Which of the following is not correct?
a. Economists use some familiar words in specialized ways.
b. Economics has its own language and its own way of thinking, but few other fields of
study do.
c. Supply, demand, elasticity, comparative advantage, consumer surplus, and
deadweight loss are all terms that are part of the economist’s language.
d. The value of the economist’s language lies in its ability to provide you with a new
and useful way of thinking about the world in which you live.
Figure 25-1.
On the horizontal axis, K/Lrepresents capital (K) per worker (L). On the vertical axis,
Y/Lrepresents output (Y) per worker (L).
RefertoFigure25-1.The shape of the curve is consistent with which of the following
statements about the economy to which the curve applies?
a. In the long run, a higher saving rate leads to a higher level of productivity.
b. In the long run, a higher saving rate leads to a higher level of income.
c. In the long run, a higher saving rate leads to neither a higher growth rate of
productivity nor a higher growth rate of income.
d. All of the above are correct.
Figure 4-1
RefertoFigure4-1. It is apparent from the figure that the
a. good is inferior.
b. demand for the good decreases as income increases.
c. demand for the good conforms to the law of demand.
d. All of the above are correct.
Which of the following is notincluded in M1?
a. a $5 bill in your wallet
b. $100 in your checking account
c. $500 in your savings account
d. All of the above are included in M1.
Eva wants to create a graph containing the prices of concert tickets and the
corresponding quantities of concert tickets demanded by customers. She should use a(n)
a. pie chart.
b. bar graph.
c. time-series graph
d. coordinate system.
The market supply curve
a. is found by vertically adding the individual supply curves.
b. slopes downward.
c. represents the sum of the prices that all the sellers are willing to accept for a given
quantity of the good.
d. represents the sum of the quantities supplied by all the sellers at each price of the
good.
Over the last ten years productivity grew faster in Mapoli than in Romeria while the
population and total hours worked remained the same in both countries. It follows that
a. real GDP per person grew faster in Mapoli than in Romeria.
b. real GDP per person must be higher in Mapoli than in Romeria.
c. the standard of living must be higher in Mapoli than in Romeria.
d. All of the above are correct.
Economists use some familiar terms in specialized ways
a. to make the subject sound more complex than it is.
b. because every respectable field of study has its own language.
c. to provide a new and useful way of thinking about the world.
d. because it was too difficult to come up with new terms.
In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of
600,000. In 2011 it had a population of 5,200 and real GDP of 636,480. 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.
If inflation expectations rise, the short-run Phillips curve shifts
a. right, so that at any inflation rate output is higher in the short run than before.
b. left, so that at any inflation rate output is higher in the short run than before.
c. right, so that at any inflation rate output is lower in the short run than before.
d. left, so that at any inflation rate output is lower in the short run than before.
Since the end of World War II, the U.S. has almost always had rising prices and an
upward trend in real GDP. This can be explained
a. only by technological progress.
b. only by money supply growth.
c. by technological progress and money supply growth.
d. None of the above is correct.
On a Sunday morning, Tom sold 300 cups of coffee for a total of $750.
a. The $750 is a nominal variable. The 300 cups of coffee is a real variable.
b. The $750 is a real variable. The 300 cups of coffee is a nominal variable.
c. Both the $750 and the 300 cups of coffee are nominal variables.
d. Both the $750 and the 300 cups of coffee are real variables.
The basic principles of economics suggest that
a. markets are seldom, if ever, a good way to organize economic activity.
b. government should become involved in markets when trade between countries is
involved.
c. government should become involved in markets when those markets fail to produce
efficient or fair outcomes.
d. All of the above are correct.
Suppose the price of a gallon of ice cream rises from $4 to $5 and the price of a can of
coffee rises from $2 to $2.50. If the CPI rises from 150 to 177, then people likely will
buy
a. more ice cream and more coffee.
b. more ice cream and less coffee.
c. less ice cream and more coffee.
d. less ice cream and less coffee.
Karena was laid off, but she is expecting to be recalled. She has not looked for work
since being laid off. Nathan is not employed, nor was he laid off. Who is counted as
“unemployed” in the U.S. labor force statistics?
a. 1) Karena and 2) Nathan, even if Nathan has not looked for work during the previous
four weeks
b. 1) Karena and 2) Nathan, if Nathan has looked for work during the previous four
weeks
c. 1) not Karena but 2) Nathan, even if Nathan has not looked for work during the
previous four weeks
d. 1) not Karena but 2) Nathan, if Nathan has looked for work during the previous four
weeks
The government increases both its expenditures and taxes by $400 billion. There is no
crowding out and no accelerator effect. Aggregate demand shifts by $400 billion.
Which of the following is consistent with how far aggregate demand shifts?
a. MPC = 1/2, and the effects of the increase in taxes is 1/2 as strong as the change in
government expenditures.
b. MPC = 2/3, and the effects of the increase in taxes is 2/3 as strong as the change in
government expenditures
c. MPC = 3/4, and the effects of the increase in taxes is 3/4 as strong as the change in
government expenditures
d. All of the above are correct.
