16. (TCO 3) Why do firms Not want to produce to at an output level that is to the left of the
profit maximizing output point? (Points: 4)
They want to make sure they always produce where the marginal cost is greater
than the marginal revenue
They will make more on a per unit basis and sell more units.
They will make more on a per unit basis but sell fewer units.
They typically have no idea where the profit maximizing output point is.
19. (TCO 3) Which of the following firms is operating in the long-run rather than the short-
run? (Points: 4)
None of the above
20. (TCO 3) Toshiro owns a minor league baseball team. The small stadium he owns is paid
for in full. His players are on various contracts ranging from game-to-game to a 3-year
contract for his star player who hit 55 home runs last year. He has been offered $10 million
for his stadium by a real estate developer. His total variable costs (TVC) have exceeded his
total revenue (TR) for several years and he decides to accept the offer. If he takes to offer
today, which of the following is not true? (Points: 4)
Shut down in the short run
Total revenue will be zero
Variable cost will be zero
Fixed cost will be zero
25. (TCO 5) In general, unanticipated inflation causes: (Points: 4)
creditors and debtors to be gainers
creditors and debtors to be losers
creditors to be gainers and debtors to be losers
creditors to be losers and debtors to be gainers
3. (TCO 6, 10) The effectiveness of discretionary fiscal policy will be reduced if: (Points: 5)
borrowing increases interest rates and crowds out private investment
the dollar depreciates because of an increased outflow of currency
the price level falls
stock prices rise
4. (TCO 6, 10) The 'crowding-out effect' of borrowing to finance an increase in government
expenditures: (Points: 5)
reduces current spending for private investment.
increases the income inequality in the U.S.
reduces the economic burden on future generations.
decreases the need for U.S. securities.
5. (TCO 6, 10) One reason that budget deficits returned to the U.S. economy in 2002 was
because of: (Points: 5)
an economic downturn
less government spending
a reduction in interest rates
6. (TCO 6, 10) Each of the following is an example of discretionary fiscal policy except
public works spending
making the automatic stabilizers more effective
changes in tax rates
changes in interest rates
11. (TCO 5, 6, 10) If automatic stabilizers kick in automatically, when real GDP falls, (Points:
tax revenues and transfer payments both should fall
tax revenues and transfer payments both should rise
tax revenues should fall and transfer payments should rise
tax revenues should rise and transfer payments should fall
16. (TCO 8) Each of the following would reduce our trade deficit except(Points: 5)
decreasing oil imports
raising interest rates
17. (TCO 9) Today international finance is based on (Points: 5)
the gold standard
mainly a relatively free-floating exchange rate system
fixed rates of exchange
none of the above
19. (TCO 8, 9) Joe is laid off because the foreign demand for the product his firm produces
fell. This is a result of the U.S. dollar (Points: 5)
Being strong relative to other nation's currencies.
Being weak relative to other nation's currencies.
Being targeted by the IMF for deflation.
none of the above
20. (TCO 8, 9) Increased U.S. imports: (Points: 5)
decrease the demand for foreign currencies and put upward pressure on the dollar
decrease the demand for foreign currencies and put downward pressure on the
increase the supply of foreign currencies and put downward pressure on the dollar
increase the demand for foreign currencies and put downward pressure on the dollar