Macroeconomics: Principles Applications and Tools 8th Edition

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978-0132948876

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0132948877

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Arthur O'Sullivan, Stephen Perez, Steven Sheffrin

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313 documents found.

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BUS 102 According To The

According to the application, shocks to aggregate demand are easily anticipated. Answer: FALSE Answer: FALSE Answer: FALSE Economics tells us what to choose given the tradeoffs. Answer: FALSE Answer: FALSE Answer: FALSE The multiplier is always larger than one because the marginal propensity to consume is always larger than one. Answer: FALSE Answer: FALSE Answer: FALSE Aggregate demand and aggregate supply must

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 132

All of the following are examples of outside lags associated with fiscal policy, except: A) the time it takes for individuals to increase consumption when personal taxes are lowered. B) the time it takes for businesses to increase investment when corporate taxes are lowered. C) the delays in the working of the multiplier

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 136 Test 2

Refer to Figure 15.2. The economy is at full employment and the unemployment rate is at the natural rate at point A) a. B) . C) c. D) d. Answer: B Answer: B Answer: B Consider two individuals, Willy and Blythe, who produce carrots and apples. Willy and Blythe's hourly productivity are as follows: Who has the absolute

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 153

The length of time that Congress takes to formulate a tax bill to help the economy is part of the: A) inside lag. B) outside lag. C) identification lag. D) inside-outside lag. Answer: A Answer: A Answer: A Federal discretionary spending consists of: A) interest payments on government debt held by the public. B) all the spending that Congress authorized

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 163 Test

If K = $200, t = 30 years, i = 5%, the present value (PV) of a payment to be received in 30 years is: A) $190.48. B) $46.27. C) $864.39. D) none of the above Answer: B Answer: B Answer: B Economists say that the economy is at "full employment" when the A) structural unemployment rate is zero. B)

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 172 Final

When the unemployment rate is greater than the natural rate, wages and prices will fall eventually. Answer: TRUE Answer: TRUE Answer: TRUE The marginal propensity to consume is the increase in consumption brought about by an increase in wealth. Answer: FALSE Answer: FALSE Answer: FALSE The aggregate demand curve is the sum of all demand curves for all goods

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 226

To measure the effect of debt in an economy, economists use a standard measure which involves the ________ relative to the GDP. A) stock market activity B) outstanding government bonds C) stock of debt D) capital stock of equipment Answer: C Answer: C Answer: C If a firm that chooses to use all of its corporate earnings as

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 228 Quiz 1

Recall Application 3, "Are They Really Dumping?" to answer the following questions: Based on what you learned from the application, can a firm that exports to the U.S. be charged with dumping even though the price it sells at home is lower? A) No. B) Yes, because the "constructed value" estimated by the

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 242 Suppose The Demand For Hot

Suppose the demand for hot dogs decreases. In the short run, firms that produce hot dogs will experience a fall in prices, which will induce them to A) increase production and increase the number of workers. B) decrease production and increase the number of workers. C) decrease production and reduce the number of

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 259 If You Want To Purchase A New

If you want to purchase a new sports car in four years for $75,000, how much would you need to have in your bank account now, so after four years you will have $75,000 to buy the car? Assume your bank pays 6 percent interest. A) $51,226 B) $59,408 C) $60,484 D) $70,755 Answer: B Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 320

A country facing a balance of payments deficit will change the pegged value of its currency; this is called a revaluation. Answer: FALSE Answer: FALSE Answer: FALSE Additional Application INFLATION-INDEXED BONDS IN THE UNITED STATES Are there bonds that can protect your investments from inflation? In 1997, the U.S. Department of the Treasury created a

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 336 Midterm 2 M1 Is Larger

M1 is larger than M2. Answer: FALSE Answer: FALSE Answer: FALSE Banks can obtain funds to make loans by borrowing reserves from other banks through the federal funds market. Answer: TRUE Answer: TRUE Answer: TRUE Fred wants to trade peanut butter for bread. Sally wants to trade bread for jelly. Fred and Sally have a double coincidence of

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 347 Final The Opportunity

The opportunity cost of something is the gain you receive as a result of your sacrifice. Answer: FALSE Answer: FALSE Answer: FALSE When the federal government runs a budget deficit, it is possible for current taxpayers to pass the tax burden to future generations. Answer: TRUE Answer: TRUE Answer: TRUE An increase in the money supply will increase

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 371

Table 6.10 Refer to Table 6.10. If 1999 is the base year, then the inflation rate (i.e., the growth rate of the price index) between 2000 and 2001 is: A) about 11 percent. B) about 13 percent. C) about 9 percent. D) about 7 percent. Answer: A Answer: A Answer: A Recall Application 1, "Falling Home Prices, the Wealth

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 376

If the marginal propensity to import is 0.2, then a $1,000 increase in income will: A) increase imports by $20. B) increase imports by $200. C) increase exports by $20. D) increase exports by $200. Answer: B Answer: B Answer: B Best Buy, a retailer of electronics, has 500 different products in inventory. Best Buy reports its inventory

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 388 Quiz 3

Recall Application 2, "Increased Political Independence for the Bank of England Lowered Inflation Expectations," to answer the following questions: According to the application, there is evidence that supports the conjecture that: A) more central bank independence is associated with lower inflation. B) more central bank independence is associated with higher real GDP. C) less

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 438 Quiz 1

Which of the following is an example of a supply shock? A) a surprise increase of the money supply B) an increase in government spending C) a sharp increase in the price of oil D) an increase in the price level Answer: C Answer: C Answer: C Recall Application 2, "Economic Equality May Sustain Economic Growth," to answer

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 442 Test 1

If the number of wine producers decreases, A) the demand for wine increases. B) the demand for wine decreases. C) the supply of wine increases. D) the supply of wine decreases. Answer: D Answer: D Answer: D Capital gains are the profit earned from the sale of A) stocks. B) bonds. C) real estate. D) all of the above. Answer: D Answer: D Answer: D According

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 479 An Individual Worked For An

An individual worked for an airline that went out of business because the airline was unable to meet new federal safety standards. While the individual is unemployed, she will be classified as: A) frictionally unemployed. B) naturally unemployed. C) cyclically unemployed. D) structurally unemployed. Answer: D Answer: D Answer: D Assume there is no government or foreign sector.

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 496 Quiz 1

If increases in government spending on infrastructure projects "crowd out" private investment spending, this will lead to A) higher levels of real income and wages in the future. B) no effects on real income and wages in the future. C) lower levels of real income and wages in the future. D) higher levels of

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 508 Midterm 1

Table 11.1 Refer to Table 11.1. If exports decrease by 30, what is the new equilibrium level of output? A) 1,700 B) 2,300 C) 6,800 D) 9,200 Answer: A Answer: A Answer: A Trade results from A) comparative advantage. B) absolute advantage. C) self-sufficiency. D) diminishing returns. Answer: A Answer: A Answer: A Deposits are examples of a bank's A) assets. B) liabilities. C) net worth. D) balance sheet. Answer: B Answer: B Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 518 Midterm

Figure 4.5 illustrates a set of supply and demand curves for hamburgers. An increase in supply and an increase in demand are represented by a movement from A) point d to point . B) point d to point a. C) point c to point a. D) point to point c. Answer: A Answer: A Answer: A In the

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 574 Midterm 2 The Multiplier

The multiplier for investment represents the ratio of the change in income to the change in investment spending. Answer: TRUE Answer: TRUE Answer: TRUE According to Keynesian economics, prices and wages determine the level of output in the economy. Answer: FALSE Answer: FALSE Answer: FALSE Inflation distorts the operation of our tax and financial system. Answer: TRUE Answer: TRUE Answer: TRUE From the

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 576

Classical economists assumed: A) involuntary unemployment exists. B) there is never full employment. C) the wage rate adjusts to maintain labor market equilibrium. D) the wage rate cannot adjust to equate the quantity of labor demanded with quantity of labor supplied. Answer: C Answer: C Answer: C An open market ________ by the Fed decreases interest rates and

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 597 Midterm

A key assumption of most economic analysis is that people act rationally and in their own self-interest. Answer: TRUE Answer: TRUE Answer: TRUE A nation's exports are NOT impacted by the multiplier effect. Answer: FALSE Answer: FALSE Answer: FALSE The opportunity cost of going to a particular college is not the same for everyone. Answer: TRUE Answer: TRUE Answer: TRUE An unexpected

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 600 Quiz 3

During periods of poor economic performance, real GDP A) declines and unemployment rises. B) declines and unemployment declines. C) declines but unemployment typically does not change. D) is unchanged but unemployment rises sharply. Answer: A Answer: A Answer: A Figure 4.6 Figure 4.6 illustrates a set of supply and demand curves for a product. Suppose that the market is

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 603

Production inputs such as steel rods have prices that adjust very quickly. Answer: FALSE Answer: FALSE Answer: FALSE People acting in their own self interest try to gain at the expense of others in exchange leads to someone necessarily losing in a voluntary exchange. Answer: FALSE Answer: FALSE Answer: FALSE Another term for the total demand for goods

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 652 Homework

Recall Application 1, "Absolute Advantage and Comparative Disadvantage in Latvia," to answer the following questions: According to the Application, which good does Latvia have comparative advantage on? A) timber B) grain C) milk D) livestock Answer: A Answer: A Answer: A Recall Application 3, "The Financial System Under Stress: September 11, 2001," to answer the following questions: The Federal Reserve

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 675

When the Fed conducts an open market sale, it leads to a higher level of investment and output in the economy. Answer: FALSE Answer: FALSE Answer: FALSE People will buy more of a normal good when their income decreases. Answer: FALSE Answer: FALSE Answer: FALSE Capital deepening will occur as long as total saving is greater than depreciation. Answer: TRUE Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 695 Midterm

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following questions: According to Application 4, the purchase of short term commercial paper from nonfinancial corporations is a function of the Fed that was outlined in the Federal Reserve Act of 1913. Answer: FALSE Answer: FALSE Answer: FALSE A

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 721 Midterm 1

During hyperinflations, the velocity of money generally increases because A) money is no longer a good store of value, so people spend it slowly. B) money is better store of value, so people spend it immediately. C) economic agents have irrational expectations. D) money is no longer a good store of value, so people

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 721 Test 1

The Federal Reserve is a privately-operated commercial bank. Answer: FALSE Answer: FALSE Answer: FALSE Recall Application 2, "Economic Equality May Sustain Economic Growth," to answer the following questions: According to the Application, intangible capital measurements is based on expenditures on research and development, marketing, design and customer support. Answer: TRUE Answer: TRUE Answer: TRUE Under GATT's "Most Favored Nation" provision

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 728 Quiz 2

Which of the following is an example of a Federal Reserve action that increases the money supply? A) an increase in the required reserve ratio B) a decrease in the discount rate C) an increase in the federal funds rate D) the Fed selling government bonds in the open market Answer: B Answer: B Answer: B Recall Application

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 746 Midterm

Refer to Figure 15.2. Adjustment from a short-run equilibrium to the long-run equilibrium is represented by a movement from point ________ to point ________. A) a; e B) a; c C) e; D) a; Answer: D Answer: D Answer: D A supply curve is defined as the relationship between A) the price of a good and the

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 752

Which of the following is considered a cost of unemployment? A) higher crime, suicide and divorce rates B) severe psychological costs to the job loser C) wasted resources because a worker is not being utilized D) All of the above are considered costs of unemployment. Answer: D Answer: D Answer: D When the interest rate rises, bond prices: A)

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 752 Quiz 2

Economists will always reach the same conclusion in their positive analyses. Answer: FALSE Answer: FALSE Answer: FALSE The inside lags for monetary policy are relatively long compared to those for fiscal policy. Answer: FALSE Answer: FALSE Answer: FALSE If one variable A falls as the other variable B falls, then a line generated by putting variable A on

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 759 Final

Imports are products produced in the home country and sold in another country. Answer: FALSE Answer: FALSE Answer: FALSE The World Trade Organization was formed to enforce GATT and other international trade agreements. Answer: TRUE Answer: TRUE Answer: TRUE Recall Application 3, "The Effectiveness of Committees," to answer the following questions: According to the application, individuals make decisions quicker

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 768 Quiz 3

Opportunity cost is the difference between the nominal and real cost of some action. Answer: FALSE Answer: FALSE Answer: FALSE In a closed economy, when the government runs a budget deficit, national saving is reduced, interest rates rise, and investment falls, holding all else constant. Answer: TRUE Answer: TRUE Answer: TRUE The exchange rate between currencies of different

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 774 Homework

Recall Application 2, "How Fast to Sail?" to answer the following questions: Based on the Application, the marginal benefit of sailing a ship faster is: A) more cargo delivered per year. B) more fuel cost incurred. C) less fuel costs incurred. D) less cargo delivered per year. Answer: A Answer: A Answer: A Assume that C = 150 +

