Macroeconomics: Principles and Applications 6th Edition

ISBN 13

978-1111822354

ISBN 10

1111822352

Authors

Marc Lieberman, Robert E. Hall

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193 documents found.

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978-1111822354 Chapter 1 Lecture Note

CHAPTER 1 WHAT IS ECONOMICS? MASTERY GOALS The objectives of this chapter are to: 1. Define economics and describe the link between scarcity, opportunity cost and the need to make choices. 2. Define opportunity cost including the difference between explicit and implicit costs. 3. Describe the categories that economists use for classifying resources. 4. Distinguish between microeconomics and

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 1 Solution Manual

ANSWERS AND SOLUTIONS PROBLEM SET 1. a. This is a statement of how the economy works, and does not involve value judgments about how the economy should work. Hence, it is an example ofpositive economics. judgments about how the economy should work. Hence, it is an example ofpositive economics. judgments about how the

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 10 Lecture Note

CHAPTER 10 ECONOMIC FLUCTUATIONS MASTERY GOALS The objectives of this chapter are to: 1. Explain the difference between expansions and recessions.2. Explain why shifts in the labor demand curve are a poor explanation for expansions and recessions.3. Explain why shifts in the labor supply curve are a poor explanation for expansions and recessions.4. Summarize

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 10 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. a. The economy was in the midst of an expansion but not yet experiencing a boom in 1997.b. The economy was in the midst of an expansion and also in the midst of a boom in 2000.c. The economy was in the midst

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 11 Lecture Note

CHAPTER 11 THE SHORT-RUN MACRO MODEL MASTERY GOALS The objectives of this chapter are to: 1. Explain the usefulness of the short-run macro model. 2. List the four components of aggregate expenditure included in the simple macro model of this chapter. 3.List the determinants of consumption spending and describe their effects on consumption spending. 4.Describe a consumption function

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 11 Solution Manual

ANSWERS, SOLUTIONS AND EXERCISES PROBLEM SET 1. a. The MPC is 0.75, because each 1,000-unit increase in Y results in 750-unit increase in C. 1. a. The MPC is 0.75, because each 1,000-unit increase in Y results in 750-unit increase in C. 1. a. The MPC is 0.75, because each 1,000-unit increase

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 12 Lecture Note

CHAPTER 12 FISCAL POLICY MASTERY GOALS The objectives of this chapter are to: 1. Explain the concept of countercyclical fiscal policy. 2. Understand the mechanics of countercyclical fiscal policy. 3. Describe the problems associated with countercyclical fiscal policy. 4. Summarize the long run e"ects of budget deficits. 5. Understand how to put budget deficit and national debt

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 12 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. a. If government purchases rise by $7.5 billion and the MPC is 0.95, then the resulting change in real GDP is $7.5 billion *1/(1-MPC) = $150 billion, assumingno automatic stabilizers or destabilizers.b. If taxes fall by $7.5 billion, the change in real GDP is

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 13 Lecture Note

CHAPTER 13 MONEY, BANKS, AND THE FEDERAL RESERVE MASTERY GOALS The objectives of this chapter are to: 1. Define money and its functions. 2. Define liquidity. 3. Explain why credit cards, gold bars, and stocks and bonds are not money. 4. List and define the components of M1 and M2. 5. Describe a banks balance sheet. 6. Describe

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 13 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. With the required reserve ratio equal to 0.2, a $20 billion reserve injection can increase the money supply by a maximum of $20 billion (1/0.2) = $100 billion. With a required reserve ratio of 0.1, the money supply can increase by $20 billion (1/0.1)

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 14 Lecture Note

CHAPTER 14 THE MONEY MARKET AND MONETARY POLICY MASTERY GOALS The objectives of this chapter are to: 1. Explain how individuals wealth limits their demand for money. 2. Describe the tradeoff between holding money and holding bonds. 3. List the key variables that affect the demand for money and explain their effects. 4. Draw a money demand

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 14 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. a. The money supply curve shifts to the right, the money supply increases by $100 billion, and the nominal interest rate falls. billion, and the nominal interest rate falls. billion, and the nominal interest rate falls. b. The money supply curve shifts to the left, and the

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 15 Lecture Note

CHAPTER 15 AGGREGATE DEMAND AND AGGREGATE SUPPLY MASTERY GOALS The objectives of this chapter are to: 1. Use an aggregate demand (AD) curve to illustrate how price level changes affect equilibrium GDP. 2. List the variables that cause the AD curve to shi! and explain their effects. 3. Use an aggregate supply (AS) curve to illustrate

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 15 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. Initially, all three graphs depict equilibrium at point E. A lower price level reduces money demand (shown by the shift from Md1 to Md2 in the upper left-hand panel), lowers the interest rate, increases interest-sensitive spending, and raises aggregate expenditure (upper right-hand panel). Through the multiplier effect,

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 16 Lecture Note

CHAPTER 16 INFLATION AND MONETARY POLICY MASTERY GOALS The objectives of this chapter are to: 1. Describe how the Feds objectives have changed over time, and state its current objectives. 2. Explain why a low rate of in"ation is important. 3. Explain the link between cyclical unemployment and full employment, and explain why the Fed is concerned about

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 16 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. a. In the case of a negative demand shock, the central bank would shift the aggregate demand curve back to its original position by changing the interest rate just enoughto offset the initial change in spending completely. demand curve back to its original position

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 17 Lecture Note

CHAPTER 17 EXCHANGE RATES AND MACROECONOMIC POLICY MASTERY GOALS The objectives of this chapter are to: 1. Describe what a foreign exchange market is. 2. Explain what an exchange rate is, and why it is helpful to define the exchange rate as dollars per unit of foreign currency. 3. Explain why the demand curve for a

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 17 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. a. The demand for French and Italian wine, and therefore for the euro, would increase, and consequently the dollar would depreciate. b. Europeans would supply fewer euros and the dollar would depreciate. c. As the relative price level in the U.S. would be

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 2 Lecture Note

CHAPTER 2 SCARCITY, CHOICE, AND ECONOMIC SYSTEMS MASTERY GOALS The objectives of this chapter are to: 1. Construct a production possibilities frontier and use it to explain the concepts of productive inefficiency, recessions, the law of increasing opportunity cost, and economic growth. 2. Explain the sources of the gains from specialization. 3. Define comparative advantage and

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 2 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. As society moves from point F to point H to point J and so forth, the opportunity cost of 200,000 additional bushels of wheat rises. Looking at the horizontal axis we see that as we go from point F to H to J

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 3 Lecture Note

CHAPTER 3 SUPPLY AND DEMAND MASTERY GOALS The objectives of this chapter are to: 1. Describe the characteristics that define a market including the use of aggregation. 2. Distinguish between product markets and resource markets using the circular flow model. 3. Use a demand schedule and a demand curve to demonstrate the law of demand. 4. Distinguish

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 3 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. False. Slowing down oil production would correspond to a leftward shift of the supply curve. Assuming demand is unchanged, this leftward shift in supply would lead to a price increase, not decrease. Therefore, it must be that the situation described falling oil prices and

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 4 Lecture Note

CHAPTER 4 WORKING WITH SUPPLY AND DEMAND MASTERY GOALS The objectives of this chapter are to: 1. Apply the supply and demand model to actual markets and government policies. 2. Describe the various actions governments take to affect market outcomes. 3. Explain the effect of a price ceiling in a perfectly competitive market and the possible

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 4 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. a. 40 units will be traded since that is all that buyers are willing and able to buy at the price floor of $50 per ton.b. The government will have to purchase the surplus, limit imports from abroad, orcontrol the production and sale of

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 5 Lecture Note

CHAPTER 5 WHAT MACROECONOMICS TRIES TO EXPLAIN MASTERY GOALS The objectives of this chapter are to: 1. List the three important macroeconomic goals, and explain why each is important. 2. Explain how economists track economic growth using real GDP. 3. Distinguish between the expansion and recession phases of the business cycle. 4. Explain why macroeconomists use aggregation. 5.

