41) If x increases whenever y decreases, then x and y are A) not related. B) positively related. C) directly related. D) negatively related. E) related but whether positively or negatively related depends on whether the x variable or the y variable is plotted on the vertical axis.   42) Whenever one variable increases, another variable decreases. The two variables are A) definitely […]

    41) If x increases whenever y decreases, then x and y are A) not related. B) positively related. C) directly related. D) negatively related. E) related but whether positively or negatively related depends on whether the x variable or the y variable is plotted on the vertical axis.   42) Whenever one variable increases, another variable decreases. The two variables are A) definitely […]

  11.3   The Equilibrium Interest Rate   Refer to the information provided in Figure 11.3 below to answer the questions that follow.     Figure 11.3   1) Refer to Figure 11.3. There is a surplus of money and the interest rate will decline at an interest rate of A) 0%. B) 2%. C) 5%. D) 6%.   2) Refer to Figure 11.3. There is […]

  121) If, when the price falls, total revenue increases, demand is A) elastic. B) inelastic. C) unit elastic. D) perfectly inelastic. E) None of the above answers is correct because total revenue always decreases when the price of the good falls. 122) The price elasticity of demand for an agricultural product is 0.4. This value means that, when the quantity decreases 1 percent, the […]

  41) If the Fed is concerned about a possible recession, it ________ the federal funds rate, which ________ the quantity of reserves and ________ the amount of bank loans. A) raises; decreases; decreases B) lowers; decreases; decreases C) lowers; increases; decreases D) raises; increases; increases E) lowers; increases; increases 42) The Fed is concerned about inflation. Its policy will ________ U.S. short-term interest rates […]

  41) The demand for money (MD) function defines the relationship between A) interest rates and bond prices. B) inflation and bond prices. C) interest rates and financial assets. D) the quantity of money demanded and the price level. E) the quantity of money demanded and the rate of interest. 42) Refer to Figure 28-1. A rightward shift of the money demand curve can be […]

  Multiple Choice – Section 03: The Welfare Cost of Monopolies 1.Monopoliesareinefficientbecausethey (i)eliminatebarrierstoentry. (ii)pricetheirproductatalevelwheremarginalrevenueexceedsmarginalcost. (iii)restrictoutputbelowthesociallyefficientlevelofproduction. a.(i)and(ii)only b.(ii)and(iii)only c.(iii)only d.(i),(ii),and(iii) 2.Amonopolistproduces a.morethanthesociallyefficientquantityofoutputbutatahigherpricethaninacompetitivemarket. b.lessthanthesociallyefficientquantityofoutputbutatahigherpricethaninacompetitivemarket. c.thesociallyefficientquantityofoutputbutatahigherpricethaninacompetitivemarket. d.possiblymoreorpossiblylessthanthesociallyefficientquantityofoutput,butdefinitelyatahigherpricethaninacompetitivemarket. 3.”Monopolistsdonotworryaboutefficientproductionandminimizingcostssincetheycanjustpassalonganyincreaseincoststotheirconsumers.”Thisstatementis a.false;priceincreaseswillmeanfewersales,whichmaylowerprofits. b.true;thisistheprimaryreasonwhyeconomistsbelievethatmonopoliesresultineconomicinefficiency. c.false;themonopolistisapricetaker. d.true;consumersinamonopolymarkethavenosubstitutestoturntowhenthemonopolistraisesprices. 4.Deadweightloss a.measuresmonopolyinefficiency. b.exceedsmonopolyprofits. c.equalsmonopolyprofits. d.equalsmonopolyrevenuesminusprofits. 5.Amonopolyisaninefficientwaytoproduceaproductbecause a.itcanearnbothshort-runandlong-runprofits. b.itfacesadownward-slopingdemandcurve. c.thecosttothemonopolistofproducingonemoreunitexceedsthevalueofthatunittopotentialbuyers. d.itproducesasmallerlevelofoutputthanwouldbeproducedinacompetitivemarket. 6.Thedeadweightlossassociatedwithamonopolyoccursbecausethemonopolist a.maximizesprofits. b.producesanoutputlevellessthanthesociallyoptimallevel. c.producesanoutputlevelgreaterthanthesociallyoptimallevel. d.equatesmarginalrevenuewithmarginalcost. 7.Theeconomicinefficiencyofamonopolistcanbemeasuredbythe a.numberofconsumerswhoareunabletopurchasetheproductbecauseofitshighprice. b.excessprofitgeneratedbymonopolyfirms. c.poorqualityofserviceofferedbymonopolyfirms. d.deadweightloss. 8.Theeconomicinefficiencyofamonopolistcanbemeasuredbythe a.deadweightloss. b.valueoftheunrealizedtradesthatcouldbemadeifthemonopolistproducedthesocially-efficientoutput. c.areaabovemarginalcostbutbeneathdemandfromthemonopolyoutputtothesocially-efficientoutput. d.Alloftheabovearecorrect. 9.Monopolypricingpreventssomemutuallybeneficialtradesfromtakingplace.Theseunrealized,mutuallybeneficialtradesare a.oflittleconcerntosociety. b.adeadweightlosstosociety. c.asunkcosttosociety. d.alsoobservedincompetitivemarkets. 10.Monopolypricingpreventssomemutuallybeneficialtradesfromtakingplace.Theseunrealized,mutuallybeneficialtradesare a.notaconcernifamarketisperfectlycompetitive. b.adeadweightlosstosociety. c.afunctionofthereductioninthequantityproducedbyamonopolistincomparisontoacompetitivemarket. d.Alloftheabovearecorrect.   […]

