5 Steps To A 5 AP Microeconomics And Macroeconomics 1st Edition Eric Dodge - Solutions

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A student decides that, having already spent three hours studying for an exam, she should spend one more hour studying for the same exam.Which of the following is most likely true?(A) The marginal benefit of the fourth hour is certainly less than the marginal cost of the fourth hour.(B) The
Economics is best described as(A) the study of how scarce material wants are allocated between unlimited resources.(B) the study of how scarce labor can be replaced by unlimited capital.(C) the study of how decision makers choose the best way to satisfy their unlimited material wants with a scarce
Which of the following tax systems is designed to redistribute income from the wealthy to the poor?(A) A progressive tax system(B) A regressive tax system(C) A proportional tax system(D) An excise tax system(E) A tariff system
A negative externality from the production of a good exists when(A) the market overallocates resources to the production of this good.(B) spillover benefits are received by society.(C) the marginal social benefit equals the marginal social cost.(D) total welfare is maximized.(E) the marginal
Which of the following is the best example of a public good?(A) A visit to the orthodontist(B) A session at the tanning salon(C) A large pizza(D) A cup of coffee(E) The Hubble Space Telescope
If the above firm were a monopsonist, the wage would be _________ and employment would be _________ the competitive outcome.(A) greater than; less than(B) less than; greater than(C) greater than; greater than(D) less than; less than(E) less than; the same as
If a firm is hiring labor in the perfectly competitive labor market, the wage and employment will be(A) $4 and zero.(B) $5 and 10.(C) $6 and 20.(D) $7 and 30.(E) $8 and 40.
Which of the following statements is true about the demand for labor?(A) It rises if the price of a substitute resource falls and the output effect is greater than the substitution effect.(B) It falls if the price of the output produced rises.(C) It falls if the price of a complementary resource
Which of the following is most likely to decrease the demand for kindergarten teachers?(A) An increase in K–12 funding.(B) Increased immigration of foreign citizens and their families.(C) A decrease in the average number of children per household.(D) Subsidies given to college students who major
If the government wishes to regulate a natural monopoly so that it produces an allocatively efficient level of output, it would be(A) where price is equal to average total cost.(B) where marginal revenue equals marginal cost.(C) where normal profits are made.(D) where price is equal to average
The market structures of perfect competition and monopolistic competition share which of the following characteristics?(A) Ease of entry and exit in the long run(B) Homogenous products(C) Perfectly elastic demand for the firm’s product(D) Long-run positive profits(E) Rigid or “sticky” prices
Which of the following is necessarily a characteristic of oligopoly?(A) Free entry into and exit from the market(B) A few large producers(C) One producer of a good with no close substitutes(D) A homogenous product(E) No opportunities for collusion between firms
Which of the following statements describes a profit-maximizing monopolist?I. Output is set where marginal revenue equals marginal cost, creating an efficient allocation of economic resources.II. Deadweight loss is eliminated in the long run.III. Price is set above marginal cost, creating
If the perfectly competitive price is currently below minimum average total cost, we can expect which of the following events in the long run?(A) The price will rise and each firm’s output will fall as firms exit the industry.(B) Market equilibrium quantity will increase as firms exit the
If the market price of the output increases from P1 to P3, the profitmaximizing firm will(A) increase output from q1 to q4 and earn positive economic profits.(B) increase output from q1 to q4 and earn a normal profit.(C) increase output from q1 to q3 and earn positive economic profits.(D) increase
The shutdown point is seen at:(A) P0, q0(B) P1, q1(C) P2, q2(D) P3, q3(E) P3, q4
Monopolistic competition is often characterized by(A) strong barriers to entry.(B) a long-run price that exceeds average total cost.(C) a price that exceeds average variable cost, causing excess capacity.(D) a homogenous product.(E) many resources devoted to advertising?
