In mid-2009, the unemployment rate stood at
a. 25 percent
b. 5 percent
c. 6 percent
d. 9.5 percent
e. 20 percent
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 are not substitutes for bonds found in the primary market
e. newly issued bonds
A positive demand shock may
a. cause an economy to operate at a point above potential GDP in the short run
b. increase potential output
c. be caused by relatively low employment levels
d. cause the price level to fall
e. be offset by falling wage rates
Which of the following would lead to a rightward movement along the demand curve
for British pounds?
a. An increase in the dollar price of a pound
b. A decrease in U.S. GDP
c. A renewed interest in British beef products
d. A decrease in the dollar price of a pound
e. An increase in U.S. GDP.
High-income people will sometimes pay higher prices at convenience stores for goods
that are available at discount stores. They do this because
a. they are irrational
b. their opportunity cost of time is low
c. crowded and understaffed discount stores impose higher time costs
d. they like to be seen paying more money
e. they do not mind wasting time
An open market purchase of bonds by the Fed
a. drains reserves from the banking system and decreases the money supply
b. injects reserves into the banking system and increases money demand
c. injects reserves into the banking system and increases the money supply
d. drains reserves from the banking system and increases the money supply
e. injects reserves into the banking system and decreases the money supply
Which of the following is a major macroeconomic goal?
a. Low prices
b. Declining prices
c. Pure competition
d. Stable prices
e. High prices
Refer to Figure 15-2. If the economy is initially at equilibrium at $7 trillion, what is the
least likely cause of the shift of the aggregate expenditure line from AE1 to AE2, and the
shift of the aggregate demand curve from AD1 to AD2?
a. An increase in government purchases
b. A decrease in taxes
c. An increase in autonomous consumption
d. An increase in the money supply
e. A decrease in the price level.
Suppose the economy consists of two distinct groups: wage earners and goods sellers. If
the price level increases by 30 percent and real wages increase by 30 percent,
a. there will be no redistribution of purchasing power between goods sellers and wage
earners
b. purchasing power will be redistributed from wage earners to goods sellers
c. purchasing power will be redistributed from goods sellers to wage earners
d. nominal wages will increase by 90 percent
e. nominal wages will decrease by 60 percent
To be considered employed, a person must have worked at least __________ hour(s)
during the previous week
a. 40
b. 20
c. 10
d. 12
e. 1
Demand deposits are liabilities to a bank because
a. the bank must pay interest on these accounts
b. we need some method of creating a balance
c. the bank must be willing to account for loans and bonds
d. the bank could potentially lose this money if loans are not repaid
e. the customers have the right to withdraw the funds from their checking accounts
To say that the housing market is in equilibrium means that
a. there are no vacant houses
b. the number of houses that are being constructed is equal to the housing stock
c. the number of houses that are currently empty is equal to the number of households
currently looking to buy a house
d. the quantity demanded of houses is equal to the number of houses currently under
construction
e. the number of houses that people want to own is equal to the housing stock
Refer to Figure 14-5. If the Fed wishes to reduce the interest rate, it will
a. increase money demand
b. decrease money demand
c. increase the money supply
d. decrease the money supply
e. simply set a lower market interest rate
In the long run, the currency of a country with a higher inflation rate will depreciate
against the currency of a country with a lower inflation rate.
Economic models do not have to completely describe every aspect of the economy in
order to be useful.
The term laissez faire can be translated
a. “leave it alone”
b. “make it equitable (fair)”
c. “take an active role”
d. “markets work”
e. “free of problems”
Which of the following is not another way of describing the marginal propensity to
consume?
a. MPC
b. The slope of the consumption function
c. The change in real consumption spending divided by the change in real disposable
income
d. The amount by which real consumption spending rises when real disposable income
increases by one dollar
e. Autonomous consumption spending.
If demand deposits increase, the result is that
a. required reserves must increase
b. the reserve ratio must increase
c. all banks are “loaned up”
d. the number of loans must decrease
e. all banks are suffering a loss
For any value of the required reserve ratio (RRR), the demand deposit multiplier is
a. 1/RRR
b. 1 – (1/RRR)
c. RRR multiplied by the change in reserves
d. 1 – RRR
e. (1/RRR) -1