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The average cost curves (AVC and ATC) should be minimized
) The average cost curves (AVC and ATC) should be minimized
A. where MC = ATC and MC = AVC
B. where FC = ATC and FC = AVC
C. where TC starts to increase at a faster rate
D. where ATC = AVC
5) If the wage rate increases,
A. a purely competitive producer will hire less labor, but an imperfectly competitive producer will not
B. an imperfectly competitive producer will hire less labor, but a purely competitive producer will not
C. a purely competitive and an imperfectly competitive producer will both hire less labor
D. an imperfectly competitive producer may find it profitable to hire either more or less labor
6) The real wage will rise if the nominal wage
A. falls more rapidly than the general price level
B. increases at the same rate as labor productivity
C. increases more rapidly than the general price level
D. falls at the same rate as the general price level
7) Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason they do this is to
A. restrict the supply of construction workers
B. increase the elasticity of demand for construction workers
C. increase the demand for construction workers
D. increase the price of substitute inputs
9) A good real-world example of monopolistic competition is
A. lawyers
B. gas stations
C. Time Warner Cable
D. groceries stores
10) An industry comprising a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions, is called
A. monopolistic competition
B. oligopoly
C. pure monopoly
11) Price is constant or given to the individual firm selling in a purely competitive market because
A. the firmÂ’s demand curve is downward sloping
B. of product differentiation reinforced by extensive advertising
C. each seller supplies a negligible fraction of total supply
D. there are no good substitutes for its product
12) The most important pricing strategy for a perfectly competitive firm is
A. minimizing cost
B. maximizing sales
C. product differentiation
D. advertising
14) A third-degree price discrimination can be applied to which of the following market structure
A. A monopoly
B. An oligopoly
C. A monopolistic competition
D. A perfect competition
16) All economies of scale are achieved at the minimum of
A. average total cost
B. total cost
C. average variable cost
D. average fixed cost
17) Inflation is undesirable because it
A. arbitrarily redistributes real income and wealth
B. invariably leads to hyperinflation
C. usually is accompanied by declining real GDP
D. reduces everyoneÂ’s standard of living in the same proportion
18) An economyÂ’s aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the
A. net export effect
B. wealth effect
C. real-balances effect
D. multiplier effect
20) If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium
A. output would rise
B. output would fall
C. price level would necessarily fall
D. price level would necessarily rise
21) Expansionary fiscal policy is so named because it
A. involves an expansion of the nationÂ’s money supply
B. can only be attained by expanding government consumption
C. is aimed at achieving greater price stability
D. can motivate an expansion of real GDP
22) Suppose the price level is fixed, the MPC is .5, and the GDP gap is a negative $100 billion. To achieve full-employment output (exactly), government should
A. increase government expenditures by $100 billion
B. increase government expenditures by $50 billion
C. reduce taxes by $50 billion
D. reduce taxes by $200 billion
23) GDP understates the value of output produced by an economy because it
A. includes transactions that do not take place in organized markets, such as home cooked meals
B. includes environmental degradation caused by increased output production
C. excludes value aIDed from the underground economy, such as tips taken under the table
D. excludes the value of the wages and benefits of government employee
25) Other things equal, a decrease in corporate income taxes will
A. decrease the market price of real capital goods
B. have no effect on the location of the investment demand curve
C. shift the investment demand curve to the right
D. shift the investment demand curve to the left
26) Inflation in U.S. prices will cause
A. an increase in the demand for U.S. dollars and an appreciation in the exchange rate
B. an increase in the supply of U.S. dollars and a depreciation in the exchange rate
C. a decrease in the demand for U.S. dollars and a depreciation in the exchange rate
D. a decrease in the supply of U.S. dollars and an appreciation in the exchange rate
27) The quantity theory of money states that
A. the money supply divided by the velocity of money equals the price level divided by real output
B. the money supply times the velocity of money equals the price level times real output
C. the money supply times the price level equals real output divided by the velocity of money
D. the money supply times the price level equals real output times the velocity of money
28) Suppose that U.S. prices rise 4% over the next year while prices in Mexico rise 6%. According to the purchasing power parity theory of exchange rates, what should happen to the exchange rate between the dollar and the peso?
A. The dollar should depreciate.
B. The peso should appreciate.
C. The peso should depreciate.
D. The dollar will be revalued.
29) A rise in the domestic interest rate leads to capital
A. outflows and exchange rate appreciation
B. outflows and exchange rate depreciation
C. inflows and exchange rate depreciation
D. inflows and exchange rate appreciation