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 801 Midterm 1

Additional Application NEETS ARE THE NEW DISCOURAGED WORKERS IN JAPAN Who are the new discouraged workers in Japan? In Japan, there is growing concern about young people who are not joining the labor force. Young workers who have given up looking for work and often receive support from their parents are known as

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 837 Midterm 2

One way to prove the Ricardian equivalence is true is to show that when the government deficit increases, (the) ________ also increase(s). A) private sector saving B) country's imports C) consumption expenditures D) money supply Answer: A Answer: A Answer: A A bank's reserves A) are the sum of its excess and required reserves. B) can be held as cash

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 863 Midterm 1

Minimum wage laws are examples of: A) price ceilings. B) equilibrium prices. C) price floors. D) minimum supply prices. Answer: C Answer: C Answer: C During the Kennedy Era, the tax cut implemented resulted in: A) stimulating economic growth. B) facilitating a recession. C) driving the economy deeper into a depression. D) pushed the economy into stagflation. Answer: A Answer: A Answer: A ________ is the

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 884

If the multiplier = 2.5, the MPS would be A) 0.25. B) 0.4. C) 0.6. D) 0.75. Answer: B Answer: B Answer: B If the economy is in long run equilibrium at full employment, the level of overall economic activity: A) is positively affected by changes in the price level. B) is not affected by changes in the price level. C)

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 889 Homework

A product produced in a foreign country and purchase by residents of the home country is an import. Answer: TRUE Answer: TRUE Answer: TRUE The opportunity cost of a table is 5 chairs in nation A and 1 chair in nation B. If the nations specialize and trade, an acceptable terms of trade for

Macroeconomics: Principles Applications and Tools 8th Edition

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BUS 889 Quiz 3

If sellers have an expectation of higher future prices: A) the current supply of that good will decrease. B) the current demand for that good will increase. C) the current supply of that good will increase. D) the current demand for that good will decrease. Answer: A Answer: A Answer: A Economists have found that as a nation's

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 109

Recall Application 2, "Economic Equality May Sustain Economic Growth," to answer the following questions: After reading the application, one can conclude that all countries that experience economic growth also experience improved income equality. Answer: FALSE Answer: FALSE Answer: FALSE If the unemployment rate is above the natural rate, we would expect that the inflation rate

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 135 Test

Figure 4.3 illustrates the demand for tacos. An increase in price of tacos would bring about a movement from A) point a to point c. B) point c to point a. C) D2 to D0. D) D0 to D1. Answer: B Answer: B Answer: B Recall Application 1, "Falling Home Prices, the Wealth Effect, and Decreased Consumer Spending,"

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 141 Test 1

When it comes to pollution, economists believe that the government must: A) allow firms to pollute as long as they bear the full cost of their pollution. B) never allow pollution to exist. C) allow firms to pollute as long as the benefits of pollution is positive. D) allow pollution to exist unabated. Answer: A Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 152

Commercial banks: A) conducts monetary policy. B) are nonprofit organizations that lend and borrow funds. C) are financial intermediaries that lend funds and accept deposits. D) print all the money used in the US. Answer: C Answer: C Answer: C Refer to Figure 18.4. With an import ban, what is the equilibrium quantity of gloves in Duckland? A) 100 B)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 170 Test 1

An increase in the demand for labor means that A) the demand for labor increases as a result of an increase in the real wage rate. B) the demand for labor increases as a result of a decrease in the real wage rate. C) the demand for labor increases at any real wage

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 173 Final

Investments are actions that incur costs in the future but provide expected benefits today. Answer: FALSE Answer: FALSE Answer: FALSE Real business cycle theory emphasizes that shocks to technology can play a big part in causing economic fluctuations. Answer: TRUE Answer: TRUE Answer: TRUE The rate of interest that a bank states as its interest rate is the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 174 Homework

Changes in demand will often be met with changes in output rather than changes in prices because of formal and informal contracts. Answer: TRUE Answer: TRUE Answer: TRUE Taxes are the only mechanism by which the federal government earns money. Answer: FALSE Answer: FALSE Answer: FALSE Unemployment occurs even during periods when the economy is growing. Answer: TRUE Answer: TRUE Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 180

The principle that "as one input increases while the other inputs are held fixed, output beyond some point will exhibit increases at a decreasing rate" is known as the: A) marginal principle. B) principle of opportunity cost. C) principle of diminishing returns. D) spillover principle. Answer: C Answer: C Answer: C A possible reason to impose a protectionist

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 254

Insurance companies can reduce risk by accepting premiums from A) many people to insure against independent events. B) few people to insure against independent events. C) many people to insure against dependent events. D) few people to insure against dependent events. Answer: A Answer: A Answer: A Firms expect to make money on repeat business because: A) they think

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 259 Quiz

The price of a stock is equal to the present value of expected future dividend payments. Answer: TRUE Answer: TRUE Answer: TRUE A restriction on imports is likely to reduce further restrictions on trade. Answer: FALSE Answer: FALSE Answer: FALSE Higher tax rates lower the value of the spending multiplier and make the economy more susceptible to shocks. Answer: FALSE Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 363 Test

Assume there is no government or foreign sector. If the multiplier is 5, a $10 billion increase in investment will cause equilibrium output to increase by: A) $5 billion. B) $10 billion. C) $50 billion. D) $200 billion. Answer: C Answer: C Answer: C Figure 9.5 Refer to Figure 9.5. Suppose the economy is a point B. A

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 379 Homework

The amount of income that households keep after paying taxes is A) national income. B) personal income. C) personal disposable income. D) value added income. Answer: C Answer: C Answer: C Which of the following situations will arise in the domestic market following the imposition of an import quota? A) Imports increase, domestic production decreases, prices decrease. B) Imports decrease,

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 417 The Realnominal Principle

The real-nominal principle can be stated as A) production generates income. B) only final goods and services should be counted in GDP. C) what matters to people is the purchasing power of money or income. D) only the manufacture of real goods is production. Answer: C Answer: C Answer: C In 1929-1933, the U.S. experienced unemployment rates exceeding

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 427 Midterm 1

Recall the Application about the market for meteorites to answer the following question(s). According to the Application, people in Morocco bring meteorites picked up in the desert to local dealers, who then sell them to the public through Websites. If the Moroccan government decided to intervene in this market by requiring

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 427 Test

Excess demand in an unregulated market will cause the price of a product to fall. Answer: FALSE Answer: FALSE Answer: FALSE During recessions, the full utilization of the capital stock raises labor productivity. Answer: FALSE Answer: FALSE Answer: FALSE Governments sometime create an excess demand for a product by setting a maximum price that is less than the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 434 If The Yen To Dollar

If the yen to dollar exchange rate moves from 105 to 115 yen per dollar, then the dollar has ________ and the yen has ________. A) depreciated; depreciated B) depreciated; appreciated C) appreciated; depreciated D) appreciated; appreciated Answer: C Answer: C Answer: C Recall Application 2, "What Have Been the Local Effects of Chinese Imports?" to answer the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 456 Midterm

Excess reserves in a bank are the difference between required reserves and the bank's total net worth. Answer: FALSE Answer: FALSE Answer: FALSE When prices rise, increases in real income are greater than increases in nominal income. Answer: FALSE Answer: FALSE Answer: FALSE The notion of opportunity cost allows the measurement of tradeoffs. Answer: TRUE Answer: TRUE Answer: TRUE If cash is

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 475 Test

Flexible exchange rates require the coordination of economic policies between countries. Answer: FALSE Answer: FALSE Answer: FALSE All topics concerning taxes are within the realm of macroeconomics. Answer: FALSE Answer: FALSE Answer: FALSE A country that experiences population growth (holding K constant) will experience real GDP growth. Answer: TRUE Answer: TRUE Answer: TRUE When the public expects inflation, real and nominal rates

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 508 Quiz 2

Replacing the personal income tax with a consumption tax would: A) favor wealthy and high income individuals. B) favor poor and low income individuals. C) increase overall federal revenues from taxation. D) favor all taxpayers equally, regardless of their personal wealth. Answer: A Answer: A Answer: A The policy of running deficits and only gradually increasing taxes later

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 519 Midterm

The crowding-in effect implies that a decrease in government purchases causes: A) interest rates to fall, which decreases investment. B) interest rates to fall, which increases investment. C) interest rates to rise, which decreases investment. D) interest rates to rise, which increases investment. Answer: B Answer: B Answer: B Which of the following is a problem with the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 537 According To The

According to the Application, moving from a country with relatively weak civil liberties to one with relatively strong civil liberties, the economic rate of return on World Bank development projects A) increases by about 15 percentage points. B) more than triples. C) decreases by more than 20 percent. D) is not noticeably changed. Answer: A Answer: A Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 556

The Fed has immense power and there are no limits to the extent to which it can effectively control the economy. Answer: FALSE Answer: FALSE Answer: FALSE The government can use contractionary fiscal policies to prevent a wage-price spiral. Answer: TRUE Answer: TRUE Answer: TRUE Taxation and government spending are examples of fiscal policy tools used to stabilize

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 559 Midterm 1

An increase in the marginal propensity to import will cause the aggregate expenditure line to: A) become flatter. B) become steeper. C) shift upwards. D) shift downwards. Answer: A Answer: A Answer: A Suppose that in the time it takes for him to bake a cake, Bob can produce sew 5 pairs of jeans. In the time it

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 577 Midterm

Figure 7.2 Refer to Figure 7.2. According to classical economists if the wage rate is: A) $12, the wage rate will decline to eliminate the surplus. B) $12, the wage rate will increase to eliminate the shortage. C) $7, the wage rate will decline to eliminate the surplus. D) $12, the wage rate

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 580 Quiz 3

The economic theory that emphasizes the role of difficulties in coordinating economic affairs as a cause of economic fluctuations is known as A) Keynesian economics. B) investment cycle theory. C) real business cycle theory. D) technology shock theory. Answer: A Answer: A Answer: A The weekly income earned in 1974 at that time could buy ________ standard baskets

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 583 Quiz 2

The reason why economists do not need details regarding the topography of a region when determining driving directions is because the topography is irrelevant to complete your objective of getting to a certain place. Answer: TRUE Answer: TRUE Answer: TRUE The Bretton Woods exchange rate system was replaced by a gold standard. Answer: FALSE[/cpmembership] Answer: FALSE[/cpmembership] Answer: FALSE[/cpmembership] Changes

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 621 Homework

Which of the following is not a transfer payment? A) Social Security benefits B) corporate dividends C) Medicaid D) government welfare payments Answer: B Answer: B Answer: B Arguments against the balanced budget amendment include which of the following? A) A balanced budget amendment would exert fiscal discipline on the federal government. B) A balanced budget amendment would increase capital

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 625 Quiz 1

Estate and gift taxes account for a very small portion of total tax revenues collected by the federal government because taxes are levied only on large estates. Answer: TRUE Answer: TRUE Answer: TRUE The only way governments can finance a deficit is by printing new money. Answer: FALSE Answer: FALSE Answer: FALSE Compensation of employees is the largest

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 639

The entire short-run production function shifts upward if: A) diminishing returns are close to zero. B) the stock of capital increases. C) the quantity of labor increases. D) productivity decreases. Answer: B Answer: B Answer: B If the marginal propensity to consume is 0.75 and marginal propensity to import is 0.15, then the multiplier in an open economy is: A)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 640 Midterm 2

The Federal Reserve is under the supervision of Congress. Answer: FALSE Answer: FALSE Answer: FALSE The investment rule states that you should invest in a project if the present value of the future payments from the project is less than or equal to the cost you incur today. Answer: FALSE Answer: FALSE Answer: FALSE A decrease in demand

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 641

The income-expenditure model assumes that the aggregate supply curve is horizontal at a given price level. Answer: TRUE Answer: TRUE Answer: TRUE An inside lag is the time period it takes for the stabilization policies to take effect after they have been implemented. Answer: FALSE Answer: FALSE Answer: FALSE The tax cuts of 2008 were valued at approximately one

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 672 Quiz 1

If a project costs $600 today and returns $630 next year, the highest interest rate at which the project should still be undertaken is five percent. Answer: TRUE Answer: TRUE Answer: TRUE An increase in checking account balances equals the initial deposit multiplied by total reserves. Answer: FALSE Answer: FALSE Answer: FALSE Aggregate demand will be affected by

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 691 Quiz

If a competitive market operates perfectly, it relies on A) the number of people buying goods. B) the laws of supply and demand. C) how many products can be produced for sale. D) how much people are willing to pay for the products. Answer: B Answer: B Answer: B Markets exist A) so people can buy and sell things. B)

