Movements along the supply curve are a result of changes in__________.

• a.)input prices
• b.)resource access
• c.)regulations
• d.)price

Cross-price elasticityrefers to changes in demand that happen due to changes in price of related goods.

If this value is negative for two goods or services, then they are __________.

If this value is positive, then they are __________.

• a.)luxury; inferior
• b.)substitutes;complementary
• c.)inferior; luxury
• d.)complementary; substitutes

In 2007,the government attempted to end inflation by enforcing a price freeze on basic commodities such as corn, sugar and eggs. This led to runs on grocery stores and other places that sold such items since in some cases the prices were rolled back to almost 50% of what they had been. A shortage occurred because people rushed to stock up on these items as much as they could.

In this example, the freeze on prices is known as a government-enforced __________, with businesses forbidden to charge more than the price set by the government. These government-enforced price constraints are binding because they are lower than the __________.

• a.)price ceiling;equilibrium price
• b.)price floor; price ceiling
• c.)price ceiling; price floor
• d.)price floor; equilibrium price

When the government pays money to encourage production, this is known as a __________.

• a.)revenue stream
• b.)subsidy
• c.)tax incidence
• d.)transfer payment

The value of an item in monetary terms at a specific point in time is the __________.

• a.)inflation
• b.)money supply
• c.)interest rate
• d.)price

Which of the following examples corresponds with frictional unemployment?

• a.)This type of unemployment occurs only during a recession.
• b.)This type of unemployment occurs when the economy changes and people with skills that were once desirable can no longer find work.
• c.)This type of unemployment occurs when college students graduate and look for full-time work.
• d.)This type of unemployment occurs only when the economy is at a peak.

Which of the following is areason why the aggregate demand curve slopes downward?

• a.)
• Balance of payments
• b.)Solow growth curve
• c)Trade surplus
• d.)Interest rate effect

Which of the following is true regarding exchange rates?

• a.)Exchange rates are stable and predictable.
• b.)Exchange rates are set by governments and do not change often.
• c.)Exchange rates are influenced by the market and subject to volatility.
• d.)Economics models can accurately pinpoint changes in exchange rates using economic indicators

When the Current Account and the Capital Account are added together, __________.

• a.)the sum will be negative
• b.)the sum will be positive
• c.)it is impossible to predict, given changes in trade patterns
• d.)the sum will be zero

A demand curve can shift for many reasons.

Select the reason below that does NOT shift a demand curve.

• a.)Changes in preferences
• b.)Price of complements increases
• c.)Price of substitutes increases
• d.)Changes in the price of the good

As prices increase, producers are willing to __________.

• a.)supply a larger quantity of a good or service
• b.)produce less of a good or service
• c.)demand less of a good or service
• d.)demand more of a good or service

If producers are willing to sell 20 cans of soda at a total price of $10 and a local restaurant offers to pay $16, then producer surplus is equal to __________.

• a.)$26
• b.)$6
• c.)$10
• d.)$16

Which of the following does NOT describe equilibrium?

• a.)Every buyer can find a seller, every seller can find a buyer
• b.)Firms maximizing profit
• c.)Quantity supplied and quantity demanded are equal
• d.)The market-clearing price is attained

Where do supply and demand intersect, ceteris paribus?

• a.)At the reservation price
• b.)At equilibrium
• c.)When there is a shortage
• d.)When there is a surplus

Which of the following statements is true?

• a.)A price floor is binding when it is placed above equilibrium.
• b.)A price ceiling is when the minimum wage is higher than the prevailing market wage.
• c.)A price floor happens when the market clears.
• d.)A price ceiling creates surplus when it is binding.

Which of the following statements is true as it relates to equilibrium?

• a.)Set below equilibrium, rent control is an example of a price floor.
• b.)For a price ceiling to be an effective, binding constraint, it must be set higher than equilibrium.
• c.)There is no deadweight loss at equilibrium.
• d.)When above equilibrium, price floors transfer surplus from producers to consumers.

The goal of a subsidy is to __________.

• a.)encourage the production of a good
• b.)discourage consumption of a good
• c.)avoid the deadweight loss
• d.)raise revenue for the government

Which of the statements about aggregate demand is true?

• a.)The price level increases, so firms produce more goods.
• b.)The price level falls, so RGDP does as well.
• c.)As the price level falls, consumers purchase more.
• d.)There is a direct relationship between the price level and RGDP that consumers purchase.

Which statement below is NOT true about the LRAS?

• a.)The LRAS will shift outward if resources allow for a higher sustainable output level.
• b.)The LRAS represents the maximum output level an economy can sustain given its current resources.
• c.)The LRAS remains fixed over time.
• d.)An outward shift in LRAS will occur at the same rate as growth in the economy.

When an economy is producing to the left of the LRAS, __________.

• a.)the LRAS curve will shift to the left to meet the current price level and GDP
• b.)expansionary fiscal policies should be put in place
• c.)contractionary monetary policies should be put in place
• d.)resources are over-utilized