The length of time that Congress takes to formulate a tax bill to help the economy is
part of the:
A) inside lag.
B) outside lag.
C) identification lag.
D) inside-outside lag.
Federal discretionary spending consists of:
A) interest payments on government debt held by the public.
B) all the spending that Congress authorized by prior laws.
C) all the programs authorized by Congress on an annual basis.
D) all of the above.
Suppose that a bushel of wheat costs $3 in the U.S. and 20 pesos in Mexico. If the
nominal exchange rate is 10 pesos per dollar, the real exchange rate is:
A) $1.50 per bushel of Mexican wheat.
B) 3/2 bushels of Mexican wheat per bushel of U.S. wheat.
C) 2/3 bushels of Mexican wheat per bushel of U.S. wheat.
D) $2 per bushel of Mexican wheat.
Suppose workers negotiate for a 5 percent nominal wage increase and expect a 1
percent inflation rate. If the actual inflation rate is 6 percent, then workers
A) and firms are both better off.
B) are better off and firms are worse off.
C) are worse off and firms are better off.
D) and firms are both worse off.
Recall Application 4, “The Argentine Financial Crisis,” to answer the question below:
The Argentine economy suffered a depression after the financial crisis in 2002 because:
A) the freeze in bank accounts caused a sharp decrease in wealth.
B) imports decreased.
C) imports increased.
D) the freeze in bank accounts caused a sharp increase in wealth.
Which of the following pairs of events will definitely lead to an increase in the
equilibrium interest rate?
A) the purchase of government bonds by the Federal Reserve and a decrease in the level
of real GDP
B) an increase in the discount rate and an increase in the price level
C) a decrease in the required reserve ratio and an increase in the level of real GDP
D) the sale of government bonds by the Federal Reserve and a decrease in the price
level
If the government imposes a price floor that is below the equilibrium price, then the
market will experience:
A) an equilibrium.
B) a shortage.
C) an excess supply.
D) no scarcity.
Angelina, age seven, decides to dress up like Princess Fiona for Halloween. What is the
opportunity cost of her decision?
A) the cost of the costume
B) the fact that she can’t dress up like Dora the Explorer, her second choice
C) zero, because seven-year-olds don’t have opportunity costs
D) the cost of the Lady Gaga costume which she did not want
If the demand for labor ________, real wages fall and the amount of labor employed
________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
________ is a curve that shows the relationship between the price level and the quantity
of real GDP demanded.
A) The aggregate demand curve
B) The aggregate supply curve
C) The product demand curve
D) The market demand curve
Which of the following is a tool used by the Fed to control the money supply?
A) open market operations
B) the reserve requirement
C) the discount rate
D) All of the above are correct.
Recall the Application about the factors which allow the United States to continue to
run large current account trade deficits with the rest of the world to answer the
following question(s). The 2006 Economic Report of the President addressed the issue
of whether the United States can continue to run large current account deficits. The
report stated that the current account deficits would eventually be reduced and
highlighted a number of factors that suggested the deficits could continue for a long
period of time.According to this Application, if the United States is running a current
account deficit, it must also have
A) a balance of payment deficit.
B) a financial account surplus.
C) a balance of payment surplus.
D) purchasing power parity.