The area between the market price and the demand curve provides a measure of:
a. consumer surplus.
b. producer surplus.
c. consumer surplus plus producer surplus.
d. marginal utility.
Question 2Which of the following would cause the U.S. money supply to expand?
a. a commercial bank using excess reserves to extend a loan to a customer
b. a commercial bank purchasing U.S. securities from the Fed as an investment
c. an increase in reserve requirements
d. an increase in the discount rate
Question 3It is generally true that per capita GNP is:
a. negatively correlated with labor productivity.
b. positively correlated with the standard of living.
c. negatively correlated with the life expectancy rate.
d. uncorrelated with the literacy level.
e. positively correlated with the rate of population growth.
Question 4Total welfare gains from trade to the economy can be measured:
a. as the sum of consumer and producer surpluses.
b. as the difference between producer surplus and consumer surplus.
c. as the sum of consumer and producer surpluses minus taxes
d. as the net gain in consumer surplus that results from an action that alters a market equilibrium.
Question 5If multiplier effects are ____ than policy makers expect or the natural rate of real output is _____ than expected, monetary policy will tend to undershoot its intended effects.
a. Greater; greater.
b. Greater; less
c. Less; greater
d. Less; less
Question 6Compared to First World countries, developing countries would have _____.
a. a higher life expectancy
b. higher productivity rates
c. lower education levels
d. lower birthrates
e. a higher rate of private investment
Question 7Graphically, consumer surplus is measured by:
a. the area below the demand curve.
b. the area below the demand curve, but above the upward-sloping supply curve.
c. the area below the demand curve, but above the market price.
d. the area below the market demand curve, but above the supply curve.
Question 8If multiplier effects are ____ than policy makers expect or the natural rate of real output is _____ than expected, monetary policy will tend to overshoot its intended effects.
a. Greater; greater.
b. Greater; less
c. Less; greater
d. Less; less
Question 9Which of the following is least likely to be included in a definition of basic human needs?
a. A minimal level of clothing
b. A minimal level of health care
c. A minimal level of savings
d. A minimal level of shelter
e. A minimal level of calorie intake
Question 10The difference between the value of a good to sellers and its price is known as:
a. consumer surplus.
b. producer surplus.
c. demand.
d. supply.
Question 11Which of the following is false?
a. Policy makers generally get the timing of countercyclical macroeconomic policy correct.
b. To know the appropriate countercyclical policy to adopt, policy makers would need to know the natural rate of real output.
c. If policy makers underestimate the multiplier, they may overshoot their goal for stimulus policies.
d. All of the above are true
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