What combination of changes in supply increases equilibrium

Question

Questions:

Part 1

Question 1.  As a consequence of the problem of scarcity
there is never enough of anything.
individuals have to make choices from among alternatives.
production has to be planned by government.
things which are plentiful have relatively high prices.

Question 2. Money is not considered to be an economic resource because
as such, it is not productive.
money is not a free gift of nature.
money is made by man.
idle money balances do not earn interest income.

Question 3. A point inside the production possibilities curve is
attainable and the economy is efficient.
attainable, but the economy is inefficient.
unattainable, but the economy is inefficient.
unattainable and the economy is efficient.

Question 4.  In a command system
self-interest guides and commands individuals to pursue actions that lead them toward achieving their goals.
the head of each family decides what to do with the family's resources.
the government makes production and allocation decisions.
market traders command what outputs are produced and how they are allocated.

Question 5. The demand curve is a representation of the relationship between the quantity of a product demanded and
supply.
wealth.
price.
income.

Question 6. What combination of changes in supply and demand would most likely increase the equilibrium quantity?
When supply increases and demand increases
When supply decreases and demand decreases
When supply decreases and demand increases
When supply increases and demand decreases

Question 7. When the price of movie tickets in a certain town was reduced, the movie theaters' revenues did not change. This suggests that the demand for movie tickets in that town has a price-elasticity coefficient of
1.0.
greater than 1.
0.5.
zero.

Question 8.  The elasticity of supply for a product will be 2 if:
A 1 percent decrease in the price causes a 0.2 percent decrease in quantity supplied
A 2 percent decrease in price causes a 1 percent decrease in quantity supplied
A 1 percent decrease in price causes a 2 percent decrease in quantity supplied
A 2 percent decrease in price causes a 2 percent decrease in quantity supplied

Question 9. A profit-maximizing firm in the short run will expand output
until marginal cost begins to rise.
until total revenue equals total cost.
until marginal cost equals average variable cost.
as long as marginal revenue is greater than marginal cost.

Question 10.Consumers who clip and redeem discount coupons
exhibit the same price elasticity of demand for a given product than consumers who do not clip and redeem coupons.
exhibit more price elasticity of demand for a given product than consumers who do not clip and redeem coupons.
exhibit less price elasticity of demand for a given product than consumers who do not clip and redeem coupons.
cause total revenue to decrease for firms that issue coupons for their products.

Question 11. A major reason that firms form a cartel is to
reduce the elasticity of demand for the product.
enlarge the market share for each producer.
minimize the costs of production.
maximize joint profits.

Question 12. The main difference between the short run and the long run is that
firms earn zero profits in the long run.
the long run always refers to a time period of one year or longer.
in the short run, some inputs are fixed.
in the long run, all inputs are fixed.

Question 13.
 Refer to the diagram. The phases of the business cycle from points A to D are, respectively:

Peak, recession, expansion, trough
Trough, recovery, expansion, peak
Expansion, recession, trough, peak
Peak, recession, trough, expansion

Question 14. The unemployed are those people who
do not have jobs.
are not employed but are seeking work.
are not working.
are not in the workforce.

Question 15. To avoid multiple counting in national income accounts
only final goods and services should be counted.
intermediate goods and services should be counted.
both final and intermediate goods and services should be counted.
primary, intermediate, and final goods and services should be counted.

Question 16.  Nominal GDP differs from real GDP because
nominal GDP is based on constant prices.
real GDP is based on current prices.
real GDP is adjusted for changes in the price level.
nominal GDP is adjusted for changes in the price level.

Question 17. When the federal government uses taxation and spending actions to stimulate the economy it is conducting
fiscal policy.
incomes policy.
monetary policy.
employment policy.

Question 18. Refer to the graph. What combination would most likely cause a shift from AD1 to AD2?

Increases in taxes and government spending
Decrease in taxes and increase in government spending
Increase in taxes and no change in government spending
Decreases in taxes and government spending

Question 19.  Which of the following serves as an automatic stabilizer in the economy?
Interest rates
Exchange rates
Inflation rate
Progressive income tax

Question 20.  The lag between the time the need for fiscal action is recognized and the time action is taken is referred to as the
crowding-out lag.
recognition lag.
operational lag.
administrative lag.

Part 2

Question 1.  An increase in expected future income will
increase aggregate demand and aggregate supply.
decrease aggregate demand and aggregate supply.
increase aggregate supply.
increase aggregate demand.