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 5 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1 This statement is false (see Figure 2 in the chapter). Although the U.S. unemployment rate was very high in 2010 (9.6%), it was even higher throughout the 1930s, and remained higher through 1941. rate was very high in 2010 (9.6%), it was even

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 6 Lecture Note

CHAPTER 6 PRODUCTION, INCOME, AND EMPLOYMENT MASTERY GOALS The objectives of this chapter are to: 1. State the definition of Gross Domestic Product (GDP) and describe the problems with and limitations of this measure.2. Explain why tracking and reporting GDP can be difficult.3. Explain why it is important to take account of inventory changes when

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 6 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1 a. Counted in GDP as an increase in inventories; I b. Counted in GDP; C c. Not counted. This is an intermediate good whose value will be included in the value of the restaurant meals.d. Not counted. Stock is not a final good

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 7 Lecture Note

CHAPTER 7 THE PRICE LEVEL AND INFLATION MASTERY GOALS The objectives of this chapter are to: 1. Describe how index numbers are calculated. 2. Discuss how the Consumer Price Index (CPI) is compiled and how it is used. 3. Describe what the inflation rate measures. 4. Define deflation. 5. Explain why it is important to translate nominal variables

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 7 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. a. The inflation rate for the year 2008 = (210.0 210.0)/210.0 = 0%. b. Total inflation from December 1970 to December 2005 is (196.8 39.8)/39.8 =394.5%. b. Total inflation from December 1970 to December 2005 is (196.8 39.8)/39.8 =394.5%. b. Total inflation from December 1970 to

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 8 Lecture Note

CHAPTER 8 THE CLASSICAL LONG-RUN MODEL MASTERY GOALS The objectives of this chapter are to: 1. Explain why the classical model seemed to be discredited in the 1930s. 2. List two reasons why the classical model remains useful today. 3. State the classical models cri!cal assump!on, and use it to explain the classical result that the economy

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 8 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1. a. An increase in labor demand will shift the labor demand curve from LD1 to LD2, raising the real hourly wage from W1 to W2. Given the stock of capital and the current level of technology, this will move the economy from point A to

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 9 Lecture Note

CHAPTER 9 ECONOMIC GROWTH AND RISING LIVING STANDARDS MASTERY GOALS The objectives of this chapter are to: 1. Explain why economic growth is an important determinant of a nations standard of living. 2. Use the rule of 70 to show how even small differences in economic growth can result in huge difference in living standards. 3.

Macroeconomics: Principles and Applications 6th Edition

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978-1111822354 Chapter 9 Solution Manual

ANSWERS, SOLUTIONS, AND EXERCISES PROBLEM SET 1 a. Increased immigrationThe labor supply curve would shift rightward. Full employment output would rise, but productivity (measured by output per hour worked) would fall because of diminishing returns to labor. Assuming that the fraction of the population that is working remains unchangedso that

Macroeconomics: Principles and Applications 6th Edition

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BUS 106

A weakness of the market system of resource allocation is that a. such economies tend to be stagnant b. most participants in such an economy have low standards of living c. there are no limits on an individual's freedom of action d. it does not address the problem of initial inequities in endowments e. its

Macroeconomics: Principles and Applications 6th Edition

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BUS 122 Test 2

The Fed's objectives present it with a true dilemma when a. there are demand shocks caused by shifts in money demand b. there are demand shocks caused by changes in spending c. there are negative supply shocks d. cyclical unemployment exists e. there is member bank opposition Answer: C Answer: C Answer: C In general, a higher-than-anticipated inflation

Macroeconomics: Principles and Applications 6th Edition

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BUS 141 In Mid2009 The

In mid-2009, the unemployment rate stood at a. 25 percent b. 5 percent c. 6 percent d. 9.5 percent e. 20 percent Answer: D Answer: D Answer: D The secondary market for bonds is a market for a. bonds that is smaller than the primary market b. bonds that are not first-class c. previously issued bonds d. bonds that

Macroeconomics: Principles and Applications 6th Edition

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BUS 145 Homework

If real consumption spending increases by $400 billion each time real disposable income rises by $1,000 billion, the marginal propensity to consume is a. 40 b. 4 c. 0.4 d. 0.04 e. 0.004 Answer: C Answer: C Answer: C Which of the following would lead to a rightward shift of the money demand curve? a. A decrease in the

Macroeconomics: Principles and Applications 6th Edition

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BUS 156 Final

Microeconomics involves the analysis of smaller, less developed economies while macroeconomics is concerned with the analysis of larger developed economies. Answer: B Answer: B Answer: B Which of the following would lead to an increase in the supply of Russian rubles? a. An increase in the dollar price of the ruble b. An

Macroeconomics: Principles and Applications 6th Edition

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BUS 162 Midterm 2

Refer to Figure 9-12. Assume that a nation can slow its population growth rate so that it now requires only N' worth of investment in capital to maintain current capital per worker. If the nation adopts such a policy but maintains investment in capital at N, what would be the likely

Macroeconomics: Principles and Applications 6th Edition

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Bus 237 Which Of The Following Is A

Which of the following is a normative statement? a. Fifteen percent of Americans go without health insurance in a year. b. The Consumer Price Index rose three-tenths of one percent in May. c. An increase in the minimum wage will increase teenage unemployment. d. Americans would be better served by single-payer health care system. e.

Macroeconomics: Principles and Applications 6th Edition

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BUS 238 If Greg Uses A Special Glue

If Greg uses a special glue to make model planes that he sells and the price of his model planes increases, then one would expect that the equilibrium price of the special glue would _______ and the equilibrium quantity would _________. a. increase; decrease b. decrease; increase c. increase; increase d. decrease; decrease e. increase; indeterminant

Macroeconomics: Principles and Applications 6th Edition

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BUS 290 Quiz

If there is an excess supply of money in the economy, a. there is also an excess demand for money b. there is also an excess demand for bonds c. there is also an excess supply of bonds d. the interest rate will rise e. the Fed must intervene to restore equilibrium Answer: B Answer: B Answer:

Macroeconomics: Principles and Applications 6th Edition

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BUS 348 Test

Real consumption spending is inversely related to a. real disposable income b. the amount of common stock owned c. the amount of real estate owned d. expectations of future income e. the interest rate Answer: E Answer: E Answer: E Microeconomics deals with which of the following? a. the total output of an economy b. the measurement of a nation's

Macroeconomics: Principles and Applications 6th Edition

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BUS 433

Since a long run consists of many short runs, the classical model is a. incorrect every time we look at output data b. accurate during the short run c. paradoxically quite accurate in the long run; however, it is not very accurate in the short run d. our best guide to fluctuations in the

Macroeconomics: Principles and Applications 6th Edition

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BUS 441 Quiz 3

Those who prefer that the Fed react to negative supply shocks by tolerating higher rates of inflation as a means of moderating a recession are called a. inflation doves b. inflation hawks c. monetarists d. Keynesians e. hard headed and soft hearted Answer: A Answer: A Answer: A The employment-to-population ratio in the U.S. is

Macroeconomics: Principles and Applications 6th Edition

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BUS 441 Test 2 Rapid Economic

Rapid economic growth, stable prices and __________ are the three important macroeconomic goals about which most economists agree. a. an unemployment rate of zero b. zero inflation c. full employment d. a high exchange rate e. low interest rates Answer: C Answer: C Answer: C The supply and demand model a. tries to include as many

Macroeconomics: Principles and Applications 6th Edition

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BUS 476 Homework

Which of the following can happen? a. Prices are rising and the inflation rate is negative but rising. b. Prices are falling and the inflation rate is positive and falling. c. Prices are falling and the inflation rate is positive and rising. d. Prices are rising and the inflation rate is positive but falling. e.

