Which of following is an example of fiat money?
a. US dollars
b. Gold
c. Diamonds
d. Silver
e. Fur
The short-run macro model
a. is an attempt to explain why the economy tends to perform better in the short run
than in the long run
b. was developed during the Great Depression to explain the economy’s continuing poor
performance
c. lost its popularity during the 1950s
d. was developed during the early 19th century
e. explains the forces that work to drive the economy to full employment
The introduction of new technology causes
a. the production function to shift upward
b. real output to decrease
c. a decrease in the standard of living
d. decreases in capital stock
e. productivity to decrease
In the market for British pounds, if the current exchange rate is above the equilibrium
rate,
a. there is an excess supply of pounds and those who hold pounds will be able to sell
them and make a profit
b. there is an excess supply of pounds and the exchange rate will fall
c. there is an excess demand for pounds and suppliers will not be able to supply enough
pounds to meet the demand
d. there is an excess demand for pounds and the exchange rate will rise
e. the quantity of pounds supplied is barely sufficient to meet the quantity demanded
If Chris pays $500 for a bond that will return $750 in one year, what is the interest rate?
a. 50 percent
b. 10 percent
c. 25 percent
d. 250 percent
e. 33 percent
The occurrence of the Great Depression offered evidence that supported
a. the classical theory of economics
b. the need for the government to practice the policy of laissez faire
c. the need for the government to control prices
d. Congress to take action to stop rising prices
e. the Keynesian idea that the government needed to guide the economy
An effective import quota will
a. increase the revenue received by the exporting nation
b. eliminate all incentives for trade between nations
c. reduce the quantity demanded of the imported good
d. lead to a lower domestic price
e. lead to a higher price in the exporting nation
A major difference between the Federal Reserve System and foreign central banks is
that the
a. Fed is considered part of our government while central banks in other countries are
not part of the government
b. Fed is completely independent of government influence while central banks in other
countries are under government influence
c. Fed deals with less money than its foreign counterparts
d. U.S. does not have a single central bank like its foreign counterparts
e. purpose of the Fed is to make a profit while other countries’ central banks exist to
serve the public
A public university knows that demand from potential students is elastic. If the
university wants to increase tuition revenue, it should
One of the defining characteristics of a perfectly competitive market is
Demand is said to be price inelastic when the coefficient of price elasticity of demand is
An increase in government spending leads to a(n)
a. downward shift of the aggregate expenditure line and a leftward shift of the money
demand curve
b. upward shift of the aggregate expenditure line and a rightward shift of the money
demand curve
c. downward shift of the aggregate expenditure line and a rightward shift of the money
demand curve
d. upward shift of the aggregate expenditure line and a leftward shift of the money
demand curve
e. upward shift of the aggregate expenditure line but no shift of the money demand
curve
If there are high transportation costs
a. the terms of trade will also be high
b. the result could be incomplete specialization
c. large countries will have an advantage in trading with small countries
d. small countries will have an advantage in trading with large countries
e. trade will be based on absolute advantage rather than comparative advantage
In the short-run macro model, a decrease in the money supply will
a. lower the interest rate, increase spending, and increase GDP
b. lower the interest rate, reduce spending, and lower GDP
c. raise the interest rate, increase spending, and increase GDP
d. raise the interest rate, reduce spending, and lower GDP
e. raise the interest rate, reduce spending, and increase GDP
In perfect competition, the demand curve facing a firm is a horizontal line at the market
price because
In the long run, changes in equilibrium GDP are most likely to be caused by
a. changes in full-employment output
b. open market operations by the Fed
c. changes in nominal wages
d. contractionary or expansionary fiscal policy
e. none of these; long-run equilibrium GDP is a constant
If the federal government announces a tax cut, which of the following is most likely in
the short run?
a. A decrease in output, an increase in money demand, and an increase in the interest
rate
b. An increase in output, a decrease in money demand, and a decrease in the interest
rate
c. A decrease in output, a decrease in money demand, and a decrease in the interest rate
d. An increase in output, an increase in money demand, and a decrease in the interest
rate
e. An increase in output, an increase in money demand, and an increase in the interest
rate.