Which of the following is inconsistent with the burglary crime model presented in the
textbook?
a. The burglary rate rises during recessions.
b. The burglary rate declines during recessions.
c. The burglary rate remains does not change because of a recession.
d. The anguish cost of committing a burglary is directly related to the expected cost of
committing a burglary.
e. a and d
The boundaries of the Federal Reserve districts were determined based on trade patterns
between cities.
a. True
b. False
The Fed is one of the largest departments within the U.S. Treasury.
a. True
b. False
Who would be most likely to agree that “People do not always save more as interest
rates rise”?
a. a classical economist
b. John Maynard Keynes
c. an efficiency wage theorist
d. a and b
e. a, b, and c
New classical economists believe that it is possible under certain circumstances for an
increase in the money supply to lead to a decrease in Real GDP in the short run.
a. True
b. False
Which set of changes will definitely shift the aggregate demand (AD) curve to the
right?
a. Business taxes decline and foreign real national income rises.
b. Businesses become pessimistic about future sales and the U.S. dollar depreciates.
c. Wealth increases and individuals expect higher (future) incomes.
d. a and b
e. a and c
The answer is: “The difference between the price buyers pay for a good and the
maximum or highest price they would have paid for the good.” This is the definition for
a. taxes.
b. producers’ surplus.
c. consumers’ surplus.
d. the sum of producers’ and consumers’ surpluses.
e. the welfare triangle.
Expansionary fiscal policy actions include __________ government spending and/or
__________ taxes, while contractionary fiscal policy actions include __________
government spending and/or __________ taxes.
a. increasing; increasing; decreasing; decreasing
b. decreasing; decreasing; increasing; increasing
c. increasing; decreasing; increasing; decreasing
d. decreasing; increasing; increasing; decreasing
e. increasing; decreasing; decreasing; increasing
Exhibit 9-7
Which point is representative of the economy on its LRAS curve?
a. A
b. B
c. C
d. D
e. E
When an economy is not using all of its resources, it is producing at a point below its
production possibilities frontier.
a. True
b. False
“Demand-side fiscal policy is capable of changing Real GDP.”This statement would be
most likely to be said by an economist who believes that
a. the AS curve is vertical.
b. the AS curve is upward sloping.
c. complete crowding out exists.
d. there is little, if any, crowding out.
e. b and d
Because money __________________, people are _________________ likely to
specialize in their work in a money economy.
a. is a store of value; less
b. eliminates the double coincidence of wants; more
c. is a unit of account; more
d. eliminates the need for holdings of precious metals; more
Which of the following illustrates the law of demand?
a. Jorge buys fewer pencils at $2 per pencil than at $1 per pencil, ceteris paribus.
b. Chen buys more ice cream at $4 per half-gallon than at $3 per half gallon, ceteris
paribus.
c. Karissa buys fewer sweaters at $50 each than at $35 each, ceteris paribus.
d. a, b, and c
e. a and c
A simultaneous rise in both aggregate demand and short-run aggregate supply will
definitely
a. raise the price level, but there is not enough information provided to know how Real
GDP will change.
b. lower Real GDP, but there is not enough information provided to know how the price
level will change.
c. raise the price level and Real GDP.
d. raise Real GDP, but there is not enough information provided to know how the price
level will change.
e. raise the price level and lower Real GDP.
Suppose Americans buy inputs from foreigners. When the price of foreign inputs falls,
the U.S. SRAS curve __________, which tends to __________the U.S. price level.
a. shifts rightward; reduce
b. shifts leftward; increase
c. shifts leftward; reduce
d. remains constant; increase
Which of the following statements is false?
a. MPC plus MPS equals 1.
b. MPC is additional saving divided by additional disposable income.
c. The MPS is the ratio of the change in saving to the change in disposable income.
d. If MPC equals 0.80, autonomous consumption equals $400, and disposable income
equals $600, then consumption equals $880.
e. none of the above
Studies show that, in the United States,
a. price elasticity of demand for agricultural products has hovered around 3.2 for many
years.
b. as real income has been increasing, the per-capita demand for food has been
decreasing.
c. as real income has been increasing, the per-capita demand for food has been
increasing by much more.
d. none of the above