Suppose that medical technicians and nurses’ aides are not unionized. If the nurses’
aides unionize, then the wages of
a. both medical technicians and nurses’ aides will rise.
b. both medical technicians and nurses’ aides will fall.
c. medical technicians will rise, and the wages of nurses’ aides will fall.
d. nurses’ aides will rise, and the wages of medical technicians will fall.
Suppose you win a small lottery and you are given the following choice: You can
receive (1) an immediate payment of $10,000 or (2) two annual payments, each in the
amount of $5,200, with the first payment coming one year from now, and the second
payment coming two years from now. You would choose to take the immediate
payment of
$10,000 if the interest rate is
a. 2 percent, but not if the interest rate is 1 percent.
b. 3 percent, but not if the interest rate is 2 percent.
c. 4 percent, but not if the interest rate is 3 percent.
d. 5 percent, but not if the interest rate is 4 percent.
If you are convinced that stock prices are impossible to predict from available
information, then you probably also believe that
a. the efficient markets hypothesis is not a correct hypothesis.
b. the stock market is informationally efficient.
c. the stock market is informationally inefficient.
d. there is no reason to establish a diversified portfolio of stocks.
Twenty years ago, Dr. Montgomery borrowed money from her parents to pay her tuition
at graduate school. Now she wants to pay them back. She gives them double what they
gave her. According to the rule of 70, what interest rate would have given her parents
the same amount of money if they had put it in the bank rather than lending it to their
daughter?
a. 3.5 percent
b. 4.5 percent
c. 5 percent
d. 7 percent
Which of the following is always measured in prices from a base-year?
a. both nominal and real GDP.
b. nominal but not real GDP.
c. real but not nominal GDP.
d. neither nominal nor real GDP.
The Fisher effect
a. says the government can generate revenue by printing money.
b. says there is a one for one adjustment of the nominal interest rate to the inflation rate.
c. explains how higher money supply growth leads to higher inflation.
d. explains how prices adjust to obtain equilibrium in the money market.
A bank has $500,000 in deposits and $475,000 in loans. It has loaned out all it can. It
has a reserve ratio of
a. 2.5 percent.
b. 5 percent.
c. 9.5 percent.
d. 25 percent.
In the open-economy macroeconomic model which of the following falls if there is an
increase in the budget deficit?
a. the interest rate
b. net exports
c. the exchange rate
d. All of the above are correct.
The country of Wiknam has net capital outflow of $1,000, government purchases of
$5,000 and consumption of $20,000. Which of the following is correct?
a. If its domestic investment is $1,000, its GDP is $26,000.
b. If its domestic investment is $2,000, its GDP is $28,000.
c. If its domestic investment is $5,000, its GDP is $29,000.
d. None of the above are correct.
When the government has a deficit, a burden is necessarily imposed on future
generations of taxpayers.
a. True
b. False
Figure 35-3. The left-hand graph shows a short-run aggregate-supply (SRAS) curve
and two aggregate-demand (AD) curves. On the left-hand diagram, Y represents output
and on the right-hand diagram, U represents the unemployment rate.
RefertoFigure35-3.Assume the figure depicts possible outcomes for the year 2018. In
2018, the economy is at point A on the left-hand graph, which corresponds to point A on
the right-hand graph. The price level in the year 2017 was
a. 144.
b. 150.
c. 152.
d. 156.
Aggregate demand includes
a. only the quantity of goods and services households want to buy.
b. only the quantity of goods and services households and firms want to buy.
c. only the quantity of goods and services households, firms, and the government want
to buy.
d. the quantity of goods and services households, firms, the government, and customer
abroad want to buy.
Most financial decisions involve two related elements:
a. advice and consent.
b. investment and taxes.
c. time and risk.
d. saving and consumption.
The rule of 70 applies to a growing savings account but not to a growing economy.
a. True
b. False
Which of the following is included in both M1 and M2?
a. currency
b. demand deposits
c. other checkable deposits
d. All of the above are correct.
The slope of the supply of loanable funds curve represents the
a. positive relation between the real interest rate and investment.
b. positive relation between the real interest rate and saving.
c. negative relation between the real interest rate and investment.
d. negative relation between the real interest rate and saving.
The line that relates the price of a good and the quantity demanded of that good is
called the demand
a. schedule, and it usually slopes upward.
b. schedule, and it usually slopes downward.
c. curve, and it usually slopes upward.
d. curve, and it usually slopes downward.
