthcareprogramonthenation’sunemploymentrate. b.theeffectofnewregulationsonproductioninthepulpandpaperindustry. c.theeffectofchangesininterestratesongrossdomesticproduct. d.thegrowthrateofproductionintheeconomy. 5.Whichofthefollowingareasofstudytypifiesmicroeconomicsasopposedtomacroeconomics? a.theimpactofminimum-wagelawsonemploymentinthefastfoodindustry b.theeffectofchangesinhouseholdsavingratesonthegrowthrateofnationalincome c.theimpactoffastermoneygrowthontherateofinflation d.acomparisonofalternativetaxpoliciesandtheirrespectiveimpactsontherateofthenation’seconomicgrowth 6.Whichofthefollowingwouldlikelybestudiedbyamicroeconomistratherthanamacroeconomist? a.theeffectofforeigndirectinvestmentoneconomicgrowth b.theeffectofasalestaxonthecigaretteindustry c.theeffectofaninvestmenttaxcreditontheeconomy’scapitalstock d.theeffectofawarongovernmentspending 7.Amacroeconomist—asopposedtoamicroeconomist—mightstudytheeffectof a.changesinthemoneysupplyontheinflationrate. b.anincreaseinthegastaxonfuelconsumption. c.atechnologicaladvanceonthenaturalgasindustry. d.ahurricaneonpricesintheorangeindustry. 8.Amacroeconomist-asopposedtoamicroeconomist-wouldstudy a.theeffectsofrentcontrolonhousinginNewYorkCity. b.theeffectsofforeigncompetitionontheUSautoindustry. c.theeffectsofborrowingbythefederalgovernment. d.theeffectsofraisingthegasolinetaxontransitridership. 9.Whichofthefollowingareasofstudytypifiesmacroeconomicsasopposedtomicroeconomics? a.theeffectsofrentcontrolontheavailabilityofhousinginNewYorkCity b.theeconomicimpactoftornadoesoncitiesandtownsinOklahoma c.howtariffsonshoesaffectstheshoeindustry d.theeffectontheeconomyofchangesinthenation’sunemploymentrate 10.Whichofthefollowingwouldlikelybestudiedbyamacroeconomistratherthanamicroeconomist? a.theeffectofanincreaseinthealcoholtaxonthemarketforbeer b.theeffectofforeigncompetitiononthedomesticautoindustry c.theeffectofapricewarintheairlineindustry d.theeffectofanincreaseintheminimumwageonaneconomy’soverallrateofunemployment 11.Whichofthefollowingstatementsbestcapturestherelationshipbetweenmicroeconomicsandmacroeconomics? a.Forthemostpart,microeconomistsareunconcernedwithmacroeconomics,andmacroeconomistsareunconcernedwithmicroeconomics. b.Microeconomistsstudymarketsforsmallproducts,whereasmacroeconomistsstudymarketsforlargeproducts. c.Microeconomicsandmacroeconomicsaredistinctfromoneanother,yettheyarecloselyrelated. d.Microeconomicsisorientedtowardpolicystudies,whereasmacroeconomicsisorientedtowardtheoreticalstudies. […]

  103) If the price elasticity of demand for gasoline equals 0.3, then an increase in the price of a gallon of gasoline from $3.70 to $3.90 A) decreases total revenue. B) increases total revenue. C) leads to no change in total revenue. D) makes the demand for gasoline elastic. E) Both answers B and D are correct.   104) If a Pizza Hut raises […]

  51) Rayburn Reed is a highly talented photographer. He has chosen to specialize in photography because of all of the following except A) he obviously has a comparative advantage in photography. B) his opportunity cost of pursuing another career is very low. C) for him, this is the most lucrative way to purchase the products that he wants to consume. D) his photographs are […]

    31) Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books? A) postage and supplies B) travel C) rent D) wages and salaries   32) Which of the following statements is false? A) An implicit cost is a nonmonetary opportunity cost. B) Economic costs include both accounting costs and implicit […]

  21. Which of the following statements regarding activity-based costing (ABC) is true?  A. Resources consume activities and products consume costs. B. Activities consume resources and products consume activities. C. Costs consume activities and products cause costs. D. Resources consume activities and activities cause costs.   22. Which of the following is a key feature of activity-based costing?  A. Overhead costs are assigned on the basis of volume. B. Overhead costs are assigned […]

    21) Which of the following is true? A) Real GDP fluctuates around potential GDP. B) Potential GDP fluctuates around nominal GDP. C) Nominal GDP fluctuates around real GDP. D) Real GDP never equals potential GDP. E) The Okun Gaps are much larger than the Lucas Wedge.   22) Over the business cycle, real GDP fluctuates around A) the business cycle trough. B) the […]

  Article Summary In an August 2013 speech from the Lincoln Memorial, President Obama was expected to emphasize that increased economic equality is needed to improve racial equality. Economic gaps based on race have endured for 50 years, with the differences in unemployment rates between blacks and whites remaining virtually unchanged and the gap in wealth actually increasing. “If you look at 50 years after […]