    31) Public sector unions differ from their private sector counterparts in that most public sector unions: A) require union membership. B) are organized by location. C) have less bargaining power. D) have no restrictions against striking.   32) Which country has the highest per capita union representation? A) Great Britain B) Denmark C) Sweden D) Italy 33) Coralie lives in France and works […]

  21.ClassicaleconomistDavidHumeobservedthatasthemoneysupplyexpandedaftergolddiscoveriesittooksometimeforpricestoriseandinthemeantimetheeconomyenjoyedhigheremploymentandproduction.Thisisinconsistentwithmonetaryneutralitybecause a.monetaryneutralitywouldmeanthatneitherpricesnorproductionshouldhaverisen. b.monetaryneutralitywouldmeanthatproductionshouldhaverisen,butpricesshouldnothave. c.monetaryneutralitywouldmeanthepricesshouldhaverisen,butproductionshouldnothavechanged. d.monetaryneutralitywouldmeanthatpricesandproductionshouldbothhavefallen. 22.ClassicaleconomistDavidHumeobservedthatasthemoneysupplyexpandedaftergolddiscoveries a.pricesandoutputbothincreasedimmediately. b.pricesincreasedimmediatelywhileoutputremainedunchanged. c.ittooktimeforpricestorise;inthemeantimeoutputwaslower. d.ittooktimeforpricestorise;inthemeantimeoutputwashigher. 23.Realandnominalvariablesarehighlyintertwined,andchangesinthemoneysupplychangerealGDP.Mosteconomistswouldagreethatthisstatementaccuratelydescribes a.boththeshortrunandthelongrun. b.theshortrun,butnotthelongrun. c.thelongrun,butnottheshortrun. d.neitherthelongrunnortheshortrun. 24.Inordertounderstandhowtheeconomyworksintheshortrun,weneedto a.studytheclassicalmodel. b.studyamodelinwhichrealandnominalvariablesinteract. c.understandthat“moneyisaveil.” d.understandthatmoneyisneutralintheshortrun. 25.Wedepartfromtheassumptionsofclassicaleconomicswhenwefocusontherelationshipbetween a.thequantityofoutputandthepricelevel. b.thequantityofoutputandtheunemploymentrate. c.thepricelevelandtheinflationrate. d.inflationandthenominalinterestrate. 26.Themodelofshort-runeconomicfluctuationsfocuseson a.thepricelevelandrealGDP. b.productivityandeconomicgrowth. c.theneutralityofmoneyandinflation. d.Noneoftheaboveiscorrect. 27.Whenlookingatagraphofaggregatedemand,whichofthefollowingiscorrect? a.Therearenominalvariablesonboththeverticalandthehorizontalaxes. b.Therearerealvariablesonboththeverticalandhorizontalaxes. c.Thevariableontheverticalaxisisnominal;thevariableonthehorizontalaxisisreal d.Thevariableontheverticalaxisisreal;thevariableonthehorizontalaxisisnominal 28.Theaveragepricelevelismeasuredby a.thepriceofoil. b.therateofinflation. c.thenominalinterestrate. d.theGDPdeflator. 29.Theaggregatedemandandaggregatesupplygraphhas a.thepricelevelonthehorizontalaxis.ThepricelevelcanbemeasuredbytheGDPdeflator. b.thepricelevelonthehorizontalaxis.ThepricelevelcanbemeasuredbyrealGDP. c.thepricelevelontheverticalaxis.ThepricelevelcanbemeasuredbytheGDPdeflator. d.thepricelevelontheverticalaxis.ThepricelevelcanbemeasuredbyGDP. 30.Theaggregatedemandandaggregatesupplygraphhas a.quantityofoutputonthehorizontalaxis.OutputcanbemeasuredbytheGDPdeflator. b.quantityofoutputonthehorizontalaxis.OutputcanbemeasuredbyrealGDP. c.quantityofoutputontheverticalaxis.OutputcanbemeasuredbytheGDPdeflator. d.quantityofoutputontheverticalaxis.OutputcanbemeasuredbyrealGDP.    

  41) What solution did Andersen Consulting provide to the Moscow Bread Company to solve the problem of stale bread? A) Deliver the bread frozen. B) Package the bread in plastic bags. C) MBC should convert a paperless office to cut red tape. D) Deliver the bread sliced rather than in whole loaf form. E) Use paper packaging for bread. 42) In exchange for a […]