The ultimate purpose of an economic model is to
a. explain reality as completely as possible
b. establish assumptions that closely resemble reality
c. help us understand economic behavior
d. determine what each decision maker wants to maximize
e. guide government policy decisions
If automobiles are like most goods and the price of automobiles rises, then holding all
else constant, the
a. demand for automobiles will rise
b. quantity demanded of automobiles will fall
c. demand for automobiles will fall
d. quantity demanded of automobiles will rise
e. supply of automobiles will fall
Under market capitalism, resources are allocated primarily through
a. government decree
b. voter consensus
c. tradition
d. lottery
e. prices
The Federal Reserve has been quite successful in keeping the inflation rate low for the
past 20 years.
The equilibrium interest rate will change if
a. the money demand curve shifts
b. there is a movement along the money demand curve
c. crowding out becomes so serious that the dollar loses value
d. the federal funds rate fluctuates rapidly
e. Congress threatens to put a cap on interest rates
If the CPI overstates the true rate of inflation, then
a. the economy will grow more slowly than if inflation was measured accurately
b. the economy will grow more rapidly than if inflation was measured accurately
c. social security payments will increase in real terms
d. social security payments will decrease in real terms
e. so will other means of measuring the inflation rate
“Output fell 2 percent last quarter” is an example of a positive economic statement.
As of mid-2009, the unemployment rate for blacks is approximately 1.7 times the rate
for
a. Hispanics
b. white teenagers
c. women
d. black teenagers
e. whites
What does the supply curve for Mexican pesos tell us?
a. The number of pesos people will want to sell at each different exchange rate
b. The number of pesos people will want to sell at each level of output
c. The number of pesos people will want to buy at each different exchange rate
d. The number of pesos people will want to buy in each different time period
e. The number of pesos people will want to sell at each different interest rate.
Equilibrium in the money market means that the quantity of money people are holding
equals
a. their entire wealth
b. their entire income
c. the quantity of money that they want to hold
d. the money supply
e. the value of bonds in their financial portfolios
All types of unemployment are harmful to the economy.
An excess supply of money implies an excess
a. supply of corporate stock
b. demand for bonds
c. supply of bonds
d. demand for corporate stock
e. demand for goods and services
An economy’s production possibilities frontier is fixed in the long run.
What is the full-employment output level?
a. The output level that results when the loanable funds market clears
b. The output level that results when the returns to labor are zero
c. The output level that results when factories are completely full
d. The output level that results when the labor market clears
e. The output level that would occur if the output level was positive.
An economic expansion causes
a. the federal budget deficit to rise.
b. federal government tax receipts to fall.
c. federal government spending to rise.
d. transfer payments to fall.
e. transfer payments to rise.