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 701 Quiz 3

Explain how each of the following policy actions by the Federal Reserve would affect the quantity of money supplied: (a) a decrease in the required reserve ratio (b) an increase in the discount rate (c) the Fed purchases government bonds from the public Answer:(a) A decrease in the required reserve ratio will raise the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 704

Recall the Application about the increase in Chinese demand for pecans to answer the following question(s). Between 2006 and 2009, Chinese imports of U.S. pecans increased from 9 million pounds per year to 88 million pounds per year, and as a result of the increase in demand, the equilibrium price

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 724 Midterm 1

An economy's capital stock is increased when individuals and institutions use savings to increase capital investment in stocks and bonds. Answer: TRUE Answer: TRUE Answer: TRUE The notion of opportunity cost allows the measurement of tradeoffs. Answer: TRUE Answer: TRUE Answer: TRUE The interest rate quoted in financial markets is the nominal interest rate, and the nominal interest rate

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 727 Quiz 1

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following questions: According to Application 4, the solution that the Fed came up with to prevent the collapse of Bear Stearns was to: A) sell Bear Sterns to JP Morgan Chase and Co. B) buy an 80

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 742

In a business cycle, the period following a trough is called an expansion. Answer: TRUE Answer: TRUE Answer: TRUE An economy is better off with an increase in the stock of capital. Answer: TRUE Answer: TRUE Answer: TRUE A tax cut of $10 billion will have less effect on the economy than an increase in government spending of

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 743 Midterm 2

Table 3.1 Table 3.1 illustrates Willy and Blythe's hourly production for apples and carrots. Based on the table, Willy's opportunity cost of 1 apple is: A) 1 carrot. B) 2/3 carrot. C) 4 carrots. D) 6 carrots. Answer: B Answer: B Answer: B If the nominal interest rate is 2 percent and the inflation rate is 4 percent, then

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 772

The long run aggregate supply curve is vertical. Answer: TRUE Answer: TRUE Answer: TRUE Fiscal actions to eliminate a recession are likely to decrease the federal budget deficit. Answer: FALSE Answer: FALSE Answer: FALSE Markets exist to facilitate exchange between people. Answer: TRUE Answer: TRUE Answer: TRUE Net interest payments made by the government depend on the total federal debt held and

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 779

In order to reduce the high inflation of the late 1970s, Paul Volcker A) increased the growth of the money supply, thereby decreasing interest rates. B) decreased the growth of the money supply, thereby decreasing interest rates. C) decreased the growth of the money supply, thereby increasing interest rates. D) increased the growth of

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 781 Test

The Fed's management of public expectations is sometimes hindered by its own: A) inside lags. B) difficulty in communicating the direction of future policy actions. C) internal disagreements about the course of future monetary policy. D) inability to conduct effective open market operations. Answer: B Answer: B Answer: B Figure 19.1 Refer to Figure 19.1. The yen is

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 788 Quiz 2

The federal income tax on wages is the largest source of revenue for the federal government. Answer: TRUE Answer: TRUE Answer: TRUE A principle is a self-evident truth that most people readily understand and accept. Answer: TRUE Answer: TRUE Answer: TRUE An import quota is the same as an import ban. Answer: FALSE Answer: FALSE Answer: FALSE A large government debt increases

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 822 Midterm

With the use of growth accounting, which of the following helps explain why the growth rate in the United States has been positive during the 1900s? A) the increase in capital per worker B) the reduction in oil prices C) the reduction in nominal wages D) the increase in the minimum wage Answer: A Answer: A Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 827 Test 1

Education can contribute to economic growth through: A) a better integration of technology and workers' skills. B) the faster discovery of new technologies. C) the faster adaptation of existing technologies. D) all of the above. Answer: D Answer: D Answer: D Figure 19.3 Refer to Figure 19.3. The market for yen is currently at Point A. An increase

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 862

The unemployment that occurs as a result of the normal functioning of the labor market is called cyclical unemployment. Answer: FALSE Answer: FALSE Answer: FALSE Nominal wage increases will cause real wage increases. Answer: FALSE Answer: FALSE Answer: FALSE The price system always works instantaneously. Answer: FALSE Answer: FALSE Answer: FALSE The larger the marginal propensity to save, the smaller the multiplier. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECB 886 Homework

What government agency has the option to purchase government bonds issued by the U.S. Treasury? A) the IRS B) the Federal Reserve C) the Commerce Department D) the Congressional Budget Office Answer: B Answer: B Answer: B Let C = 550 + 0.8y and I = 75. Assume no government or foreign sectors. If investment increases by 100,

Macroeconomics: Principles Applications and Tools 8th Edition

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ECB 895 Midterm 2

Price level is held constant when moving along the planned expenditures curve. Answer: TRUE Answer: TRUE Answer: TRUE Recall Application 3, "Oil Supply Disruptions, Speculation and Supply Shocks," to answer the following questions: Oil price speculators cause an increase in the price of oil both now and in the future. Answer: FALSE Answer: FALSE Answer: FALSE The marginal principle

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 100 Midterm 2

The reason why economists do not need details regarding the topography of a region when determining driving directions is because economics is because economics desires unrealistic assumptions. Answer: FALSE Answer: FALSE Answer: FALSE The deposit insurance is provided by a private corporation. Answer: FALSE Answer: FALSE Answer: FALSE The definition of a hyperinflation is having an inflation rate

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 133 Midterm

The production function is the mathematical representation of the technological relationship between: A) output and government policy. B) inputs and output. C) government policy changes and inflation. D) the rate of capital accumulation and national output. Answer: B Answer: B Answer: B Discouraged workers are workers who leave the labor force because of: A) their inability to find jobs. B)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 141 Test

Suppose that an economy is experiencing continuously rising prices. If 2000 is the base year, then the real GDP in 1990 is ________ the nominal GDP. A) less than B) equal to C) greater than D) There is insufficient information to answer this question. Answer: C Answer: C Answer: C An example of a good that has auction

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 156 Quiz 3

What matters to people is the face value of money or income. Answer: FALSE Answer: FALSE Answer: FALSE In the circular flow diagram, households and the firms interact in two markets: the product and the factor markets. Answer: TRUE Answer: TRUE Answer: TRUE The opportunity cost of a table is 5 chairs in nation A and 4 chairs

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 170

If the quantity of money demanded is less than the quantity of money supplied, then the A) interest rate stays the same. B) interest rate will increase. C) interest rate will decrease. D) effect on the interest rate is indeterminate. Answer: C Answer: C Answer: C Which one of the following statements is true? A) In the short run,

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 183 Quiz

The federal budget acts as an automatic economic stabilizer because the President has the power to authorize additional discretionary spending. Answer: FALSE Answer: FALSE Answer: FALSE Governments occasionally get involved in creating a market equilibrium by setting a maximum price that is less than the equilibrium price, resulting in a permanent excess demand for

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 212

Long-run money neutrality means that an increase in the money supply has no effect on real interest rates, investment, or output in the long run. Answer: TRUE Answer: TRUE Answer: TRUE When decisions are made regarding inflation using the rule-of-thumb, decision makers assume that inflation next year will be the same as the current year. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 235 Prisoners In World War II

Prisoners in World War II POW camps traded products for other products, a process referred to as A) barter. B) rationing. C) central planning. D) advantage exchange. Answer: A Answer: A Answer: A Refer to Figure 8A.1. Capital deepening occurs as long as A) total saving exceeds depreciation. B) depreciation exceeds total saving. C) total saving and depreciation are equal. D) the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 242 Midterm

The Mexican financial crisis of 1994 was not caused by: A) improved tourism from the U.S. to Mexico. B) the country experiencing increasingly larger trade deficits. C) the rising Mexican inflation rate. D) a loss of confidence in the economy which resulted in massive selling of pesos. Answer: A Answer: A Answer: A Figure 18.4 Refer to Figure 18.4.

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 272 Quiz

If a country is experiencing inflation, nominal GDP is always greater than real GDP. Answer: FALSE Answer: FALSE Answer: FALSE Capital deepening is the only mechanism by which economies can grow. Answer: FALSE Answer: FALSE Answer: FALSE Accurate predictions for exchange rates can be determined by considering purchasing power parity. Answer: FALSE Answer: FALSE Answer: FALSE Because GDP ignores most transactions that

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 278

The marginal propensity to save (MPS) is equal to A) 1 - MPC. B) MPC - 1. C) MPC + 1. D) 1 + MPC. Answer: A Answer: A Answer: A Recall Application 1, "Creating the U.S. Federal Fiscal System Through Debt Policy," to answer the following questions: According to the Application, what was the reason why the federal

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 292 Quiz 2

Corporate income is taxed twice. Answer: TRUE Answer: TRUE Answer: TRUE Unlike social insurance taxes, income taxes are paid on wages only. Answer: FALSE Answer: FALSE Answer: FALSE When there is imperfect competition, the role of government is to take control of production. Answer: FALSE Answer: FALSE Answer: FALSE The actual unemployment rate can be greater than or less than the natural

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 330 Test 1

Recall Application 1, "Don't Forget the Costs of Time and Invested Funds," to answer the following questions. From the Application, the opportunity cost of your invested capital is: A) the interest you could get if you invested in in a bond. B) zero. C) the revenue you could get once the capital is used. D)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 385 Homework

The labor supply curve is based on the decision of: A) workers on how many hours to work and how much to enjoy as leisure. B) firms on how many workers to hire. C) firms on how many goods and services to produce. D) workers on how much income to spend. Answer: A Answer: A Answer: A Payments

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 387 Quiz 2

The absolute value of the tax multiplier is equal to the absolute value of the government spending multiplier. Answer: FALSE Answer: FALSE Answer: FALSE The market demand curve shows the relationship between the price and the quantity demanded by all consumers, everything else being equal. Answer: TRUE Answer: TRUE Answer: TRUE A consumption possibilities curve shows the combinations of

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 394 Quiz 1

If the economy is in equilibrium at full employment, a decrease in aggregate demand will: A) decrease the price level and leave the level of output unchanged in the short run. B) increase the price level and leave the level of output unchanged in the short run. C) increase both the price level

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 398 Test

Hyperinflation refers to an inflation rate which exceeds 5 percent per month. Answer: FALSE Answer: FALSE Answer: FALSE Uncertainty about the future is likely to increase current consumption spending. Answer: FALSE Answer: FALSE Answer: FALSE An excess supply of dollars will cause an appreciation of the pound relative to the dollar. Answer: TRUE Answer: TRUE Answer: TRUE Positive relationships are also referred

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 435

If the Federal Reserve raises the discount rate, banks will be inclined to borrow additional reserves and the money supply will increase. Answer: FALSE Answer: FALSE Answer: FALSE When people who are not working start looking for jobs, the labor-force participation rate increases. Answer: TRUE Answer: TRUE Answer: TRUE Rule-of-thumb methods of forecasting inflation uses rational expectations. Answer: FALSE Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 450 Final

Recall Application 1, "Increasing Life Expectancy and Aging Populations Spur Costs of Entitlement Programs," to answer the following questions: According to the application, increasing life expectancy would affect the budget because: A) as the population grows older, the Social Security payments will increase. B) as the population grows older, Medicare payments would increase. C) as

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 451

Recall the Application about the lack of property rights in Peru, and why clear property rights are important for economic growth in developing countries, to answer the following question(s). Clear property rights give owners an incentive to make long-term investments in their property, and are vital for the property owners to

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 457 Test 1

Along the short run supply curve, when the price level rises, there is an increase in aggregate quantity supplied. Answer: TRUE Answer: TRUE Answer: TRUE An excess demand for money drives interest rates down. Answer: FALSE Answer: FALSE Answer: FALSE The United States experienced a liquidity trap in the 1st decade of the 21st century. Answer: TRUE Answer: TRUE Answer: TRUE If

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 468 Quiz 3

A "trade deficit" occurs when A) we sell more to other countries than we buy from them. B) we buy more from other countries than we sell to them. C) we sell more to one country than another. D) we sell less to one country than another. Answer: B Answer: B Answer: B Markets perform all of the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 478 Quiz 3

Figure 14.3 If the quantity of money demanded is less than the quantity of money supplied, then the interest rate will: A) change in an uncertain direction. B) rise. C) remain constant. D) fall. Answer: D Answer: D Answer: D Bananas and apples are substitutes. When the price of bananas falls and a technological advancement in apple production occurs at

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 482

Higher taxes is an example of an expansionary fiscal policy. Answer: FALSE Answer: FALSE Answer: FALSE According to the Application, all countries that are involved in a war will experience hyperinflation. Answer: FALSE Answer: FALSE Answer: FALSE In the determination of production of goods or services with respect to GDP, transfer payments are included. Answer: FALSE Answer: FALSE Answer: FALSE Markets exist

