An individual worked for an airline that went out of business because the airline was
unable to meet new federal safety standards. While the individual is unemployed, she
will be classified as:
A) frictionally unemployed.
B) naturally unemployed.
C) cyclically unemployed.
D) structurally unemployed.
Assume there is no government or foreign sector. If the marginal propensity to save is
0.25, the multiplier is:
A) 1.33.
B) 1.11.
C) 9.
D) 4.
A decrease in the amount of subsidies that a public university receives would result in:
A) an upward movement along the supply curve for college classes.
B) an downward movement along the supply curve for college classes.
C) a shift in the supply of college classes to the left.
D) a shift in the supply of college classes to the right.
Table 3.3
Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel’s
and Mia’s hourly productivity are shown in Table 3.3. Nigel’s opportunity cost of
producing one hair pin is
A) 1/3 of a bandana.
B) 2.5 bandanas.
C) 3 bandanas.
D) 10 bandanas.
In order to ________, a government must increase spending and decrease taxation.
A) increase aggregate demand
B) decrease aggregate demand
C) increase aggregate supply
D) decrease aggregate supply
Figure 15.3
Refer to Figure 15.3. At full employment equilibrium, investment would increase from
$10 million to $15 million if:
A) the government increases taxes.
B) the government increases government spending.
C) the Fed sells bonds in the open market.
D) both B and C
Use the rule of 70 to calculate how long it would take for an economy’s real GDP per
capita to double if its growth rate is:
(a) 1 percent
(b) 2 percent
(c) 3 percent
(d) 7 percent
(e) 10 percent
An increase in the U.S. interest rate relative to the British interest rate will cause a(n):
A) appreciation of the dollar and an appreciation of the British pound.
B) appreciation of the dollar and a depreciation of the British pound.
C) depreciation of the dollar and an appreciation of the British pound.
D) depreciation of the dollar and a depreciation of the British pound.
In growth accounting, the three sources of growth for a country are:
A) labor, capital and technological progress.
B) supply, demand and equilibrium.
C) land, labor and capital.
D) human capital, physical capital and resources.
If the government liberalizes immigration policies, the demand for labor will ________,
the real wage will ________, and the quantity of labor hired will ________.
A) remain the same; decrease; decrease
B) increase; decrease; remain the same
C) remain the same; increase; decrease
D) remain the same; decrease; increase
Which of the following is a step that the Federal Reserve has taken to better control
expectations of long term interest rates?
A) The Fed now asks the members of the FOMC for their predictions of future
short-term interest rates and makes them public.
B) The Fed now asks the members of the FOMC for their predictions of inflation rates
and makes them public.
C) The Fed now purchases and sells long term bonds.
D) Both A and B are correct.
Recall Application 3, “Jasper Johns and House Painting,” to answer the following
questions:
Suppose that a house painter can earn $200 per day painting houses and painting Jasper
Johns’ house requires 25 days of labor. According to the application, if Jasper Johns
earns $5,000 per day painting art, then he must:
A) paint his house if he can paint it in less than a day.
B) switch occupations and paint houses only.
C) never paint his house.
D) paint his house if he can paint it in less than 25 days.
Figure 18.3
Refer to Figure 18.3. With free trade, domestic production is:
A) 80.
B) 100.
C) 60.
D) 0.
A possible reason to impose a protectionist policy such as a tariff is to
A) increase the welfare of domestic consumers.
B) slow domestic production.
C) aid other nations in developing their own industries.
D) protect domestic workers from foreign competition.