Figure 2-23
Refer to Figure2-23. The opportunity cost of an additional doghouse increases as more
doghouses are produced.
a. True
b. False
Today, bank runs are not a major problem for the U.S. banking system because
a. bank runs are now illegal.
b. banks now hold 100 percent of their deposits in reserve.
c. banks are now all government-operated.
d. the federal government now guarantees the safety of deposits at most banks.
Money demand depends on
a. the price level and the interest rate.
b. the price level but not the interest rate.
c. the interest rate but not the price level.
d. neither the price level nor the interest rate.
M1 equals currency plus demand deposits plus
a. nothing else.
b. other checkable deposits.
c. traveler’s checks plus other checkable deposits.
d. traveler’s checks plus other checkable deposits plus savings deposits.
Among the following countries, which one has the highest level of real GDP per person
but the lowest growth rate of real GDP per person over a very long period of time?
a. the United Kingdom
b. Mexico
c. Argentina
d. China
Which of the following statements is correct?
a. The interest rate that is usually reported is the interest rate that has been corrected for
inflation.
b. The supply of, and demand for, loanable funds depend on the real (rather than
nominal) interest rate.
c. If the nominal interest rate has decreased and the real interest rate has also decreased,
then the inflation rate must have decreased as well.
d. All of the above are correct.
In the short run,
a. the price level alone adjusts to balance the supply and demand for money.
b. output responds to changes in the aggregate demand for goods and services.
c. changes in the money supply cause a proportional change in the price level.
d. increases in the money supply shift the aggregate supply curve causing output to rise.
The Economy in 2008
In the first half of June 2008 the effects of a housing and financial crisis and an increase
in world prices of oil and foodstuffs were affecting the economy.
RefertoTheEconomyin2008.In the short-run the housing and financial crises
a. raised both the price level and output.
b. raised the price level and reduced output.
c. reduced the price level and raised output.
d. reduced both the price level and output.
If U.S. residents want to buy more foreign bonds, then in the market for
foreign-currency exchange the exchange rate
a. and the quantity of dollars traded rises.
b. rises and the quantity of dollars traded falls.
c. falls and the quantity of dollars traded rises.
d. and the quantity of dollars traded falls.
Which of the following is a source of market risk?
a. Holding stocks in many companies carries the risk of a reduced average return.
b. Real GDP varies over time and sales and profits move with real GDP.
c. When a paper producer has declining sales, it is likely that so will other paper
producers.
d. If stockholders become aggravated with the way a CEO runs a company, the price of
that company’s stock
might fall in the stock market.
Which of the following firms is most likely to have market power?
a. a grocery store in a metropolitan area
b. a convenience store in a suburb
c. a pub in a college town
d. the only gasoline station in a rural area
Table 3-31
RefertoTable3-31.For the farmer, the opportunity cost of 1 pound of meat is
a. 0.625 pound of potatoes.
b. 1.6 pounds of potatoes.
c. 5 pounds of potatoes.
d. 8 pounds of potatoes.
Figure 4-16
RefertoFigure4-16. The shift from S to S” is called a(n)
a. decrease in supply.
b. decrease in quantity supplied.
c. increase in supply.
d. increase in quantity supplied.
If the quantity of money supplied is greater than the quantity demanded, then prices
should fall.
a. True
b. False
A CPA recently has come to expect higher prices for expert tax advice in the near
future. We would expect
a. the CPA to supply more expert tax advice now than she was supplying previously.
b. the CPA to supply less expert tax advice now than she was supplying previously.
c. the demand for this CPA’s expert tax advice to fall.
d. no change in the CPA’s current supply; instead, future supply will be affected.
The aggregate supply curve is
a. vertical in the long run and slopes upward in the short run.
b. upward sloping in the long run and vertical in the short run.
c. vertical in the short run and in the long run.
d. upward sloping in the short run and in the long run.
The notion that our ability to conserve natural resources is growing more rapidly than
their supplies are dwindling is supported by the fact that
a. most economists do not regard the availability of natural resources as a determinant
of productivity.
b. the quantity of natural resources does not enter into any production function.
c. inflation-adjusted prices of most natural resources have been stable or fallen over
time.
d. inflation-adjusted prices of most natural resources have risen over time.
Unemployment data is collected
a. through a monthly survey of about 20,000 firms.
b. through a monthly survey of about 60,000 households.
c. from unemployment insurance claims.
d. All of the above are correct.
Suppose a country had a smaller increase in debt in 2011 than it had in 2010. Then
other things the same, we would expect
a. lower interest rates and investment in 2011 than in 2010.
b. lower interest rates and greater investment in 2011 than in 2010.
c. higher interest rates and greater investment in 2011 than in 2010.
d. higher interest rates and lower investment in 2011 than in 2010.