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 499 Midterm

Figur e 15.3 Refer to Figure 15.3 If this economy is initially in a recession, the change in price level which would bring the economy back to full employment would lead to a change in money demand, which is reflected by the movement from A) f to e. B) 1 to 0. C) AS1

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 500 Midterm 2

The cost savings from outsourcing often lead to ________ for consumers and ________ for the outsourcing company. A) lower prices; less output B) lower prices; more output C) higher prices; less output D) higher prices; more output Answer: B Answer: B Answer: B Recall the Application about the government of Mexico City repainting highway lane lines to transform a

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 505 Final

A(n) ________ is a trade policy by which a nation agrees to limit its exports of a good in order to avoid more restrictive trade policies. A) tariff B) voluntary export restraint C) import quota D) import ban Answer: B Answer: B Answer: B Suppose that technological advancement makes labor more productive. What is likely to happen wages

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 526

Recall Application 1, "Falling Home Prices, the Wealth Effect, and Decreased Consumer Spending," to answer the following questions: According to the application, from 1997-2006, the nationwide increase in home values averaged: A) 90 percent. B) 80 percent. C) 150 percent. D) 200 percent. Answer: A Answer: A Answer: A The term "classical economics" was first used by ________ to

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 573

A large technological improvement will shift the short-run aggregate supply curve to the right. Answer: TRUE Answer: TRUE Answer: TRUE Excess supply in an unregulated market will cause the price of a product to fall. Answer: TRUE Answer: TRUE Answer: TRUE According to the real business cycle theory, technological progress is responsible for fluctuations in output. Answer: TRUE Answer: TRUE Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 616 Test

A reduction in the price level will shift the money demand curve to the right. Answer: FALSE Answer: FALSE Answer: FALSE In the United States, corporate profits are taxed twice. Answer: TRUE Answer: TRUE Answer: TRUE Recall Application 3, "The Broken Window Fallacy and Keynesian Economics," to answer the following question: During recessions, automatic stabilizers work to reduce government

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 664 Quiz 1

A price index is: A) a measurement showing how the average price of a bundle of goods changes over time. B) a measurement showing the cost of a bundle of goods at a point in time. C) a sustained increase in the overall price level. D) a decrease in the overall price level. Answer: A

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 667 Quiz

Figure 4.7 If demand and supply rise in Figure 4.7, then the equilibrium: A) price rises. B) price falls. C) quantity rises. D) quantity falls. Answer: C Answer: C Answer: C Firms consider the ________ wage when considering whether to hire additional units of labor. A) nominal B) real C) minimum D) normal Answer: B Answer: B Answer: B Which of the following assets is the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 687 Test 1

The marginal output of labor is the amount of output that can be produced if one more unit of labor is added. Answer: TRUE Answer: TRUE Answer: TRUE The marginal propensity to consume is the slope of the consumption function. Answer: TRUE Answer: TRUE Answer: TRUE According to the quantity equation, money times the velocity of money equals

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 692 Midterm

Recall Application 2, "World Savings and the U.S. Current Account Deficits," to answer the following questions: Since reaching a high in July 2008, the price of oil has been fluctuating at lower prices worldwide. Based on the argument provided in the Application, how will this drop in the price of oil affect

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 694 Quiz 1

The substitution effect of a price change implies that as the price of a good falls, people are likely to buy less of the good whose price has fallen. Answer: FALSE Answer: FALSE Answer: FALSE Spending on consumer durables decreases as the interest rate increases. Answer: TRUE Answer: TRUE Answer: TRUE The value of goods produced in a

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 706

A(n) ________ in U.S. prices will cause an increase in the demand for U.S. dollars and a(n) ________ in the (per dollar) exchange rate. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease Answer: C Answer: C Answer: C An increase in government spending and a decrease in taxes will cause the: A) budget deficit to

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 749

Diminishing returns to labor implies that: A) as labor increases output increases. B) as output increases, labor increases. C) as labor increases, output decreases. D) as labor increases, labor productivity decreases. Answer: D Answer: D Answer: D A single variable can be illustrated as: A) a bar graph. B) a pie chart. C) a time-series graph. D) all of the above. Answer: D Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 780 Midterm 1

An increase in the supply of dollars: A) increases the dollar price of yen. B) decreases the dollar price of yen. C) increases the yen price of dollars. D) does not change the exchange rate between dollars and yen. Answer: A Answer: A Answer: A Figure 18.1 Refer to Figure 18.2. After trade and specialization begin, the maximum

Macroeconomics: Principles Applications and Tools 8th Edition

Exam Prep

ECON 805 Test

Foreign investment can increase a country's capital stock. Answer: TRUE Answer: TRUE Answer: TRUE When applying the marginal principle, you should pick the level at which the activity's marginal benefit is less than its marginal cost. Answer: FALSE Answer: FALSE Answer: FALSE In the short run, it is likely that an increase in the money supply will cause

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 814 Test

If current unemployment is close to the natural rate of unemployment, the level of real GDP is likely to be close to the level of potential output. Answer: TRUE Answer: TRUE Answer: TRUE Fiat money refers to a monetary system in which gold backs up paper money. Answer: FALSE Answer: FALSE Answer: FALSE Recall the Application about the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 837 Quiz 1

An increase in the price level increases the speculative demand for money. Answer: FALSE Answer: FALSE Answer: FALSE Intermediate goods are not counted as part of gross domestic product. Answer: TRUE Answer: TRUE Answer: TRUE Inside lags in fiscal policy tend to take a long time, usually longer than the outside lags. Answer: TRUE Answer: TRUE Answer: TRUE The basket of goods

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 870 Final

Active fiscal policy is the main tool used by the Fed for economic stabilization. Answer: FALSE Answer: FALSE Answer: FALSE Insurance companies such as Farmers Insurance are considered as financial intermediaries. Answer: TRUE Answer: TRUE Answer: TRUE Economists who have studied economic growth find strong evidence of convergence. Answer: FALSE Answer: FALSE Answer: FALSE If taxes and government spending increase by the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 877 Midterm

A surplus is defined as A) the excess of total expenditures over total revenues. B) the excess of total revenues over total expenditures. C) government spending plus transfer payments. D) the sum of all past borrowing by the government. Answer: B Answer: B Answer: B The knowledge and skills acquired by a worker through education and experience is

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON 892 Homework

Daily Output of Japan and U.S. Table 18.2 Refer to Table 18.2. Japan has a comparative advantage in the production of: A) stereos. B) tractors. C) both stereos and tractors. D) neither stereos nor tractors. Answer: A Answer: A Answer: A If the economy is experiencing 50 percent inflation per month, then a donut that costs $1.50 today will

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 115 Test 2

What is the motivation for individuals to hold money? A) to reduce risk B) to have liquidity C) to facilitate transactions D) all of the above Answer: D Answer: D Answer: D Table 2.5 Comparing the minimum wages between 1974 and 2011 addresses the economic concept of A) the marginal principle. B) the principle of voluntary exchange. C) the principle of diminishing

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 165 Midterm 2

Recall Application 2, "Two Approaches to Determining the Causes of Recessions," to answer the following questions: According to the application, a recession is likely to be caused by a decrease in aggregate supply if: A) prices change but output does not change in the long run. B) both prices and output change in

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 226

Recall Application 4, "The Introduction of Cell Phones and the Bias in the CPI," to answer the following questions: According to the application, the failure to include cell phones in the calculation of the CPI creates an upward bias on the telecommunications component of the CPI by 0.8 to 1.9 percent.

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 245 Homework

The purpose of having the members of the Board of Governors of the Federal Reserve serve fourteen-year terms is to A) ensure that the governors become well-experienced at policymaking. B) insulate the governors' policy decisions from the influence of presidential elections and politics. C) promote unity of opinion from shared time together. D) establish

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 251 Midterm 2

Suppose that a sporting goods store had $800 of golf balls on its shelves at the beginning of 2012 and $1,300 at the end of 2012. The amount of inventory investment included in GDP would be A) $500. B) $800. C) $1,300. D) $2,100. Answer: A Answer: A Answer: A Insurance: A) specifies the term of exchange facilitating exchange

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 267

If the growth rate of money changes, there will be no long-run effects on real interest rates. Answer: TRUE Answer: TRUE Answer: TRUE A decrease in supply will cause the equilibrium price and quantity of a good to fall. Answer: FALSE Answer: FALSE Answer: FALSE Countries that devote a large share of GDP to investment tend to have

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 280 Test 2

The federal revenue source that generates a little revenue but generates a lot of controversy is the: A) estate and gift tax. B) medicare tax. C) social security tax. D) corporate tax. Answer: A Answer: A Answer: A Table 2.3 Refer to Table 2.3. The marginal product of the 2nd worker is: A) 100 units of output. B) 80 units

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 285 Quiz 1

In the short run, the level of GDP is determined primarily by the aggregate supply. Answer: FALSE Answer: FALSE Answer: FALSE If supply of a product increases and demand for the product decreases, equilibrium price will definitely change. Answer: TRUE Answer: TRUE Answer: TRUE The George W. Bush administration inherited budget surpluses from the Clinton administration before starting

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 374 Quiz

The federal budget works as an automatic economic stabilizer because: A) budgetary lags are shorter than monetary lags. B) federal agencies can not be crowded out. C) it is activated by a constitutional amendment. D) it does not require explicit action by the President or Congress. Answer: D Answer: D Answer: D In the consumption function C =

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 376

Suppose that the quantity supplied of cars exceeds the quantity of cars demanded. We would expect that: A) the price of cars will increase. B) the price of cars will decrease. C) the supply will increase to meet the demand. D) the demand will decrease to meet the supply. Answer: B Answer: B Answer: B Which of the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 386

Expected Real Rates of Interest for Five Countries Source: Trading Economics, September, 2010Table 12.1Refer to Table 12.1. The expected real rate of interest for Australia is A) -1.4%. B) 1.4%. C) 6.9%. D) cannot be determined from the information provided. Answer: B Answer: B Answer: B At a price of $1000, Dell Computer Co. is willing to sell 20

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 393 Midterm 2

Recall Application 3, "Sources of Growth in China and India," to answer the following questions: According to the application, which country has a low GNP per capita relative to the U.S.? A) China B) India C) Both A and B are correct. D) Neither A nor B is correct. Answer: C Answer: C Answer: C Table 11.6 Refer

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 416 Quiz 1

The price of a stock is equal to the present value of expected future dividend payments from the stock. Answer: TRUE Answer: TRUE Answer: TRUE Growth that cannot be explained by increases in capital and labor must be caused by technological progress. Answer: TRUE Answer: TRUE Answer: TRUE Recall Application 3, "Oil Supply Disruptions, Speculation and Supply Shocks,"

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 440 Midterm

Assume that the consumption function is C = 100 + 0.8Y, income (Y) is $1,000 billion, and investment I is $50 billion, then the unplanned inventory change will be $ ________ billion. A) -50 B) 0 C) 50 D) 100 Answer: C Answer: C Answer: C If the Federal Reserve purchases newly issued government bonds, the government is

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 460 Test 2

Rational expectations of inflation means that when decisions are made regarding inflation, people use information rather than making assumptions that inflation will rise or decline in the future. Answer: TRUE Answer: TRUE Answer: TRUE Stocks and bonds are types of financial intermediaries. Answer: FALSE Answer: FALSE Answer: FALSE Economists assume that individuals make informed decisions and act in

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 485 Quiz 3

The marginal propensity to consume (MPC) is the fraction of additional income that is spent. Answer: TRUE Answer: TRUE Answer: TRUE An increase in the price level in the United States relative to the price level in Mexico will cause an appreciation of the dollar against the peso. Answer: FALSE Answer: FALSE Answer: FALSE The opportunity cost of

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 510 Midterm 2

Other things being equal, the higher the interest rate, the larger investment spending. Answer: FALSE Answer: FALSE Answer: FALSE National policy always overrides free trade in matters of environmental concern. Answer: FALSE Answer: FALSE Answer: FALSE The substantial increase in clear property rights has severely impeded growth in many developing countries. Answer: FALSE Answer: FALSE Answer: FALSE Reductions in the real interest

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 533

Another term for full-employment output is: A) potential output. B) maximum output. C) perfectly competitive output. D) actual output. Answer: A Answer: A Answer: A If government spending is $6.2 trillion while government revenue is $6.2 trillion, the government is said to have a A) budget deficit. B) budget surplus. C) balanced budget. D) balanced debt. Answer: C Answer: C Answer: C The formula for the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 553 Test

If the opportunity cost of a table is 5 chairs in nation A and 1 chair in nation B, it makes sense for nation B to produce chairs. Answer: FALSE Answer: FALSE Answer: FALSE Economists argue that individuals should continue to consume until total benefit equals total cost. Answer: FALSE Answer: FALSE Answer: FALSE One example of a microeconomic

