9. The marginal rate of substitution is equal to the
(A)slope of the demand curve.
(B) marginal cost of each good.
(C)magnitude of the slope of the indifference curve.
(D)relative prices of the two goods.

10. A market structure in which many firms compete by making similar but slightly different products is called (A)perfect competition. (B) monopolistic competition. (C)oligopoly. (D)monopoly.

11. Which of the following statements is true? (A)In the long run, the average cost curve is always downward sloping. (B) In the long run, the quantities of all inputs are fixed. (C)In the long run, the firms' fixed costs are greater than its variable costs. (D)In the long run, all costs are variable costs.

12. Compared to a single-price monopolist, a price-discriminating monopolist (A)produces more output. (B) produces the same amount of output but charges a higher price. (C)generates a larger deadweight loss. (D)produces less output but charges a lower price.

13. Gross domestic product is a measure of the total value of all (A)sales in an economy over a period of time. (B) consumer income in an economy over a period of time. (C)capital accumulation in an economy over a period of time. (D)final goods and services produced in an economy over a period of time.

14. The labor force is defined as the (A)number of people over 16 years of age. (B) number of people who are working. (C)sum of employed and unemployed people. (D)number of people in blue-collar jobs.

15. Suppose that a bond promises to pay its holder $100 a year forever. If the price of the bond increases from $1,000 to $1,250, then the interest rate on the bond (A)falls from 10 percent to 8 percent. (B) rises from 8 percent to 10 percent. (C)does not change because it is not affected by the price of the bond. (D)falls from 10 percent to 6 percent.

16. In the absence of a Ricardo-Barro effect, a government budget deficit ________ the demand for loanable funds and ________ investment. (A)increases; increases (B) increases; decreases (C)decreases; increases (D)decreases; decreases

17. In the figure above, an increase in the monetary base would create a change such as a (A)movement from point a to point b along the supply of money curve MS0. (B) movement from point b to point a along the supply of money curve MS0. (C)shift from the supply of money curve MS0 to the supply of money curve MS1. (D)shift from the supply of money curve MS1 to the supply of money curve MS0.

18. Suppose the price level, the money wage, and the price of all other resources rise by 10 percent. This set of changes leads to (A)an upward movement along the LAS curve. (B) a downward movement along the LAS curve. (C)an upward movement along the SAS curve. (D)a leftward shift of the LAS curve.

19. Taking into account the upward-sloping short-run aggregate supply curve, the short-run effect of an increase in government expenditure on real GDP is that (A)real GDP increases by more in the short run than in the long run. (B) real GDP increases by the same amount in the short run as in the long run. (C)real GDP increases by less in the short run than in the long run. (D)real GDP does not change in the short run because the price level increases.

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