By definition, imports are
a. people who work in foreign countries.
b. goods in which a country has an absolute advantage.
c. limits placed on the quantity of goods leaving a country.
d. goods produced abroad and sold domestically.
Unemployment that results because it takes time for workers to search for the jobs that
best suit their tastes and skills is called
a. the natural rate of unemployment.
b. cyclical unemployment.
c. structural unemployment.
d. frictional unemployment.
Which of the following is nota commonly-cited explanation for the dramatically
increasing labor-force participation rates for women from 1950 to the present?
a. availability of reliable birth control
b. invention of household labor-saving devices such as dishwashers and microwave
ovens
c. an increasing number of women who work to support their parents
d. changing social attitudes about working mothers
Figure 2-18
RelationshipbetweenPriceandRestaurantMeals
RefertoFigure2-18.A movement from point A to point Z is called
a. a shift in demand.
b. a movement along the demand curve.
c. a shift in supply.
d. a movement along the supply curve.
Economists generally believe that policies such as reducing barriers to trade are likely
to foster economic growth.
a. True
b. False
Suppose the economy is in long-run equilibrium. If there is a sharp decline in
government purchases combined with a significant increase in immigration of skilled
workers, then in the short run,
a. real GDP will rise and the price level might rise, fall, or stay the same. In the
long-run, real GDP will rise and the price level might rise, fall, or stay the same.
b. the price level will fall, and real GDP might rise, fall, or stay the same. In the
long-run, real GDP and the price level will be unaffected.
c. the price level will rise, and real GDP might rise, fall, or stay the same. In the long
run, real GDP will rise and the price level will fall.
d. the price level will fall, and real GDP might rise, fall, or stay the same. In the long
run, real GDP will rise and the price level will fall.
If the reserve ratio is 15 percent, the money multiplier is
a. 7.7.
b. 6.7.
c. 5.7.
d. 15.
When the Soviet Union began breaking up in the late 1980s, cigarettes began replacing
the ruble as the medium of exchange even though the ruble was legal tender. The
cigarettes provide an example of commodity money.
a. True
b. False
Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing
toasters at a constant rate.
RefertoTable3-25. The opportunity cost of 1 mixer for Maya is
a. 0.625 toasters.
b. 5 hours of labor.
c. 1.6 toasters.
d. 20 hours of labor.
When the price of a good is high, selling the good is profitable, and so the quantity
supplied is large.
a. True
b. False
For a closed economy, GDP is $18 trillion, consumption is $13 trillion, taxes are $2
trillion and the government runs a deficit of $1 trillion. What are private saving and
national saving?
a. $3 trillion and $1 trillion, respectively
b. $3 trillion and $2 trillion, respectively
c. $2 trillion and $3 trillion, respectively
d. $2 trillion and $2 trillion, respectively
If a country raises its budget deficit then
a. both its supply of and demand for loanable funds shift.
b. its supply of but not its demand for loanable funds shifts.
c. its demand for but not its supply of loanable funds shifts.
d. neither its supply nor its demand for loanable funds shift.
Figure 3-21
Refer to Figure3-21. Suppose Azerbaijan is willing to trade 3 nails to Uzbekistan for
every bolt that Uzbekistan makes and sends to Azerbaijan. Which of the following
combinations of bolts and nails could Azerbaijan then consume, assuming Uzbekistan
specializes in making bolts and Azerbaijan specializes in making nails?
a. 8 bolts and 56 nails
b. 14 bolts and 44 nails
c. 18 bolts and 32 nails
d. 20 bolts and 26 nails
Which is the most accurate statement about trade?
a. Trade can make every nation better off.
b. Trade makes some nations better off and others worse off.
c. Trading for a good can make a nation better off only if the nation cannot produce that
good itself.
d. Trade helps rich nations and hurts poor nations.
Which of the following items is counted as part of government purchases?
a. The federal government pays $2,000 in Social Security benefits to a retired person.
b. The city of Athens, Ohio pays $10,000 to a tree-trimming firm to trim trees along city
boulevards.
c. The state of Nebraska pays $1,000 to help a low-income family pay its medical bills.
d. All of the above are correct.
A bank has a 20 percent reserve requirement, $8,000 in loans, and has loaned out all it
can given the reserve requirement.
a. It has $6,400 in deposits.
b. It has $10,000 in deposits.
c. It has $9,600 in deposits.
d. It has $1,600 in deposits.
Suppose there are six bait and tackle shops that sell worms in a lakeside resort town in
Minnesota. If we add the respective quantities that each shop would produce and sell at
each of the six bait and tackle shops when the price of worms is $2 per bucket, $2.50
per bucket, and $3 per bucket, and so forth, we have found the
a. market demand curve.
b. market supply curve.
c. equilibrium curve.
d. surplus or shortage depending on market conditions.
Which famous person referred to compounding as “the greatest mathematical discovery
of all time?”
a. Abraham Lincoln
b. Thomas Edison
c. Benjamin Franklin
d. Albert Einstein
Table 28-4
2010 Labor Data for Adults (ages 16 and older) in Meditor
RefetoTable28-4. What is the adult population in Meditor?
a. 90 million
b. 160 million
c. 230 million
d. 240 million
Table 3-15
Refer to Table3-15. Which of the following combinations of meat and potatoes could
the farmer produce in 40 hours?
a. 1 pound of meat and 7 pounds of potatoes.
b. 2 pounds of meat and 5 pounds of potatoes.
c. 3 pounds of meat and 3 pounds of potatoes.
d. 4 pounds of meat and 2 pounds of potatoes.