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 567 Homework

The corporate tax rate during the Kennedy Administration was lower than the corporate tax rate today. Answer: FALSE Answer: FALSE Answer: FALSE Banks will never hold any additional reserves beyond what is required. Answer: FALSE Answer: FALSE Answer: FALSE This year's nominal GDP is this year's output of final goods and services evaluated in base year dollars. Answer: FALSE Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 569

People are said to have rational expectations if they: A) use all available information in forming their expectations. B) assume that this year's inflation rate will be equal to the average inflation rate over the past 10 years. C) merely guess at the inflation rate. D) assume that this year's inflation rate will be

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 579

If the economy is experiencing inflation, then nominal GDP is always greater than real GDP. Answer: FALSE Answer: FALSE Answer: FALSE The Asian financial crisis of 1997 was avoided thanks to the coordination of large scale international lending. Answer: FALSE Answer: FALSE Answer: FALSE Citibank is a financial intermediary. Answer: TRUE Answer: TRUE Answer: TRUE If a country is currently engaged in

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 616

The principle that individuals and firms pick the activity level where the incremental benefit of that activity equals the incremental cost of that activity is known as the A) marginal principle. B) principle of opportunity cost. C) principle of diminishing returns. D) spillover principle. Answer: A Answer: A Answer: A Compared to the long run aggregate supply curve,

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 641 Final

Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are known as: A) sticky prices. B) fixed prices. C) regulatory prices. D) market prices. Answer: A Answer: A Answer: A Refer to Figure 15.2. A decrease in wages is represented by a movement from point ________ to point ________. A) d; c

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 651 Test 1

Because the dK line is drawn as a straight line, then the Solow Model assumes that: A) the depreciation rate in the economy is constant. B) the total depreciation in the economy is constant. C) the total depreciation in the economy is zero. D) the higher the level of capital, the lower the amount

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 681 Midterm

Figure 19.3 Refer to Figure 19.3. The market equilibrium for yen is currently at Point A. A decrease in the price level in Japan causes a movement to Point ________. A) B B) D C) E D) C Answer: A Answer: A Answer: A The time it takes for a policy to actually

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 727

Economic analysis includes commuting time as part of the cost of traffic congestion. Answer: TRUE Answer: TRUE Answer: TRUE The exchange rate of currencies between countries affects the prices of the goods purchased and sold between them. Answer: TRUE Answer: TRUE Answer: TRUE In the United States today, the government will exchange gold or silver for paper money. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 737 Test 2

One of the flaws of GDP is that it A) includes only transactions that take place in formal businesses. B) ignores transactions that do not take place in organized markets. C) includes measures of the underground economy. D) includes measures of changes of quality of life associated with producing output. Answer: B Answer: B Answer: B When supply

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 753 Quiz 1

If the consumption function is C = 100 + 0.8Y, then the Savings Function is: A) S = 100 + 0.8 Y. B) S = -100 + 0.8Y. C) S = -100 + 0.2Y. D) S = 100 + 0.2Y. Answer: C Answer: C Answer: C In 2003, the Bush administration revised the tax bill

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 767 Test

If the opportunity cost of 1 wristwatch is 4 wall clocks in Japan and 2 wall clocks in Germany, it makes sense for Germany to produce wristwatches. Answer: TRUE Answer: TRUE Answer: TRUE Labor market equilibrium occurs at a real wage where the demand for labor exceeds the supply of labor. Answer: FALSE[/cpmembership] Answer: FALSE[/cpmembership] Answer: FALSE[/cpmembership] Overstating the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 774

Table 11.6 Refer to Table 11.6. If government spending increases by $100, equilibrium output increases by: A) $100. B) $200. C) $400. D) $800. Answer: B Answer: B Answer: B Figure 10.2 Refer to Figure 10.2 to answer the question below. Points A, B, and C correspond to a GDP level in Year 2. Suppose that in Year

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 785 Homework

Recall the Application about the possibility of increases in health-care expenditures crowding out consumption or investment spending to answer the following question(s). In 1950, health-care expenditures in the United States were 5.2 percent of GDP; by 2000, this share had risen to 15.4 percent. Driving these increases were several factors:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 800 Midterm

Figure 2.3 In Figure 2.3, point A: A) implies unemployment of some resources. B) is the optimum. C) cannot be produced. D) all of the above. Answer: A Answer: A Answer: A As the real interest rate ________, the real investment spending ________. A) increases; increases B) decreases; decreases C) increases; decreases D) changes; does not change Answer: C Answer: C Answer: C Replacing the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 810 Quiz 2

One of the key economic questions is "where should products be produced?" Answer: FALSE Answer: FALSE Answer: FALSE The balanced-budget multiplier is calculated as the government spending multiplier minus the tax multiplier. Answer: FALSE Answer: FALSE Answer: FALSE Macroeconomics helps explain economic fluctuations, why the economy shrinks and expands and why some of the economy's resources are idle. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 826 Final

An increase in Swiss prices will cause A) an increase in the demand for U.S. dollars and an increase in the exchange rate of Swiss francs per dollar. B) a decrease in the demand for U.S. dollars and a decrease in the exchange rate of Swiss francs per dollar. C) an increase in

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 834

Recall the Application about the time involved in including cell phones in the calculation of the CPI to answer the following question. According to this Application, the failure of including cell phones in a timely manner when calculating the CPI caused the telecommunications component of the price index A) to be biased

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 843

If there is inflation, real interest rates will be greater than nominal interest rates. Answer: FALSE Answer: FALSE Answer: FALSE A "market" is an arrangement that enables people to exchange goods and services. Answer: TRUE Answer: TRUE Answer: TRUE In order to go to college, James incurs an opportunity cost even though all he gave up was a

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 877 Final

Refer to Figure 18.4. With a tariff or quota, what is the equilibrium price of gloves in Duckland? A) $8 B) $9 C) $10 D) $11 Answer: C Answer: C Answer: C Inside lags associated with fiscal policy are due to all of the following, except: A) the political infighting involved in approving changes in government spending or taxes. B)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 889 Test 1

Suppose that a natural disaster substantially increases the cost of producing cheese. We would predict that the equilibrium quantity of cheese will ________ and the equilibrium price of cheese will ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease Answer: C Answer: C Answer: C If the government is required to balance the budget

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 897

The appreciation of the dollar will make U.S. goods ________ to foreigners and make imports ________ for U.S. residents. A) more expensive; more expensive B) cheaper; cheaper C) more expensive; cheaper D) cheaper; more expensive Answer: C Answer: C Answer: C Which of the following individuals referred to the expectations of investors as "animal spirits"? A) Friedman B) Lucas C) Keynes D)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON A 899

Recall Application 3, "The Broken Window Fallacy and Keynesian Economics," to answer the following questions: In the Application, why might fixing a broken window not be good for society? A) because the money spent on fixing the broken windows could have been spent elsewhere B) because the spending on the window creates a

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 131

GDP ignores transactions that take place in the underground economy. Answer: TRUE Answer: TRUE Answer: TRUE In the long run, the real rate of interest does not depend on monetary policy but the nominal rate of interest does. Answer: TRUE Answer: TRUE Answer: TRUE In the last few decades there has been little progress in lowering the barriers

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 141 Midterm

Assume that coffee and tea are substitutes. When the price of coffee increases A) the demand for tea decreases. B) the demand for tea increases. C) the supply of tea increases. D) the supply of tea decreases. Answer: B Answer: B Answer: B The GDP equation is A) Y = C + I + G + NX. B) Y =

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 168 Test

When the economy slows down and national income falls, the government will have ________ tax revenue to fund programs. A) more B) less C) about the same D) a rapid increase in Answer: B Answer: B Answer: B A movement along the consumption function is the result of a change in A) autonomous consumption. B) income. C) consumer wealth. D) expected wealth. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 200 Quiz

The net international investment position of the United States measures A) U.S. holdings of foreign assets. B) foreign holdings of U.S. assets. C) U.S. holdings of foreign assets plus foreign holdings of U.S. assets. D) U.S. holdings of foreign assets minus foreign holdings of U.S. assets. Answer: D Answer: D Answer: D If the number of automobile manufacturers

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 272 Homework

In the United States there are some methods to save which reduce taxes on savings. These include A) commodity purchases. B) stock purchases. C) retirement plans like 401Ks and 403Bs. D) money market accounts. Answer: C Answer: C Answer: C In the United States in recent years, the national debt has been approximately ________ percent of GDP. A) 25 B) 50 C)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 274 Final

The government uses the buying power of wages rather than face value or nominal value in reporting changes in "real wages" in the economy. Answer: TRUE Answer: TRUE Answer: TRUE The government spending multiplier is equal to the tax multiplier. Answer: FALSE Answer: FALSE Answer: FALSE The federal government has a Constitutional requirement to operate a balanced budget

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 277 Test 2

Figure 19.1 Referring to Figure 19.1, if the exchange rate is currently 14 pesos per dollar, then we expect the dollar to ________ and the peso to ________. A) depreciate; depreciate B) depreciate; appreciate C) appreciate; depreciate D) appreciate; appreciate Answer: B Answer: B Answer: B Fearing that the economy was overheating, policymakers instituted a temporary tax surcharge in

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 299 Quiz 2

A man is fired from his job because he was late for work too many times. While he is searching for another job he would be classified as: A) not in the labor force because his employer had a legitimate reason for firing him. B) structurally unemployed. C) cyclically unemployed. D) frictionally unemployed. Answer: D Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 312 Quiz 1

If the capital stock remains fixed while the supply of labor increases, it is likely that: A) the new labor will be more productive than the old labor. B) the new labor will be less productive than the old labor. C) the productivity of labor will not change. D) output per capita will rise. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 315 Midterm 2

When federal government spending amounts to less than tax revenues, the federal government runs a budget deficit. Answer: FALSE Answer: FALSE Answer: FALSE Money is anything that is regularly used in exchange. Answer: TRUE Answer: TRUE Answer: TRUE The government debt tends to rise when GDP rises, and tends to fall when GDP falls. Answer: FALSE Answer: FALSE Answer: FALSE A U.S.

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 326 Quiz 3

If the Federal Reserve wanted to change the money supply in the economy, it would be least likely to A) buy bonds on the open market. B) sell bonds on the open market. C) change the level of reserves required to be held by banks. D) change the federal funds rate. Answer: C Answer: C Answer: C When

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 425 Quiz 1

_______________________ Suppose: C = 100 + .75 (y-T) I = 200 G = 300 T = 300 _______________________ Table 11.5 Refer to Table 11.5. If both G and T decrease by 100, equilibrium output will: A) stay the same. B) decrease by 200. C) decrease by 100. D) increase by 100. Answer: C Answer: C Answer: C Which of the following must be true before a

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 435

Social insurance taxes are paid by wages and investment income. Answer: FALSE Answer: FALSE Answer: FALSE Based in part on the budget surplus, in 2001 President Bush and Congress passed a permanent tax cut. Answer: FALSE Answer: FALSE Answer: FALSE Excess supply in an unregulated market will cause the price of a product to fall. Answer: TRUE Answer: TRUE Answer: TRUE Import

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 454

The income-expenditure model focuses on changes in price levels. Answer: FALSE Answer: FALSE Answer: FALSE Social insurance taxes are paid by corporations based on their profits. Answer: FALSE Answer: FALSE Answer: FALSE The Keynesian short-run aggregate supply curve is vertical. Answer: FALSE Answer: FALSE Answer: FALSE Nominal GDP is calculated using a constant set of prices from a base year. Answer: FALSE Answer: FALSE Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 464 Midterm

Full-employment output is: A) the level of output that is produced when the labor market is in equilibrium. B) the level of output that is produced when the unemployment rate is zero. C) the level of output that is produced when there is no voluntary unemployment. D) the level of output that is produced

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 562 Quiz 2

All economic activities are included in the GDP. Answer: FALSE Answer: FALSE Answer: FALSE As the price of a product falls, the demand for the product increases, ceteris paribus. Answer: FALSE Answer: FALSE Answer: FALSE On the "demand side" of a market, consumers indicate to producers what they are willing to buy, in what quantity, and at what

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 571 Quiz

An increase in supply of a product results when A) taxes on the product are increased. B) the companies that produce the product have higher materials costs. C) technological innovations are introduced in the manufacturing process. D) the government reduces subsidies on the product. Answer: C Answer: C Answer: C Figure 7.4 From Figure 7.4, crowding out occurs between: A)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 620 Test