At a quantity of 4, what is the total cost of production?(A) $7.50(B) $2.50(C) $15(D) $30(E) $14.50
The first unit of output to exhibit diminishing marginal productivity is the _____ unit.(A) 1st(B) 2nd(C) 3rd(D) 4th(E) 5th
The total fixed cost of producing a quantity of 4 is(A) $5.(B) $7.50.(C) $7.(D) $2.50.(E) $10.
In the short run, a firm employs labor and capital to produce gadgets. If the annual price of capital increases, what will happen to the short-run cost curves?(A) The marginal cost and average variable cost curves will shift upward.(B) The average fixed cost and average total cost curves will shift
If a consumer is not required to pay a monetary price for each cookie she consumes, the consumer will stop eating cookies when(A) the total utility from eating cookies is equal to zero.(B) the substitution effect outweighs the income effect from eating cookies.(C) the ratio of marginal utility
Which of the following describes the theory behind the demand curve?(A) Decreasing marginal utility as consumption rises.(B) Increasing marginal cost as consumption rises.(C) Decreasing marginal cost as consumption rises.(D) Increasing total utility at an increasing rate as consumption rises.(E)
If the price of firm A’s cell phone service rises by 5 percent and the quantity demanded for firm B’s cell phone service increases by 10 percent, we can say that(A) demand for firm B is price elastic.(B) supply for firm B is price elastic.(C) firms A and B are substitutes because the
Suppose the price of beef rises by 10 percent and the quantity demanded of beef falls by 20 percent. We can conclude that(A) demand for beef is price elastic and consumer spending on beef is falling.(B) demand for beef is price elastic and consumer spending on beef is rising.(C) demand for beef is
In Figure D.2, identify the area of consumer surplus.(A) 0ACB(B) 0FCB(C) AFC(D) ACE(E) FCE
If the demand for grapes increases simultaneously with an increase in the supply of grapes, we can say that(A) equilibrium quantity rises, but the price change is ambiguous.(B) equilibrium quantity falls, but the price change is ambiguous.(C) equilibrium quantity rises, and the price rises.(D)
The competitive market for gasoline is currently in a state of equilibrium. Which of the following would most likely increase the price of gasoline?(A) Household income falls.(B) Technology used to produce gasoline improves.(C) The price of subway tickets and other public transportation falls.(D)
Which of the following is true of equilibrium in a purely (or perfectly)competitive market for good X?(A) A shortage of good X exists.(B) The quantity demanded equals the quantity supplied of good X.(C) A surplus of good X exists.(D) The government regulates the quantity of good X produced at the
The graph in Figure D.1 shows a nation’s production possibility frontier(PPF) for the production of bread and butter. Which of the following is true?(A) The opportunity cost of producing more butter is a decreasing amount of bread.(B) Point X represents unemployed economic resources.(C) The
Which of the following statements describes a capitalist market economy?I. Economic resources are allocated based upon relative prices.II. Private property is fundamental to innovation, growth, and trade.III. A central government plans the production and distribution of goods.(A) I only(B) II
Scarcity is best defined as(A) the difference between limited wants and limited economic resources.(B) the difference between the total benefit of an action and the total cost of that action.(C) the difference between unlimited wants and limited economic resources.(D) the opportunity cost of
3. The competitive world price of steel is lower than the equilibrium price of steel in the U.S. A. In a correctly labeled graph, show the U.S. market for steel, being careful to clearly identify cach of the following: i. The domestic price of steel in the absence of imported steel. ii. The world
2. Assume that the European Union (EU) has expe- rienced lower interest rates while interest rates in the U.S. have remained relatively high. Explain how these lower real interest rates will affect each of the following:A. The purchase of EU assets by American investors. B. The international value
1. The U.S. cconomy is experiencing a severe reces- sion and the budget is currently balanced. A. One policy analyst advocates expansionary tax cuts, while another advocates expansion- ary government spending. Which of these policies will have the greatest impact on real domestic output? Explain
60. When a large increase in aggregate demand has an even greater increase in real GDP, economists refer to this as A. the balanced budget multiplier.B. the money multiplier.C. the foreign substitution effect.D. the wealth effect.E. the spending multiplier.
