In equilibrium which of the following happens if the U.S. imposes tariffs on leather
boots?
a. U.S. production of leather boots rise
b. U.S. net exports rise
c. the exchange rate falls
d. All of the above are correct.
Which of the following describes the Volcker disinflation most accurately?
a. Almost all of the public believed that the Fed would keep money growth low, so
unemployment rose less than it would have otherwise.
b. Almost all of the public believed that the Fed would keep money growth low, so
unemployment rose more than it would have otherwise.
c. Much of the public did not believe that the Fed would keep money growth low, so
unemployment rose less than it would have otherwise.
d. Much of the public did not believe that the Fed would keep money growth low, so
unemployment rose more than it would have otherwise.
If there is a surplus in the U.S. loanable funds market, then the interest rate
a. rises, which increases quantity of loanable funds demanded.
b. rises, which decreases the quantity of loanable funds demanded.
c. falls, which increases the quantity of loanable funds demanded.
d. falls, which decreases the quantity of loanable funds demanded.
In the open-economy macroeconomic model, the market for loanable funds identity can
be written as
a. S = I
b. S = NCO
c. S = I + NCO
d. S + I = NCO
Nathan owns a coffee kiosk. All of his employees work 8 hours per day. In 2009, he
employed 5 people who produced a total of 900 cups of coffee each day. In 2010, he
hired a sixth employee and production increased to 1188 cups of coffee each day. In
Nathan’s kiosk, productivity
a. decreased by 2 percent.
b. increased by 9 percent.
c. increased by 10 percent.
d. increased by 1.11 percent.
Table 7-11
Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. At
equilibrium, producer surplus is
a. $24.
b. $32.
c. $48.
d. $64.
The price level rises if either
a. money demand shifts rightward or money supply shifts leftward; this rise in the price
level is associated with a rise in the value of money.
b. money demand shifts rightward or money supply shifts leftward; this rise in the price
level is associated with a fall in the value of money.
c. money demand shifts leftward or money supply shifts rightward; this rise in the price
level is associated with a rise in the value of money.
d. money demand shifts leftward or money supply shifts rightward; this rise in the price
level is associated with a fall in the value of money.
A binding price floor
(i) causes a surplus.
(ii) causes a shortage.
(iii) is set at a price above the equilibrium price.
(iv) is set at a price below the equilibrium price.
a. (i) only
b. (iii) only
c. (i) and (iii) only
d. (ii) and (iv) only
Market economies are distinguished from other types of economies largely on the basis
of
a. the political affiliations of government officials.
b. the process by which government officials are elected or appointed.
c. the ways in which scarce resources are allocated.
d. the number of retail outlets available to consumers.
In the actual economy, households
a. spend all of their income.
b. divide their income among spending, taxes, and saving.
c. buy all goods and services produced in the economy.
d. Both (a) and (c) are correct.
Table 5-4
Refer to Table 5-4. As price rises from $10 to $12, the price elasticity of demand using
the midpoint method is approximately
a. 0.08.
b. 0.18.
c. 0.42.
d. 0.58.
If a Starbucks tall latte cost $3.20 in the United States and 3 euros in the Euro area, then
purchasing-power parity implies the nominal exchange rate is how many euros per
dollar?
a. 0.938 If the exchange rate is less than this, it costs more dollars to buy a tall latte in
the U.S. than in the Euro area.
b. 0.938 If the exchange rate is less than this, it costs fewer dollars to buy a tall latte in
the U.S. then in the Euro area.
c. 1.067 If the exchange rate is less than this, it costs more dollars to buy a tall latte in
the U.S. than in the Euro area.
d. 1.067 If the exchange rate is less than this, it costs fewer dollars to buy a tall latte in
the U.S. than in the Euro area.
Table 3-13
The following table contains some production possibilities for an economy for a given
month.
Refer to Table 3-13. If the production possibilities frontier is a straight line, then “?”
must be
a. 100.
b. 150.
c. 200.
d. 250.
For the following questions, use the diagram below:
Figure 21-7.
Refer to Figure 21-7. Which of the following is correct?
a. Unemployment rises as the economy moves from point a to point b.
b. Either fiscal or monetary policy could be used to move the economy from point b to
point a.
c. If the economy is left alone, then as the economy moves from point b to long-run
equilibrium, the price level will fall farther.
d. All of the above are correct.
