In an open economy, there is interaction with other economies in terms of both trading of goods and services and borrowing and lending.
Indicate whether the statement is true or false
Ques. 2Productivity gains in the United States since 1990 have been ________ productivity gains in other leading industrial nations.
A) the same as B) higher than C) lower than D) more variable than
Ques. 3If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years, then
A) investment spending will remain unaffected. B) investment spending will rise and then fall.
C) investment spending will rise. D) investment spending will fall.
Ques. 4Refer to Figure 26-7. Suppose the economy is in short-run equilibrium above potential GDP, the unemployment rate is very low, and wages and prices are rising.
Using the static AD-AS model in the figure above, the correct Fed policy for this situation would be depicted as a movement from
A) A to B. B) B to C. C) C to D. D) C to B. E) A to E.
Ques. 5Refer to Table 20-10. Suppose an economy has only three goods and the typical family purchases the amounts given in the table above. If 2011 is the base year, then what is the CPI for 2016?
A) 14.3 B) 87.5 C) 114.3 D) 160
Ques. 6Refer to Figure 28-2. Suppose the economy is at point A. The Fed uses expansionary monetary policy to lower the unemployment rate permanently below the level associated with A. Which of the following will occur?
A) Inflationary expectations will decline. B) Unemployment will rise above the natural rate.
C) Unemployment will accelerate in the long run. D) Inflation will accelerate in the long run.
Ques. 7The Walt Disney Company is in a position to use a two-part tariff policy in setting prices for admission and rides at Disney World. If this strategy resulted in maximum profit, Disney would convert all consumer surplus into profit.
Which of the following explains why Disney does not maximize its profits from admission and rides?
A) Disney purposely charges less than the profit-maximizing price for admission to Disney World because it does not want to risk alienating its customers.
B) To maximize its profits, Disney would have to know the demand curves of each of its customers. Since this is not possible, Disney is not able to convert all consumer surplus into profit.
C) Disney purposely charges less than the profit-maximizing price for admission to Disney World in order to earn more profit from sales of food, lodging, and other related services.
D) Disney does not charge the profit-maximizing price for admission because it wants to keep admission affordable for children who will be more likely to visit Disney World when they become parents.
Ques. 8Which of the following best explains why productivity growth in the United States has been faster than in other leading industrialized nations?
A) There are fewer government regulations in the United States regarding the way firms can hire and fire workers.
B) Job mobility in the United States is more restricted than it is in many foreign countries.
C) European countries have more flexible policies regarding the number of hours employees are permitted to work.
D) The financial systems of foreign countries are generally more efficient than those in the United States.
Ques. 9The Gini coefficient is measured by
A) summing up the total income earned by the population and dividing by the size of the population.
B) summing up the cumulative income percentages on the Lorenz curve.
C) using the formula: area between the line of perfect equality and the Lorenz curve the area under the line of perfect equality.
D) using the formula: area between perfect inequality and Lorenz curve area between the line of perfect equality to the Lorenz curve.
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