If Y = $100 billion, then C = $50 billion, and I = $60 billion. What will autonomous
investment be when Y = $200 billion and C = $100 billion?
a. $50 billion
b. $60 billion
c. $100 billion
d. $120 billion
e. $200 billion
Beginning from an equilibrium at point E1 in Exhibit 4-2, an increase in demand for
good X, other things being equal, would move the equilibrium point to:
a. E1, no change.
b. E2.
c. E3.
d. E4.
When economists want to hold a number of factors constant, they are demonstrating
which of the following expressions?
a. Positive economics model.
b. Consumer sovereignty.
c. Ceteris paribus.
d. Normative economics.
The real balances effect is the impact on real GDP caused by the ____ relationship
between the price level and the real value of financial assets.
a. direct
b. inverse
c. independent
d. linear
Exhibit 7-1 Consumer Price Index YearConsumer
Price Index
1 100
2 110
3 115
4 120
5 125As shown in Exhibit 7-1, the rate of inflation for Year 2 is:
a. 5 percent.
b. 10 percent.
c. 20 percent.
d. 25 percent.
Exhibit 18-2 Production possibilities curves for U.S. and Mexico
As
shown in Exhibit 18-2, in Mexico, producing 1 additional ton of wheat costs:
a. 1/2 ton of cloth.
b. 2/3 ton of cloth.
c. 1 ton of cloth.
d. 1 1/2 tons of cloth.
Suppose a quota on foreign-made automobiles is proposed in Congress. Which of the
following groups is most likely to oppose the bill?
a. American Automobiles Manufacturers.
b. Consumers.
c. American Steel Workers.
d. United Auto Workers.
Economists who prefer a broader definition of money prefer the:
a. M4 measure of the money supply to the M1 measure.
b. M2 measure of the money supply to the M1 measure.
c. M3 measure of the money supply to the M2 measure.
d. prefer the M1 measure of the money supply to the M2 measure.
The following information is provided by the Ferrara Corporation:
Calculate Ferrara Corporation’s expenses.
a. $20,000
b. $30,000
c. $40,000
d. Cannot tell from the information provided.
An improvement in a firm’s technology that reduces its production costs will result in
a(n):
a. rightward shift of the supply curve.
b. increase in supply.
c. increase in quantity supplied at any given price.
d. all of these are true.
Assume that we want to drive our economy out of recession by generating a $400
billion change in real GDP. The MPC is 0.80. Which of the following policy
prescriptions would generate the targeted $400 billion change in income?
a. $120 billion increase in government spending and $50 billion increase in tax revenue.
b. $140 billion increase in government spending and $70 billion increase in tax revenue.
c. $160 billion increase in government spending and $120 billion increase in tax
revenue.
d. $220 billion increase in government spending and $100 billion increase in tax
revenue.
e. $400 billion increase in government spending and $300 billion increase in tax
revenue.
Eric lost his job because a recession caused his employer’s sales to fall. This is an
example of:
a. involuntary unemployment.
b. frictional unemployment.
c. structural unemployment.
d. cyclical unemployment.
A technological improvement in the production of good X causes the:
a. demand curve for X to shift to the right. c. supply curve for X to shift to the right.
b. demand curve for X to shift to the left. d. supply curve for X to shift to the left.
Exhibit 11-1 Disposable income and consumption data Income (Y)Change in
Disposable Income
Consumption (C)
0 500
1,000 1,000 1,400
2,000 1,000 2,200
3,000 1,000 2,900
4,000 1,000 3,500
5,000 1,000 4,000 In Exhibit 11-1, when disposable income (Y) is increased from
$1,000 to $2,000, the marginal propensity to consume is:
a. 0.2.
b. 0.6.
c. 0.8.
d. 1.0.
e. 1.25.