What would happen to the equilibrium price and quantity of latts if coffee shops began
using a machine that reduced the amount of labor necessary to produce steamed milk,
which is used to make latts, and scientists discovered that latts cause heart attacks?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would decrease, and the effect on equilibrium quantity would
be ambiguous.
d. The equilibrium quantity would decrease, and the effect on equilibrium price would
be ambiguous.
Table 28-2
Labor Data for Aridia
RefetoTable28-2.The number of adults not in the labor force of Aridia in 2011 was
a. 600.
b. 1,100.
c. 1,700.
d. 2,400.
Figure 2-5
RefertoFigure2-5. Inefficient production is represented by which point(s)?
a. A, B
b. C
c. C, D
d. D
The price index that measures the cost of a basket of goods and services bought by
firms is called the
a. industrial price index.
b. producer price index.
c. core price index.
d. GDP deflator.
Angela reads financial advice columns and concludes the following. Which, if any, of
her conclusions are incorrect?
a. Higher average returns come at the price of higher risk.
b. People who are risk averse should never hold stock.
c. Diversification cannot eliminate all of the risk in stock portfolio.
d. None of her conclusions are incorrect.
Figure 3-20
Refer to Figure3-20. Canada would incur an opportunity cost of 6 units of Good X if it
increased its production of Good Y by
a. 3 units.
b. 6 units.
c. 9 units.
d. 12 units.
If a decrease in income increases the demand for a good, then the good is a(n)
a. substitute good.
b. complementary good.
c. normal good.
d. inferior good.
Gina, a U.S. citizen, works only in Bermuda. The value of Gina’s production is included
in
a. U.S. GDP and Bermudan GDP.
b. U.S. GDP and Bermudan GNP.
c. U.S. GNP and Bermudan GDP.
d. U.S. GNP and Bermudan GNP.
Figure30-2. On the graph, MS represents the money supply and MD represents money
demand. The usual quantities are measured along the axes.
RefetoFigure30-2. Suppose the relevant money-demand curve is the one labeled MD1;
also suppose the economy’s real GDP is 20,000 for the year. If the money market is in
equilibrium, then how many times per year is the typical dollar bill used to pay for a
newly produced good or service?
a. 4
b. 2
c. 8
d. 10
Which of the following would likely increase private saving?
a. both expansion of means testing and a consumption tax
b. expansion of means testing, but not a consumption tax
c. a consumption tax, but not expansion of means testing
d. neither expansion of means testing nor a consumption tax
The opportunity cost of an item is
a. the number of hours needed to earn money to buy the item.
b. what you give up to get that item.
c. usually less than the dollar value of the item.
d. the dollar value of the item.
The effects of a higher than expected price level are shown by
a. shifting the short-run aggregate supply curve right.
b. shifting the short-run aggregate supply curve left.
c. moving to the right along a given aggregate supply curve.
d. moving to the left along a given aggregate supply curve.
The Kennedy tax cut of 1964 included an investment tax credit that was designed to
a. increase aggregate demand in the short run and aggregate supply in the long run.
b. increase aggregate supply in the short run and aggregate demand in the long run.
c. only increase aggregate supply in the long run.
d. only increase aggregate demand in the short run.
GDP adds together many different kinds of products into a single measure of the value
of economic activity by using market prices.
a. True
b. False
Figure26-3.The figure shows two demand-for-loanable-funds curves and two
supply-of-loanable-funds curves.
RefertoFigure26-3.Which of the following movements shows the effects of
households’ decision to save more?
a. a movement from Point A to Point B
b. a movement from Point F to Point A
c. a movement from Point C to Point F
d. a movement from Point B to Point C
The nominal interest rate tells you
a. how fast the number of dollars in your bank account rises over time.
b. how fast the purchasing power of your bank account rises over time.
c. the number of dollars in your bank account today.
d. the purchasing power of your bank account today.
Figure35-1.The left-hand graph shows a short-run aggregate-supply (SRAS) curve and
two aggregate-demand (AD) curves. On the right-hand diagram, U represents the
unemployment rate.
RefertoFigure35-1.What is measured along the horizontal axis of the left-hand graph?
a. the wage rate
b. the inflation rate
c. employment
d. output
According to classical macroeconomic theory, changes in the money supply affect
a. nominal variables and real variables.
b. nominal variables, but not real variables.
c. real variables, but not nominal variables.
d. neither nominal nor real variables.
Table 3-5
Assume that Aruba and Iceland can switch between producing coolers and producing
radios at a constant rate.
Refer to Table3-5. Which of the following represents Aruba’s production possibilities
frontier when 100 labor hours are available?
a.
b.
c.
d.
Most goods and services produced at home
a. and most goods and services produced illegally are included in GDP.
b. are included in GDP while most goods and services produced illegally are excluded
from GDP.
c. are excluded from GDP while most goods and services produced illegally are
included in GDP
d. and most goods and services produced illegally are excluded from GDP.