Macroeconomics: Principles and Applications 6th Edition

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BUS 518 Quiz 1

Economic growth a. involves both benefits and costs b. is beneficial to the economy only if it arises from population growth c. is beneficial to the economy only if it arises from technological change d. involves costs that usually outweigh the benefits e. imposes costs because it requires a movement along the production possibilities frontier

Macroeconomics: Principles and Applications 6th Edition

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BUS 545 Test 2

If the federal government announces a tax cut, which of the following is most likely in the short run? a. A decrease in output, an increase in money demand, and an increase in the interest rate b. An increase in output, a decrease in money demand, and a decrease in the interest

Macroeconomics: Principles and Applications 6th Edition

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BUS 624 Test 1

Which of the following could lead to an increase in the equilibrium quantity of a good? a. a decrease in supply and a decrease in demand b. an increase in the price of an input c. an increase in demand and an increase in supply d. a decrease in demand regardless of supply e. a

Macroeconomics: Principles and Applications 6th Edition

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BUS 636 Midterm 1

The ultimate purpose of an economic model is to a. explain reality as completely as possible b. establish assumptions that closely resemble reality c. help us understand economic behavior d. determine what each decision maker wants to maximize e. guide government policy decisions Answer: C Answer: C Answer: C If automobiles are like most goods and the price

Macroeconomics: Principles and Applications 6th Edition

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BUS 681 Final

The three methods for computing GDP include a. the expenditure approach, the value-added approach, and the factor payments approach b. the expenditure approach, the value-added approach, and the productivity approach c. the productivity approach, the value-added approach, and the factor payments approach d. the expenditure approach, the productivity approach, and the factor payments approach e.

Macroeconomics: Principles and Applications 6th Edition

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BUS 715 Quiz 2 Full Employment

Full employment occurs when a. everyone has a job b. everyone who wants a job has one c. there is no frictional unemployment d. there is no cyclical unemployment e. there is no structural, frictional, and seasonal unemployment Answer: D Answer: D Answer: D Assuming the economy was in equilibrium, use the following information to determine the amount

Macroeconomics: Principles and Applications 6th Edition

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BUS 770

According to Say's Law, in the aggregate a. demand creates its own supply b. the production of output will generate exactly enough income to purchase what has been produced c. the economy is incapable of producing output fast enough to ensure full employment d. full employment cannot be sustained without government action e. consumer saving

Macroeconomics: Principles and Applications 6th Edition

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BUS 794 Midterm 2

The slope of the production function reflects a. capital expenditures. b. government expenditures. c. Constant returns to labor. d. Increasing returns to labor. e. Diminishing returns to labor. Answer: E Answer: E Answer: E Characterizing a market involves a. counting the number of demanders and measuring their quantity demanded b. counting the number of suppliers and measuring

Macroeconomics: Principles and Applications 6th Edition

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ECB 139 Midterm

An aggregate production function, when shown on a graph, a. is linear and slopes upward b. is linear and slopes downward c. is horizontal d. is vertical e. slopes upward, and flattens out as more labor is used Answer: E Answer: E Answer: E The highest annual inflation rate experienced in the United States during

Macroeconomics: Principles and Applications 6th Edition

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ECB 214

If the required reserve ratio is 0.25 and the First National Bank holds $10 million in demand deposits and $5 million in reserves, how much more in demand deposits is this bank capable of creating? a. $0 b. $0.625 million c. $1.875 million d. $2.5 million e. $10 million Answer: D Answer: D Answer: D Consider the market

Macroeconomics: Principles and Applications 6th Edition

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ECB 221 Quiz

Which of the following is the most liquid category of assets? a. Large time deposits b. Money market mutual fund balances c. Small time deposits d. Saving-type accounts e. Demand deposits Answer: E Answer: E Answer: E The primary macroeconomic cost of unemployment is a. higher prices b. lost leisure time c. lost output d. domestic violence e. mental illness (e.g., depression) Answer:

Macroeconomics: Principles and Applications 6th Edition

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ECB 230

Careetha has just taken a fixed-rate loan and agreed to pay a nominal interest rate of 6 percent. If the inflation rate during the first year of the loan was 2 percent, her real interest rate that first year was a. 6 percent b. 8 percent c. 4 percent d. 12 percent e. impossible to

Macroeconomics: Principles and Applications 6th Edition

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ECB 262 Midterm

Which of the following is the best definition of a spot market? a. A market in which a good is bought or sold with the idea that the price will increase in the future b. A market in which a good is bought or sold with the hope that the price will

Macroeconomics: Principles and Applications 6th Edition

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ECB 266 Final

If the CPI for 2008 was 112, the typical market basket purchased that year would cost a. 12 percent more than the same market basket purchased the previous year b. 112 percent more than the same market basket purchased the previous year c. 12 percent more than the same market basket purchased in

Macroeconomics: Principles and Applications 6th Edition

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ECB 372 Test 1

The Fed typically decreases the money supply by a. selling government bonds b. buying government loans c. selling government loans d. printing more currency e. buying government bonds Answer: A Answer: A Answer: A Supply curves are usually assumed to slope upward because a. profits fall as prices rise b. a higher price leads to increases in demand c. a higher

Macroeconomics: Principles and Applications 6th Edition

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ECB 380

Suppose the current interest rate is 5% and you pay $250 for a bond. What is the total payment that should be made to you in one year? a. $12.50 b. $262.50 c. $237.50 d. $255.00 e. $267.50 Answer: B Answer: B Answer: B From 1929 to 1933, U.S. output dropped by about a. 10 percent b. 20 percent c. 25

Macroeconomics: Principles and Applications 6th Edition

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ECB 402

Which point in Figure 2-3 is not possible for this society to produce? Figure 2-3 a. A b. B c. C d. D e. E Answer: E Answer: E Answer: E Suppose that the market for DVDs is initially at point A on demand curve D2 in Figure 3-7. If there is a decrease in the price

Macroeconomics: Principles and Applications 6th Edition

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ECB 446 Quiz 3

Countries like _________ have no reserve requirements at all. a. England b. Canada c. Australia d. all of the above e. none of the above. Answer: E Answer: E Answer: E In a typical economy, the dollar value of the total output for a period will equal the sum of consumption spending, planned investment spending, government spending, and

Macroeconomics: Principles and Applications 6th Edition

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ECB 479

A reliable indicator of a healthy economy is an appreciating currency. Answer: B Answer: B Answer: B In the following index: 2003 = 123.3; 2004 = 143; 2005 = 111.4; 2006 = 100; 2007 = 94.3, what is the rate of change from 2006 to 2007? a. 5.7% b. 5% c. 4.3% d. 2.5% e. unable to determine Answer:

