Consumption is $5 million, planned investment spending is $8 million, government
purchases are $10 million, and net exports are equal to $2 million. If GDP during that
same time period is equal to $27 million, what unplanned changes in inventories
occurred?
A) There was an unplanned increase in inventories equal to $2 million.
B) There was no unplanned change in inventories.
C) There was an unplanned decrease in inventories equal to $2 million.
D) There was an unplanned decrease in inventories equal to $19 million.
Which of the following would increase the size of the government purchases
multiplier?
A) an increase in the tax rate
B) an increase in the quantity of imports purchased by households from an increase in
income
C) a decrease in the amount of consumption spending by households from an increase
in income
D) a decrease in the amount saved by households from an increase in income
Which of the following describes the accuracy of the Consumer Price Index?
A) Changes in the CPI accurately reflect the true rate of inflation.
B) Changes in the CPI understate the true rate of inflation.
C) Changes in the CPI overstate the true rate of inflation.
D) Changes in the CPI are unrelated to the true rate of inflation.
Refer to Figure 13-2. Ceteris paribus, a decrease in the expected future price level
would be represented by a movement from
A) SRAS1 to SRAS2.
B) SRAS2 to SRAS1.
C) point A to point B.
D) point B to point A.
If households and firms decide to hold less of their money in checking account deposits
and more in currency, then the money supply
A) will not change.
B) will increase.
C) will decrease.
D) may increase or decrease.
A tariff is a tax imposed by a government on
A) exports.
B) services.
C) imports.
D) luxury items.
Draw a demand curve and label it D1. On the graph, illustrate an increase in demand
and a decrease in demand, and label the curves D2 and D3, respectively. Starting on
demand curve D1, explain the shift that would result from each of the following events:
a. an increase in income and the good is a normal good
b. an increase in income and the good is an inferior good
c. a decrease in the price of a substitute good
d. a decrease in the price of a complementary good
e. an increase in the taste for the good
f. a decrease in population
g. an increase in the expected future price of the good
Which of the following describes the accuracy of the Consumer Price Index?
A) Changes in the CPI accurately reflect the true rate of inflation.
B) Changes in the CPI understate the true rate of inflation.
C) Changes in the CPI overstate the true rate of inflation.
D) Changes in the CPI are unrelated to the true rate of inflation.
The Soviet Union’s economy grew rapidly in terms of GDP per hour worked in the
1950s, but eventually this growth slowed. Why did this occur?
A) Capital per hour worked grew rapidly from 1950 to 1980, but technological change
occurred very slowly.
B) Capital per hour worked grew slowly, but technological change grew very rapidly.
C) Increasing implementation of new technologies eventually suffered diminishing
marginal returns.
D) The centrally planned economy invested too heavily in technological change.
An increase in public saving has what impact on the market for loanable funds?
A) The supply of loanable funds increases.
B) The demand for loanable funds increases.
C) The supply of loanable funds decreases.
D) The demand for loanable funds decreases.