“A decrease in the price of digital cameras will decrease the demand for camera film.”
This statement is an example of a positive economic statement.
Higher interest rates increase both consumption and investment spending.
If the rate of inflation in the United States exceeds the rate of inflation in Great Britain
we would expect the U.S. dollar to depreciate in value against the British pound.
The unemployment rate tends to be higher in the European Union as compared to the
United States.
An increase in population shifts the production possibility frontier inwards over time.
Dumping refers to countries exporting unwanted and inferior products to other
countries.
Net exports equals the balance of trade surplus.
If government increases taxes by the same amount it increases government spending,
there will be no effect on aggregate demand: the increase in government spending is
offset by an equal decrease in consumption spending by households.
If there is public dissaving, investment spending in the economy will decline, holding
everything else constant.
Since World War II, the Federal Reserve has not been involved in carrying out
monetary policy.
An increase in liabilities will reduce a firm’s net worth.
Real GDP per capita is calculated by dividing the value of real GDP for a country by
the country’s adult population.
A supply shock causes the long-run aggregate supply curve to shift left, decreasing the
price level.
Developing countries with large informal sectors tend to have firms that invest less in
capital equipment.
If the equilibrium exchange rate exceeds the par exchange rate in the market for
pounds, the pound is overvalued.
________ and ________ are the largest sources of revenue collected by the federal
government.
A) Individual income taxes; corporate income taxes
B) Individual income taxes; social insurance taxes
C) Corporate income taxes; excise and other taxes
D) Excise and other taxes; individual income taxes
Which of the following is a true statement about the multiplier?
A) The formula for the multiplier overstates the real world multiplier when we take into
account the impact of changes in GDP on imports, inflation and the interest rate.
B) The larger the MPC, the smaller the multiplier.
C) The multiplier is the ratio of the change in spending to the change in GDP.
D) The multiplier makes the economy less sensitive to changes in autonomous
expenditure.
An increase in a fixed exchange rate from $2.00 per pound to $2.10 per pound is called
a(n) ________ of the pound.
A) devaluation
B) depreciation
C) appreciation
D) revaluation
From 1990-2012, productivity growth in the United States was ________ the growth
rates of other high-income countries.
A) greater than
B) less than
C) equal to
D) greater than for the first 15 years, then less than
An increase in national income could by caused by which of the following?
A) an increase in depreciation
B) an increase in personal taxes
C) a decrease in personal income
D) an increase in gross domestic product
The term “brain drain” refers to
A) highly educated individuals who leave developing countries for high-income
countries.
B) the diminishing returns to studying for an exam.
C) the negative impact on brain function of an individual’s overinvestment in human
capital.
D) the decreased quality of the college-educated workforce.
Which of the following will not shift the demand for the euro to the right?
A) an increase in interest rates in the European Union
B) an increase in incomes in countries that buy goods from the European Union
C) expectations among speculators that the price of the euro will rise in the future
D) a decrease in the demand for European goods
Figure 2-6
Refer to Figure 2-6. If the economy is currently producing at point E, what is the
opportunity cost of moving to point D?
A) 26 thousand forks
B) 20 thousand forks
C) 16 thousand spoons
D) 0 spoons
Which of the following is a normative statement about economic growth?
A) Economic growth is associated with higher labor productivity growth.
B) Economic growth increases GDP per capita.
C) Economic growth hurts developing countries.
D) Foreign direct investment stimulates economic growth.
An example of a final good would be
A) the soy milk sold to Starbucks.
B) the whipped cream sold to Starbucks.
C) a soy latte sold by Starbucks to a student.
D) the coffee beans sold to Starbucks.
If disposable income increases by $500 million, and consumption increases by $400
million, then the marginal propensity to consume is
A) 1.25.
B) 0.8.
C) 0.6.
D) 0.4.
Which of the following labor market statistics best indicates the amount of labor that is
available to the economy from a given working-age population?
A) unemployment rate
B) discouraged-worker ratio
C) labor force participation rate
D) the ratio of minimum wage to inflation
Explain why economies with financial account surpluses usually have current account
deficits.
Describe the four determinants of exchange rates in the long run.
Use the dynamic aggregate demand and aggregate supply model and start with Year 1 in
a long-run macroeconomic equilibrium. For Year 2, graph aggregate demand, long-run
aggregate supply, and short-run aggregate supply such that the condition of the
economy will induce the president and the Congress to conduct contractionary fiscal
policy. Briefly explain the condition of the economy and what the president and the
Congress are attempting to do.
Why does the holding of excess reserves by banks and the holding of currency by
households and firms cause the real-world deposit multiplier to be less than the simple
deposit multiplier?
Use production functions from the economic growth model to explain why the United
States grew at a much faster rate than the Soviet Union in the latter half of the 20th
century.
What is “human capital,” and how does human capital affect labor productivity and
economic growth?
What is a banking panic, and what role did banking panics play in the decision by
Congress to establish the Federal Reserve?