Macroeconomics: Principles and Applications 6th Edition

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ECB 510

An excess supply of rice in a competitive market would indicate that a. the problem of scarcity has been solved in that market b. buyers want to purchase more rice at the current price than the sellers want to sell c. the market will not be able to approach equilibrium d. the entire supply

Macroeconomics: Principles and Applications 6th Edition

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ECB 531

Suppose that a labor union leader is trying to bargain for an increase in union workers' real wages of 5 percent. If he expected the price level to rise at a rate of 3 percent this year, how much would nominal wages need to increase for him to accomplish his

Macroeconomics: Principles and Applications 6th Edition

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ECB 599 Quiz 1

The Full Employment and Balanced Growth Act of 1978 set the target unemployment rate for the United States economy at 4 percent. Answer: A Answer: A Answer: A Which of the following most accurately describes the aggregate supply curve? a. It shows the price level associated with firms' unit costs and markups

Macroeconomics: Principles and Applications 6th Edition

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ECB 708

If 130 million individuals are employed and 6 million are unemployed, what is the unemployment rate? a. 4.8 percent b. 3.0 percent c. 4.4 percent d. 4.6 percent e. 9.6 percent Answer: C Answer: C Answer: C Increases in the general price level are primarily a macroeconomic issue. Answer: A Answer: A Answer: A The real wage rate measures a.

Macroeconomics: Principles and Applications 6th Edition

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ECB 803 Final

When a mall Santa Claus loses his job at the end of the Christmas season, this is an example of a. frictional unemployment b. structural unemployment c. frictional unemployment d. seasonal unemployment e. economic unemployment Answer: D Answer: D Answer: D Assume that U.S. agricultural land is used either to raise cattle for beef or to grow wheat.

Macroeconomics: Principles and Applications 6th Edition

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ECB 805

An example of a good whose production is counted in this year's GDP is a. a share of corporate stock b. a used book c. an acre of farm land d. a used car e. a new shirt Answer: E Answer: E Answer: E Assume that the publishing industry produces novels and textbooks, as shown in the production

Macroeconomics: Principles and Applications 6th Edition

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ECB 866 Test 2

If the demand for new automobiles falls when income falls, automobiles are said to be normal goods. Answer: A Answer: A Answer: A If the required reserve ratio is 0.2, and a bank has $100 million in demand deposits and $40 million in property and buildings, it must hold reserves of at least a. $28

Macroeconomics: Principles and Applications 6th Edition

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ECB 870 Midterm 1

Figure 2-5 shows five different points along the production possibilities frontier for a country that produces rockets and cruise ships. If the country is currently operating at point C and decided to move to point B, a. the opportunity cost would be four rockets b. it could not do so, given the

Macroeconomics: Principles and Applications 6th Edition

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ECB 883

An increase in the price level will lead to which of the following sequences? a. The money demand curve shifts leftward, the interest rate drops, the aggregate expenditure line shifts upward, and there is movement downward along the aggregate demand curve. b. The money demand curve shifts rightward, the interest rate increases,

Macroeconomics: Principles and Applications 6th Edition

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ECB 885 Final

When we talk about injections in the classical model, we refer to a. taxes b. total government purchases. c. federal government purchases only. d. state government purchases only. e. local government purchases only. Answer: B Answer: B Answer: B Transfer payments are a. payments for goods or services that individuals provide b. funds given to people or organizations when

Macroeconomics: Principles and Applications 6th Edition

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ECB 897

Which of the following would be studied in macroeconomics? a. a drop in the price of personal computers b. an individual household's decision on how to allocate its spending power c. a rise in employment in movie theaters across the nation d. total output in the nation e. a local bank's increase in the interest

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 215 Homework

The classical model a. relies on the equivalency of the labor, capital, and land resource markets b. includes a land market and a labor market c. focuses primarily on capital markets d. focuses primarily on labor markets e. focuses on labor, capital, and land markets Answer: D Answer: D Answer: D Which of the following disciplines is not

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 238 Test

Under which of the following circumstances should we be concerned about a rising national debt? a. When it rises at a slower pace than GDP. b. When the government runs deficits over a long period of time, such as a decade. c. When it rises at a faster pace than GDP. d. When the

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 256

The supply curve for a foreign currency typically a. is horizontal b. is vertical c. slopes downward d. slopes upward e. none of the above. Answer: D Answer: D Answer: D An increase in the price level a. increases investment spending, thereby shifting the AD curve to the left b. does not shift the AD curve c. causes the government's budget

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 260 Quiz 2

Even though households may have unlimited wants, they have to allocate their spending carefully because they a. do not want their credit card bills to be too high b. worry about their taxes c. have limited intelligence d. have limited incomes e. basically want to become wealthy Answer: D Answer: D Answer: D If two goods are substitutes, then

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 287 Midterm 2

A critical assumption differs from a simplifying assumption in that a critical assumption a. is a means of getting rid of extraneous details in the model b. cannot affect the conclusions of the model c. can affect the conclusions of the model d. is rarely used in economic models e. is never a fundamental assumption

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 317 Quiz 2

The demand curve for a foreign currency a. slopes upward b. slopes downward c. is horizontal d. has a slope of 45 degrees e. is vertical Answer: B Answer: B Answer: B Because it lowers the amount of output per person, unemployment results in a. a shift in the economy's production possibilities frontier b. increased workers' incomes c. optimism about economic

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 318

Which of the following would be considered a resource cost of inflation? a. A cost of living adjustment b. Loss of purchasing power c. Additional trips to the bank d. Adjusting nominal interest rate to get real rates e. Creeping inflation Answer: C Answer: C Answer: C If the price of leather (an input for leather shoes) increases,

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 322 Test

Which of the following is a reason why a bank may hold excess reserves? a. It earns more interest on reserves than on loans. b. It is required to do so. c. It may want flexibility to increase its loans if interest rates rise in the near future. d. Banks often expect a drop

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 329 Quiz 1

The real wage can increase only if the nominal wage increases. Answer: B Answer: B Answer: B Over the past several decades, federal transfer payments as a fraction of GDP have trended upward. Answer: A Answer: A Answer: A If the price level is increasing and output is falling, which of the following could be the reason? a. A

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 331 Quiz 2

During a recession, both output and unemployment fall. Answer: B Answer: B Answer: B The classical model's theory of the interest rate does not apply in the short run. Answer: A Answer: A Answer: A Which of the following is a way in which a government could encourage spending on research and development? a. Increase the

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 386 Midterm 2

The Fed has been able to achieve a zero rate of inflation throughout most of the 1990s. Answer: B Answer: B Answer: B In the Full Employment and Balanced Growth Act of 1978, Congress set a target rate of unemployment. The nation achieves this target rate a. in most years b. at least once a year c. only

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 440 Quiz 3

Which of the following annual real GDP growth rates would be needed just to maintain output per capita in the United States? a. 10.0 percent b. 2.5 percent c. 1.0 percent d. 7.0 percent e. 3.5 percent Answer: C Answer: C Answer: C In the classical model, we include unintended inventory changes. Answer: B Answer: B Answer: B If

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 444 Homework

Microeconomics analyzes individual parts of the economy rather than broad economic aggregates. Answer: A Answer: A Answer: A Which of the following are the best examples of substitute goods? a. personal computers and computer software programs b. milk and cookies c. Packard Bell and IBM personal computers d. hot dogs and mustard e. contact lenses and

