Raising taxes on interest and dividend income will increase the level of investment and
economic growth.
The rising cost of uninsured patients receiving treatment at hospital emergency rooms is
one of the leading causes of the increase in health care spending as a percentage of GDP
in the United States.
An open market purchase of Treasury securities by the Federal Reserve causes the
reserves of banks to rise.
The household survey is compiled from firms who answer questions about the number
of persons who are employed and on the company payroll.
In response to a shortage the market price of a good will rise; as the price rises, the
demand will decrease and supply will increase until equilibrium is reached.
Government intervention in agriculture began in the United States in the 1890s.
The income tax system serves as an automatic stabilizer over the course of the business
cycle.
The labor productivity slowdown in the United States in the 1970s was due to declining
quality of education in the United States, because no other industrialized country
experienced the same labor productivity slowdown at the same time.
Which of the following is counted as a liability for a bank?
A) customer deposits
B) bank reserves
C) securities
D) bank loans
The difference between the value of the goods a country exports and the value of the
goods a country imports is the country’s
A) financial account balance.
B) current account balance.
C) balance of trade.
D) capital account balance.
Suppose the U.S. GDP growth rate is slower relative to other countries’ GDP growth
rates. This will
A) move the economy up along a stationary aggregate demand curve.
B) move the economy down along a stationary aggregate demand curve.
C) shift the aggregate demand curve to the left.
D) shift the aggregate demand curve to the right.
Table 7-1
Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where
they had to find and make their own food. Rob and Bill spent one day each fishing and
picking berries. The table lists the pounds of output Rob and Bill produced.
Refer to Table 7-1. Use the table above to select the statement that accurately interprets
the data in the table.
A) Rob has an absolute advantage in picking berries and Bill has an absolute advantage
in catching fish.
B) Bill has an absolute advantage in picking berries and Rob has an absolute advantage
in catching fish.
C) Bill has an absolute advantage in picking berries and catching fish.
D) Rob has an absolute advantage in picking berries and catching fish.
Table 2-5
Table 2-5 shows the number of labor hours required to produce a cell phone and a board
foot of lumber in Estonia and Finland.
Refer to Table 2-5. If the two countries specialize and trade, who should export lumber?
A) There is no basis for trade between the two countries.
B) Estonia
C) Finland
D) They should both be exporting lumber.
Growth in real GDP per capita for the world economy was greatest during
A) the seventeenth century.
B) the eighteenth century.
C) the nineteenth century.
D) the twentieth century.
Actual investment spending includes spending by consumers on
A) durable goods.
B) nondurable goods.
C) new houses.
D) services.
Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.
Which of the following will occur because of the automatic mechanism adjusting the
economy back to potential GDP?
A) Output will decrease.
B) Prices will increase.
C) Unemployment will rise.
D) Short-run aggregate supply will shift to the right.
Assuming that the United States is the domestic economy, ________ are goods and
services produced by ________ and purchased by ________.
A) exports; foreign countries; the United States
B) exports; the United States; the United States
C) imports; foreign countries; foreign countries
D) imports; foreign countries; the United States
Using the money demand and money supply model, an open market sale of Treasury
securities by the Federal Reserve would cause the equilibrium interest rate to
A) increase.
B) decrease.
C) not change.
D) increase, then decrease.
Explain how “net capital flows” are related to “net foreign investment,” “net foreign
direct investment,” and “net foreign portfolio investment.”
How is the impact of expansionary monetary policy different in an open economy than
in a closed economy?
Based on the following information, calculate public saving, net foreign investment,
and national income.
Private saving = $83 billion
Exports = $125 billion
Imports = $130 billion
Consumption = $200 billion
Private investment = $56 billion
Government purchases = $38 billion
Why does the short-run aggregate supply curve slope upward?
What does it mean when one currency is “pegged” against another currency?
Explain how the aggregate demand and aggregate supply model can be made more
dynamic.
How do adverse selection and moral hazard affect the market for insurance?