Krugmans Macroeconomics For Ap 1st Edition Margaret Ray, David A Anderson - Solutions

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When a perfectly competitive market has come to long-run equilibrium, we know that(A) economic profit is zero and accounting profit is greater than zero.(B) economic profit and accounting profit are both zero.(C) price is greater than average total cost.(D) price is equal to average variable
Which of the following is a characteristic of perfectly competitive markets?(A) Product differentiation(B) Barriers to entry(C) Strategic behavior(D) Very few producers(E) Price-taking behavior
If a perfectly competitive firm is maximizing profit and short-run profits are positive, which of the following must be true?(A) P = MR = MC = ATC(B) P > MR = MC = ATC(C) P = MR = MC > ATC(D) P = MR = MC < ATC(E) P = MR > MC = ATC
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
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.
What is the average product of labor for the fifth unit of labor?(A) 5(B) 30(C) 6(D) 2(E) 25
What is the marginal product of labor for the third unit of labor?(A) 24(B) 6(C) 8(D) 3(E) 12
A pizza restaurant is operating in the short run and looking at expenses for next month. Which of the following is a variable cost for the owners of the restaurant?(A) Rent on the building(B) Cost of Wi-Fi in the building(C) Cost of deliveries of cheese and pepperoni(D) Insurance payments on pizza
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 shortrun 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) The
Professor Peach spends her entire budget on tea and biscuits to maximize her utility. The price of tea is $2 per cup and the price of each biscuit is $3. At her current consumption levels, the marginal utility of tea is 22 utils and the marginal utility of biscuits is 33 utils, and she has used her
An excise tax of $T is imposed on the sellers of a product exchanged in a competitive market. Which of the following statements accurately describes the outcome?(A) If the supply curve is less elastic than the demand curve, consumers pay a higher share of the tax and there is deadweight loss.(B) If
A binding price floor is imposed in a competitive market. How will this change consumer surplus and producer surplus, and will there be a shortage or surplus of the product exchanged? CONSUMER PRODUCER SHORTAGE SURPLUS SURPLUS OR SURPLUS? (A) Decreases Increases Surplus (B) Decreases Increases
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 of beef demanded 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
In Figure D.2, identify the area that corresponds to total dollars spent on this product.(A) 0ACB(B) 0FCB(C) AFC(D) ACE(E) FCE Price E F A 0 B S S Quantity
In the competitive market for cherry pie, we observe the equilibrium price has risen and the equilibrium quantity has fallen. Which of the following could explain this?(A) Income has increased, and cherry pie is a normal good.(B) The price of raw cherries has increased.(C) The technology used to
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, a normal good, 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
Which of the following is true of equilibrium in a 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 market
Theo and Eliza can both paint the fence and wax the car after school.For every hour of waxing the car, Theo can paint eight sections of fence and Eliza can paint two sections of fence. Based on this information, the most efficient division of labor would be(A) Theo should paint the fence because he
Felipe wants to go see a concert next month. He knows that the concert, including his drive to and from the arena, will take five hours.Which of the following is the best example of an implicit cost that Felipe should consider before deciding whether to attend the concert?(A) The price of the
A small bakery has been so busy that they have hired two part-time employees. This is an example of a business changing its _____ resource.(A) capital(B) profit(C) land(D) entrepreneurial(E) labor
Jess likes to purchase $1 tacos from the taco truck near her school. If Jess uses marginal analysis, how many tacos will she consume on a given day?(A) Jess will stop consuming tacos when the marginal benefit of the next taco is equal to zero.(B) Jess will stop consuming tacos when the marginal
The graph in Figure D.1 shows a nation’s production possibilities curve (PPC) to produce bread and butter. Suppose that production technology in butter production improves. All else being equal, how will this affect the PPC and the opportunity cost of producing bread?(A) The vertical intercept of
The graph in Figure D.1 shows a nation’s production possibilities curve (PPC) 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 is most consistent with a capitalist market economy?(A) Economic resources are allocated according to the decisions of the central bank.(B) Private property is fundamental to innovation, growth, and trade.(C) A central government plans the production and
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
Your study partner asks you, “If central banks lose the ability to use discretionary monetary policy under fixed exchange rates, why would nations agree to a fixed exchange rate system?” How do you respond?
Suppose that Albernia’s central bank has fixed the value of its currency, the bern, to the U.S. dollar (at a rate of US$1.50 to 1 bern) and is committed to that exchange rate. Initially, the foreign exchange market for the bern is also in equilib- rium, as shown in the accompanying diagram.
Starting from a position of equilibrium in the foreign exchange market under a fixed exchange rate regime, how must a government react to an increase in the demand for the nation’s goods and services by the rest of the world to keep the exchange rate at its fixed value?
