Recall Application 3, “Are They Really Dumping?” to answer the following questions:
Based on what you learned from the application, can a firm that exports to the U.S. be
charged with dumping even though the price it sells at home is lower?
A) No.
B) Yes, because the “constructed value” estimated by the Department of Commerce can
overstate the price that the firm charges at home.
C) Yes, because the firm that brings forward the charges can supply overstated figures
data to the Department of Commerce.
D) B and C are correct.
Using a production possibility curve, a shifting of the curve outward illustrates:
A) economic growth.
B) a lower level of production.
C) fewer inputs.
D) a decrease in the unemployment rate.
If GDP is ________ potential output, then we expect to see ________ wages, causing
the short-run aggregate supply curve to shift up.
A) above; increasing
B) above; decreasing
C) below; increasing
D) below; decreasing
A tax on labor results in a(n):
A) decrease in labor demand.
B) increase in labor demand.
C) decrease in labor supply.
D) increase in labor supply.
Other things unchanged, legalization of previously illegal activities:
A) reduced GDP.
B) reduces the size of the underground economy and increases GDP.
C) reduces both the underground economy and GDP.
D) increases the size of the underground economy and lowers GDP.
Suppose that for a given year money growth is 10 percent, real GDP growth is 8
percent, and velocity is constant. According to the growth version of the quantity
equation, the inflation rate would be
A) -2 percent.
B) 1.25 percent.
C) 2 percent.
D) 18 percent.
You want to make a 5% real return on a loan that you are planning to make, and the
expected inflation rate during the period of the loan is 6%. You should charge a nominal
interest rate of:
A) 1%.
B) 11%.
C) -1%.
D) 7%.
Which of the following did not directly contribute to the large U.S. budget deficit in
2009?
A) the U.S. recession in 2007-2009
B) the large expenses associated with the wars in Iraq and Afghanistan
C) the large stimulus package in 2009
D) the large U.S. trade deficit with China.
In the income-expenditure model, for each price level there is a different equilibrium
output level. These various price level and equilibrium output combinations are used to
derive
A) the aggregate demand curve.
B) a point on the aggregate demand curve.
C) the aggregate supply curve.
D) the slope of the planned expenditures line.
Which of the following is not included in the capital account?
A) net sales of currency
B) debt forgiveness
C) purchases of foreign patents and copyrights.
D) migrant’s transfers
When a firm has earnings it has not yet paid out to the owners, those earnings are called
A) surplus capital.
B) cash reserves.
C) retained earnings.
D) unearned income.
Figure 11.3 Refer to Figure 11.3 to answer the following questions. Suppose the
economy is initially at point d. A decrease in consumer confidence will move the
economy back to equilibrium at point:
A) a.
B) b.
C) c.
D) d.
Which of the following trade agreements provides for the development of a single
market among its members?
A) North American Free Trade Agreement
B) World Trade Organization
C) European Union
D) Asian Pacific Economic Cooperation
Recall Application 3, “Increasing Health-Care Expenditures and Crowding Out,” to
answer the following questions:
According to the application, health-care expenditures as a proportion of GDP has risen
from 1950-2000 from:
A) 5.2% -15.4%.
B) 23.9%-51.3%.
C) 2.3% – 5.2 %.
D) 5.4% – 9.2%.
Changes in the unemployment that occur as the economy expands and contracts are
called ________ unemployment.
A) the natural rate of
B) frictional
C) structural
D) cyclical