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 468 Quiz 2

If government spending increases, which of the following is most likely to occur? a. GDP, money demand, the interest rate, and investment spending will all increase. b. GDP, money demand, the interest rate, and investment spending will all decrease. c. GDP, money demand and the interest rate will increase, while investment spending will

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 499 Quiz 1

Which of the following is a period of decreasing output that is severe and long lasting? a. business cycle b. expansion c. peak d. recession e. depression Answer: E Answer: E Answer: E Why would workers and retirees want to have their wages and benefits indexed to the Consumer Price Index (CPI)? a. To lower their

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 520

Ceteris paribus, when households spend less but do not supply of all their additional saving to the loanable funds market, a. total spending will exceed below total income, satisfying Say's law. b. total spending will drop below total income, violating Say's law. c. total spending will drop below total income, thereby satisfying Say's

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 554 Homework

When GDP is rising, the economy is experiencing a. a contraction b. a recession c. a financial crisis d. an expansion e. equilibrium Answer: D Answer: D Answer: D The index used to translate nominal GDP into real GDP is the a. Consumer Price Index b. Wholesale Price Index c. GDP Price Index d. Producer Price Index e. Manufacturer's Input

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 577

If the price level increases, the money demand curve will a. shift leftward b. become steeper c. remain in the same position; however, there will be movement upward along the curve d. shift rightward e. remain in the same position; however, there will be movement downward along the curve Answer: D Answer: D Answer: D Which of the

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 701 Test 1

If an excise tax is imposed on steak, a. the government's tax revenue will decrease b. the government's tax revenue will increase c. the amount of steak produced and sold will increase d. the market price of steak will decrease e. the market price will rise but the market quantity will be unaffected Answer: B Answer:

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 707 Quiz 3

Which of the following statements is true when total spending equals total output? a. Saving plus taxes equals investment plus government purchases. b. Output equals investment plus government purchases plus saving plus taxes. c. Output equals consumption spending plus investment plus government purchases plus saving plus taxes. d. Output equals consumption plus investment plus

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 708

Which of the following statements about modern macroeconomic theory is most accurate? a. Keynes' ideas help us understand movements in output around its long-run trend, while the Classical model is more useful in explaining the long-run trend itself. b. The classical model helps us understand movements in output around its long-run trend,

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 722 Quiz 2

The equilibrium short-run interest rate is determined at the intersection of the demand and supply curves in the market for a. labor b. money c. capital goods d. mortgage funds e. corporate bonds Answer: B Answer: B Answer: B If steel manufacturers expected that the price of steel was going to rise in the next six months, this

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 752 Test

The Federal Reserve banks make loans to member banks at a special interest rate called the discount rate. Answer: A Answer: A Answer: A When opportunity costs rise as more of a good is consumed, the production possibilities frontier will be concave (bowed out) with respect to the origin. Answer: A Answer: A Answer: A The federal funds rate

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON 837 Quiz 2

Which of the following is the definition of a capital gain? a. An increase in a firm's capital stock b. Profit earned from selling a financial asset c. The dividend earned from a company's stock d. Taxes saved by selling a share of corporate stock e. The profit earned by a corporation Answer: B Answer: B Answer:

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 133 Midterm

When analyzing the housing market, the supply curve a. will be upward sloping because the higher the price of a house the more that will exist b. will be horizontal to illustrate that the supply of housing is a stock variable c. will be downward sloping; that is what went wrong with the

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 152 Final

If the base year for an index is 2005 and the value of the index in 2008 is 165.1, by what percent has the measure grown over those 3 years? a. 165.1 percent b. 100.0 percent c. 6.51 percent d. 0 percent e. 65.1 percent Answer: E Answer: E Answer: E Whether a subsidy for a certain good

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 169

Many less developed countries have low rates of economic growth because a. high population growth rates reduce living standards b. low population growth rates result in an inadequate labor supply c. high current output per capita reduces incentives for growth d. interest rates are too high e. they invest too much in infrastructure leaving little

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 314

Which of the following is not a tool for controlling the money supply? a. Buying government bonds b. Selling government bonds c. Changing tax rates d. Changing the required reserve ratio e. Changing the discount rate. Answer: C Answer: C Answer: C Which of the following is the least liquid asset? a. checkable deposits. b. savings-type deposits. c. traveler's checks. d. demand

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 358 Quiz 2

If there is a large increase in the price of oil and the Fed wishes to maintain stable output, which of the following should it do? a. Do nothing, because the self-correcting mechanism will adjust the economy b. Sell bonds in the open market c. Wait, because output seldom changes when there is

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 392 Homework

Which of the following is the best example of an intermediate good? a. a new fighter jet purchased by the federal government b. tires purchased by an automobile manufacturer for installation on new cars c. a new saw purchased by a carpenter d. screwdrivers purchased by a homeowner for home repairs e. aprons purchased by

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 414 Quiz

Government purchases a. are only weakly related to aggregate income b. include spending on goods and services plus transfer payments c. are inversely related to aggregate income d. are inversely related to the price level e. are inversely related to the interest rate Answer: A Answer: A Answer: A Which of the following would notcause the demand curve

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 430 Homework

A rise in the interest rate tends to a. reduce many kinds of spending b. stimulate investment in high-profit industries c. cause bond prices to increase d. encourage confidence in the Fed's control over the economy e. suggest a downturn in the economy is coming within 6 months Answer: A Answer: A Answer: A Suppose there is a

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 471 Final

Susie grows corn in her backyard garden to feed her family. The corn she grows is not counted in GDP because a. it was not produced for the marketplace b. it is an intermediate good that Susie will process further before feeding her family c. goods produced using land are not included in

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 482 Final

All cash within the geographical boundaries of the United States is counted as part of the U.S. money supply. Answer: B Answer: B Answer: B Managed floats are only effective in the long run. Answer: B Answer: B Answer: B A monetary system is what allows us to a. earn a wage b. compare the costs of different goods and

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 529 Quiz 2

Refer to Figure 14-4. If the interest rate is currently 12 percent, we would expect the a. interest rate to fall to 10 percent b. interest rate to remain at 12 percent c. interest rate to fall to 6 percent d. quantity of money held to decrease to $500 billion e. money supply to

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 530 Quiz 2

For the two year period ending in 2008-2009, what has been the number of bank failures? a. About 500 b. About 2,000 c. Fewer than 150 d. More than 5,000 e. Fewer than 1,000 Answer: C Answer: C Answer: C According to the law of increasing opportunity cost, a. opportunity cost rises as technology improves b. the production possibilities frontier

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 531

The level of detail in an economic model a. is as close as possible to the level of detail in reality b. depends on the purpose of the model c. is as complex as possible d. is the same regardless of the purpose of the model e. is as complex as possible to accomplish its

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 606 Midterm 1

Due to society's overall scarcity of resources, a. only households are constrained by income b. only government agencies are constrained by limited budgets c. only business firms are constrained by the cost of buying their inputs d. households, business firms and government agencies all face constraints e. households and business firms face constraints, but government

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 630 Quiz 3

Using the following information on a hypothetical economy in equilibrium, calculate total output for 2008. If exports are exactly equal to imports, total output for 2008 is a. $5.2 trillion b. $5.7 trillion c. $8.4 trillion d. $8.7 trillion e. $13.9 trillion Answer: C Answer: C Answer: C Maximizing output by following the principle of comparative advantage requires a. specialization