Additional Application MAKING THE FEDERAL RESERVE MORE TRANSPARENT What are the advantages and disadvantages of the Federal Reserve becoming more transparent about its actions and decisions and disclosing more information to the public? In recent years, the Fed has gradually become more open in its deliberations. For many years, the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 655

Recall Application 4, "Coping with the Financial Chaos Caused by the Mortgage Crisis," to answer the following questions: According to Application 4, which insurance company did the Fed take an 80 percent stake in and made an $85 billion loan to? A) AIG B) Bank of America C) Geico D) Bear Stearns Answer: A Answer: A Answer: A Spending

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 656 Test

Investment is "crowded out" by an increase in government spending when A) an increase in government spending causes output and prices to rise, which in turn causes interest rates to rise. B) an increase in government spending causes output and prices to fall, which in turn causes interest rates to rise. C) an

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 659 Quiz

Capital gains are taxed at a different rate than income and this reduces revenues the government receives. All else equal, what would happen if capital gains taxes were eliminated? A) The government would not be able to spend money on any programs. B) Everyone would have to pay less in taxes. C) The

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 665 Midterm 2

Money is an example of a scarce factor of production. Answer: FALSE Answer: FALSE Answer: FALSE Tradeoffs involve an exchange of one thing for another because resources are limited and can be used in different ways. Answer: TRUE Answer: TRUE Answer: TRUE Additional factors beyond supply and consumer purchasing desire can affect demand. Answer: TRUE Answer: TRUE Answer: TRUE Both the nominal

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 679

What would be a way for the Federal Reserve to stimulate a sluggish economy? A) print more money B) buy government bonds on the open market C) sell more government bonds D) encourage the stock market Answer: B Answer: B Answer: B When referring to "marginal" changes, the economic focus is on A) changes which affect only a few

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 686 Test 2

Table 11.2 Refer to Table 11.2. If aggregate output equals ________, there will be a $100 unplanned decrease in inventories. A) $200 B) $400 C) $600 D) $800 Answer: B Answer: B Answer: B If real GDP was 100 in 2011 and 104.4 in 2012, the growth rate of real GDP between 2011 and 2012 was A) 2.2 percent. B)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 687 Quiz

The larger the marginal propensity to consume, the smaller the multiplier. Answer: FALSE Answer: FALSE Answer: FALSE If the required reserve ratio is 100%, the money multiplier is zero. Answer: FALSE Answer: FALSE Answer: FALSE The natural rate of unemployment is the unemployment rate during a period of full employment. Answer: TRUE Answer: TRUE Answer: TRUE The opportunity cost of getting a

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 699 Final

Why were cell phones not included in the CPI basket immediately after it was introduced? A) Most American families did not have cell phones when they were first introduced. B) The cell phones were all made in Japan, so they were not included in GDP. C) Only one kind of phone can be

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 703

The government sometimes creates an excess demand for a product by setting a maximum price at which the product may be sold to consumers. This is sometimes called a A) price ceiling. B) price floor. C) tax. D) subsidy. Answer: A Answer: A Answer: A If the number of beer producers decreases: A) the demand for beer increases. B) the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 723

One example of a microeconomic question is, "Should unemployment benefits be increased?" Answer: FALSE Answer: FALSE Answer: FALSE A decrease in the cost of production will shift the supply curve down and to the right. Answer: TRUE Answer: TRUE Answer: TRUE For a given interest rate, a higher level of output means an increase in the number of

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 740 Quiz 2

Mexico pegged its exchange rate to the U.S. dollar in the 1980s A) to discourage foreign investment. B) in an attempt to abandon the peso and switch to U.S. dollars as currency. C) to signal investors that Mexico was serious about controlling inflation. D) to maintain a similar unemployment rate to the United States Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 744

Tax changes that favor people who save will also tend to favor those with relatively higher incomes. Answer: TRUE Answer: TRUE Answer: TRUE Decreases in taxes shift the aggregate demand curve to the right. Answer: TRUE Answer: TRUE Answer: TRUE As a component of GDP, consumption expenditures refers to purchases by consumers of currently produced goods and services. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 749 Homework

Table 2.1 A group of people has formed a house cleaning and yard maintenance business. The number of houses or yards that they can clean or maintain in any given day is depicted in Table 2.1. The opportunity cost of cleaning the second house in a day is: A) 1 yard maintained. B)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 774 Quiz 3

The expectations augmented Phillips curve argues that unemployment varies with anticipated inflation. Answer: FALSE Answer: FALSE Answer: FALSE If a company's total costs per day increase from $200 to $400 by adding another worker, but its additional benefits are $300, it is sensible to add that additional worker. Answer: TRUE Answer: TRUE Answer: TRUE Dumping is sometimes legal

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 784 Test

A nation's net exports consist of A) its exports plus its imports. B) its exports minus its imports. C) its exports plus all other nation's imports. D) its imports plus all other nation's exports. Answer: B Answer: B Answer: B The efforts of nations to influence exchange rates are known as A) open market operations. B) foreign exchange market intervention. C)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 789 Midterm 2

Free trade makes the people of a country worse off. Answer: FALSE Answer: FALSE Answer: FALSE Firms react to a unplanned positive inventory investment by increasing output. Answer: FALSE Answer: FALSE Answer: FALSE Being self-sufficient in the production of everything we need is efficient. Answer: FALSE Answer: FALSE Answer: FALSE What matters to people is the face value of money or income. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 790 Midterm 2

Figure 18.2 Refer to Figure 18.2. In autarky, the maximum amount of spears that Macadamia can produce is A) 40. B) 100. C) 120. D) 160. Answer: B Answer: B Answer: B If incomes increase and hotdogs are inferior goods, then: A) the demand for hotdogs increases. B) the demand for hotdogs decreases. C) the quantity demanded for hotdogs decreases. D) the quantity

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 806

GDP is: A) a measure of all spending in the economy on foreign and domestic goods and services. B) the total market value of all final goods and services produced within a country in a given year. C) the value of all monetary transactions within a country in a given year. D) all of

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 810

Those who supply ________ are holders of pounds seeking to exchange them for ________. A) dollars; pounds B) both pounds and dollars; dollars C) pounds; pounds D) pounds; dollars Answer: D Answer: D Answer: D The reason why an increase in government expenditure has a more than proportional impact on aggregate demand is known as: A) the wealth effect. B)

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 814 Final

COLA is an acronym that stands for: A) Cost of Living Adjustment. B) Cost of Living Annually. C) Cost of Living Alone. D) Cost of Living Account. Answer: A Answer: A Answer: A Table 6.3 Refer to Table 6.3. The number of people not in the labor force equals: A) 5.9. B) 68.4. C) 74.3. D) 201.9. Answer: B Answer: B Answer: B Which of the

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 817 Quiz 2

Imagine two countries, Bruceland and Davidia. Bruceland is producing everything at a lower absolute cost than Davidia. If the two countries trade what is the reason? Answer: Just because Bruceland has an absolute advantage in the production of all goods does not mean that it is not beneficial for the two

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 825 Quiz

If the exchange rate changes from 150 yen per U.S. dollar to 125 yen per U.S. dollar, then the U.S. dollar has appreciated. Answer: FALSE Answer: FALSE Answer: FALSE Personal disposable income is pre-tax income that flows directly to households. Answer: FALSE Answer: FALSE Answer: FALSE An increase in the price level lowers the real value of wealth. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 828 Quiz 3

Assume that last year's inflation rate is the same as the expectation of inflation for the next year. According to the expectations Phillips curve, if the inflation rate increases relative to the expected rate, the unemployment rate A) decreases. B) increases. C) may increase or decrease. D) does not change. Answer: A Answer: A Answer: A The Phillips

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 851

The principle that states that the cost of something is equal to what is sacrificed to get it is known as the: A) marginal principle. B) principle of opportunity cost. C) principle of diminishing returns. D) reality principle. Answer: B Answer: B Answer: B Suppose a new use for aluminum has been discovered, making aluminum more expensive. In a

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 874 Homework

To determine the equilibrium price level and equilibrium level of real GDP, the aggregate demand and aggregate supply must A) be considered separately. B) intersect. C) be disregarded. D) be considered as a multiplier. Answer: B Answer: B Answer: B The demand for money that arises so that individuals or firms can make purchases on quick notice is

Macroeconomics: Principles Applications and Tools 8th Edition

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ECON E 889 Midterm 2

An open market ________ by the Fed increases interest rates and ________ output. A) sale; increases B) sale; decreases C) purchase; increases D) purchase; decreases Answer: B Answer: B Answer: B Rising wages and input prices: A) cause the aggregate demand curve to shift to the right. B) cause the aggregate supply curve to shift to the left. C) cause the

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 100 Quiz

Figure 14.5 Refer to Figure 14.5. Assume the interest rate equals 8% and the money supply decreases from to . If the interest rate remains at 8%: A) money demand will increase. B) money demand will decrease. C) there will be an excess demand for money. D) there will be an excess supply of

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 102 Midterm 1

If consumption is $25,000 when income is $26,000, and consumption increases to $25,900 when income increases to $28,000, the marginal propensity to consume is: A) 0.59. B) 0.65. C) 0.55. D) 0.45. Answer: D Answer: D Answer: D Most econometric models predict that an interest rate cut will take at least ________ before most of its effects are

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 113 Test 1 If The MPC

If the MPC = 0.75, the government spending multiplier would be A) 0.25. B) -7.5. C) 4. D) 25. Answer: C Answer: C Answer: C The depreciation of the dollar will make U.S. goods ________ to foreigners and make imports ________ for U.S. residents. A) more expensive; more expensive B) cheaper; cheaper C) more expensive; cheaper D) cheaper; more expensive Answer: D Answer: D Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 145

If the Fed wishes to increase long-term investment spending, it must: A) cut the current short-term interest rate. B) convince the public that the expected future short-term rates would be low. C) raise the short-term interest rates but lower the expected short-term future rates. D) A and B are correct. Answer: D Answer: D Answer: D Suppose that

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 167 Quiz

Table 5.3 Refer to Table 5.3. Assume that this economy produces only two goods: Good X and Good Y. If year 1 is the base year, the value for this economy's GDP Deflator in year 2 is: A) 113.8. B) 133.3. C) 152.0. D) 184.5. Answer: A Answer: A Answer: A Table 2.2 Krystal runs a nail salon and needs

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 172

In the supply and demand for U.S. dollars in Europe, who is a supplier in that market? A) the Americans who want to invest in Europe B) the Europeans who want to invest in the U.S. C) the Americans who want to bring their investments back to the U.S. D) the European who wants

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 198

Table 2.5 Refer to the table above. By what percentage did the federal minimum wage increase from 1974 to 2011? A) 72.41 percent B) 262.5 percent C) 362.5 percent D) 525.0 percent Answer: B Answer: B Answer: B If the tariffs on the textiles, apparel items and footwear mentioned in the Application were replaced by equivalent voluntary export restraints

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 205

Which is not a way in which the federal government can finance its expenditure? A) issuing bonds B) creating money C) buying federal government securities D) tax revenues Answer: C Answer: C Answer: C A White House proposal to increase infrastructure spending on roads, rail lines and runways is an example of A) expansionary fiscal policy. B) contractionary fiscal policy. C)

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 214 Quiz 2

The crisis in Mexico in 1994, Asia in 1997 and Argentina in 2002 were all caused by weak fundamentals. Answer: FALSE Answer: FALSE Answer: FALSE If the price level falls faster than the wage rate, then the real wage decreases. Answer: FALSE Answer: FALSE Answer: FALSE Unlike Classical economists, Keynes believed that the economy could be trapped in

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 243 Test

Which of the following sequence of events would follow an open market purchase of bonds? A) interest rate investment aggregate demand real GDP B) interest rate investment aggregate demand real GDP C) interest rate investment aggregate demand real GDP D) interest rate investment aggregate demand real GDP Answer: A Answer: A Answer: A When the Fed conducts open

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 262 Midterm 1

If autonomous consumption (Ca) increases, the slope of the consumption function becomes steeper. Answer: FALSE Answer: FALSE Answer: FALSE Acquiring knowledge and skills by participating in the production process is called "learning by doing." Answer: TRUE Answer: TRUE Answer: TRUE A larger labor force will allow the economy to produce more total output. Answer: FALSE Answer: FALSE Answer: FALSE According to the

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 305 Test A Specialized

A specialized worker does not spend time switching from one task to another. This is called: A) continuity. B) innovation. C) functionality. D) repetition. Answer: A Answer: A Answer: A If the government collects taxes using a constant income tax rate t, then the adjusted marginal propensity to consume (adjusted MPC) is: A) b ( 1 - t ).

