Equilibrium of aggregate supply and aggregate demand

Question

Question 1. The mixed economy is the dominant economic system in the world because

• custom and religion have no influence on economic decisions in these systems
• pure capitalist economies have placed more control in the hands of individuals in recent years
• there is public (i.e., government) ownership of resources but regulation of government by individuals reduces some of the flaws of pure capitalism
• there is private ownership of property but government regulation of individuals reduces some of the flaws of pure capitalism
• governments in pure command economies have increased their control over decision-making in recent years

Question 2. The equilibrium wage

• is the same in all labor markets
• occurs where the supply of labor curve begins to bend backward
• cannot be calculated because there are so many labor markets
• is determined by the market demand for labor and the market supply of labor

Question 3. Strikes are expensive for

• the public only because output falls
• both the public and employers because workers are compensated by the union for lost income
• employers only because their revenue falls
• workers, employers, and the public

Question 4. If a monopolist is forced to set price equal to average total cost, economic profit

• will be negative, and the monopolist may go out of business
• will be zero
• will be positive
• will be negative, and the firm will stay in business if there are significant fixed costs

Question 5. Increased international trade and deregulation have resulted in

• increased competition in the U.S. economy
• greater monopolization of industries in the U.S. economy
• more oligopolies and cartels in the U.S. economy
• greater government intervention in the U.S. economy

Question 6. The purpose of a political action committee is

• to help enact officials sympathetic to its members' special interests
• to help elect officials who will enact in fair legislation
• to raise money for public interest groups
• to exchange trade secrets

Question 7. Equilibrium of aggregate supply and aggregate demand is best described as a situation in which

• the slope of aggregate demand equals the slope of aggregate supply
• quantity demanded exceeds quantity supplied
• quantity demanded equals quantity supplied at a unique price level
• quantity supplied exceeds quantity demanded at a unique price level

Question 8. The aim of supply-side economics is

• increase government spending to stimulate aggregate supply
• stimulate exports to increase the balance of payments
• decrease wages to make production cheaper
• lower taxes to increase the supply of resources

Question 9. Labor productivity is measured by

• total employment/total output
• total output/total employment
• labor force/total output
• total output/labor force

Question 10. Which of the following is the best indicator of the standard of living?

• nominal GDP
• real GDP
• real GDP per capita
• productivity

Question 11. In the resource market,

• businesses borrow money to buy the capital resources they need
• businesses sell services to the households
• firms provide the resources to the households
• households sell the resources to firms in return for factor payments

Question 12. Depreciation refers to a decrease in the value of a durable good caused by

• an increase in the price level
• changes in the depreciation allowance
• wear and tear over time
• changes in tax law

Question 13. If real GDP increased by 3 percent, then

• real output has increased by 3 percent
• the price level has increased by 3 percent
• consumer spending increased by 3 percent
• government spending increased by 3 percent

Question 14. Cost-push inflation is typically caused by an

• inward shift of the demand curve
• outward shift of the supply curve
• inward shift of the supply curve
• inward shift of the aggregate supply and demand curves

Question 15. Anticapted inflation

• allows us to eliminate the problems associated with unemployment
• causes more problems than unanticipated inflation
• causes fewer problems than unanticipated inflation
• is easy to predict for economists

Question 16. Unanticipated inflation is usually viewed as undesirable because it

• reduced everyone's nominal wages
• redistributes income and wealth
• is accompanied by reductions in real GDP
• usually results in the public sector growing less rapidly than the private sector

Question 17. The federal government budget is

• a year-end record of how much the government received in income and how much it spent
• a plan for government expenditures and revenues for the coming year
• always in balance: receipts must equal expenditures
• equal to government receipts minus government expenditures

Question 18. Which institution was created under the Employment Act of 1946 to assist the President in formulating an appropriate fiscal policy?

• the Council of Economic Advisers
• the Board of Governors of the Fed
• the Office of Management and Budget
• the Fed's Open Market Committee

Question 19. The opportunity cost of holding money is measured by the

• interest rate
• liquidity lost by holding money
• money supplu curve
• inflation rate

Question 20. The United States is major exporter of

• diamonds
• bauxite
• coffee
• corn

Question 21. Dumping is the practice of

• selling a lower quality product abroad
• selling a commodity abroad at a price lower than the domestic price
• selling a commodity abroad at a price higher than the domestic price
• flooding a foreign market with large quantities of a good