Refer to Figure 14.2. A movement from point b to point a could be caused by a(n):
A. increase in government spending.
B. decrease in the price of oil.
C. increase in taxes.
D. a massive crop failure.
Answer: D
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When the central bank sells $1,000,000 worth of government bonds to the public, the money supply:
A. increases by $1,000,000. B. decreases by $1,000,000. C. decreases by more than $1,000,000. D. decreases by less than $1,000,000.
Even if two competitive firms in the same market have different production technologies, they will each earn long-run zero profits. Why?
What will be an ideal response?
The presence of price controls in a market usually is an indication that
a. an insufficient quantity of a good or service was being produced in that market to meet the public's need. b. the usual forces of supply and demand were not able to establish an equilibrium price in that market. c. policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. d. policymakers correctly believed that, in that market, price controls would generate no inequities of their own.
A major factor contributing to the growth in employee-based health insurance in the United States has been:
a. the legislation requiring all firms to provide health insurance to all full-time workers. b. the long-standing tradition in the United States of providing a generous package of benefits to all workers. c. the tax-free treatment of health insurance as an employee benefit. d. greater-than-average economic growth leading to increased demand for labor.