Table 3-5
Assume that England and Spain can switch between producing cheese and producing
bread at a constant rate.
Labor Hours Needed
to Make 1 Unit of Number of Units
Produced in 40 Hours
Refer to Table 3-5. At which of the following prices would both England and Spain
gain from trade with each other?
a. 16 units of bread for 16 units of cheese
b. 16 units of bread for 24 units of cheese
c. 16 units of bread for 48 units of cheese
d. England and Spain could not both gain from trade with each other at any price.
Which of the following can a country increase in the long run by increasing its money
growth rate?
a. the nominal wage divided by the price level
b. real output
c. real interest rates
d. None of the above is correct.
If the government reduced the minimum wage and pursued contractionary monetary
policy, then in the long run
a. both the unemployment rate and the inflation rate would be lower.
b. the unemployment rate would be lower and the inflation rate would be higher.
c. the unemployment rate would be higher and the inflation rate would be lower.
d. the unemployment rate and the inflation rate would be higher.
Just like models constructed in other areas of science, economic models
a. incorporate assumptions that contradict reality.
b. incorporate all details of the real world.
c. complicate reality.
d. avoid the use of diagrams and equations.
Which of the following statements is correct?
a. NASDAQ is an important stock exchange in the United States.
b. The demand for a corporation’s stock is largely based on people’s perception of the
corporation’s profitability in the future.
c. Compared to the Standard & Poor’s 500 Index, the Dow Jones Industrial Average
incorporates the stock prices of a much smaller number of corporations.
d. All of the above are correct.
In the 1990s, inflation in the United States was
a. very close to zero.
b. about 3 percent per year.
c. about 6 percent per year.
d. commonly referred to as “public enemy number one.”
Figure 9-5
Refer to Figure 9-5. Without trade, consumer surplus amounts to
a. $210.50.
b. $245.50.
c. $367.50.
d. $607.50.
For a self-sufficient producer, the production possibilities frontier
a. is the same as the consumption possibilities frontier.
b. is greater than the consumption possibilities frontier.
c. is less than the consumption possibilities frontier.
d. is always a straight line.
Economists disagree as to whether
a. the stock price of a company should reflect the company’s expected profitability.
b. the basic tools of finance reflect valid ideas.
c. stock prices reflect rational estimates of a company’s true worth.
d. there is any relationship between stock market fluctuations and fluctuations in the
economy more broadly.
Countries with low GDP per person tend to have
a. lower rates of child malnutrition.
b. fewer infants with low birth weight.
c. higher rates of infant mortality.
d. more access to safe drinking water.
Almost all economists agree that tariffs and import quotas
a. reduces general economic welfare.
b. increases general economic welfare.
c. have no effect on general economic welfare.
d. stimulate a less than fully employed economy.
Over the period 1900-2008, Brazil’s rate of economic growth exceeded that of China.
If a country increases its saving rate, which of the following permanently grow at a
higher rate?
a. productivity and real GDP per person
b. productivity but not real GDP per person
c. real GDP per person but not productivity
d. neither real GDP per person nor productivity
If tax rates are raised to avoid a deficit during a recession, then
a. real GDP and deadweight loss from taxes will rise.
b. real GDP will rise and deadweight loss from taxes will fall.
c. real GDP will fall and deadweight loss from taxes will rise.
d. real GDP and deadweight loss from taxes will fall.
The relatively low inflation experienced in the United States in the 1990s is attributable
to
a. slow growth of U.S. productivity during the 1990s.
b. slow growth of the quantity of money in the U.S. in the 1990s.
c. low levels of government spending in the U.S. in the 1980s and 1990s.
d. the eight-year presidency of William Jefferson Clinton during the 1990s.
The sticky-wage theory of the short-run aggregate supply curve says that the quantity of
output firms supply will increase if
a. the price level is higher than expected making production more profitable.
b. the price level is higher than expected making production less profitable.
c. the price level is lower than expected making production more profitable.
d. the price level is higher than expected making production less profitable.
Figure 3-4
Perry’s Production Possibilities Frontier Jordan’s Production Possibilities Frontier
Refer to Figure 3-4. The opportunity cost of 1 poem for Jordan is
a. 1/2 novel.
b. 1/3 novel.
c. 3 novels.
d. 4 novels.