59. An import quota on foreign automobiles is expected to A. increase domestic efficiency, and protect domestic producers at the expense of foreign producers.B. decrease the price of automobiles, and protect domestic consumers at the expense of foreign producers.C. increase the price of
58. Which component of a nation’s balance of payments recognizes the purchase and sale of real and financial assets between nations?A. The capital account.B. The official reserves account.C. The current account.D. The trade deficit account.E. The trade surplus account.
57. If in a given year the government collects more money in net taxes than they spend, there would exist A. a current account deficit.B. a budget surplus.C. a trade surplus.D. a budget deficit.E. a trade deficit.
53. Suppose the economy is in long-run equilibrium when an expansionary supply shock is felt in the economy. This changes the short-run Phillips Curve, the short-run unemployment rate, and the long-run unemployment rate in which of the following ways?
52. Which of the following is a predictable advantage of expansionary monetary policy in a recession?A. It decreases aggregate demand so that the price level falls, which increases demand for the dollar.B. It increases investment, which increases aggregate demand and increases employment.C. It
51. Which of the following could limit the ability of the Fed to conduct expansionary monetary policy?A. Money demand is nearly perfectly elastic.B. Investment demand is nearly perfectly elastic.C. Banks make loans with all excess reserves.D. Households carry very little cash, holding their money
50. Holding all else equal, which of the following Fed monetary policies would be used to boost U.S. exports?A. Increasing the discount rate.B. Increasing the reserve ratio.C. Buying Treasury securities.D. Lowering tariffs.E. Removing import quotas.
49. Which of the following is likely to shift the longrun aggregate supply curve to the right?A. A nation that devotes more resources to nondurable consumption goods, rather than durable capital goods.B. Research that improves the productivity of labor and capital.C. More restrictive trade
48. Congress has embarked on another round of expansionary fiscal policy to boost employment and get reelected. As chair of the Fed, how would you reduce the “crowding out” effect and what macroeconomic problem might your policy exacerbate?A. Increase the reserve ratio, risking the devaluation
47. Suppose that Congress and the Fed agreed to combine fiscal and monetary policies to lessen the threat of inflation. Which of the following combinations would likely accomplish this goal?Fiscal Policy Monetary Policy A. Decrease taxes Increase the reserve ratio B. Decrease spending Buy Treasury
46. For a given level of government spending, the federal government usually experiences a budget _____ during economic _____ and a budget _____ during economic _____.A. deficit, recession, surplus, expansion B. surplus, recession, deficit, expansion C. deficit, expansion, surplus, recession D.
45. Of the following choices, which combination of fiscal and monetary policy would most likely reduce a recessionary gap?Fiscal Policy Monetary Policy A. Increase taxes Increase the reserve ratio B. Decrease spending Sell Treasury securities C. Decrease taxes Buy Treasury Securities D. Increase
44. Monetary tools of the Federal Reserve do not include which of the following choices?A. Buying Treasury securities from commercial banks.B. Changing tariffs and quotas on imported goods.C. Changing the reserve ratio.D. Changing the discount rate.E. Selling Treasury securities to commercial banks.
