Rapid economic growth, stable prices and __________ are the three important
macroeconomic goals about which most economists agree.
a. an unemployment rate of zero
b. zero inflation
c. full employment
d. a high exchange rate
e. low interest rates
The supply and demand model
a. tries to include as many realistic details as possible in order to provide insights into
real-world competitive markets
b. uses simplifying assumptions while still providing insights into real-world
competitive markets
c. uses simplifying assumptions that severely limit its usefulness in practice
d. is too complicated to be useful in practice
e. is unable to explain price movements in most real-world competitive markets
Economists began carefully calculating GDP
a. simply because the data was available
b. to determine the contribution of specific firms to the economy
c. as a result of the problems during the Great Depression
d. to make sure that firms were being productive
e. to gain insight into the causes of unemployment
Refer to Figure 15-8. Suppose that the economy is at the full-employment level of
output of $6 trillion when a demand shock increases real GDP to $6.5 trillion. In the
long run, we would expect the
a. economy to remain at the new level of output of $6.5 trillion
b. aggregate demand curve to shift leftward until the economy returns to full
employment at the original price level
c. aggregate supply curve to shift upward until the economy returns to full employment,
but at a higher price level
d. aggregate supply curve to shift downward until the price level returns to its original
level
e. aggregate demand curve to shift further to right as the multiplier effect occurs.
One reason a bank keeps vault cash is because it
a. may be required to provide cash to customers who are withdrawing their funds
b. wants to earn more interest income
c. wants to offer more loans
d. may need to make transactions with other banks
e. may need to pay more interest on its savings accounts
When measuring GDP, economists count only the values of final goods and services
because
a. the final value is taxable
b. adding the values of intermediate products is too difficult a task
c. the value of all intermediate products is automatically included in the value of those
final goods
d. intermediate products are overpriced
e. the final cost is the selling price, which is what economists want to know
Which of the following is true?
a. As the national debt increases relative to GDP, interest on the debt relative to GDP
declines.
b. As the national debt decreases relative to GDP, interest on the debt relative to GDP
rises.
c. As the national debt increases relative to GDP, interest on the debt relative to GDP
rises.
d. The national debt relative to GDP has been constant in recent years.
e. The national debt relative to GDP has been falling in the last few years.
The Bureau of Labor Statistics complies two different types of market baskets, to reflect
the spending habits of two different types of people:
a. All Urban Workers (CPI-U) and All Farm Workers (CPI-F)
b. All Urban Workers (CPI-U) and Urban Low Wage Workers (CPI-LW)
c. All Urban Workers (CPI-U) and Urban Wage Earners and Clerical Workers (CPI-W)
d. All Urban Workers (CPI-U) and All Rural Workers (CPI-R)
e. All Urban Workers (CPI-U) and Urban Service Workers (CPI-S).
Productive inefficiency could arise from
a. a waste of available labor
b. a lack of resources
c. an improvement in technology
d. a movement along the production possibilities frontier
e. too many goods being produced by the country or firm
The aggregate supply curve is
a. vertical in the short run
b. horizontal in the short run
c. the sum of all of the supply curves of individual firms in the economy
d. downward sloping in the short run
e. upward sloping in the short run
The aggregate supply curve would shift downward if
a. unit costs increase due to an increase in output
b. the wage rate increases
c. good weather increases crop yields
d. an increase in real GDP causes the price level to decrease
e. an oil embargo causes world oil prices to rise
Which of the following would be a concern of normative economics?
a. measuring the actual distribution of income in the economy
b. recommending a change in government policy to make the distribution of income
more equitable
c. determining the impact of higher income taxes on the distribution of income
d. determining the impact of a lower federal budget deficit on the distribution of income
e. measuring the change in the nation’s income distribution since 1960
The market for a particular good is more likely to be local
a. the lower the cost of transporting the good and the greater the ease of communication
between buyers and sellers
b. the higher the cost of transporting the good and the greater the ease of
communication between buyers and sellers
c. the lower the cost of transporting the good and the greater the ease of determining the
good’s quality
d. the lower the cost of transporting the good and the more difficult the communication
between buyers and sellers
e. the higher the cost of transporting the good and the more difficult the communication
between buyers and sellers
Refer to Figure 15-7. If the economy is currently at a price level of 120 and real GDP is
$6.5 trillion, an increase in taxes will, in the short run,
a. shift the aggregate demand curve rightward, increasing both the price level and real
GDP
b. shift the aggregate demand curve leftward, decreasing both the price level and real
GDP
c. shift the aggregate supply curve upward, increasing the price level and decreasing
real GDP
d. shift the aggregate supply curve downward, decreasing the price level and increasing
real GDP
e. have no effect on aggregate demand because of crowding out
There are approximately ______ banks in the U.S.
a. 8,000.
b. 2,000.
c. 100,000.
d. 25,000.
e. 4,000.
Which of the following is an example of productive inefficiency?
a. Scientists discover a new substance that dramatically increases potential steel
production.
b. A demographic boom leads to a rise in the number of workers in the labor force.
c. The rate of unemployment falls to zero.
d. Computer technicians are forced to answer telephones rather than perform their
normal duties.
e. Due to economic growth, the economy reaches a new point along its production
possibilities frontier.