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 663

Suppose you start your own company making T-shirts that commemorate campus sporting events. An example of the resource capital would be a. the factory you created in a building you are leasing b. your time and effort used to produce T-shirts c. the entire campus, since the demand for T-shirts is obtained from

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 689 If The Federal Reserve

If the Federal Reserve purchases $1,000 in bonds and the reserve requirement ratio is 0.2, what will be the total change in reserves at all banks assuming there are no excess reserves? a. +$500 b. +$5,000 c. -$500 d. -$5,000 e. +$1,000 Answer: E Answer: E Answer: E Private investment expenditure, which is a flow, affects the stock

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 788 Quiz

The discovery and dissemination of a new cost-saving technology a. is an example of a positive demand shock b. would cause the long-run AS curve to shift leftward, thereby increasing both output and the price level c. would increase firms' unit costs d. would lead to an increase in output and a decrease in

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 848 Test 1

Macroeconomics studies the behavior of aggregates while microeconomics studies the behavior of individual decision-making units. Answer: A Answer: A Answer: A Which of the following is the most liquid form of asset? a. Small time deposits b. Large time deposits c. Savings accounts d. Money market mutual fund (MMMF) balances e. Travelers' checks Answer: E Answer: E Answer:

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 849 Quiz 1

In the classical view, all markets clear, except the labor market. Answer: B Answer: B Answer: B Suppose that equilibrium in the dollar-pound market occurs where 300 million pounds are demanded at a price of $1.75 per pound. If the current exchange rate is $1.60 per pound, we know that a. the

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 854 Homework

Which of the following best defines the specialization of resources? a. Workers are compensated as individuals. b. Special resources are needed to produce most goods. c. Each resource is paid for in full. d. Each resource is paid the most if it is specialized. e. Each resource is focused on a limited number of productive

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON A 869 Final

Oil and Natural Gas can each be used as a source of energy and are, for many purposes interchangeable. Which of the following best explains the increase in the price of natural gas that accompanied the increase in the price of oil during the 1990-1991 Persian Gulf War? a. Increased oil

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 110 Quiz

In the U.S. over the past century, increases in labor a. supply have outpaced increases in labor demand, causing the average wage rate to fall b. supply have outpaced increases in labor demand, causing the average wage rate to rise c. demand have outpaced increases in labor supply, causing the average wage rate

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 122 Test 2

If the price of bonds rises, a. the Fed will decrease the money supply b. the Fed will increase the money supply c. the interest rate will rise d. the interest rate will fall e. inflation must be accelerating Answer: D Answer: D Answer: D An increase in supply could be caused by a(n) a. increase in price b. government-imposed

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 151 Quiz 2

The money market is in equilibrium when there is no excess supply of or excess demand for bonds. Answer: A Answer: A Answer: A Refer to Figure 8-3. This figure is known as a. the classical aggregate production function b. the Keynesian aggregate production function c. the full-employment model d. the circular flow diagram e. Say's diagram Answer:

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 168 Quiz 2

The law of supply says that a. supply and income are inversely related b. supply follows demand c. quantity supplied equals quantity demanded d. price and quantity supplied are inversely related e. price and quantity supplied are directly related Answer: E Answer: E Answer: E Suppose that equilibrium in the dollar-pound market occurs where 300 million pounds are

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 237 Homework

Whenever prices are rising, the inflation rate is rising. Answer: B Answer: B Answer: B The Federal Reserve Banking Act of 1978 a. attempted to guarantee stability of the banking system b. was a reaction to the savings and loan crisis c. added full employment to the list of objectives for the Fed d. strengthened deposit insurance programs e.

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 290

Which of the following would be the best example of a spot market? a. the market for fine art b. the market for bananas c. the market for stocks and bonds d. the market for baseball cards Answer: B Answer: B Answer: B Which of the following statements about U.S. unemployment is true? a. All racial groups experience

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 333 Quiz

Carl is considering attending a concert with a ticket price of $35. He estimates that the cost of driving to the concert and parking there will total an additional $20. In order to attend the concert, Carl will have to take time off from his part-time job. He estimates that

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 372 Test

Which combination of government policies would be most likely to increase labor supply? a. Increasing income tax rates and cutting transfer payments to the needy b. Decreasing income tax rates and cutting transfer payments to the needy c. Decreasing income tax rates and increasing subsidies to businesses for hiring certain kinds of workers d.

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 372 Test 1

In what way is the result of an excise tax imposed on either demanders or suppliers similar to the result of a price ceiling? a. The amount that consumers pay for the good will be less than they previously paid b. The amount of the good that will be traded in the

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 421

In a traditional economy, decisions about what to produce, how to produce, and who should get society's output are made by a. the market b. the government c. repeating what was done in the past d. business firms e. nonprofit firms Answer: C Answer: C Answer: C Carl is considering attending a concert with a ticket price of

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 426 Quiz

Improvements in the quality of goods and services over time a. cause GDP statistics to understate true output growth from year to year b. cause GDP statistics to overstate true output growth from year to year c. are fully accounted for in the Bureau of Economic Analysis' measurement of GDP d. are reflected in

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 437 Midterm 1

The Phillips curve represents the Fed's short-run choices between inflation and unemployment. Answer: A Answer: A Answer: A Market equilibrium occurs at that price for which a. quantity supplied equals quantity demanded b. cost equals the wages to labor c. the surplus quantity drives increased demand d. quantity supplied exceeds quantity demanded e. quantity supplied is less than quantity

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 452 Homework

According to the law of comparative advantage, individuals and economies should specialize in producing those goods and services in which they have a comparative advantage. Answer: A Answer: A Answer: A Which of the following describes the relationship between GDP and government spending? a. Government spending = GDP + consumption + private investment - exports

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 490 Homework

If the Federal Reserve unexpectedly raised its interest rate target, which of the following would most likely occur? a. The interest rate would increase and bond prices would rise. b. The interest rate would decrease and bond prices would rise. c. The interest rate would increase and bond prices would fall. d. The interest

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 555 Final

An increase in government spending leads to a(n) a. downward shift of the aggregate expenditure line and a leftward shift of the money demand curve b. upward shift of the aggregate expenditure line and a rightward shift of the money demand curve c. downward shift of the aggregate expenditure line and a rightward

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 559 Midterm 1

The AD curve is derived by adding up demand curves for all goods and services. Answer: B Answer: B Answer: B If inflation is higher than anticipated and benefits are not indexed, which group loses purchasing power? a. Borrowers and lenders b. Lenders and retirees c. Borrowers and retirees d. Only borrowers e. Only lenders Answer: B Answer: B Answer: B An

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 565 Homework

Suppose that the United States has an absolute advantage over Mexico in producing both agricultural and manufactured goods. In the U. S., the opportunity cost of 1 unit of agricultural output is 2 units of manufactured goods. In Mexico, the opportunity cost of 1 unit of agricultural output is 1.5

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 583 Midterm 2

Refer to Figure 14-3. What are the equilibrium interest rate and quantity of money? a. 10 percent and $500 billion b. 8 percent and $500 billion c. 6 percent and $500 billion d. 8 percent and $750 billion e. 6 percent and $750 billion Answer: D Answer: D Answer: D Given the balance sheet

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 590 Midterm 2

In macroeconomics, a. we study one market at a time b. we try to understand how the entire economy behaves c. we focus on large, important products and ignore the rest d. we study one nation's economy only e. we aggregate all national economies into a world economy Answer: B Answer: B Answer: B Most

