The multiplier effect suggests that:
A. a tax cut will increase GDP by more than the amount of the initial tax cut.
B. a ripple effect occurs from one person's initial spending.
C. government spending $1 will create more than a $1 increase in GDP.
D. All of these are true.
Answer: D
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The payoff matrix below shows the daily profit for two firms, Row Restaurant and Column Cafe, for two different strategies, publishing coupons in the student paper and not publishing coupons in the student paper. 
If Row Restaurant publishes coupons, Column Cafe would earn the highest profit if it:
A. only offered coupons half of the time. B. also published coupons. C. did not publish coupons. D. chooses either strategy because Column Cafe will have the same profit in either case.
Refer to the figure above. If the government sets the minimum wage rate at $35, the unemployment in the market will be:
A) 20 units of labor. B) 25 units of labor. C) 15 units of labor. D) 10 units of labor.
An increase in demand will have what effect on equilibrium price and quantity?
a. Price will increase; quantity will decrease. b. Price will decrease; quantity will increase. c. Both price and quantity will increase. d. Both price and quantity will decrease.
Which of the following would impose the greatest costs to society?
A. High levels of expected inflation B. Low levels of expected inflation C. Variable rates of inflation D. Stable rates of inflation