Table 23-5
The country of Caspir produces only cereal and milk. Quantities and prices of these
goods for the last several years are shown below. The base year is 2015.
Prices and Quantities
RefertoTable23-5.This country’s output grew
a. 31.3% from 2015 to 2016.
b. 42.0% from 2016 to 2017.
c. 15.4% from 2016 to 2017.
d. 53.6% from 2017 to 2018.
Which of the following illustrates how the investment accelerator works?
a. An increase in government expenditures increases aggregate spending so that
SnoozeBargain Co. decides to modernize its motels.
b. An increase in government expenditures increases the interest rate so that
SnoozeBargain Co. decides to modernize its motels.
c. An increase in government expenditures increases the interest rate so that the demand
for stocks and bonds issued by SnoozeBargain Co. rises.
d. An increase in government expenditures decreases the interest rate so that
SnoozeBargain Co. decides to modernize its motels.
In the United States during the 1970s, expected inflation
a. rose substantially.
b. rose slightly.
c. fell slightly.
d. fell substantially.
If the price of Spanish olives imported into the United States decreases, then
a. both the GDP deflator and the consumer price index will decrease.
b. neither the GDP deflator nor the consumer price index will decrease.
c. the GDP deflator will decrease, but the consumer price index will not decrease.
d. the consumer price index will decrease, but the GDP deflator will not decrease.
Which of the following is notcorrect?
a. Countries that have had higher output growth per person have typically done so
without higher productivity growth.
b. A country’s standard of living and its productivity are closely related.
c. Productivity refers to output produced per hour of work.
d. Increases in productivity can be used to increase output or leisure.
The two basic reasons why economists often appear to give conflicting advice to
policymakers are differences in
a. opinions and education.
b. opinions and values.
c. scientific judgments and education.
d. scientific judgments and values.
Figure 3-10
RefertoFigure3-10.Both Alice and Betty
a. face a constant trade-off between producing pitchers of lemonade and pizzas.
b. can produce more pizzas than pitchers of lemonade if they devote all of their time to
pizza production.
c. would benefit from specializing in lemonade production.
d. would benefit from specializing in pizza production.
Microeconomic substitution is impossible for the economy as a whole because
a. money is a veil.
b. real GDP measures the total quantity of goods and services produced by all firms in
all markets.
c. the prices of some goods and services adjust sluggishly in response to changing
economic conditions.
d. a lower price level increases real wealth, which stimulates spending by consumers
and vice-versa.
If the long-run Phillips curve shifts to the right, then for any given rate of money
growth and inflation the economy has
a. higher unemployment and lower output.
b. higher unemployment and higher output.
c. lower unemployment and lower output.
d. lower unemployment and higher output.
Maureen’s college raises the cost of room and board per semester. This increase raises
Maureen’s opportunity cost of attending college
a. even if the amount she would have to pay for room and board if she didn’t attend
college rose by the same amount. An increase in opportunity cost reduces Maureen’s
incentive to attend college.
b. even if the amount she would have to pay for room and board if she didn’t attend
college rose by the same amount. An increase in opportunity cost increases Maureen’s
incentive to attend college.
c. only if the amount she would have to pay for room and board if she didn’t attend
college rose by less than the increase in the amount her college charges. An increase in
opportunity cost reduces Maureen’s incentive to attend college.
d. only if the amount she would have to pay for room and board if she didn’t attend
college rose by less than the increase in the amount her college charges. An increase in
opportunity cost increases Maureen’s incentive to attend college.
Sheila is on a temporary layoff from her automobile factory job but has not looked for
work in the last four weeks. The Bureau of Labor Statistics counts Sheila as
a. unemployed and in the labor force.
b. unemployed and not in the labor force.
c. employed and in the labor force.
d. employed and not in the labor force.
A society allocates its scarce resources to various jobs. These scarce resources include
a. land.
b. people.
c. machines.
d. All of the above are correct.
In the U.S., the average adult holds about $4,490 in
a. currency.
b. wealth.
c. M1.
d. M2.
Which of the following would cause price to decrease?
a. a decrease in supply
b. an increase in demand
c. a surplus of the good
d. a shortage of the good
Just as the aggregate-demand curve slopes downward only in the short run, the trade-off
between inflation and unemployment holds only in the long run.
a. True
b. False
If you are vacationing in France and the dollar depreciates relative to the euro, then
a. the dollar buys more euros. It will take fewer dollars to buy a good that costs 50
euros.
b. the dollar buys more euros. It will take more dollars to buy a good that costs 50
euros.
c. the dollar buys fewer euros. It will take fewer dollars to buy a good that costs 50
euros.
d. the dollar buys fewer euros. It will take more dollars to buy a good that costs 50
euros.