Question 2.  The short-run aggregate supply curve
becomes flatter at output levels above the full-employment output.
becomes vertical at output levels above the full-employment output.
is upward-sloping with a constant slope.
is horizontal.

Question 3. Which would most likely increase aggregate supply?
An increase in the prices of imported products
An increase in productivity
A decrease in business subsidies
A decrease in personal taxes

Question 4.  Deflation refers to a situation where
price level falls.
price level rises.
the rate of inflation falls.
the rate of inflation rises.

Question 5. Dissaving occurs when
income is greater than saving.
income is less than consumption.
saving is greater than consumption.
saving is greater than the interest rate.

Question 6. Which definition(s) of the money supply include(s) only items which are directly and immediately usable as a medium of exchange?
M1
M2
Neither M1 nor M2
M1 and M2

Question 7. United States currency has value primarily because it
is legal tender, is generally acceptable in exchange for goods or services, and is backed by the gold and silver of the federal government.
is generally acceptable in exchange for goods or services, is backed by the gold and silver of the federal government, and facilitates trade.
is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services.
facilitates trade, is legal tender, and permits the use of credit cards and near-monies.

Question 8. How many members can serve on the Board of Governors of the Federal Reserve System?
Seven
Nine
12
14

Question 9. Which of the following is the most important function of the Federal Reserve System?
Setting reserve requirements
Controlling the money supply
Lending money to banks and thrifts
Acting as fiscal agent for the U.S. government

Question 10.The Federal funds rate is the rate that banks pay for loans from
the Fed.
the U.S. Treasury.
other banks.
large corporations.

Question 11.The establishment of a federal deposit insurance program resulted from the
establishment of the Federal Reserve System in 1913.
speculation during World War I.
stock market crash of 1987.
bank panics of 1930-1933.

Question 12.The purchase and sale of government securities by the Fed is called
federal funds market.
open market operations.
money market transactions.
term auction facility.

Question 13.The Federal Reserve could reduce the money supply by
selling government bonds in the open market.
buying government bonds in the open market.
operating the term auction facility.
reducing the discount rate.

Question 14.Which nation has greatly increased its role in international trade in recent years?
Japan
Iran
Peru
China

Question 15.In a two-nation world, comparative advantage means that one nation can produce
a product with fewer inputs than the other nation.
a product at lower average cost than the other nation.
a product at a lower domestic opportunity cost than the other nation.
more of a product than the other nation.

Question 16.An excise tax on imported commodities is known as a(n)
quota.
tariff.
export restriction.
price ceiling.

Question 17.A key difference between import quotas and voluntary export restraints (VERs) is that the
domestic government administers the former, whereas the foreign government administers the latter.
foreign government administers the former, whereas the domestic government administers the latter.
one is a tax, whereas the other is a quantity limit.
one raises the price of the imported product involved, whereas the other one does not.

Question 18.The major beneficiaries of a tariff on a product are the
domestic producers of the product.
domestic consumers of the product.
workers engaged in trade, like transportation workers.
foreign producers of the product.

Question 19.About how many nations belonged to the World Trade Organization as of 2010?
35
72
153
210

Question 20. U.S. imports
increase the foreign demand for foreign currencies.
increase the domestic demand for foreign currencies.
decrease the foreign supply of foreign currencies.
increase the domestic supply of foreign currencies.

Part 3

1.  Remittances of Mexican workers in the U.S. to their families in Mexico are included in the U.S. balance of payments as a debit in the section on
trade in services.
net international transfers.
financial accounts.
capital accounts.

Question 2. A trade deficit means a net
inflow of payments for goods and services.
outflow of goods and services.
inflow of goods and services.
excess of exports over imports.

Question 3. Foreign exchange rates refer to the
price at which purchases and sales of foreign goods take place.
movement of goods and services from one nation to another.
price of one nation's currency in terms of another nation's currency.
difference between exports and imports in a particular nation.

Question 4. When the exchange rate between pounds and dollars moves from $2 = 1 pound to $1 = 1 pound, we say that the dollar has
depreciated.
appreciated.
inflated.
deflated.

Question 5. The monetary system for conducting international trade is usually described as a system of
fixed exchange rates.
freely floating exchange rates.
a managed gold standard.
managed floating exchange rates.

Question 6.

a) Define the four basic types of trade barriers. b) Who gains and who loses from a protective tariff? Explain.

Question 7.  a) Identify the four major tools of monetary policy. b) Describe how changes in the Fed's major policy tools leads to [1] expansionary and [2] restrictive or contractionay monetary policies.