In the economy of Talikastan in 2015, consumption was $3000, exports were $1200,
GDP was $6300, government purchases were $1300, and investment was $1500. What
were Talikastan’s imports in 2015?
a. $500
b. -$700
c. $700
d. $500
You bought some shares of stock and, over the next year, the price per share decreased
by 7 percent and the price level decreased by 9 percent. Before taxes, you experienced
a. both a nominal gain and a real gain.
b. a nominal gain and a real loss.
c. a nominal loss and a real gain.
d. both a nominal loss and a real loss.
If the discount rate is raised then banks borrow
a. more from the Fed so reserves increase.
b. more from the Fed so reserves decrease.
c. less from the Fed so reserves increase.
d. less from the Fed so reserves decrease.
For the Bureau of Labor Statistics to place someone in the “unemployed” category, that
person must
a. have worked no more than 10 hours during the past week..
b. have tried to find employment during the previous year.
c. not have been laid off.
d. None of the above is correct.
In the open-economy macroeconomic model, the supply of loanable funds comes from
a. national saving.
b. private saving.
c. domestic investment.
d. the sum of domestic investment and net capital outflow.
Table 28-4
2010 Labor Data for Adults (ages 16 and older) in Meditor
RefetoTable28-4. What is the adult female unemployment rate in Meditor?
a. 4.8%
b. 5.0%
c. 7.1%
d. 7.7%
The tool most often used by the Fed to control the money supply is
a. changing reserve requirements.
b. open market operations.
c. buying and selling of equities.
d. altering the discount rate.
Someone who is without work but is not looking for work is included in the Bureau of
Labor Statistics’ “unemployed” category.
a. True
b. False
The outer loop of the circular-flow diagram represents the flows of dollars in the
economy. Which of the following does not appear on the outer loop?
a. wages
b. income
c. capital
d. rent
RefertoFigure2-9,Panel(a).Production is
a. possible at points J, K, L, and M, but efficient only at points J, L, and M.
b. possible at points J, K, L, and M, but efficient only at point K.
c. possible at points J, L, M, and N, but efficient only at points J, L, and M.
d. possible at points J, L, M, and N, but efficient only at point N.
In the long run, changes in the money supply affect
a. prices.
b. output.
c. unemployment rates.
d. All of the above.
Olga owns her own business. Sven is an unpaid worker in his family’s business. Who is
included in the Bureau of Labor Statistics’ “employed” category?
a. only Olga
b. only Sven
c. both Olga and Sven
d. neither Olga nor Sven
Which of the following is included in government purchases?
a. unemployment benefits a state pays
b. Social Security payments the U.S. government makes
c. the services of a U.S. government attorney valued at the cost of her salary
d. All of the above are correct.
Scenario 4-1
Suppose the demand schedule in a market can be represented by the equation
, where is the quantity demanded and is the price. Also, suppose the
supply schedule can be represented by the equation , where is the quantity supplied.
RefertoScenario4-1. Suppose the price is currently equal to 18 in this
market. Is there a shortage or surplus in this market, and how large is the
shortage/surplus?
If the exchange rate rises, domestic goods become relatively ______ expensive. This
change in the affordability of domestic goods makes domestic goods _____ attractive to
foreigners. So, _______ ______.
Table 23-12
A country produces only ice cream and cake in the quantities and prices listed below.
Use 2011 as the base year.
RefertoTable23-12. Calculate real and nominal GDP for the year 2013.
Why does the GDP deflator give a different rate of inflation than the CPI?
Suppose a boom in stock market prices helps make people feel wealthier. Using the
model of aggregate demand and aggregate supply, identify the curves that are affected,
and which way these curves would shift.
If there is a shortage in the market for foreign-currency exchange, what happens to the
exchange rate and to net exports?
Is coal a produced factor of production?
Who would be more likely to study the inflation rate in the United States, a
macroeconomist or a microeconomist?
Research suggests that taller workers tend to earn more income than shorter workers.
What does this suggest about the relationship between workers’ height and their
productivity?
Figure 4-30
RefertoFigure4-30.In this market for iPhones, the technology improves while all other
factors remain constant. Explain the change(s) in the equilibrium price and quantity.
Scenario 3-1
The production possibilities frontiers below show how much Greg and Catherine can
each produce in 8 hours of time.
Refer to Scenario3-1. What is Catherine’s opportunity cost of producing ice cream?
Explain how you derived your answer.
Figure 2-22
RefertoFigure2-22.What is the slope of the line with points A, B, and C?
The price level in Country A is 250. The price level in Country B is 300. If
purchasing-power parity holds, what is the nominal value of Country A’s currency in
the market for foreign exchange with Country B? Show your work.
Money, such as gold, with some intrinsic value is called. Money with no intrinsic value
is called.