Microeconomics involves the analysis of smaller, less developed economies while
macroeconomics is concerned with the analysis of larger developed economies.
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 increase in Russian GDP
c. An increase in the U.S. price level relative to the Russian price level
d. A decrease in the dollar-ruble exchange rate
e. Expectation that the price of the ruble will rise.
Which of the following is an accurate description of the aggregate demand curve?
a. It is the sum of all individual demand curves for all products
b. It shows all price levels at which firms’ unit costs equal their percent markups.
c. It is the curve decided upon by the voters.
d. It shows the relationship between firms’ unit costs and their percentage markups.
e. It shows the equilibrium level of GDP associated with price level.
Federal subsidies to higher education have the effect of
a. increasing the demand for higher education
b. increasing the supply of higher education
c. decreasing the demand for higher education
d. decreasing the supply of higher education
Assuming that households do not change their cash holdings and banks loan out all of
their excess reserves, if the required reserve ratio (RRR) is 20 percent and the Fed
purchases $2,000 worth of bonds from banks, how much money will be eventually
created?
a. $1,800
b. $2,000
c. $10,000
d. $18,000
e. $20,000
Assume the required reserve ratio (RRR) is 10 percent. If the Fed purchases a $5,000
bond from a bond dealer who then deposits the $5,000 in a HSBC Bank account, what
has happened to the money supply?
a. It has decreased by $5,000.
b. It has increased by $5,000.
c. It has decreased by $4,500.
d. It has increased by $4,500.
e. There has been no change in the money supply.
The track record of foreign assistance
a. is not very clear.
b. shows that it have been very successful in helping poor countries.
c. has enhanced the protection of private property rights in less developed countries.
d. has drastically reduced corruption in less developed countries.
e. has made most economists skeptical.
An economist claims that “the evidence suggests that high rates of inflation are
associated with slow long-term economic growth.” This is an example of
a. positive economics
b. normative economics
c. negative economics
d. a simplifying assumption
e. microeconomic analysis
Which of the following are examples of leakages?
a. government purchases, net taxes and imports
b. government purchases, exports and investment spending
c. net taxes, household saving and imports
d. net taxes, investment spending and exports
e. net exports, investment spending and net taxes
In the classical model with an open economy, an increase in government purchases may
not cause complete crowding out, but crowding out will be complete worldwide.
The equilibrium price of automobiles is a primarily macroeconomic issue.
What effect did the Iraqi invasion of Kuwait have on the U.S. economy?
a. A rightward shift of the aggregate demand curve
b. It had no effect
c. A downward shift of the aggregate supply curve
d. A leftward shift of the aggregate demand curve
e. An upward shift of the aggregate supply curve.
An increase in government spending will increase the government budget deficit, which
tends to increase interest rates, increase saving, crowd out private investment, stimulate
capital formation, and slow the level of economic activity.
The Consumer Price Index includes the prices of only those goods
a. purchased by consumers
b. purchased by consumers and produced in the United States
c. that are brand new and purchased by consumers
d. purchased by consumers and government
e. purchased by consumers, government and firms
With which of the following responses would the Census Bureau declare the person
unemployed?
a. “I am currently working full-time but my employer is going to lay me off tomorrow.”
b. “I am currently working part-time but I would like to work full-time.”
c. “I was working at two different jobs, I lost my primary job a few weeks ago, and I am
searching for a new job.”
d. “I would love a job but I am not looking for one because I have no chance of finding
one.”
e. “I just turned 16 and I am looking for a job.”
During the Great Depression of the 1930s, it took the economy only a couple of years to
return to full employment.
The classical model assumes that
a. the supply of labor is fixed
b. the stock of capital and technology are fixed
c. the stock of capital and technology grows at a constant rate
d. the supply of labor grows at a constant rate
e. the supply of labor grows at an increasing rate.