A voluntary export restraint is an agreement negotiated between two countries that
places a numerical limit on the quantity of a good that can be imported by one country
from the other country.
Compared to the previous 20 years, productivity growth in the United States increased
between 1996 and 2012.
In face of rational expectations regarding changes in monetary policy, the short-run
Phillips Curve may be vertical.
An increase in government spending will force an appreciation of the dollar, which
causes net exports to fall.
If the market price is at equilibrium, the deadweight loss is zero.
Since 1981, deaths from cardiovascular diseases have decreased in the United States.
Currently, the base year for the CPI is the average of prices in the years 1982 to 1984.
If inflationary expectations on the part of the public increase, the trade-off between
inflation and unemployment becomes worse.
An economic model is a complex version of reality used to analyze real-world
economic situations.
Goodwill is listed as an asset on a firm’s balance sheet.
One example of human capital is the amount of savings that you have.
The formula for the multiplier is (1 – MPC).
a. Define the term “globalization.”
b. Describe the benefits of globalization.
c. Who is likely to oppose globalization and why?
The leader of the monetarist school and major proponent of a monetary growth rule was
A) Ben Bernanke.
B) Milton Friedman.
C) Alan Greenspan.
D) Paul Volcker.
Figure 4-3
Figure 4-3 shows the market for granola. The market is initially in equilibrium at a price
of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order
to raise the price to P2.
Refer to Figure 4-3. What area represents consumer surplus at the equilibrium price of
P1?
A) A
B) A + B + C
C) D + E
D) A + B + C + D + E
The money demand curve has a
A) negative slope because an increase in the interest rate decreases the quantity of
money demanded.
B) positive slope because an increase in the interest rate increases the quantity of
money demanded.
C) negative slope because an increase in the price level decreases the quantity of money
demanded.
D) positive slope because an increase in the price level increases the quantity of money
demanded.
Mike has been unemployed for over a year. He hasn’t looked for a job in the last three
months, but he’s just started looking for work again. Because Mike started looking for a
new job,
A) the unemployment rate increased.
B) the labor force participation rate decreased.
C) the unemployment rate decreased.
D) the working-age population increased.
The rate of interest banks charge other banks for overnight loans of reserves is the
A) discount rate.
B) prime rate.
C) federal funds rate
D) real rate.
The “underground economy” is also referred to as
A) the informal sector.
B) the formal sector.
C) the halfway economy.
D) the net domestic product economy.
When the value of a currency is determined ________, the exchange rate system is
defined as managed float.
A) only by supply and demand
B) by its issuing government
C) mostly by supply and demand, but with occasional government intervention
D) by its issuing government, with occasional readjustments in value
If people speculate that a run on one bank will cause a run on all banks in the financial
system, and this speculation proves accurate, then the financial system would
experience what is known as a
A) commodity crisis.
B) securitization meltdown.
C) bank panic.
D) institutional death spiral.
Marla is an architect who is designing a home for Chuck. Chuck is paying Marla $150
per hour to design his new home. When Chuck and Marla get married, Marla continues
to work on designing the home, but she no longer charges Chuck for her work. As a
result, GDP ________ because ________.
A) falls; Marla’s work takes place in the underground economy once she’s married
B) falls; Marla’s work becomes less valuable once she’s married
C) falls; Marla’s architectural design services are no longer bought by Chuck once
they’re married
D) rises; Marla becomes more productive once she’s married
Figure 10-6
Refer to Figure 10-6. The loanable funds market is given in the figure above. If the
current real interest rate is 5 percent, which of the following is true?
A) The loanable funds market is in equilibrium.
B) There is a surplus of loanable funds in the market.
C) There is a shortage of loanable funds in the market.
D) The quantity of loanable funds being demanded in the market is less than $90
million.
Explain why you would rather be a borrower during a period of unexpected rising
inflation, and a lender during a period of unexpected declining inflation.
Suppose you are a famous international economic advisor. You have been asked to asses
the possibilities for growth in an African country. It is a country abundant in labor and
some natural resources. The capital to labor ratio is low. It has a free market economy.
You have found that this country does not have a very strong and healthy banking
system, however the political system is stable and the government does a good job
protecting property rights. Assess this country’s prospects for growth. Recommend two
things that would enhance the country’s growth.
What is deadweight loss? When is deadweight loss equal to zero?
Table 11-6
Refer to Table 11-6. Consider the statistics in the table above in describing the
developing countries. Are these consistent with the economic growth model? Briefly
explain.
Suppose the United States experiences a long period of inflation relative to other
countries. How will this affect U.S. net exports?
Two key consequences of asymmetric information are adverse selection and moral
hazard. Define each concept, provide one example of each and explain how the two
concepts differ.