43. If the economy were experiencing a recessionary gap, choose the option below that would be an appropriate fiscal policy to eliminate the gap, and the predicted impact of the policy on real GDP and unemployment.Fiscal Policy Real GDP Unemployment A. Increase taxes Increase Decrease B. Decrease
42. The reserve ratio is .10 and Daddy Morebucks withdraws $1 million from his checking account and keeps it as cash in his refrigerator. How does this withdrawal potentially impact money in circulation?A. Decreases by $9 million.B. Decreases by $1 million.C. Decreases by $100,000 D. Increases by
41. Which of the following insures the value of the U.S. dollar?A. The Euro and other foreign currencies held by the Federal Reserve.B. Gold bars in Fort Knox.C. The promise of the U.S. government to maintain its value.D. The value of the paper on which it is printed.E. An equal amount of physical
40. What is the main difference between the shortrun and long-run Phillips Curve?A. The short-run Phillips Curve is downward sloping and the long-run Phillips Curve is upward sloping.B. The short-run Phillips Curve is upward sloping and the long-run Phillips Curve is vertical.C. The short-run
39. Daddy Morebucks withdraws $1 million from his savings account and puts the cash in his refrigerator. This affects M1, M2, and M3 in which of the following ways?M1 M2 M3 A. Rises Rises Rises B. No change No change No change C. Falls Falls Falls D. Rises Falls No change E. Rises No change No
38. The economy is in a deep recession. Given this economic situation, which of the following statements about monetary policy are accurate?I. Expansionary policy would only worsen the recession.II. Contractionary policy is the appropriate stimulus for investment and consumption.III. Expansionary
37. Which of the following is an example of contractionary monetary policy?A. The Fed lowers the reserve ratio.B. The Fed lowers the discount rate.C. The Fed increases taxes on household income.D. The Fed decreases spending on welfare programs.E. The Fed sells Treasury securities to commercial
36. Which of the following fiscal policy combinations would be most likely to slowly increase real GDP without putting tremendous pressure on the price level.A. Increase government spending with a matching decrease in taxes.B. Decrease government spending with a matching increase in taxes.C.
35. Which of the following is an example of an expansionary supply shock?A. Rapid increasing wages B. A greatly depreciated currency C. Declining labor productivity D. Lower than expected agricultural harvests E. Lower input prices in major industries
34. If the economy is suffering from extremely high rates of inflation, which of the following fiscal policies would be an appropriate strategy for the economy?A. Increase government spending and decrease taxes.B. Decrease government spending and increase taxes.C. Increase government spending with
33. Which of the following might worsen a nation’s trade deficit?A. Lower wages relative to other nations.B. Lower taxes on corporate profits relative to other nations.C. A higher interest rate on financial assets relative to other nations.D. A higher rate of inflation relative to other
32. Which of the following increases the size of the tax multiplier?A. An increase in the marginal propensity to consume.B. An increase in the reserve ratio.C. An increase in the marginal propensity to save.D. A decrease in the spending multiplier.E. A decrease in the velocity of money.
31. Which of the following is true about the relationship between the M1, M2, and M3 measures of money?A. M1 + M2 = M3 B. M1 includes checking deposits, while M2 includes checking and saving deposits.C. M2 includes coin and paper money, but M1 does not.D. M2 is more liquid than M1.E. M1 is greater
30. If $100 of new autonomous private investment were added to an economy with a marginal propensity to consume of .90, by how much would aggregate demand shift to the right?A. $190 B. $900 C. $1000 D. $1900 E. $90
29. Which of the following is most likely to produce stronger economic growth over time?A. More rapid consumption of natural resources.B. Higher adult illiteracy rates.C. A falling stock of capital goods.D. Investment tax credits.E. Higher taxes on foreign capital investment.
28. Which of the following is true of a typical contraction of the business cycle?A. Consumption is falling, but household is wealth is rising.B. Consumption is increasing.C. Private investment is rising.D. Employment and inflation are low.E. Private saving rates are rising.
27. In a private closed economy, which of the following statements are true?I. When unplanned changes in inventories are considered, saving and investment are always equal, no matter the level of GDP.II. Real GDP equals real spending in equilibrium.III. Households saving can never be negative.IV.