In each of the following scenarios, suppose that the two nations are the only trading nations in the world. Given inflation and the change in the nominal exchange rate, which nation’s goods become more attractive?a. Inflation is 10% in the United States and 5% in Japan; the U.S. dollar–Japanese
From January 1, 2001, to June 30, 2003, the U.S. federal funds rate decreased from 6.5% to 1%. During the same period, the analogous interest rate in Europe decreased from 5.75% to 3%.a. Considering the change in interest rates over the period and using the loanable funds model, would you have
Suppose the United States and Japan are the only two trading countries in the world. What will happen to the value of the U.S. dollar if the following occur, other things equal?
Go to http://fx.sauder.ubc.ca. Using the table labeled “The Most Recent Cross-Rates of Major Currencies,” determine whether the British pound (GBP), the Canadian dollar (CAD), the Japanese yen (JPY), the euro (EUR), and the Swiss franc(CHF) have appreciated or depreciated against the U.S.
Based on the exchange rates for the first trading days of 2009 and 2010 shown in the accompanying table, did the U.S. dollar appreciate or depreciate during 2009? Did the movement in the value of the U.S. dollar make American goods and services more or less attractive to foreigners?
Suppose that Northlandia and Southlandia are the only two trading countries in the world, that each nation runs a balance of payments on both current and financial accounts equal to zero, and that each nation sees the other’s assets as identical to its own. Using the accompanying diagrams,
In the economy of Popania in 2008, total Popanian purchases of assets in the rest of the world equaled $300 billion, purchases of Popanian assets by the rest of the world equaled $400 billion, and Popania exported goods and services equaled $350 billion. What was Popania’s balance of payments on
In the economy of Scottopia in 2008, exports equaled $400 billion of goods and $300 billion of services, imports equaled$500 billion of goods and $350 billion of services, and the rest of the world purchased $250 billion of Scottopia’s assets. What was the merchandise trade balance for Scottopia?
The accompanying diagram shows the assets of the rest of the world that are in the United States and U.S. assets abroad, both as a percentage of rest-of-the-world GDP. As you can see from the diagram, both have increased nearly fivefold since 1980.
How would the following transactions be categorized in the U.S. balance of payments accounts? Would they be entered in the current account (as a payment to or from a foreigner) or the financial account (as a sale to or purchase of assets from a foreigner)? How will the balance of payments on the
Assume the United States is operating below potential output.a. Draw a correctly labeled aggregate demand and supply graph showing equilibrium in the economy.b. Suppose the government decreases taxes. On your graph, show how the decrease in taxes will affect AD, SRAS, LRAS, equilibrium aggregate
Suppose the U.S. economy is experiencing a recession.a. Draw a correctly labeled aggregate demand-aggregate supply graph showing the aggregate demand, short-run aggregate supply, long-run aggregate supply, equilibrium output, and aggregate price level.b. Assume that energy prices increase in the
If the Mexican government pursues expansionary fiscal policy in response to the recession, what will happen to aggregate demand and aggregate supply in the short-run?Aggregate demand Short-run aggregate supplya. increase increaseb. increase decreasec. decrease increased. decrease decreasee.
Suppose the aggregate price level in Mexico decreases relative to that in the United States. What is the effect of this price level change on the demand and on the exchange rate, for Mexican pesos?Demand for pesos Exchange ratea. increases appreciatesb. increases depreciatesc. decreases
If the aggregate price level in Mexico decreases, what will happen to the real interest rate?a. It will increase.b. It will decrease.c. It will be unchanged.d. It will stabilize.e. It cannot be determined.
What is the effect of Mexico’s falling income on the demand for money and the nominal interest rate in Mexico?Demand for money Nominal interest ratea. increases decreasesb. decreases decreasesc. increases increasesd. decreases increasese. increases unchanged
Which of the following occurs as a result of the recession in Mexico?I. Output in Mexico decreases.II. Aggregate demand in the United States decreases.III. Output in the United States decreases.a. I onlyb. II onlyc. III onlyd. I and II onlye. I, II, and III
The economy is operating in long-run macroeconomic equilibrium.a. Illustrate this situation using a correctly labeled aggregate demand-aggregate supply graph.b. Use your graph to show the short-run effect on real GDP and the aggregate price level if there is a decrease in government spending.c.
List three tools used to fix exchange rates and explain the major costs resulting from their use.