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 313 Test 1

The Obama stimulus package included fiscal policy actions designed to assist the economy in its recovery from recession. These fiscal policy actions would include ________ government spending and ________ taxes. A) increasing; decreasing B) decreasing; increasing C) increasing; Increasing D) decreasing; decreasing Answer: A Answer: A Answer: A When an individual in the US invests in a 401K,

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 341 Midterm 2

If a central bank is credible in its desire to fight inflation, it can deter the private sector from taking aggressive actions that drive up prices. Answer: TRUE Answer: TRUE Answer: TRUE When demand changes and the demand curve shifts, equilibrium price and equilibrium quantity change in the same direction. Answer: TRUE Answer: TRUE Answer: TRUE Among all

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 341 Suppose Your Bank

Suppose your bank pays you 6% interest per year on your savings account. If prices increase by 3% per year over that time, approximately how much nominal value do you gain by keeping $100 in the bank for a year? A) $6 B) $0 C) $3 D) $106 Answer: A Answer: A Answer: A If Andrew is paid an

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 359

The marginal propensity to consume is always greater than unity. Answer: FALSE Answer: FALSE Answer: FALSE A government's budget deficit or surplus is the difference between what it spends and what it collects in taxes in a year. Answer: TRUE Answer: TRUE Answer: TRUE In the short run, the price level is determined primarily by the supply of

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 362 Quiz 1

Philip Cagan, a student of Milton Friedman, is best known for his work on: A) money and real GDP. B) hyperinflation. C) the quantity theory of money. D) measuring money supply. Answer: B Answer: B Answer: B A reason that economists keep an eye on both M2 and M1 is because A) M2 is more accurate than M1. B) both

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 362 Quiz 2

Which of the following is not counted in the GNP of the United States? A) the wage of a U.S. citizen who works in a foreign country for a foreign firm B) the interest earned by a U.S. bank on loans to a business firm located in Brazil C) the profit earned by

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 369

When money is used to express the value of goods and services, it is functioning as a A) medium of exchange. B) store of value. C) unit of account. D) store of purchasing power. Answer: C Answer: C Answer: C Suppose your bank pays you 4 percent interest per year on your savings account, so that $1,000 grows to

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 381

Suppose that real GDP starts at 200 and grows at a rate of 9 percent per year for two years. In the third year real GDP would be A) 183.49. B) 236. C) 237.62. D) 239.24. Answer: C Answer: C Answer: C What was the U.S. response to the Mexican currency crisis of 1994? A) The U.S., along with

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 402 Homework

The multiplier in an open economy ________ the multiplier in a closed economy. A) is larger than B) equals C) is smaller than D) The multiplier can be smaller or larger, depending on the size of MPM and MPC. Answer: C Answer: C Answer: C If the consumption function is C = 90 + 0.75y, then the

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 481 Quiz 1

Decreases in the demand for products can be caused by which of the following? A) decreases in income B) decreases in population C) decreases in the prices of substitute goods D) all of the above Answer: D Answer: D Answer: D Figure 19.2 Referring to Figure 19.2, the effect of a decrease in Japanese prices is represented by a

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 482 Midterm 2

If inflation is eight percent, a nominal interest rate of six percent translates into a real interest rate of two percent. Answer: FALSE Answer: FALSE Answer: FALSE The full-employment level of output represents that maximum output that a country can produce. Answer: FALSE Answer: FALSE Answer: FALSE According to the Solow Model, if the depreciation rate is greater than

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 483 Midterm 2

A comparative advantage is the ability of one person or nation to produce a good at an opportunity cost that is lower than that of another person or nation. Answer: TRUE Answer: TRUE Answer: TRUE In a barter economy, the exchange of goods trade requires a double coincidence of wants. Answer: TRUE Answer: TRUE Answer: TRUE Raising the

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 485 Quiz

When Jimmy produces one guitar his costs total $250. When he produces two guitars his total costs are $400. This means that Jimmy's marginal cost of producing the second guitar is $200. Answer: FALSE Answer: FALSE Answer: FALSE Active economic policies are more likely to destabilize the economy if the adjustment process is quick

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 491 Homework

The most recent recession that the U.S. experienced started in: A) December 2007. B) November 2001. C) March 2001. D) December 2008. Answer: A Answer: A Answer: A Figure 15.5 Refer to Figure 15.5. An increase in the price level, ceteris paribus, is represented by movement from point ________ to point ________. A) ; c B) c; d C) d; D)

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 509 Quiz

Figure 18.1 Refer to Figure 18.1. After trade begins, ________ will specialize in the production of bicycles and ________ will specialize in the production of hang gliders. A) the United States.; the United States B) the United States; Canada C) Canada; the United States D) Canada; Canada Answer: C Answer: C Answer: C Which of the following can be

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 517 Midterm

Recall Application 1, "The Chinese Yuan and Big Macs," to answer the following questions: According to the application, the law of one price holds for Big Macs. Answer: FALSE Answer: FALSE Answer: FALSE The highest tax rate for individuals during the Kennedy Administration was lower than the highest tax rate today. Answer: FALSE Answer: FALSE Answer: FALSE By providing

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 525 Quiz

Recall Application 2, "The Confucius Curve?" to answer the following questions: According to the application, the central idea for the Laffer curve is: A) cutting tax rates may increase tax revenues. B) cutting tax rates may increase GDP growth. C) cutting tax rates may decrease tax revenues. D) cutting tax rates may decrease inflation. Answer: A Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 576 Test

Recall the Application about the level of real wages for laborers in England from 1350 to 1550 to answer the following question(s). In 1348, the bubonic plague, also known as the Black Death, arrived in England from Asia and caused a long decline in total population through the 1450s. According to this

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 587 Quiz 3

Bananas and apples are substitutes. When the price of bananas rises, and a technological advance in apple production occurs at the same time A) the equilibrium price of apples rises and the equilibrium quantity of apples falls. B) the equilibrium price of apples rises and the equilibrium quantity of apples rises. C) the

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 589 Quiz 2

Additional Application INFLATION-INDEXED BONDS IN THE UNITED STATES Are there bonds that can protect your investments from inflation? In 1997, the U.S. Department of the Treasury created a new financial instrument called the Treasury Inflation-Protected Security, or TIPS. The key feature of TIPS is that the payments to investors adjust automatically

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 630 Quiz 1

A(n) ________ in U.S. interest rates will cause an increase in the demand for U.S. dollars and a(n) ________ in the (per dollar) exchange rate. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease Answer: A Answer: A Answer: A Figure 9.1 shows three aggregate demand curves. A movement from point to point a could

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 640 Test

Recall Application 3, "The Effectiveness of Committees," to answer the following questions: The time it takes policymakers to recognize the need for and implement an economic policy to stimulate the economy is known as the outside lag. Answer: FALSE Answer: FALSE Answer: FALSE The ratio of the labor force to the number of people employed

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 655 Midterm 1

Interest payments on the national debt are not a problem because we owe all of it to ourselves. Answer: FALSE Answer: FALSE Answer: FALSE As a lender of last resort, the Fed avoids most financial crisis by providing liquidity to the financial system. Answer: TRUE Answer: TRUE Answer: TRUE If the exchange rate between dollars and pesos is

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 718 Midterm 1

Underground activities pertain to all illegal activities in the economy. Answer: FALSE Answer: FALSE Answer: FALSE When individuals or firms make an investment, they incur costs today in the hope of future gains. Answer: TRUE Answer: TRUE Answer: TRUE From 1948 to 2010, the United States has experienced only 4 recessions. Answer: FALSE Answer: FALSE Answer: FALSE In practice, the Board of

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 722 Test

Recall Application 3, "The Financial System Under Stress: September 11, 2001," to answer the following questions: To avoid a financial crisis after September 11, 2001, any policy by the implemented Fed must: A) be approved by the President of the United States. B) decrease the amount of money in circulation. C) increase the debt of

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 745 Quiz 1

Recall Application 3, "The Effectiveness of Committees," to answer the following questions: Supporters of stabilization policy argue that attempts to stabilize the economy can always be effective because of time lags. Answer: FALSE Answer: FALSE Answer: FALSE In the short run, higher taxes will lead to a higher price level and a higher level of

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 762 Quiz 2

Expansionary policies are policies designed to A) increase the level of real GDP. B) reduce the level of real GDP. C) decrease government spending. D) reduce the federal deficit. Answer: A Answer: A Answer: A In order to prevent a wage-price spiral from emerging when the economy is producing above full employment, the monetary authority could: A) contract the

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 766 Test 1

Table 11.2 Refer to Table 11.2. At an aggregate output level of $600, the unplanned inventory change is: A) -$100. B) -$50. C) $0. D) $50. Answer: B Answer: B Answer: B Table 6.13 Refer to Table 6.13. If 2000 is the base year, the inflation rate between 1999 and 2001 is: A) 1.4%. B) 114%. C) 14%. D) 9%. Answer: C Answer: C Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 770 Quiz 3

As more efficient capital equipment becomes available, the demand for labor will ________, the real wage will ________, and the quantity of labor hired will ________. A) increase; increase; increase B) increase; remain the same; increase C) increase; remain the same; decrease D) increase; decrease; remain the same Answer: A Answer: A Answer: A If the equilibrium output

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 771 Quiz 1

Recall the Application about the behavior of prices in retail catalogs to answer the following question(s). Economist Anil Kashyap of the University of Chicago examined the prices of 12 selected goods from L.L. Bean, REI, and The Orvis Company, Inc. Kashyap tracked the prices from the companies' catalogs which were

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 772 Midterm 1

If the Fed wished to decrease interest rates, it could A) increase the reserve requirement or conduct an open market sale. B) increase the reserve requirement or conduct an open market purchase. C) decrease the reserve requirement or conduct an open market sale. D) decrease the reserve requirement or conduct an open market purchase. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 791 Test 2

A bank has reserves of $40, loans of $110, deposits of $90, and owners' equity of $60. Which of the following represents the bank's total assets? A) $180 B) $110 C) $130 D) $150 Answer: D Answer: D Answer: D Crowding out refers to A) an increase of investment caused by an increase in government spending. B) a decrease in

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 794 Recall Application

Recall Application 3, "The Ends of Hyperinflations," to answer the following questions: According to the Application, which of the following was Sargent's explanation for why hyperinflations occurred? A) contractionary fiscal policy coupled with contractionary monetary policy. B) money creation and higher taxes. C) expansionary fiscal policy financed by money creation. D) higher spending and higher taxes. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 809

If a technological advance makes it possible to produce bananas at a lower cost: A) the demand for bananas increases. B) the demand for bananas decreases. C) the supply of bananas increases. D) the supply of bananas decreases. Answer: C Answer: C Answer: C Suppose that union leaders negotiate a significant increase in nominal wages. If the Federal

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 818 Test 2

If the government estimates that the marginal cost of building a bridge is $100 million, while the marginal benefit is $150 million, the marginal principle dictates that the government should: A) build the bridge. B) never build the bridge. C) wait until the marginal cost of building the bridge rises to above $150

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 847

The outside lags related to monetary policy tend to be quite long. Answer: TRUE Answer: TRUE Answer: TRUE A decrease in the population of an economy is likely to lead to lower wages and a lower quantity of labor used. Answer: FALSE Answer: FALSE Answer: FALSE If the net international investment position of the U.S. equals $100 billion, this

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 883 Quiz

If the government collects taxes using a constant income tax rate t, then an increase in t will result in: A) a higher disposable income. B) no change to disposable income. C) a lower disposable income. D) an unknown change in disposable income. Answer: C Answer: C Answer: C Which of the following is a nondurable good? A) laptop

Macroeconomics: Principles Applications and Tools 8th Edition

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Economics 896 Final

If the monthly unemployment rate increase mentioned in the Application wound up being a permanent and not temporary change, the best economic decision by the committee would most likely be to A) increase the money supply to stimulate the economy. B) decrease the money supply to stimulate the economy. C) decrease the money

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 117 Midterm

When using the formula PV = K/(1+i)t to calculate the present value of a future payment, a higher t implies: A) a lower present value. B) a higher future value. C) a higher present value. D) a lower future value. Answer: A Answer: A Answer: A Figure 4.4 Figure 4.4 illustrates the demand for guitars. A decrease in the

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 118

The absence of clear property rights A) is caused by capital deepening. B) is common in many developing nations. C) encourages creative destruction. D) all of the above Answer: B Answer: B Answer: B Currency held by the public + demand deposits + travelers checks + other checkable deposits =: A) M3. B) M2 - M1. C) M3 - M1. D) M1. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 122

Suppose that in October the price of a cup of cafe latte was $2.50 and 400 lattes were consumed. In November the price of a latte was $2.00 and 600 lattes were consumed. What might have caused this change? A) The price of tea (a substitute for cafe lattes) fell. B) The

