In the long run import quotas do not affect the size of net exports.
a. True
b. False
Table 28-11
2010 Labor Data for Tajnia
RefetoTable28-11.The unemployment rate of Tajnia in 2010 is about 18.4 percent.
a. True
b. False
In 2010, the imaginary nation of Mainland had a population of 6,000 and real GDP of
120,000. In 2011 the population was 6,200 and real GDP of 128,960. Over the year in
question, real GDP per person in Mainland grew by
a. 2 percent, which is high compared to average U.S. growth over the last one-hundred
years.
b. 2 percent, which is about the same as average U.S. growth over the last one-hundred
years.
c. 4 percent, which is high compared to average U.S. growth over the last one-hundred
years.
d. 4 percent, which is about the same as average U.S. growth over the last one-hundred
years.
Table 3-31
Referto Table 3-31. Relative to the farmer, the rancher has an absolute advantage in the
production of
a. meat, but not in the production of potatoes.
b. potatoes, but not in the production of meat.
c. both meat and potatoes.
d. neither meat nor potatoes.
The Bureau of Labor Statistics produces data on unemployment and other aspects of the
labor market from a regular survey of about 600 households, called the Current
Population Survey.
a. True
b. False
Which of the following would notbe an expected response from a decrease in the price
level and so help to explain the slope of the aggregate-demand curve?
a. When interest rates fall, In-and-Out Convenience Stores decides to build some new
stores.
b. The exchange rate falls, so French restaurants in Paris buy more Kansas beef.
c. Tyler feels wealthier because of the price-level decrease and so he decides to remodel
his kitchen.
d. With prices down and wages fixed by contract, Fargo Concrete Company decides to
lay off workers.
Paul Volcker’s inflation reduction efforts
a. failed to reduce inflation.
b. failed to reduce expected inflation.
c. resulted in the highest unemployment rate since the Great Depression.
d. none of the above are correct.
A municipal bond is
a. issued by the federal government.
b. issued by state and local governments.
c. issued by corporations.
d. issued by households.
A production possibilities frontier has a bowed shape if the opportunity cost is constant
at all levels of output.
a. True
b. False
In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of
500,000. In 2011 it had a population of 5,100 and real GDP of 520,200. During 2011
real GDP per person in Bovina grew by
a. 2 percent, which is high compared to average U.S. growth over the last one-hundred
years.
b. 2 percent, which is about the same as average U.S. growth over the last one-hundred
years.
c. 4 percent, which is high compared to average U.S. growth over the last one-hundred
years.
d. 4 percent, which is about the same as average U.S. growth over the last one-hundred
years.
Which of the following could the government do to decrease the costs of inflation
without lowering the inflation rate?
a. Avoid unexpected changes in the inflation rate.
b. Rewrite the tax laws so that nominal gains were taxed instead of real gains.
c. Make policy that would discourage firms from issuing indexed bonds.
d. All of the above are correct.
In the United States, incomes have historically grown
a. about 5 percent per year.
b. about 2 percent per year.
c. about 4 percent per year.
d. about 6 percent per year.
Which of the following events shifts aggregate demand rightward?
a. an increase in government expenditures or a decrease in the price level
b. a decrease in government expenditures or an increase in the price level
c. an increase in government expenditures, but not a change in the price level
d. a decrease in the price level, but not an increase in government expenditures
Suppose banks decide to hold more excess reserves relative to deposits. Other things
the same, this action will cause the
a. money supply to fall. To reduce the impact of this the Fed could lower the discount
rate.
b. money supply to fall. To reduce the impact of this the Fed could raise the discount
rate.
c. money supply to rise. To reduce the impact of this the Fed could lower the discount
rate.
d. money supply to rise. To reduce the impact of this the Fed could raise the discount
rate.
Which of the following statements about GDP is correct?
a. GDP measures two things at once: the total income of everyone in the economy and
the unemployment rate of the economy’s labor force.
b. Money continuously flows from households to government and then back to
households, and GDP measures this flow of money.
c. GDP is to a nation’s economy as household income is to a household.
d. All of the above are correct.
Scenario 26-2. Assume the following information for an imaginary, closed economy.
GDP = $5 trillion; consumption = $3.1 trillion; government purchases = $0.7 trillion;
and taxes = $0.9 trillion.
RefertoScenario26-2.For this economy, private saving is equal to
a. $0.3 trillion.
b. $1.2 trillion.
c. $1.0 trillion.
d. $1.7 trillion.
Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling
facilities. Which of the following would notbe a direct result of this event?
a. Sellers would not be able to produce and sell as much as before at each relevant
price.
b. The supply would decrease.
c. Buyers would not be willing to buy as much as before at each relevant price.
d. The equilibrium price would rise.
Figure 2-8
RefertoFigure2-8.Efficient production is represented by which point(s)?
a. J
b. J, K
c. J, K, L
d. J, K, M
Minimum-wage laws can keep wages
a. above equilibrium and cause a surplus of labor.
b. above equilibrium and cause a shortage of labor.
c. below equilibrium and cause a surplus of labor.
d. below equilibrium and cause a shortage of labor.
All else equal, which of the following would tend to cause real GDP per person to rise?
a. a change from inward-oriented policies to outward-oriented policies
b. an increase in investment in human capital
c. strengthening of property rights.
d. All of the above are correct.
Unemployment generated by the existence of labor unions is structural unemployment
and so contributes to the natural rate of unemployment.
a. True
b. False
Today, unions play a larger role in Europe than they do in the U.S.
a. True
b. False
Your nominal wage increases from $12 per hour to $13 per hour. At the same time, the
price level increases from 140 to 147. As a result,
a. The number of dollars you receive increases and the purchasing power of the dollars
you receive increases.
b. The number of dollars you receive increases and the purchasing power of the dollars
you receive decreases.
c. The number of dollars you receive decreases and the purchasing power of the dollars
you receive increases.
d. The number of dollars you receive decreases and the purchasing power of the dollars
you receive decreases.
When an Egyptian firm purchases a cement mixer from Slovakia,
a. Egyptian investment does not change, Egyptian net exports decrease, Egyptian GDP
decreases, Slovakian net exports increase, and Slovakian GDP increases.
b. Egyptian investment increases, Egyptian net exports decrease, Egyptian GDP is
unaffected, Slovakian net exports increase, and Slovakian GDP increases.
c. Egyptian investment decreases, Egyptian net exports increase, Egyptian GDP is
unaffected, Slovakian net exports decrease, and Slovakian GDP decreases.
d. Egyptian investment increases, Egyptian net exports do not change, Egyptian GDP
increases, Slovakian net exports do not change, and Slovakian GDP is unaffected.
The analysis of Friedman and Phelps can be summarized in the following equation
where ais a positive number:
a. Unemployment Rate = Natural Rate of Unemployment – a(Actual Inflation –
Expected Inflation).
b. Unemployment Rate = Natural Rate of Unemployment – a(Expected Inflation –
Actual Inflation).
c. Unemployment Rate = Expected Rate of Inflation – a(Actual Inflation – Expected
Inflation).
d. Unemployment Rate = Actual Rate of Inflation – a(Actual Unemployment – Expected
Unemployment).
As the price level rises
a. people will want to hold more money, so the interest rate rises.
b. people will want to hold more money, so the interest rate falls.
c. people will want to hold less money, so the interest rate falls.
d. people will want to hold less money, so the interest rate rises.
Microeconomics is the study of how households and firms make decisions and how
they interact in specific markets.
a. True
b. False
An increase in expected inflation shifts the
a. short-run Phillips curve right.
b. short-run Phillips curve left.
c. long-run Phillips curve right.
d. long-run Phillips curve left.
Table 3-30
Assume that Falda and Varick can switch between producing wheat and producing cloth
at a constant rate.
RefertoTable3-30.Varick has an absolute advantage in the production of
a. wheat.
b. cloth.
c. both goods.
d. neither good.
Suppose chocolate-dipped strawberries are currently selling for $30 per dozen, but the
equilibrium price of chocolate-dipped strawberries is $20 per dozen. We would expect a
a. shortage to exist and the market price of chocolate-dipped strawberries to increase.
b. shortage to exist and the market price of chocolate-dipped strawberries to decrease.
c. surplus to exist and the market price of chocolate-dipped strawberries to increase.
d. surplus to exist and the market price of chocolate-dipped strawberries to decrease.
Outward-oriented policies
a. allow countries to take advantage of gains from trade.
b. have generally led to high growth for the countries that pursued them.
c. receive widespread support from economists.
d. All of the above are correct.
Figure 2-1
RefertoFigure2-1. Which arrow represents the flow of income payments?
a. A
b. B
c. C
d. D
Which of the following is consistent with moving from a surplus to equilibrium in the
market for foreign currency exchange?
a. the exchange rate falls causing U.S. residents to import more
b. the exchange rate falls causing U.S. residents to import less
c. the exchange rate rises causing U.S. residents to import more
d. the exchange rate rises causing U.S. residents to import less