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 615 Quiz 2

An economic model a. uses equations to understand normative economic phenomena b. often omits crucial elements c. simplifies reality in order to focus on crucial elements d. tries to make simple concepts more complex e. cannot be proven wrong Answer: C Answer: C Answer: C The price of a typical basket of goods and services

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 674 Test

Where is the interest rate determined in the classical model? a. In the goods market b. In the loanable funds market c. By the federal government d. By the Fed e. Where aggregate expenditure equals GDP. Answer: B Answer: B Answer: B If a change in investment spending is due to a change in the

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 687 Quiz 1

All production involves an opportunity cost because a. to produce costs money b. costs of production are sky rocketing c. to produce more of one thing, we must produce more of everything d. to produce more of one thing, we must produce less of something else e. when an individual obtains more of a good,

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 807 Midterm

For society as a whole, producing more of one good or service has an opportunity cost because a. human wants are limited and resources are unlimited b. both human wants and resources are unlimited c. resources are limited; human wants are irrelevant d. human wants are unlimited and resources are limited e. both human wants

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 853 Midterm 1

Congress created the Federal Deposit Insurance Corporation to a. sell insurance to individuals who have bank accounts b. inject reserves into the economy more quickly c. develop a better working relationship between bank managers and government officials d. charge higher interest rates to banks e. reimburse those who lose their bank deposits Answer: E Answer: E Answer:

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 856 Test 1

Refer to Figure 15-1. Assume the economy is in equilibrium at $7 trillion. If the changes in all three graphs were caused by the same event, what was that event? a. An increase in nominal income b. An increase in the price level c. An increase in the interest rate d. An increase in

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

ECON E 884 Quiz

Which of the following factors may lead to an underestimation of the significance of unemployment when evaluating the overall unemployment rate? a. Involuntary full-time employment b. An increase in the number of military personnel c. Discouraged workers d. An increase in the number of people under the age of 16 e. A decrease in the

Macroeconomics: Principles and Applications 6th Edition

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Economics 211 Quiz 2 By Driving

By driving up interest rates, an increase in investment spending causes a. a voluntary decrease in consumption b. a voluntary increase in consumption c. an involuntary decrease in consumption d. an involuntary increase in consumption e. government spending to be crowded out Answer: A Answer: A Answer: A Assume that Ernesto earned a nominal wage

Macroeconomics: Principles and Applications 6th Edition

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Economics 307 Midterm

Refer to Figure 15-3. Which of the following most likely caused the shifts from AE1 to AE2, and from AD1 to AD2? a. A decrease in the money supply b. An increase in government purchases c. An increase in investment spending d. An increase in autonomous consumption e. An increase in taxes. Answer: E Answer:

Macroeconomics: Principles and Applications 6th Edition

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Economics 308

In the short run, a. spending depends on income and income depends on spending b. spending depends on income, but income does not depend on spending c. income depends on spending, but spending does not depend on income d. spending and income are independent of one another e. spending is the only determinant of how

Macroeconomics: Principles and Applications 6th Edition

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Economics 337 Test 1

Refer to Figure 9-4. Which of the following policies would most likely shift the supply of loanable funds curve from S1 to S2? a. Introduction of an investment tax credit b. Cutting the corporate profits tax rate c. Increasing personal income tax rates d. Eliminating taxes on interest income e. Decreasing the government's budget deficit

Macroeconomics: Principles and Applications 6th Edition

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Economics 438 Midterm 2

Given the balance sheet below and assuming a required reserve ratio of 20 percent, how much (in dollar terms) must the bank hold in required reserves? a. It is failing to meet its reserve requirement. b. It is just meeting its reserve requirement, but has no excess reserves. c. It is meeting its reserve

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

Economics 449 Test 2

If there is a sudden increase in government spending, which of the following should the Fed do if it wants to keep the price level steady? a. Do nothing, since the self-correcting mechanism will adjust the economy b. Sell bonds in the open market c. Wait, since the price level usually does not change

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

Economics 571

A floating exchange rate is one that is allowed to move freely between two points that have been determined by an exchange treaty. Answer: B Answer: B Answer: B The 2008 financial crisis peaked in September 2008, when Lehman Brothers declared bankruptcy. Answer: A Answer: A Answer: A If the government lowered the capital gains

Macroeconomics: Principles and Applications 6th Edition

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Economics 599 Midterm

Given the balance sheet below and assuming a required reserve ratio of 20 percent, how much (in dollar terms) is this bank actually holding in reserves? a. $3.5 million b. $8 million c. $15 million d. $20 million e. $35 million Answer: E Answer: E Answer: E One way to increase economic efficiency in saving lives is to a. shift

Macroeconomics: Principles and Applications 6th Edition

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Economics 641

The money demand curve indicates the total quantity of money demanded in the economy at each a. price level b. level of GDP c. quantity of money supplied d. level of income e. interest rate Answer: E Answer: E Answer: E "The Consumer Price Index increased by 4.2 percent in the first quarter of this year." What type

Macroeconomics: Principles and Applications 6th Edition

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Economics 771

Stagflation a. is caused by a negative demand shock b. is theoretically impossible c. is a long-run phenomenon d. was rampant during the Great Depression e. is the combination of rising price levels and negative GDP growth Answer: E Answer: E Answer: E Suppose that the country of Utopia produces only steel and coffee. In 1998, Utopia produced

Macroeconomics: Principles and Applications 6th Edition

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Economics 824 Midterm 2

Macroeconomics studies the determination of a. total output, total employment, the general price level, and the general level of interest rates b. total output and the general level of interest rates only c. total employment and the general level of prices only d. the interaction of individual economic actors in specific markets and industries e.

Macroeconomics: Principles and Applications 6th Edition

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Economics 883 Test 1

In the long-run AS-AD model, a. the position of the AD curve determines output b. the self-correcting mechanism of the economy is irrelevant c. the AS curve shifts leftward whenever the economy is growing d. the position of the AD curve determines the price level e. output fluctuates a great deal Answer: D Answer: D Answer: D Refer

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 102 Midterm

If people work longer or harder, a. they are unambiguously worse off b. living standards will rise but nonmarket activities must be sacrificed c. living standards will fall d. more output can be produced, but living standards will fall e. they will have fewer consumer goods to enjoy Answer: B Answer: B Answer: B People's decision about whether

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 111 Midterm 2

Refer to Figure 8-1. If the real hourly wage rate was $6, what would be the effect? a. There would be a shortage of 40 million workers and the wage rate would rise. b. There would be a shortage of 20 million workers and the wage rate would rise. c. There would

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 182 Quiz 1

Assume that U.S. agricultural land is used either to raise cotton for clothing or to grow wheat. Curve FG in Figure 2-8 represents the current production possibilities frontier for cotton and wheat. What could cause the production possibilities frontier to shift from FG to FH? Figure 2-8 a. a change in

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 216 Test 1

Refer to Figure 8-4. Based on these graphs, what are the equilibrium interest rate and quantity of loanable funds exchanged? a. 5 percent and $1.4 trillion b. 5 percent and $2.2 trillion c. 8 percent and $1.8 trillion d. 8 percent and $2.8 trillion e. It cannot be determined with the information given. Answer: C

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 234

Which of the following is a definition of the consumption function? a. A functional relationship between real consumption spending and real disposable income b. A functional relationship between real consumption spending and the interest rate c. A functional relationship between real consumption spending and wealth d. A functional relationship between real consumption spending and