26. If the short-run aggregate supply curve is horizontal, it is because A. there exist many unemployed resources so that output can be increased without increasing wages and prices.B. any increase in output requires a corresponding increase in wages and prices.C. increases in output cause prices
25. Stagflation is the result of A. a leftward shift in the aggregate supply curve.B. a leftward shift in the aggregate demand curve.C. a leftward shift in both the aggregate supply and aggregate demand curves.D. a rightward shift in the aggregate supply curve.E. a rightward shift in the aggregate
24. When we observe an unplanned decrease in inventories, we can expect A. prices to begin to fall.B. output to begin to rise.C. saving to begin to fall.D. output to begin to fall.E. planned investment to begin to rise.
23. Suppose that current disposable income is$10,000 and consumption spending is $8000.For every $100 increase in disposable income, saving increases $10. Given this information, A. the marginal propensity to consume is .80.B. the marginal propensity to save is .20.C. the marginal propensity to
22. Suppose that the federal government reclassified the purchase of a new home as consumption spending rather than investment spending. This decision would A. increase aggregate demand and decrease real GDP.B. decrease aggregate demand and decrease real GDP.C. decrease aggregate demand and
21. Of the following choices, the most direct exchange in the circular flow model of a private closed economy is when A. households provide goods to firms in exchange for wage payments.B. households provide resources to firms in exchange for goods.C. households provide revenues to firms in exchange
20. According to the quantity theory of money, increasing the money supply serves to A. stimulate short-run production and employment with very little long-run inflation.B. increase short-run output, but is the source of long-run inflation.C. lower the unemployment rate while also lowering the rate
19. A policy supported by supply-side economists would be A. higher taxes on corporate profits.B. lower tax rates on interest earned from savings.C. removal of investment tax credits.D. a longer duration of unemployment benefits.E. higher marginal income tax rates to fund social welfare programs.
18. Which of the following is not included in the U.S. GDP?A. The U.S. military opens a new base in a foreign country with 1000 U.S. personnel.B. Japanese consumers buy thousands of CDs produced in the U.S.C. An American pop singer performs a sold-out concert in Paris.D. A French theatrical
17. The figure above shows aggregate demand (AD)and supply (AS) for the economy. Assuming that aggregate demand remains constant, which of the following best predicts the short-run price level, the long-run price level, and the long-run level of output?Short-run Long-run Long-run Price Level Price
16. Which of the following would increase the aggregate demand function?A. Higher levels of imported goods.B. Lower levels of consumer wealth.C. A higher real interest rate.D. Lower taxes on personal income.E. Lower levels of exported goods. Price level P3 P2 P1 22 long-run AS short-run AS AD real
15. Which of the following is true of money and financial markets?A. As the demand for bonds increases, the interest rate increases.B. For a given money supply, if nominal GDP increases, the velocity of money decreases.C. When demand for stocks and bonds increases, the asset demand for money
14. The table above summarizes the local labor market. Based on this information, which of the following is an accurate statement?A. The number of discouraged workers has fallen from 2003 to 2004.B. Although the population has grown, the labor force has remained constant from 2003 to 2004.C. The
13. Which choice produces a faster rate of economic growth for the U.S.?A. Institution of higher tariffs on imported goods.B. More investment in capital infrastructure and less consumption of nondurable goods and services.C. Elimination of mandatory school attendance laws.D. Annual limits on the
12. Which of the following is not included in national income?A. Wages B. Salaries C. Interest D. Depreciation E. Profits
11. Suppose the price level in the U.S. has risen in the past year, but production of goods and services has remained constant. Based on this information, which of the following is true?Nominal GDP Real GDP A. Increased Increased B. No change Decreased C. Decreased Decreased D. Increased Decreased
10. How does an increasing national debt impact the market for U.S. dollars and the value of the dollar with respect to other currencies?Market for the dollar Value of the dollar A. Increased demand Appreciating B. Increased supply Appreciating C. Decreased supply Depreciating D. Decreased demand
9. Which of the following is not a scarce economic resource?A. Labor B. Capital C. Human wants D. Land E. Natural resources
8. Brent loses his job at the public swimming pool when the pool closes for the winter. This is an example of A. cyclical unemployment.B. discouraged worker.C. seasonal unemployment.D. frictional unemployment.E. structural unemployment.
