Which of the following is a normative statement?
a. Fifteen percent of Americans go without health insurance in a year.
b. The Consumer Price Index rose three-tenths of one percent in May.
c. An increase in the minimum wage will increase teenage unemployment.
d. Americans would be better served by single-payer health care system.
e. The French trade deficit reached an all-time high last year.
Which of the following statements about markets is false?
a. markets are used to allocate resources in market systems
b. markets can vary in geographical size
c. prices are used to allocate goods in markets
d. markets are used to allocate resources in centrally-planned socialist economic
systems
e. supply and demand explains how prices are set in competitive markets
If the government announces a cut in the capital gains tax and it is expected that
investment spending will increase as a result, which of the following are also likely?
a. An upward shift in the aggregate expenditure line, a rightward shift of the money
demand curve, and a leftward shift of the aggregate demand curve
b. A downward shift in the aggregate expenditure line, a rightward shift of the money
demand curve, and a rightward shift of the aggregate demand curve
c. An upward shift in the aggregate expenditure line, a leftward shift of the money
demand curve, and a rightward shift of the aggregate demand curve
d. A downward shift in the aggregate expenditure line, a leftward shift of the money
demand curve, and a leftward shift of the aggregate demand curve
e. An upward shift in the aggregate expenditure line, a rightward shift of the money
demand curve, and a rightward shift of the aggregate demand curve.
Which of the following shocks is most likely to cause an expansion?
a. An upward spike in oil prices.
b. An increase in autonomous consumption spending.
c. A significant decline in business equipment spending.
d. A sudden increase in the interest rate.
e. A significant decline in exports.
If the dollar-pound exchange rate is $2.00 per pound, then a shirt priced at 25 pounds
will cost an American
a. $25
b. $50
c. $26
d. $27
e. an amount that cannot be calculated without additional information.
Which of the following is a leakage in an open economy?
a. Planned investment
b. Imports
c. Exports
d. Government purchases
e. Money
An index number is important only in a relative sense – in comparison to an index
number from another period.
Which of the following statements is true?
a. Nominal GDP = (price index / real GDP) x 100
b. Nominal GDP = (real GDP / price index) x 100
c. Real GDP = (price index / nominal GDP) x 100
d. Real GDP = (nominal GDP / price index) x 100
e. Price index = (real GDP / nominal GDP) x 100
If the actual real wage exceeds the equilibrium wage, there will be an excess supply of
labor.
Since 1960, real GDP has fluctuated to some extent; however, there has been virtually
no overall growth when the entire time span is considered.
If there is a sudden increase in government spending, which of the following should the
Fed do if it wants to keep output unchanged?
a. Do nothing, since the self-correcting mechanism will adjust the economy
b. Sell bonds in the open market
c. Wait, since output usually does not change when government spending increases
d. Decrease the required reserve ratio
e. Buy bonds in the open market.
Microeconomic models focus on the behavior of
a. all households, businesses, and government sectors at the same time
b. the household sector as a whole
c. individual households and business firms
d. individual households, business firms, and government agencies
e. the business and government sectors
When households and businesses interact in product markets goods and services are
a. not exchanged
b. flowing toward businesses
c. flowing toward households
d. not used at all
e. flowing to both businesses and households