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To measure the effect of debt in an economy, economists use a standard measure which
involves the ________ relative to the GDP.
A) stock market activity
B) outstanding government bonds
C) stock of debt
D) capital stock of equipment
If a firm that chooses to use all of its corporate earnings as dividends, then:
A) retained earnings equal zero.
B) profits equal zero.
C) taxes paid to the government equal zero.
D) sales equal zero.
Daily Output of Japan and U.S.
Table 18.2 Refer to Table 18.2. The opportunity cost of
stereos in Japan is:
A) 2 tractors.
B) 1/4 tractor.
C) 1/2 tractor.
D) 4 tractors.
What are the two tools of fiscal policy that governments can use to stabilize an
economy?
A) government spending and technology improvements
B) government spending and taxation
C) taxation and controlling imports
D) taxation and controlling exports
Recall Application 6, "Culture, Evolution, and Economic Growth," to answer the
following questions:
The application claims that the source of the cultural changes that may have sparked the
industrial revolution was:
A) the higher survival rates of children of the more affluent compared to the children of
the less affluent.
B) the lower survival rates of children of the more affluent compared to the children of
the less affluent.
C) the spread of religion over most of Europe.
D) the spread of culture from the Eastern civilizations to the Western civilizations.
According to the classical economists, the economy:
A) requires fine-tuning to reach full employment.
B) can never deviate from full employment.
C) is self-correcting.
D) will never be at full employment.
If the consumption function is C = 25 + 0.9y and income increases by $100, then
autonomous consumption spending will be
A) $10.
B) $25.
C) $90.
D) $115.
The chain-weighted index for GDP and the CPI differ in that the CPI
A) excludes price changes from used and imported goods while the chain-weighted
index includes these price changes.
B) asks how much a fixed basket of goods costs in the current year as compared to the
cost of those same goods in a base year while the chain-weighted index takes an
average of price changes using base years from neighboring years.
C) is calculated by the Commerce Department while the chain-weighted index is
calculated by local newspapers.
D) is calculated in nominal terms and the chain-weighted index is calculated in real
terms.
In growth accounting, the three sources of growth for a country are capital, labor and:
A) technological progress.
B) natural resources.
C) land.
D) trade.
Recall Application 4, "Fertilizer and Crop Yields" to answer the following
questions:
Table 2.1 in the application showed that when the bags of nitrogen applied went from 0
to 1 to 2 to 3 to 4, crop yield went from 85 to 120 to 135 to 144 to 147 bushels per acre.
The principles of diminishing return began to take effect on the ________ bag of
fertilizer per acre.
A) 1st
B) 2nd
C) 3rd
D) 4th
Figure 15.3
Refer to Figure 15.3. At full employment equilibrium, investment would decrease from
$18 million to $15 million if:
A) the government reduces government expenditures.
B) the Fed buys bonds in the open market.
C) the government reduces taxes.
D) firms expect their sales to increase in the future.
More German companies start to invest in the United States. This will lead to a(n):
A) decrease in the demand for dollars and an increase in the demand for euros.
B) increase in the supply of dollars and a decrease in the demand for euros.
C) increase in the demand for dollars and a decrease in the supply of euros.
D) increase in the demand for dollars and an increase in the supply of euros.
According to the U.S. Secret Service, approximately $2.6 billion of U.S. paper currency
in circulation is counterfeit. The U.S. government is continually adding security
features to its paper currency to help make counterfeit money easier to detect. If
counterfeit currency remained undetected, a vast increase in the supply of counterfeit
U.S. currency would
A) decrease aggregate demand in the short run.
B) lead to inflation.
C) reduce the amount of M1.
D) lower the nominal income of the average U.S. worker.
A supply shock is an ________ event that shifts the aggregate ________ curve.
A) internal; supply
B) external; supply
C) internal; demand
D) external; demand
In making stock buy or sell recommendations, most stock analysts use microeconomics:
A) to evaluate the merits of public policies.
B) to understand markets and predict changes.
C) to understand marginal changes in the macroeconomy.
D) to make managerial and personal decisions.
A rise in the value of a currency is called a(n)
A) depreciation.
B) appreciation.
C) consolation.
D) integration.
If the price of crude oil (an input to the production of gasoline) increases, then we will
expect to see:
A) a movement along the supply curve for gasoline upwards.
B) a movement along the supply curve for gasoline downwards.
C) a shift in the supply of gasoline to the left.
D) a shift in the supply of gasoline to the right.
Today, most economists agree with the monetarists that, in the long run, inflation is
caused by
A) growth in the money supply.
B) people's expectations.
C) government borrowing.
D) high taxes.
The more times a worker performs a particular task, the more proficient the worker
becomes at that task. This source of productivity increase is called
A) continuity.
B) innovation.
C) specialization.
D) repetition.
Daily Output of Scotland and Poland
Table 18.1 Refer to Table 18.1. If Scotland produces 10
bagpipes, how many accordions can they produce for the rest of the day?
A) 20
B) 15
C) 40
D) 25
