Briefly discuss the relationship between leakages and the size of the multiplier. What will be an ideal response? ANSWER The fewer leakages out of the circular flow will increase the size of the multiplier. Thus, if the marginal propensities to consume and invest increase or the marginal propensity to import decreases, the slope of […]
________ are the time and resources spent trying to exchange goods and services. A) Bargaining costs B) Transaction costs C) Contracting costs D) Barter costs ANSWER B
As macroeconomic conditions improve and consumers’ incomes and wealth increase, their demand for many products tends to become ________ price inelastic. As such, the ability of firms to mark up price above cost will ________. A) more; increase B) more; decrease C) less; increase D) less; decrease ANSWER A
The markups restaurants apply to various items are heavily influenced by the price elasticity of the demand for each item. Indicate whether the statement is true or false ANSWER TRUE
Assume a perfectly competitive firm is producing a level of output at which MR < MC. What should the firm do to maximize its profits? A) The firm should do nothing — it wants to maximize the difference between MR and MC in order to maximize its profits. B) The firm should decrease output. C) […]
The coefficient of determination is .90, the number of observations is 30, and a multiple regression model using 2 independent variables is estimated. What is the value of the adjusted coefficient of determination? A) .8926 B) .9000 C) .7500 D) .8000 ANSWER A
An estimated regression coefficient is 10 with a standard error of 5. The null hypothesis is that the partial regression coefficient equals zero. What is the value of the t-statistic for testing the null hypothesis of the regression coefficient? A) 1 B) 2 C) 0.5 D) 5 ANSWER B
In the foreign exchange market, the quantity supplied of dollars is 600 whereas the quantity demanded of dollars is 400 results in a: A) balance of payments surplus of 200. B) balance of payments deficit of 200. C) balance of payments surplus of -200. D) balance of payments deficit of -200. ANSWER B
Of money’s three functions, the one that distinguishes money from other assets is its function as a A) store of value. B) unit of account. C) standard of deferred payment. D) medium of exchange. ANSWER D
Assume the market for cell phone service is initially in equilibrium. An increase in supply would cause a surplus at the initial equilibrium price. The market adjustment would then involve a decrease in price which would in turn cause quantity demanded to increase and quantity supplied to decrease until equilibrium is reestablished. Indicate whether the […]