Suppose the Federal Reserve announces that it will be making a change to a key interest
rate to increase the money supply. This is likely because
a. the Federal Reserve is worried about inflation.
b. the Federal Reserve is worried about unemployment.
c. the Federal Reserve is hoping to reduce the demand for goods and services.
d. the Federal Reserve is worried that the economy is growing too quickly.
The sticky-price theory implies that
a. the short-run aggregate-supply curve is upward-sloping.
b. an unexpected fall in the price level induces firms to reduce the quantity of goods and
services they produce.
c. menu costs influence the speed of adjustment of prices.
d. All of the above are correct.
Economists view positive statements as
a. affirmative, justifying existing economic policy.
b. optimistic, putting the best possible interpretation on things.
c. descriptive, making a claim about how the world is.
d. prescriptive, making a claim about how the world ought to be.
Table 3-26
Assume that Japan and Korea can switch between producing cars and producing
airplanes at a constant rate.
RefertoTable3-26.Japan’s opportunity cost of one car is
a. 1/5 airplane and Korea’s opportunity cost of one car is 1/3 airplane.
b. 1/5 airplane and Korea’s opportunity cost of one car is 3 airplanes.
c. 5 airplanes and Korea’s opportunity cost of one car is 1/3 airplane.
d. 5 airplanes and Korea’s opportunity cost of one car is 3 airplanes.
Table 24-10
The table below shows the prices of baseballs and baseball bats for three years. Assume
the typical consumer’s basket consists of 6 baseballs and 2 baseball bats.
RefertoTable24-10.How much was the cost of the basket in 2008?
a. $78.25
b. $84.75
c. $169.50
d. $456.50
Cyclical unemployment refers to the year-to-year fluctuations in unemployment around
its natural rate.
a. True
b. False
You buy a new car built in Sweden. Other things the same, your purchase by itself
a. raises both U.S. exports and U.S. net exports.
b. raises U.S. exports and lowers U.S. net exports.
c. raises both U.S. imports and U.S. net exports.
d. raises U.S. imports and lowers U.S. net exports.
We can explain continued increases in both output and the price level by supposing that
only aggregate demand shifted right over time.
a. True
b. False
Suppose the economy is in long-run equilibrium. If there is an increase in government
purchases at the same time there is a large increase in the price of oil, then in the
short-run
a. real GDP will rise and the price level might rise, fall, or stay the same.
b. real GDP will fall and the price level might rise, fall, or stay the same.
c. the price level will rise, and real GDP might rise, fall, or stay the same.
d. the price level will fall, and real GDP might rise, fall, or stay the same.
IRAs, and 401(k) and 403(b) plans
a. impose added taxes on those who save.
b. place no limits on the amount people can deposit into these programs.
c. impose penalties for withdrawals except under certain circumstances.
d. None of the above is correct.
Which of the following would make both the equilibrium real interest rate and the
equilibrium quantity of loanable funds decrease?
a. The demand for loanable funds shifts right.
b. The demand for loanable funds shifts left.
c. The supply of loanable funds shifts right.
d. The supply of loanable funds shifts left.
a. What is the difference between a “change in demand” and a “change in quantity
demanded?” Graph your answer.
b. For each of the following changes, determine whether there will be a change in
quantity demanded or a change in demand.
i. a change in the price of a related good
ii. a change in tastes
iii. a change in the number of buyers
iv. a change in price
v. a change in consumer expectations
vi. a change in income
Stock in Tasty Greens Restaurants is selling at $80 per share with 1 million shares
outstanding. Last year, Tasty Greens earned $4 million, of which it retained $2.4 million
for future investments. The dividend yield on the stock is
a. 8 percent.
b. 2 percent.
c. 3 percent.
d. 5 percent.
The group of goods and services used to compute the GDP deflator changes
automatically over time, but the group of goods and services used to compute the CPI
does not.
a. True
b. False
Natural rate of unemployment – a (Αctual inflation – Expected inflation) =
a. Quantity of goods and services demanded.
b. Quantity of goods and services supplied.
c. Unemployment rate.
d. Previous year’s inflation rate.
Table 4-1
RefertoTable4-1.If the market consists of Michelle and Hillary only and the price falls
by $1, the quantity demanded in the market increases by
a. 2 units.
b. 3 units.
c. 4 units.
d. 5 units.
A newspaper article informs you that most businesses reduced production in the last
quarter but also sold from their inventories during the last quarter. Based on this
information GDP likely
a. increased.
b. decreased.
c. stayed the same.
d. may have increased, decreased, or stayed the same.