Ultimately, the change in unemployment associated with a change in inflation is due to
a. the shape of the long-run aggregate supply curve.
b. unanticipated inflation, not inflation per se.
c. anticipated inflation, not inflation per se.
d. a change in the natural rate of unemployment.
The Board of Governors
a. is chaired by the U.S. Secretary of the Treasury.
b. members are elected by the U.S. public.
c. has 7 members.
d. All of the above are correct.
If a country has a trade deficit
a. it has positive net exports and positive net capital outflow.
b. it has positive net exports and negative net capital outflow.
c. it has negative net exports and positive net capital outflow.
d. it has negative net exports and negative net capital outflow.
When the price level falls
a. households want to lend less.
b. the interest rate rises.
c. firms want to spend less on investment goods.
d. None of the above are correct.
An increase in the number of college scholarships issued by private foundations would
a. increase the supply of education.
b. decrease the supply of education.
c. increase the demand for education.
d. decrease the demand for education.
Figure 2-20
RelationshipBetweenYearsofEducationandAnnualIncome
RefertoFigure2-20.According to the graph, the correlation between years of education
and annual income is
a. positive
b. negative
c. inverse
d. normative
How would a decrease in the natural rate of unemployment affect the long-run Phillips
curve?
a. It would shift the long-run Phillips curve right.
b. It would shift the long-run Phillips curve left.
c. There would be an upward movement along a given long-run Phillips curve.
d. There would be a downward movement along a given long-run Philips curve.
Who accepts all of the risk associated with a mutual fund’s portfolio of stocks and/or
bonds?
a. the fund’s managers
b. the fund’s shareholders
c. the federal government
d. the corporations that originally issued the stocks and/or bonds held by the fund
The Bureau of Labor Statistics divides the adult population into four categories:
employed, underemployed, unemployed, and not in the labor force.
a. True
b. False
Job search
a. and firms paying wages above equilibrium to improve worker health both create
frictional unemployment.
b. creates frictional unemployment, while firms paying wages above equilibrium to
improve worker health creates structural unemployment.
c. creates structural unemployment, while firms paying wages above equilibrium to
improve worker health creates frictional unemployment.
d. and firms paying wages above equilibrium to improve worker health both create
structural unemployment.
If the U.S. government imposed quotas on imports of clothing, then U.S.
a. imports and exports would both fall.
b. imports would fall and exports would rise.
c. imports would rise and exports would fall.
d. None of the above is correct.
Figure 33-4
RefertoFigure33-4. If the economy is at A and there is a fall in aggregate demand, in
the short run the economy
a. stays at A.
b. moves to B.
c. moves to C.
d. moves to D.
Policymakers following a “lean against the wind” policy would
a. increase government expenditures when output is low and decrease them when
output is high.
b. increase government expenditures when output is low and do nothing when output is
high.
c. decrease government expenditures when output is low and increase them when
output is high.
d. decrease government expenditures when output is high and do nothing when output
is low.
The key determinant of the standard of living in a country is
a. the amount of goods and services produced from each hour of a worker’s time.
b. the total amount of goods and services produced within the country.
c. the total amount of its physical capital.
d. its growth rate of real GDP.
Table 24-6
The table below pertains to Napandsnack, an economy in which the typical consumer’s
basket consists of 2 pillows and 15 hotdogs.
RefertoTable24-6. If the base year is 2009, then the consumer price index was
a. 100 in 2009, 115 in 2010, and 116 in 2011.
b. 100 in 2009, 115 in 2010, and 135 in 2011.
c. 100 in 2009, 120 in 2010, and 116 in 2011.
d. 120 in 2009, 125 in 2010, and 135 in 2011.
A permanent reduction in inflation would
a. permanently reduce shoeleather costs and permanently lower unemployment
b. permanently reduce shoeleather costs and temporarily raise unemployment
c. temporarily reduce shoeleather costs and temporarily lower unemployment
d. temporarily reduce shoeleather costs and temporarily raise unemployment
Which of the following is an example of an increase in government purchases?
a. The government builds new roads.
b. The Federal Reserve purchases government bonds.
c. The government decreases personal income taxes.
d. The government increases unemployment insurance benefit payments.
Structural unemployment results when wages are, for some reason, set above the level
that brings supply and demand into equilibrium.
a. True
b. False