A movement along the demand curve might be caused by a change in
a. income.
b. the prices of substitutes or complements.
c. expectations about future prices.
d. the price of the good or service that is being demanded.
Table 4-11
RefertoTable4-11. If the price were $8, a
a. shortage of 20 units would exist, and price would tend to rise.
b. surplus of 25 units would exist, and price would tend to fall.
c. shortage of 25 units would exist, and price would tend to rise.
d. surplus of 45 units would exist, and price would tend to fall.
Suppose stock prices rise. To offset the resulting change in output the Federal Reserve
could
a. increase the money supply. This increase would also move the price level closer to its
value before the rise in stock prices.
b. increase the money supply. However, this increase would move the price level farther
from its value before the rise in stock prices.
c. decrease the money supply. This decrease would also move the price level closer to
its value before the rise in stock prices.
d. decrease the money supply. However, this decrease would move the price level
farther from its value before the rise in stock prices.
Price cannot fall so low that some sellers choose to supply a quantity of zero.
a. True
b. False
Table 3-13
Juanita and Shantala run a business that programs and tests cellular phones. Assume
that Juanita and Shantala can switch between programming and testing cellular phones
at a constant rate. The following table applies.
Refer to Table3-13. Which of the following points would be on Juanita’s production
possibilities frontier, based on a 40-hour week?
a. (120 cellular phones programmed, 295 cellular phones tested)
b. (130 cellular phones programmed, 225 cellular phones tested)
c. (140 cellular phones programmed, 155 cellular phones tested)
d. Both (a) and (b) would be on Juanita’s production possibilities frontier.
The principal lag for monetary policy
a. and fiscal policy is the time it takes to implement policy.
b. and fiscal policy is the time it takes for policy to change spending.
c. is the time it takes to implement policy. The principal lag for fiscal policy is the time
it takes for policy to change spending.
d. is the time it takes for policy to change spending. The principal lag for fiscal policy is
the time it takes to implement it.
According to the quantity equation, the price level would change less than
proportionately with a rise in the money supply if there were also
a. either a rise in output or a rise in the rate at which money changes hands.
b. either a rise in output or a fall in the rate at which money changes hands.
c. either a fall in output or a rise in the rate at which money changes hands.
d. either a fall in output or a fall in the rate at which money changes hands.
Table 3-21
Assume that Jamaica and Norway can switch between producing coolers and producing
radios at a constant rate. The following table shows the number of coolers or number of
radios each country can produce in one day.
RefertoTable3-21.Jamaica should specialize in the production of
a. coolers and Norway should specialize in the production of radios.
b. radios and Norway should specialize in the production of coolers.
c. both goods and Norway should specialize in the production of neither good.
d. neither good and Norway should specialize in the production of both goods.
When aggregate demand shifts left along the short-run aggregate supply curve,
a. unemployment and prices rise.
b. unemployment rises and prices fall.
c. unemployment falls and prices rise.
d. unemployment and prices fall.
According to the classical model, which of the following would double if the quantity
of money doubled?
a. prices but not nominal income
b. nominal income but not prices
c. both prices and nominal income
d. neither prices nor nominal income
We would expect the interest rate on Bond A to be lower than the interest rate on Bond
B if the two bonds have identical characteristics except that
a. the credit risk associated with Bond A is lower than the credit risk associated with
Bond B.
b. Bond A was issued by the Apple corporation and Bond B was issued by the city of
Houston.
c. Bond A has a term of 20 years and Bond B has a term of 2 years.
d. All of the above are correct.
Is physical capital a produced factor of production? Is human capital a produced factor
of production?
In macroeconomics, refers to the purchase of new capital.
Suppose a country has a real growth rate of 3%. Government spending is 75 billion
units of currency and its tax revenues are 60 billion units of currency. The current
national debt is 300 billion units of currency. At what inflation rate will its
debt-to-income ratio remain unchanged?
Friedman and Phelps argued that it was dangerous to think of the short-run Phillips
curve as a menu of options for policymakers to choose from. Explain the logic of their
argument.
How are discouraged workers counted in the unemployment rate?
Just like other scientific models, economic models simplify reality using
Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year
graduate program. Her annual school expenses are $22,000 for tuition and fees and
$2,000 for books. What is her opportunity cost of attending the two-year graduate
program?
The wealth effect helps explain what feature in the aggregate demand and aggregate
supply model?
Scenario 27-1
Lisa has a utility function where Wis Lisa’s wealth in millions of dollars
and Uis the utility she obtains.
RefetoScenario27-1.Suppose Lisa is faced with a choice between two options. With
option A Lisa receives a guaranteed $9 million. With option B Lisa faces a lottery that
pays $4 million with probability 0.4 and pays $16 million with probability 0.6. Given
Lisa’s utility function, will she prefer option A or option B? Provide evidence to support
your answer.
Briefly explain the four rationales for efficiency wages.
Define efficiency wages.
Figure 2-3
RefertoFigure2-3.What does the arrow going from oval B to rectangle 2 represent in
the figure?
If people in the U.S. choose to save a smaller percentage of income, what will happen
to the interest rate, net capital outflow, the exchange rate, and net exports?
How does the government measure the economy’s rate of unemployment?
How are the effects of a favorable supply shock shown in the Phillips curve diagram? If
the Fed wants to return unemployment to its natural rate after the shock, what should it
do?
Some degree of unemployment isin a complex economy.