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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 effect through the economy.
D) the delays in the actual formulation of fiscal policy.
Voluntary export restraints
A) have the same effect as an import ban.
B) are illegal under the international trading rules.
C) violate the spirit of international trade agreements.
D) all of the above.
An economy is experiencing hyperinflation if the inflation rate exceeds:
A) 50 percent per month.
B) 100 percent per year.
C) 50 percent per year.
D) 25 percent per month.
The growth version of the quantity equation can be expressed as:
A) growth rate of money + growth rate of velocity = inflation + real GDP growth.
B) growth rate of money X growth rate of velocity = inflation X real GDP growth.
C) growth rate of money - growth rate of velocity = inflation - real GDP growth.
D) growth rate of money + growth rate of velocity = inflation - real GDP growth.
Prices that adjust slowly are
A) custom prices.
B) auction prices.
C) flexible prices.
D) heavy prices.
Suppose that the Surgeon General releases a study suggesting that orange juice
consumption reduces the risk of cancer. As a result of the study, we could predict that
the demand curve for orange juice will ________ and the equilibrium price will
________.
A) increase; increase
B) increase; decrease
C) decrease; decrease
D) decrease; increase
The labor demand curve is:
A) downward sloping, because a lower real wage entices firms to hire more workers.
B) upward sloping, because a lower real wage entices firms to hire more workers.
C) downward sloping, because a lower real wage entices workers to work less.
D) upward sloping, because a lower real wage entices workers to work less.
Table 5.1
Refer to Table 5.1. Assume that this economy produces only two goods: Good X and
Good Y. The value for this economy's nominal GDP in year 2 is:
A) $120.
B) $176.
C) $200.
D) $296.
The real value of money:
A) is another word for the face value.
B) reflects the purchasing power of the sum of money.
C) matters less to people than its nominal value.
D) Both B and C are correct.
What happens to the equilibrium wage rate in the U.S. and Canada when more
Canadian workers migrate to the United States?
A) The real wage in Canada will increase while the real wage in the US will decrease.
B) The real wage in Canada will decrease while the real wage in the US will increase.
C) The real wage in Canada and the US will increase.
D) The real wage in Canada and the US will decrease.
As U.S. interest rates fall relative to British interest rates:
A) U.S. citizens holding dollars will be attracted into British securities market.
B) British buyers must exchange pounds for dollars to buy bonds in Britain.
C) the supply of pounds shifts to the right if British citizens buy bonds in the United
States.
D) the result will be a depreciated pound and a stronger dollar.
