Which of the following does the Federal Reserve not do?
a. It controls the supply of money.
b. It acts as a lender of last resort to banks.
c. It makes loans to any qualified business that requests one.
d. It tries to ensure the health of the banking system.
Figure 3-23
The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
RefertoFigure3-23.For Bonovia, what is the opportunity cost of a pound of cheese?
a. 0.8 pounds of ham
b. 1.25 pounds of ham
c. 8 pounds of ham
d. 16 pounds of ham
By raising aggregate demand more than anticipated, policymakers
a. reduce unemployment for awhile.
b. raise unemployment for awhile.
c. reduce unemployment permanently.
d. None of the above is correct.
The claim that increases in the growth rate of the money supply increase nominal
interest rates but not real interest rates is known as the
a. Friedman Effect.
b. Hume Effect.
c. Fisher Effect.
d. the inflation tax.
When the U.S. government is in debt during a given year, it follows that its budget is in
deficit for that year.
a. True
b. False
Consider four survivors on an island.
Which of the following pairs of survivors has a double-coincidence of wants?
a. Ron with Alice, and Ron with Lee
b. Alice with Lee
c. Ron with Raymond
d. None of the above are correct.
In 2002, the United States imposed restrictions on the importation of steel into the
United States. The open- economy macroeconomic model shows that such a policy
would
a. lower the real exchange rate and increase net exports.
b. lower the real exchange rate and have no effect on net exports.
c. raise the real exchange rate and decrease net exports.
d. raise the real exchange rate and have no effect on net exports.
The equation, Unemployment rate = Natural rate of unemployment – a (Αctual inflation
– Expected inflation),
a. is the equation of the short-run Phillips curve.
b. implies the short-run Phillips curve shifts every time there is a change in actual
inflation.
c. reflects the reasoning of Samuelson and Solow.
d. All of the above are correct.
Equilibrium quantity must decrease when demand
a. increases and supply does not change, when demand does not change and supply
decreases, and when both demand and supply decrease.
b. increases and supply does not change, when demand does not change and supply
increases, and when both demand and supply decrease.
c. decreases and supply does not change, when demand does not change and supply
increases, and when both demand and supply decrease.
d. decreases and supply does not change, when demand does not change and supply
decreases, and when both demand and supply decrease.
If $300 of new reserves generates $800 of new money in the economy, then the reserve
ratio is
a. 2.7 percent.
b. 12.5 percent.
c. 37.5 percent.
d. 40 percent.
When we measure and record economic value, we use money as the
a. liquid asset.
b. medium of exchange.
c. unit of account.
d. store of value.
When a union bargains successfully with employers, in that industry,
a. both the quantity of labor supplied and the quantity of labor demanded increase.
b. both the quantity of labor supplied and the quantity of labor demanded decrease.
c. the quantity of labor supplied increases and the quantity of labor demanded
decreases.
d. the quantity of labor demanded increases and the quantity of labor supplied
decreases.
If aggregate demand shifts left, then in the short run
a. the price level and real GDP both rise.
b. the price level rises and real GDP falls.
c. the price level falls and real GDP rises.
d. the price and real GDP both fall.
The natural rate of unemployment is the same as the socially optimal rate of
unemployment.
a. True
b. False
Table 23-2
The table below contains data for country A for the year 2010.
RefertoTable23-2.What was country A’s consumption in 2010?
a. $2018
b. $3010
c. $3311
d. $4015
Figure 2-7
RefertoFigure2-7.If this economy moved from point P to point N, then
a. it still would not be producing efficiently.
b. there would be no gain in either engines or tvs.
c. it would be producing more engines and more tvs than at point P.
d. It is not possible for this economy to move from point P to point N without additional
resources.
Figure34-4.On the figure, MSrepresents money supply and MDrepresents money
demand.
RefertoFigure34-4. Suppose the current equilibrium interest rate is 1. Let Y1represent
the corresponding quantity of goods and services demanded, and let P1represent the
corresponding price level. Starting from this situation, if the Federal Reserve increases
the money supply and if the price level remains at P1, then
a. there will be an increase in the equilibrium quantity of goods and services demanded.
b. there will be a decrease in the equilibrium quantity of goods and services demanded.
c. there will be an increase in the equilibrium interest rate.
d. fewer firms will choose to borrow to build new factories and buy new equipment.
An increase in the price of maple syrup will decrease both the equilibrium price and
quantity in the market for pancakes.
a. True
b. False
As the interest rate rises, it is possible that net capital outflow could move from a
positive to a negative value.
a. True
b. False
Positive statements are not
a. descriptive.
b. prescriptive.
c. claims about how the world is.
d. made by economists speaking as scientists.
From 1995 to 1999 there was a dramatic rise in stock prices. If this rise made people
feel wealthier, then it would have shifted
a. aggregate demand right.
b. aggregate demand left.
c. aggregate supply right.
d. aggregate supply left.
Table31-2
RefertoTable31-2. Which currency(ies) is(are) have a higher nominal exchange rate
than predicted by the doctrine of purchasing-power parity?
a. the bolivar and the pound
b. the euro and the riyal
c. the yen
d. the pound
Figure30-1
RefetoFigure30-1. If the money supply is MS2and the value of money is 2, then there is
an excess
a. demand for money that is represented by the distance between points A and C.
b. demand for money that is represented by the distance between points A and B.
c. supply of money that is represented by the distance between points A and C.
d. supply of money that is represented by the distance between points A and B.
By itself, if a U.S. firm builds a new factory overseas, U.S. net capital outflow rises.
a. True
b. False
Amanda talks with several different brokers at a social gathering. She hears the
following advice from brokers A, B, and C. Which broker, if any, gave her
incorrectadvice?
a. Broker A: “There are risks in holding stocks, even in a highly diversified portfolio.”
b. Broker B: “Portfolios with smaller standard deviations have lower risk.”
c. Broker C: “Stocks with greater risks offer lower average returns.”
d. They all gave her correct advice.
Miller’s Dairy produces 960 gallons of milk per day. Each milker at the dairy works 8
hours per day and produces the same number of gallons of milk per hour. If the Dairy’s
productivity is 12 gallons of milk per hour of labor, then how many milkers does the
shop employ?
a. 8
b. 10
c. 80
d. 120
An increase in U.S. sales of movies to other countries raises U.S.
a. exports and so raises the U.S. trade balance.
b. exports and so reduces the U.S. trade balance.
c. imports and so raises the U.S. trade balance.
d. imports and so reduces the U.S. trade balance.
Since 1946, the president of the United States has received guidance from the Council
of Economic Advisers.
a. True
b. False
Adults who were waiting to be recalled to a job from which they had been laid off are
included in the Bureau of Labor Statistics’ “employed” category.
a. True
b. False
The Federal Reserve
a. was created in 1913.
b. is the U.S.’s central bank.
c. has other duties in addition to controlling the money supply.
d. All of the above are correct.
In economics, capital refers to
a. the finances necessary for firms to produce their products.
b. buildings and machines used in the production process.
c. the money households use to purchase firms’ output.
d. stocks and bonds.