By the 2000s, an important change in the mortgage market had occurred when
________ became significant participants in the secondary market for mortgages.
A) investment banks
B) Federal Reserve Banks
C) commercial banks
D) savings banks
When Americans decrease their demand for Japanese goods,
A) the demand for dollars will rise, and the demand for yen will rise.
B) the demand for dollars will fall, and the demand for yen will rise.
C) the supply of dollars will rise, and the demand for yen will rise.
D) the supply of dollars will fall, and the demand for yen will fall.
An increase in the domestic interest rate relative to other interest rates should
A) increase investment spending.
B) decrease consumption spending.
C) increase government spending.
D) increase net exports.
A Canadian oil company hires geological survey services from the United States. If all
else remains equal, this will
A) increase net exports.
B) increase the balance of trade.
C) decrease the current account balance.
D) increase the financial account.
The table below describes the value added in the production of a gallon of gasoline by
each stage of production. (The values are hypothetical.)
Table 8-10
a) What is the value added by each stage of production?
b) What is the total value added?
For simplicity, you can ignore the cost of the inputs for oil drilling.
National income is equal to
A) personal income minus personal taxes.
B) GDP minus depreciation.
C) disposable personal income plus depreciation plus personal taxes.
D) GNP plus depreciation.
Part of the spending on the Caldecott Tunnel project in northern California came from
the American Reinvestment and Recovery Act, which is an example of ________ aimed
at increasing real GDP and employment.
A) discretionary fiscal policy
B) an automatic stabilizer
C) contractionary fiscal policy
D) a transfer payment
One reason that Iceland recovered from the financial crisis which began in 2007 more
quickly than did countries like Greece, Spain, and Italy is that Iceland does not use the
euro, and the value of its currency was able to ________ versus the euro, which
increased its ________.
A) decline; exports
B) decline; imports
C) rise; exports
D) rise; imports
Figure 1-3
Refer to Figure 1-3. Calculate the area of the trapezoid X.
A) $361
B) $450
C) $1,020
D) $1,140
Figure 7-3
Since 1953 the United States has imposed a quota to limit the imports of peanuts.
Figure 7-3 illustrates the impact of the quota.
Refer to Figure 7-3. What is the value of domestic producer surplus after the
imposition of a quota?
A) $10.75 million
B) $15.75 million
C) $17.25 million
D) $27.75 million
Growth in potential GDP in the United States is estimated to be about
A) 8.25% per year.
B) 5.0% per year.
C) 3.2% per year.
D) 1.5% per year.
Figure 7-2
Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports.
Figure 7-2 shows the impact of this tariff.
Refer to Figure 7-2. With the tariff in place, the United States
A) imports 20 million pounds of coffee.
B) imports 12 million pounds of coffee.
C) imports 18 million pounds of coffee.
D) exports 38 million pounds of coffee.
Tax cuts on business income increase aggregate demand by increasing
A) business investment spending.
B) consumption spending.
C) government spending.
D) wage rates.
Figure 5-1
Figure 5-1 represents the market for vaccinations. Vaccinations are considered a benefit
to society, and the figure shows both the marginal private benefit and the marginal
social benefit from vaccinations.
Refer to Figure 5-1. At the efficient equilibrium,
A) economic surplus is maximized.
B) economic surplus is minimized.
C) economic surplus is zero.
D) economic surplus is negative.
Figure 2-7
Mercedes Benz produces a full line of luxury automobiles, including coupes, sedans,
and SUVs, at a variety of manufacturing plants across the globe. Assume Mercedes
Benz produces both coupes and SUVs at its Tuscaloosa, Alabama factory. Figure 2-7
shows changes to its production possibilities frontier in response to new developments
and different strategic production decisions at this factory.
Refer to Figure 2-7. Suppose Mercedes-Benz has to shut down a portion of its facility
as it works on remodeling the facility to merge two of its separate assembly lines in
preparation for the production of a new, hybrid models. The production decision to shut
down temporarily will result in a
A) movement from E to F in Graph A.
B) movement from G to H in Graph B.
C) movement from K to L in Graph C.
D) movement from J to H in Graph B.
An increase in the real interest rate results in which of the following?
A) an increase in the demand for loanable funds
B) a decrease in the demand for loanable funds
C) an increase in the quantity of loanable funds supplied
D) Both B and C will occur as a result of an increase in the real interest rate.
Which of the following is evidence of a shortage of chocolate?
A) Firms lower the price of chocolate.
B) The price of chocolate is raised in order to increase sales.
C) The equilibrium price of chocolate falls due to a decrease in demand.
D) The quantity of chocolate demanded is greater than the quantity supplied.