The ________ model focuses on the relationship between total spending and real GDP
in the short run, assuming the price level is constant.
A) supply and demand
B) national income
C) aggregate expenditure
D) business cycle
If a decrease in income leads to an increase in the demand for sardines, then sardines
are
A) an inferior good.
B) a neutral good.
C) a necessity.
D) a normal good.
What happens in the secondary market?
A) secondary inputs like electricity are sold
B) a corporate financial manager will raise funds for expansion of the firm
C) newly issued claims are sold by the borrowing firm to the initial buyer
D) already issued claims are sold from one investor to another
Which of the following is (are) responsible for managing the money supply in the
United States?
A) the Federal Reserve Bank of New York
B) the twelve Federal Reserve Banks
C) the Federal Open Market Committee
D) the Board of Governors
Which of the following is an example of a federal mandate?
A) an excise tax
B) the Medicaid program
C) the personal tax exemption
D) the Food and Drug Administration (FDA)
If government purchases are $400 million, taxes are $700 million, and transfers are
$200 million, which of the following is true?
A) Public saving is $500 million.
B) The budget deficit is $100 million.
C) The budget deficit is $500 million.
D) Public saving is $100 million.
Consider a used car market in which half the cars are good and half are bad (lemons).
Suppose the average price of a good car is $9,000 and the average price of a lemon is
$3,000. If rational buyers are willing to pay $6,000 for a used car, then sellers will agree
to sell mostly the lemons at this price. What is the term used to describe this situation?
A) moral hazard
B) adverse selection
C) an efficient market
D) economic irrationality
If the average productivity of Indian firms is rising more quickly than the average
productivity of American firms, which of the following would you expect to see?
(India’s currency is the rupee.)
A) a decrease in the value of the rupee relative to the dollar
B) an increase in the prices of Indian products
C) an increase in the quantity demanded of Indian products relative to American
products
D) All of the above are correct.
An increase in the value of the U.S. dollar relative to the Japanese yen would be
________ for Japanese owners of U.S. houses who wish to sell those houses, and
________ for Japanese manufacturers operating factories in the United States that
export their products back to Japan.
A) good news; good news
B) good news; bad news
C) bad news; good news
D) bad news; bad news
The income effect of a wage increase will cause a worker to devote
A) more time to labor and more time to leisure.
B) more time to labor and less time to leisure.
C) less time to labor and more time to leisure.
D) less time to labor and less time to leisure.
________ sell shares to investors and use the money to buy short-term securities.
A) Mortgage-backed securities dealers
B) Hedge funds
C) Money market mutual funds
D) Shadow banks
If the number of employees who quit, are fired, or retire increases while the hiring of
new employees declines, this indicates that the
A) labor demand curve is shifting to the right.
B) labor supply curve is shifting to the right.
C) labor demand curve is shifting to the left.
D) labor supply curve and labor demand curve are both shifting to the right.
Falling interest rates can
A) increase a firm’s stock price, which causes firms to issue more stock shares, and thus
increases funds for investment.
B) raise the cost of borrowing for firms and decrease investment.
C) raise the cost of buying new homes and fewer new homes will be purchased.
D) lower the cost of buying new homes and fewer new homes will be purchased.
Suppose the government launches a successful advertising campaign that convinces
workers with high school degrees to quit their jobs and become full time college
students. This would cause
A) the unemployment rate to decrease.
B) the labor force participation rate to decrease.
C) the number of discouraged workers to increase.
D) no change in the unemployment rate.
At a product’s equilibrium price
A) the product’s demand curve is the same as the product’s supply curve.
B) the quantity of the product demanded is greater than the quantity of the product
supplied.
C) the quantity of the product demanded is less than the quantity of the product
supplied.
D) the product’s demand curve crosses the product’s supply curve.