Suppose the United States and India were the only two countries in the world.a. Draw a correctly labeled graph of the foreign exchange market for U.S. dollars showing the equilibrium in the market.b. On your graph, indicate a fixed exchange rate set above the equilibrium exchange rate. Does the
Which of the following is a benefit of a fixed exchange rate regime?a. certainty about the value of domestic currencyb. commitment to inflationary policiesc. no need for foreign exchange reservesd. allows unrestricted use of monetary policye. all of the above
Which of the following interventions would be required to keep a country’s exchange rate fixed if the equilibrium exchange rate in the foreign exchange market were below the fixed exchange rate (measured as units of foreign currency per unit of domestic currency)? The government/central banka.
The United States has which of the following exchange rate regimes?a. fixedb. floatingc. fixed, but adjusted frequentlyd. fixed, but managede. floating within a target zone
Changes in exchange rates affect which of the following?a. the price of importsb. the price of exportsc. aggregate demandd. aggregate outpute. all of the above
Which of the following methods can be used to fix a country’s exchange rate at a predetermined level?I. using foreign exchange reserves to buy its own currency II. using monetary policy to change interest rates III. implementing foreign exchange controlsa. I onlyb. II onlyc. III onlyd. I and II
Draw a diagram, similar to Figure 43.1, representing the foreign exchange situation of China when it kept the exchange rate fixed at a target rate of $0.121 per yuan and the market equilibrium rate was higher than the target rate. Then show with a diagram how each of the following policy changes
Use a correctly labeled graph of the foreign exchange market between the U.S. and Europe to illustrate what would happen to the value of the U.S. dollar if there were an increase in the U.S. demand for imports from Europe.
Draw a correctly labeled graph of the foreign exchange market showing the effect on the equilibrium exchange rate between the U.S. and Japan (the number of yen per U.S. dollar) if capital flows from Japan to the United States decrease due to a change in the preferences of Japanese investors. Has
Which of the following will decrease the supply of U.S. dollars in the foreign exchange market?a. U.S. residents increase their travel abroad.b. U.S. consumers demand fewer imports.c. Foreigners increase their demand for U.S. goods.d. Foreigners increase their travel to the United States.e. Foreign
Which of the following would cause the real exchange rate between pesos and U.S. dollars (in terms of pesos per dollar) to decrease?a. an increase in net capital flows from Mexico to the United Statesb. an increase in the real interest rate in Mexico relative to the United Statesc. a doubling of
What happens to the real exchange rate between the euro and the U.S. dollar (expressed as euros per dollar) if the aggregate price levels in Europe and the United States both fall? Ita. is unaffected.b. increases.c. decreases.d. may increase, decrease, or stay the same.e. cannot be calculated.
The nominal exchange rate at which a given basket of goods and services would cost the same in each country describesa. the international consumer price index (ICPI).b. appreciation.c. depreciation.d. purchasing power parity.e. the balance of payments on the current account.
When the U.S. dollar buys more Japanese yen, the U.S. dollar has I. become more valuable in terms of the yen.II. appreciated.III. depreciateda. I onlyb. II onlyc. III onlyd. I and II onlye. I and III only
Suppose a basket of goods and services that costs $100 in the United States costs 800 pesos in Mexico and the current nominal exchange rate is 10 pesos per U.S. dollar. Over the next five years, the cost of that market basket rises to $120 in the United States and to 1,200 pesos in Mexico, although
Suppose Mexico discovers huge reserves of oil and starts exporting oil to the United States. Describe how this would affect the following:a. the nominal peso–U.S. dollar exchange rateb. Mexican exports of other goods and servicesc. Mexican imports of goods and services
Use two correctly labeled side-by-side graphs of the loanable funds market in the United States and China to show how a higher interest rate in the United States will lead to capital flows between the two countries. On your graphs, be sure to label the starting and ending interest rates and the
a. How would a decrease in real income in the United States affect the U.S. current account balance? Explain.b. Suppose China decides that it needs a huge program of infrastructure spending, which it will finance by borrowing.How will this program affect the U.S. balance of payments?Explain.
Which of the following will increase the demand for loanable funds in a country?a. economic growthb. decreased investment opportunitiesc. a recessiond. decreased private savings ratese. government budget surpluses
The trade balance includes which of the following?I. imports and exports of goods II. imports and exports of services III. net capital flowsa. I onlyb. II onlyc. III onlyd. I and II onlye. I, II, and III
The financial account was previously known as thea. gross national product.b. capital account.c. trade deficit.d. investment account.e. trade balance.
The balance of payments on the current account plus the balance of payments on the financial account is equal toa. zero.b. one.c. the trade balance.d. net capital flows.e. the size of the trade deficit.
