A reduced demand for lawyers' services to prosecute damage suits
A) lowers the cost of hiring a lawyer to draw up a will.
B) raises the cost of hiring a lawyer to draw up a will.
C) raises the demand for lawyers' services in drawing up wills.
D) will not affect the cost of hiring a lawyer to draw up a will though it could affect lawyers' fees.
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If the manager of a nonprofit enterprise sets prices below market clearing levels, she
A) increases the net revenue of the enterprise.
B) provides herself with control over a valuable good.
C) reduces her personal popularity.
D) produces all of the above consequences.
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The Bureau of Economic Analysis excludes from its calculation of GDP most of the goods produced that are not sold in markets because
A) their production has no real costs.
B) their value is implicitly included in the prices of marketed goods.
C) there is no satisfactory way to measure their value.
D) they do not contribute to national welfare.
E) this would be inappropriate for an exchange economy.
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What gives a demand deposit value?
A) The belief others will readily accept the demand deposit in exchange for valuable goods
B) The currency the bank holds as reserves
C) The guarantees the government provides
D) The gold backing the deposits
E) In God we trust.
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The army is more likely than a business firm to assign a highly-skilled person to a job requiring little skill because the people who assign military personnel
A) are generally guided by the public interest rather than private interest.
B) incur little cost from misallocating personnel.
C) must consider the welfare of the whole rather than the profitability of the enterprise.
D) work for the government, where there is less demand for skilled personnel.
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Movement along a supply curve implies
A) quantity demanded changes as the price changes.
B) supply changes as the price changes.
C) suppliers' plans change when the price changes.
D) all of the above.
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In a centrally planned economy, the concept of marginal cost
A) is important if planners want to achieve their objectives at the lowest possible cost.
B) is irrelevant because resources can be obtained by government decree.
C) is irrelevant because socialist firms do not have to earn profits.
D) is irrelevant if industries can be subsidized.
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Which is an example of expansionary fiscal policy?
A) A lowering of tax rates
B) A lowering of government spending
C) An increase in the discount rate
D) An increase in the federal funds rate
E) An increase in reserve requirements
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Which confers a set of property rights?
A) A driver's license
B) A land contract
C) A passing score on a C.P.A. exam
D) A successful election campaign
E) All of the above.
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Suppose the nominal interest rate is 1% and the rate of inflation is 3%. The real interest rate is therefore
A) -2%.
B) 2%.
C) 4%.
D) 5%.
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