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 128 Quiz

If the economy is in long-run equilibrium at full employment, lowering taxes leads to a higher price level and a higher level of real GDP. Answer: FALSE Answer: FALSE Answer: FALSE Along a Keynesian short-run supply curve, when the price level rises, there is an increase in aggregate quantity supplied. Answer: TRUE Answer: TRUE Answer: TRUE If prices

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 134 Homework

Recall the Application about why the U.S. federal government took over the debt of the state governments in the late 1700s to answer the following question(s).According to this Application, in exchange for the federal government absolving their debts, the states were willing to give up their ability to raise revenue

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 136

Most modern economic analysis is normative in nature, but involves questions with positive aspects. Answer: FALSE Answer: FALSE Answer: FALSE To determine an appropriate congestion tax, an economist has to assume that people respond to incentives. Answer: TRUE Answer: TRUE Answer: TRUE In the most simple model of the circular flow diagram, the two main entities are households

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 165 Midterm 1

Assuming all excess reserves are loaned out, if the reserve ratio is 8 percent, the money multiplier will be equal to A) 2. B) 8. C) 12.5. D) 16.67. Answer: C Answer: C Answer: C Figure 4.6 Figure 4.6 illustrates a set of supply and demand curves for a product. When the market moves from point A to point

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 167 Midterm

Recall the Application about how society will cope with increased demands for entitlement programs to answer the following question(s). This Application addresses the impact of increasing life expectancy and aging populations on the costs of government entitlement programs such as Social Security, Medicare and Medicaid, and examines several possible solutions

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 167 Test 1

Two goods are complements if an increase in the price of one good leads to an increase in demand for the other. Answer: FALSE Answer: FALSE Answer: FALSE Economists assume that individuals make informed decisions and act in their own self-interest. Answer: TRUE Answer: TRUE Answer: TRUE Ceteris paribus means "Let the buyer beware." Answer: FALSE Answer: FALSE Answer: FALSE A

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 197 Homework

The main reason why the government enforces contracts and maintains a legal system that punishes those who violate contracts is: A) to facilitate exchange. B) to decrease imperfect competition. C) to decrease imperfect information. D) to increase uncertainty. Answer: A Answer: A Answer: A Recall the Application about the impact inflation has on your potential future salary and

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 239 Quiz 2

An increase in the reserve requirement A) increases the money supply, which leads to increased interest rates and a decrease in GDP. B) increases the money supply, which leads to decreased interest rates and a decrease in GDP. C) decreases the money supply, which leads to increased interest rates and a decrease in GDP. D) decreases

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 262 Quiz

If GDP is higher than potential output, wages and prices will rise. Answer: TRUE Answer: TRUE Answer: TRUE Refer to Application 2, "Recovering From a Recession," to answer the following questions: After reading the application, you can infer that the recession in 1973 was also caused by a financial crisis. Answer: FALSE Answer: FALSE Answer: FALSE Politicians sometimes have

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 272 Quiz

Transfer payments are excluded from GDP. Answer: TRUE Answer: TRUE Answer: TRUE The Mexican financial crisis of 1994 was due to international investors' loss of confidence in the country. Answer: TRUE Answer: TRUE Answer: TRUE If the actual interest rate in the money market is higher than the equilibrium interest rate, there would be an excess supply of

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 281 Quiz 2

Fiscal policy affects aggregate demand. Answer: TRUE Answer: TRUE Answer: TRUE Governments sometime create an excess supply of a product by setting a minimum price that is greater than the equilibrium price, resulting in a permanent excess supply of the product. This is known as a price ceiling. Answer: FALSE Answer: FALSE Answer: FALSE Discretionary funds are typically

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 315 Homework If

If one variable declines as the other variable declines, the two variables are negatively related. Answer: FALSE Answer: FALSE Answer: FALSE The origin of a graph is the intersection of the two axes, where the value of both variables is zero. Answer: TRUE Answer: TRUE Answer: TRUE The term "crowding out" refers to increases in government spending which

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 323 Quiz 1

Table 5.1 Refer to Table 5.1. Assume that this economy produces only two goods: Good X and Good Y. If year 1 is the base year, the value for this economy's real GDP in year 3 is: A) $110. B) $146. C) $200. D) indeterminate given this information. Answer: C Answer: C Answer: C If in the third quarter

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 346 Quiz

Recall the Application about Austrian economist Henry Hazlitt and the Broken Window Fallacy to answer the following question(s). Hazlitt questioned whether a hoodlum breaking a store window was actually good for society.According to the Application, the argument that the broken window is good for society A) works in the Keynesian world when

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 371 Midterm

A Bank has excess reserves if the actual reserves that the bank holds is less than the required reserves. Answer: FALSE Answer: FALSE Answer: FALSE A decrease in population would shift the demand curve to the left. Answer: TRUE Answer: TRUE Answer: TRUE Money solves the problem of double coincidence of wants that would regularly occur under a

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 397 Final

When considering a two-input production function, one of which is increasing while the other is fixed, at some point called the point of diminishing returns, output will increase at a decreasing rate. Answer: TRUE Answer: TRUE Answer: TRUE Slope is calculated as rise / run. Answer: TRUE Answer: TRUE Answer: TRUE Some outside lags in fiscal policy are due to

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 428 Midterm 2

The cost of a bachelor's degree in philosophy equals the tuition plus the cost of room and board. Answer: FALSE Answer: FALSE Answer: FALSE "Ricardian equivalence" is the proposition that it does not matter whether government expenditure is financed by taxes or by issuing debt. Answer: TRUE Answer: TRUE Answer: TRUE If the reserve ratio is 10 percent,

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 432 Midterm 1

If the Federal Reserve purchases newly issued government debt A) the effect is the same as borrowing from the public. B) existing money is destroyed. C) new money is created. D) the money supply decreases. Answer: C Answer: C Answer: C Which one of the following statements is true? A) Demand deposits are assets of a bank. B) A bank's

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 436

Suppose that the population of a country increases. Assuming that people in that country enjoy eating steak, we would predict that the equilibrium quantity of steak will ________ and the equilibrium price of steak will ________ in that country. A) rise; rise B) rise; fall C) fall; rise D) fall; fall Answer: A Answer: A Answer: A If

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 436 Test 2

Figure 12.1 Refer to Figure 12.1. Which of the following causes a movement from Point A to Point B? A) an increase in the interest rate B) positive growth in the GDP C) negative growth in the GDP D) a decrease in the interest rate Answer: A Answer: A Answer: A We measure gross domestic product by multiplying

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 452 Midterm 1

Adverse supply shocks can cause a recession with increasing price level. Answer: TRUE Answer: TRUE Answer: TRUE The cost of unanticipated inflation is arbitrary redistribution of income and wealth. Answer: TRUE Answer: TRUE Answer: TRUE When you have a job and your employer compensates you for your time with money, resulting in both of you being better off,

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 467

The standard way to measure the effect of debt in an economy is the stock of debt relative to the GDP. Answer: TRUE Answer: TRUE Answer: TRUE When you use money to fill your car with gas every week, you are using money as a unit of account. Answer: FALSE Answer: FALSE Answer: FALSE An increase in search

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 467 Test 2

An increase in the price level increases the transaction demand for money. Answer: TRUE Answer: TRUE Answer: TRUE When federal government spending exceeds tax revenues, the federal government runs a budget surplus. Answer: FALSE Answer: FALSE Answer: FALSE An increase in taxes will increase total planned expenditures for goods and services. Answer: FALSE Answer: FALSE Answer: FALSE The balanced-budget multiplier equals 1. Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 492 Final

The marginal benefit of a worker to a firm is the value of the extra output that results when A) some workers are laid off and the remaining workers become more productive. B) an additional worker is hired. C) workers get paid for working overtime. D) work is outsourced to a foreign country. Answer: B Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 581 Midterm

Figure 19.1 Referring to Figure 19.1, Mexican goods will become more expensive in the United States if the exchange rate goes from ________ to ________ pesos to the dollar. A) 12; 11 B) 12; 13 C) 11; 13 D) 10; 13 Answer: A Answer: A Answer: A All else equal, if autonomous consumption ________, the value of the multiplier

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 591 Test

Although government spending increased during the 1930s: A) the money supply increased too, so there was no net monetary expansion. B) the exchange rate rose too, so there was no net trade expansion. C) taxes increased too, so there was no net fiscal expansion. D) interest rates rose too, so there was no lending

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 623 Midterm 2

If a person has a comparative advantage in some activity, she must have an absolute advantage in that activity as well. Answer: FALSE Answer: FALSE Answer: FALSE Recall Application 3, "Civil Liberties and the Efficiency of Government," to answer the following questions: The returns to public sector investment is highest in poor countries like North

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 646 Quiz

The relationship between the level of saving and the level of consumption is called the savings function. Answer: FALSE Answer: FALSE Answer: FALSE Labor supply curves are always upward-sloping. Answer: FALSE Answer: FALSE Answer: FALSE Hyperinflation can be thought of as a monetary policy phenomenon. Answer: TRUE Answer: TRUE Answer: TRUE The dollar will appreciate if interest rates fall in the United

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 670 Midterm

The market demand curve is: A) downward sloping and is flatter than an individual's demand curve. B) upward sloping and is flatter than an individual's demand curve. C) downward sloping and is steeper than an individual's demand curve. D) upward sloping and is steeper than an individual's demand curve. Answer: A Answer: A Answer: A Trade deficits always

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 682 Midterm 2

Suppose a product suddenly loses popularity and the firms producing the product begin to realize large losses. As firms exit the market, the equilibrium price in the market will: A) increase and make the remaining firms stay in business. B) decrease and make the remaining firms stay in business. C) decrease further and

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 682 Quiz

If GDP is above potential output, then we expect to see A) increasing wages, causing the short-run aggregate supply curve to shift up. B) increasing wages, causing the short-run aggregate supply curve to shift down. C) falling wages, causing the short-run aggregate supply curve to shift up. D) falling wages, causing the short-run aggregate

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 709 Quiz 1

The velocity of money is the ratio of real GDP to the money supply. Answer: FALSE Answer: FALSE Answer: FALSE The Phillips curve is a graph showing the relationship between the rate of inflation and the unemployment rate. Answer: TRUE Answer: TRUE Answer: TRUE The multiplier increases as the MPC increases. Answer: TRUE Answer: TRUE Answer: TRUE Nominal GDP is measured by

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 731 Homework

According to the principle of diminishing returns, an additional worker decreases total output. Answer: FALSE Answer: FALSE Answer: FALSE To draw the consumption possibilities curve for a particular nation you need to know the output of the good for which the nation has a comparative advantage and the terms of trade. Answer: TRUE Answer: TRUE Answer: TRUE In

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 782 Midterm

During the late 1990s and early 2000s, the stock market and investment expenditure were linked through: A) the creation of over-the-counter stock markets, such as NASDAQ. B) the management of monetary policy, that guaranteed low interest rates. C) expectations, first optimistic and then pessimistic, about the economy. D) the deregulation of financial intermediaries. Answer: C Answer:

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 808

The nominal interest rate tells you: A) how fast the number of dollars in your bank account increases over time. B) how fast the purchasing power of your bank account increases over time. C) the number of dollars in your bank account. D) the purchasing power of your bank account. Answer: A Answer: A Answer: A The economic

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 817

In an effort to improve the central bank's credibility in fighting inflation, the central bank in New Zealand: A) has been operating under a law that specifies that its only goal is to maintain stable prices. B) has been running advertisements on the television pledging their credibility. C) no longer issues currency and

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 871 Midterm 1

If a consumer can buy four DVDs for $44 and five DVDs for $50, then the marginal cost of the fifth DVD is: A) $10. B) $50. C) $11. D) $6. Answer: D Answer: D Answer: D Figure 2.4 Joe runs a business and needs to decide how many hours to stay open. Figure 2.4 illustrates his marginal

Macroeconomics: Principles Applications and Tools 8th Edition

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MicroEconomic 871 Quiz 2

An increase in the benefit from undertaking an activity will result in an increase in the opportunity cost of that activity. Answer: FALSE Answer: FALSE Answer: FALSE The law of demand states that there is a negative relationship between price and quantity demanded, ceteris paribus. Answer: TRUE Answer: TRUE Answer: TRUE When firms increase capital stock, the productivity

Macroeconomics: Principles Applications and Tools 8th Edition

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Macroeconomics: Principles Applications and Tools 8th Edition

Trusted by Thousands of
Students

Albert

Anna

Collins

Jill

Drake

Karen

Hill

Rachel

Kristopher

Resources

Company

Legal

Macroeconomics: Principles Applications and Tools 8th Edition

Trusted by Thousands ofStudents

Albert

Anna

Collins

Jill

Drake

Karen

Hill

Rachel

Kristopher

Resources

Company

Legal

Trusted by Thousands of
Students