A worker is “underemployed” if she is working at a job for which her skills far exceed
the requirements for the job.
a. True
b. False
If scarcity didn’t exist, neither would
a. rationing devices.
b. competition.
c. labor.
d. capital.
e. a and b
If there is complete crowding out as a result of an increase in government spending
there will be
a. a decrease in aggregate demand.
b. no change in aggregate demand.
c. an increase in aggregate demand.
d. a downward movement along the aggregate demand curve.
In the production function Real GDP = T (L, K), the T represents the tax coefficient.
a. True
b. False
A production possibilities frontier separates an attainable region from an unattainable
region.
a. True
b. False
The original (1958) Phillips curve stated that
a. unemployment and money wage rates move in the same direction.
b. unemployment and money wage rates move in opposite directions.
c. there is an inverse relationship between price inflation and
unemployment.
d. there is a direct relationship between price inflation and unemployment.
e. a and c
In year 1 the CPI is 140, and in year 2 the CPI is 160. From year 1 to year 2, Chiang’s
salary rises from $42,000 to $49,000, and Marta’s salary rises from $55,000 to $60,000.
Who is “more than keeping up with inflation”?
a. Marta
b. Chiang
c. both Marta and Chiang
d. neither Marta nor Chiang
If computers and software are complements, then
a. a fall in the price of computers will increase the demand for software and, ceteris
paribus, the price of software will rise.
b. a rise in the price of computers will decrease the demand for software and, ceteris
paribus, the price of software will rise.
c. a fall in the price of computers will decrease the demand for software and, ceteris
paribus, the price of software will fall.
d. a rise in the price of software will increase the demand for computers and, ceteris
paribus, the price of computers will rise.
e. a fall in the price of software will decrease the demand for computers and, ceteris
paribus, the price of computers will fall.
The three major components of a bond are the bond price, maturity date, and coupon
rate.
a. True
b. False
A decrease in the price level
a. shifts the AD curve to the right.
b. shifts the AD curve to the left.
c. causes an upward movement along the existing AD curve.
d. causes a downward movement along the existing AD curve.
e. none of the above
As the dollar depreciates, foreign goods become more expensive for Americans to
purchase.
a. True
b. False
During an election, a candidate who is not doing as well in the polls as his or her
opponent will
a. modify his or her position so that it is more like that of his or her opponent.
b. modify his or her position so that it is less like that of his or her opponent.
c. become more specific in discussing the issues.
d. label his or her opponent as a middle-of-the-roader.
Exhibit 14-1
Starting from point A, a one shot, supply-side-induced inflation raises the price level in
the economy to P2. Assuming no other changes, in the long run the economy is likely to
settle at point
a. A.
b. B.
c. C.
d. D.
e. E.
Suppose that the current federal funds rate is above the federal funds target rate.In order
to lower the federal funds rate the Fed will ________________ securities on the open
market which will ________________ the supply of reserves in the market for reserves,
pushing the rate closer to the target rate.
a. sell; increase
b. purchase; increase
c. purchase; decrease
d. sell; decrease
Suppose the Fed buys government securities from the public. The liquidity effect of this
is that the interest rate will
a. increase.
b. decrease.
c. remain constant.
d. any of the above are possible
The work of John Maynard Keynes led to a major revolution in economic thought.
a. True
b. False
A decrease in the price of a nonlabor input such as machinery
a. shifts the SRAS curve to the right.
b. shifts the SRAS curve to the left.
c. causes an upward movement along the existing SRAS curve.
d. causes a downward movement along the existing SRAS curve.
e. none of the above
Exhibit 38-1
The coupon rate for bond D is
a. 11 percent.
b. 6.4 percent.
c. 3 percent.
d. 0.07 percent.