The current account includes which of the following?I. payments for goods and services II. transfer payments III. factor incomea. I onlyb. II onlyc. III onlyd. I and II onlye. I, II, and III
Which of the balance of payments accounts do the following events affect?a. Boeing, a U.S.-based company, sells a newly built airplane to China.b. Chinese investors buy stock in Boeing from Americans.c. A Chinese company buys a used airplane from American Airlines and ships it to China.d. A Chinese
The accompanying table shows the percent change in verified emissions of carbon dioxide (CO2) and the percent change in real GDP per capita for selected EU countries.a. Rank the countries in terms of percentage increase in CO2 emissions, from highest to lowest. What five countries have the highest
According to the Oil & Gas Journal, the proven oil reserves of the top 12 oil producers was 1,137 billion barrels of oil in 2007.In that year, the U.S. Energy Information Administration reported that the daily oil production from these nations was 48.2 million barrels a day.a. At this rate, how
Why would you expect real GDP per capita in California and Pennsylvania to exhibit convergence but not in California and Baja California, a state of Mexico that borders the United States? What changes would allow California and Baja California to converge?
The accompanying table shows data on real GDP per capita in 2000 U.S. dollars for several countries in 1960 and 2003.(Source: The Penn World Table, Version 6.2.) Complete the table. Have these countries converged economically?
The accompanying table shows data on real GDP per capita in 2000 U.S. dollars for several countries in 1950 and 2004.(Source: The Penn World Table, Version 6.2) Complete the table. Have these countries converged economically?
Over the next 100 years, real GDP per capita in Groland is expected to grow at an average annual rate of 2.0%. In Sloland, however, growth is expected to be somewhat slower, at an average annual growth rate of 1.5%. If both countries have a real GDP per capita today of $20,000, how will their real
How have U.S. policies and institutions influenced the country’s long -run economic growth?
The Bureau of Labor Statistics regularly releases the “Productivity and Costs” report for the previous month. Go to www.bls.gov and find the latest report. (On the Bureau of Labor Statistics home page, under Latest Numbers, find “Productivity” and click on “News Release.”) What were the
The country of Androde is currently using Method 1 for its production function. By chance, scientists stumble on a technological breakthrough that will enhance Androde’s productivity. This technological breakthrough is reflected in another production function, Method 2. The accompanying table
You are hired as an economic consultant to the countries of Albernia and Brittania. Each country’s current relationship between physical capital per worker and output per worker is given by the curve labeled Productivity1 in the accompanying diagram. Albernia is at point A and Brittania is at
The accompanying table provides approximate statistics on per capita income levels and growth rates for regions defined by income levels. According to the Rule of 70, the high-income countries are projected to double their per capita GDP in approximately 37 years, in 2042. Throughout this question,
The accompanying table shows the average annual growth rate in real GDP per capita for several countries between 1960 and 2000. (Source: The Penn World Table, Version 6.2)a. For each decade and for each country, use the Rule of 70 where possible to calculate how long it would take for that
The accompanying table shows data on real GDP per capita for several countries between 1960 and 2000. (Source: The Penn World Table, Version 6.2.)a. Complete the table by expressing each year’s real GDP per capita as a percentage of its 1960 and 2000 levels.b.How does the growth in living
Draw a separate, correctly labeled aggregate demand and supply graph to illustrate each of the following situations. On each of your graphs, include the short-run aggregate supply curve(s), long-run aggregate supply curve(s), and aggregate demand curve(s).a. Expansionary fiscal policy moves the
Refer to the graph provided.a. Which point(s) could represent a downturn in the business cycle?b. Which point(s) represent efficient production?c. Which point(s) are attainable only after long-run economic growth?d. How would long-run economic growth be represented on this graph?e. Policy that
Which of the following is listed among the key sources of growth in potential output?a. expansionary fiscal policyb. expansionary monetary policyc. a rightward shift of the short-run aggregate supply curved. investment in human capitale. both a and b
In the aggregate demand-aggregate supply model, long-run economic growth is shown by aa. leftward shift of the aggregate demand curve.b. rightward shift of the aggregate demand curve.c. rightward shift of the long-run aggregate supply curve.d. rightward shift of the short-run aggregate supply
The reduction in the value of an asset due to wear and tear is known asa. depreciation.b. negative investment.c. economic decline.d. disinvestment.e. net investment.
In the production possibilities curve (PPC) model, long-run economic growth is shown by a(n)a. outward shift of the PPC.b. inward shift of the PPC.c. movement from a point below the PPC to a point on the PPC.d. movement from a point on the PPC to a point below the PPC.e. movement from a point on
Which of the following will shift the production possibilities curve outward?I. an increase in the production of investment goods II. an increase in the production of consumer goods III. technological progressa. I onlyb. II onlyc. III onlyd. I and III onlye. I, II, and III

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Krugmans Macroeconomics For Ap 1st Edition Margaret Ray, David A Anderson - Solutions

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