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 249

Stagflation is caused by a. a negative supply shock. b. a positive supply shock. c. a negative demand shock. d. a positive demand shock. e. none of the above. Answer: A Answer: A Answer: A If Cathy has a bond that will pay $1,000 one year from now and its current price is $800, what is the

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 251 Midterm

To approximate the percentage change in real income over any period of time, a. we need to subtract the percentage change in nominal income from the inflation rate b. we need to subtract the rate of inflation from the percentage change in nominal income c. we need to divide the percentage change in

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 264

We say there is productive inefficiency in saving lives if a. there is some way to save more lives b. there is some way to save more lives without sacrificing any other goods or services c. all resources are devoted to saving lives d. no resources are devoted to saving lives e. anyone dies before

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 313 Final

If net taxes were lowered from $5,000 to $1,000, the marginal propensity to consume is 0.75, and autonomous consumption spending is $10,000, by how much would consumption increase? a. $3,000 b. $1,250 c. $7,500 d. $3,750 e. $750 Answer: A Answer: A Answer: A Which of the following could explain the shift in the production possibilities frontier from

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 389 Final

Of the following, which is true of the relationship between the quantity of a good supplied and its price? a. As price increases, the quantity supplied usually decreases. b. As price increases, the quantity supplied usually increases. c. As price increases, supply increases. d. When demand increases, so will supply. e. They always meet at

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 402

As its capital stock increases, a nation will a. move rightward along a fixed production function b. move leftward along a fixed production function c. find its production function shifting upward d. find its production function shifting downward e. experience no change in the marginal product of labor Answer: C Answer: C Answer: C If you use a

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 473

When the U.S. government runs a deficit, it usually does the following: a. It buys government bonds from the public b. It asks the Treasury Department to print money to pay for the deficit c. It sells new government bonds to the public d. It borrows money directly from the Federal Reserve e. It asks

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 485 Test 2

If inflation is perfectly anticipated, benefits are indexed, and there are no restrictions on contracts, which group loses purchasing power because of inflation? a. Borrowers, lenders and retirees b. Only borrowers c. Neither lenders, borrowers, nor retirees d. Only lenders e. Only retirees Answer: C Answer: C Answer: C An appreciating currency is always a sign of economic health. Answer:

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 503

If people start to use cash because of an increase in credit card fraud, which of the following would we expect to happen under a neutralization policy? a. The money supply would decrease, real GDP would not change, and the interest rate would not change. b. The money supply would increase, real

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 523 Quiz

The difference between microeconomics and macroeconomics is that a. microeconomics deals with only small numbers while macroeconomics is always dealing with numbers in the billions and trillions b. microeconomics deals with the economy as a whole while macroeconomics deals with individual firms c. microeconomics is concerned with the behavior of individual decision-makers while

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 524 Quiz 3

A decrease in the interest rate reduces the opportunity cost of holding money. Answer: A Answer: A Answer: A Open market sales of bonds by the Federal Reserve reduce the money supply and a. reduce aggregate expenditures b. increase real aggregate expenditures c. are helpful in monetizing the federal debt d. stimulate purchases of consumer durables e. stimulate spending

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 528 Final

Suppose the Federal Reserve wants to increase the money supply. Which combination of actions would lead to the appropriate effect? a. Increase the discount rate, decrease the reserve ratio, sell bonds. b. Increase the discount rate, decrease the reserve ratio, buy bonds. c. Decrease the discount rate, decrease the reserve ratio, buy bonds. d.

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 566 Test 2

Inflation will generally redistribute purchasing power when a. it is fully expected b. it is completely unexpected c. it is greater than 3 percent d. it is greater than 5 percent e. it is greater than 10 percent Answer: B Answer: B Answer: B Which of the following is not an example of a flow variable? a. The amount

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 571 Test 2

The real interest rate on a loan a. is the amount that the consumer agrees to pay b. is always the same as the nominal rate c. is always greater than the nominal rate d. is only of concern when serious inflation occurs e. is the percentage increase in the lender's purchasing power that results

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 622

If the Fed has a goal of stable real GDP and the government announces a tax cut, which of the following would occur? a. Money demand would not change, real GDP would not change, the interest rate would decrease, and there would be partial crowding out. b. Money demand would not change,

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 634 Quiz

The economy's money supply curve is vertical. Answer: A Answer: A Answer: A In the classical model, beginning from an equilibrium in which the government is running a budget surplus a. the supply of loanable funds will be horizontal b. an increase in government spending will cause the interest rate to rise c. the supply of loanable

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 674 Quiz 3

As long as the loanable funds market clears, Say's law holds.. Answer: A Answer: A Answer: A Of the following, which could cause the demand curve for personal computers to shift to the left? a. a decrease in the price of personal computers b. an increase in the price of computer software c. a

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 729 Midterm

If inflation is correctly anticipated, in a transaction between borrowers and lenders, inflation a. will not reduce purchasing power of the money paid back b. will redistribute purchasing power from borrowers to lenders c. will not redistribute purchasing power d. will redistribute purchasing power from to lenders to borrowers e. cannot be taken into consideration

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 750 Midterm 2

If a ship-building company purchases $250 million worth of steel in one year but does not use it, this is considered investment spending. Answer: A Answer: A Answer: A Which of the following is a weakness in trying to get the wealthy to bear more of the burden of increasing growth in a less

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 785 Midterm 2

During the expansion phase of a business cycle a. employment and output are both at a peak b. employment and output are both rising c. employment is falling and output is rising d. unemployment is rising and output is falling e. employment is rising and output is falling Answer: B Answer: B Answer: B In

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 797

If the Fed has a goal of stable real GDP and government spending increased, which of the following would occur? a. The money demand would not change, real GDP would not change, the interest rate would decrease, and there would be partial crowding out. b. Money demand would not change, real GDP

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

MicroEconomic 819 Midterm 1

The inflation rate for a given year is found by taking the percentage change in the Consumer Price Index (CPI) from the base year to the year in question. Answer: B Answer: B Answer: B The idea of opportunity cost suggests that the cost of a particular choice should be measured by the a. price

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

MicroEconomic 858 Midterm

Thomas Malthus argued that population grows geometrically and the food supply grows arithmetically. Answer: A Answer: A Answer: A The labor supply curve a. slopes upward to illustrate that more people will want to work as the real wage increases b. slopes upward to illustrate that changes in the real wage are directly proportional to changes in

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

MicroEconomic 877

In the long run, supply shocks a. are of no concern b. are automatically offset so that the full-employment level of output is restored c. cause the long-run AS curve to shift d. have no effect on the wage rate e. are automatically offset so that output and the price level return to their original

Macroeconomics: Principles and Applications 6th Edition

Exam Prep

MicroEconomic 891 Midterm 1

If the U.S. inflation rate is 3 percent annually and the Japanese inflation rate is 1 percent annually, by what percent would the dollar price of the yen need to change according to purchasing power parity? a. Appreciate by 2 percent b. Appreciate by 1 percent c. Depreciate by 2 percent d. Appreciate by

Macroeconomics: Principles and Applications 6th Edition

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MicroEconomic 898 Quiz 2

The marginal propensity to consume is greater than zero but less than one. Answer: A Answer: A Answer: A The consumption function shows the relationship between real consumption spending and a. real wealth b. the interest rate c. expectations d. real disposable income e. debt Answer: D Answer: D Answer: D Which of the following units is used to

Macroeconomics: Principles and Applications 6th Edition

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