7. Which of the following transactions would be included in the computation of Gross Domestic Product?A. Josh buys a new pair of running shoes.B. Nancy offers to babysit her granddaughter.C. Katie buys her dad’s used car.D. Jim cannot go to a concert so he resells his ticket to a friend.E. Molly
6. In recent years, firms that produce cameras have begun to produce fewer 35-mm cameras and more digital cameras. This trend is an example of A. how central planners dictate which goods are produced.B. the market system answering the question of“how” cameras should be produced.C. the market
5. Which of the following is a consequence of removal of a protective tariff on imported steel? A. Imports fall. B. Income is transferred from steel consumers to domestic steel producers. C. Income is transferred from foreign steel producers to domestic steel producers. D. Allocative efficiency is
4. If Nation A can produce a good at lower oppor- tunity cost than Nation B can produce the same good, it is said that A. Nation A has comparative advantage in the production of that good. B. Nation B has comparative advantage in the production of that good. C. Nation A has absolute advantage in
3. The price of gasoline has recently increased, while at the same time gasoline consumption has also increased. What is happening in the gasoline market? A. This is evidence that contradicts the Law of Demand. B. The price of crude oil has fallen, shifting the supply of gasoline to the right. C. A
2. Now that the economy is operating on PPF2, what has happened to the opportunity cost of producing these goods? A. The opportunity cost of producing tractors has decreased, while the opportunity cost of producing corn has increased. B. The opportunity cost of producing tractors has increased,
important raw material in the production of tractors. D. An economy wide improvement in the productivity of the labor force. E. More effective pesticides used to protect crops from insect damage.
1. Suppose that the production possibility frontier (PPF) of this nation moves from PPF1 to PPF2. Which of the following could be the cause of this movement? A. Technological improvements in the produc- tion of tractors. B. A long-lasting and destructive drought. C. A more efficient use of steel, an
3. The market for economists is a perfectly competi- tive labor market and one firm, National Econ- omics Research Data (stock ticker: NERD), is a profit-maximizing employer of economists. A. Using two correctly labeled graphs, show the entire labor market side-by-side with NERD. Clearly indicate
2. Assume the following about the market for cigarettes. Cigarettes are sold in a competitive market. Cigarettes have no close substitute. The demand for cigarettes is price inelastic.Suppose now that the government imposes a per unit excise tax on producers of cigarettes. A. Using a correctly
1. Salmon and tuna are substitutes in perfectly com- petitive markets that are experiencing long-run equilibrium. A. Suppose that an unforeseen change in the weather patterns of the Pacific Ocean dramat- ically reduces the salmon population while leaving the tuna populations unaffected. In a
60. Because of the free rider effect, the private marketplace tends to A. provide the allocatively efficient amount of a public good.B. produce too much of a public good, requiring the government to intervene and tax the production of it.C. produce a public good in the amount where the marginal
59. Which of the following scenarios is the best example of a positive externality?A. Your neighbor has a swimming pool and throws loud late-night parties.B. Your neighbor has a swimming pool and allows you free access.C. Your neighbor has a swimming pool and the powerful chlorine odor blows into
58. The U.S. government collects tax revenue, buys military equipment from many private firms, and uses this equipment to provide national defense to all Americans. This is a good example of A. a natural monopoly.B. an excise tax on military equipment.C. a regressive tax.D. a public good.E. dead
57. The local market for bankers is currently in equilibrium. Which of the following increases the local wage paid to bankers?A. Internet banking at home is becoming more popular.B. More college students are majoring in finance and economics, majors that make them attractive as bank employees.C.

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5 Steps To A 5 AP Microeconomics And Macroeconomics 1st Edition Eric Dodge - Solutions

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