A person buys a newly issued bond that matures in 10 years with a face value of
$10,000 and a coupon rate of 4%. How much money will the bondholder receive in the
tenth year?
a. $10,040.
b. $10,400.
c. $10,000.
d. $40.
e. $400.
Government provides a nonexcludable public good that no one wants.This situation is
most closely related with:
a. government solving a market failure.
b. government failure.
c. market failure.
d. the market solving a government failure.
Foreign real national income rises. This raises U.S. ___________ which ________
aggregate demand (AD). The AD curve shifts ___________ as a result.
a. net exports; raises; rightward
b. imports; raises; rightward
c. prices; reduces; leftward
d. investment; reduces; leftward
e. none of the above
Which of the following exchange rates between the dollar and the peso would an
American buyer of Mexican goods most prefer?
a. $0.10 = 1 peso
b. $0.08 = 1 peso
c. $0.06 = 1 peso
d. $0.04 = 1 peso
The real business cycle theory focuses on the impact that changes in long-run aggregate
supply will have on the business cycle.
a. True
b. False
The economy is in equilibrium, TP = TE. Then, autonomous consumption rises. As a
result, __________ rises, the __________ curve shifts __________, inventory levels
unexpectedly __________, and business firms __________ the quantity of goods and
services they produce.
a. consumption; TE; downward; fall; increase
b. consumption; TE; upward; fall; increase
c. consumption; TE; upward; rise; decrease
d. investment; TE; upward; fall; increase
e. investment; TP; leftward; fall; increase
Which of the following is a positive economic statement?
a. The temperature is too high today.
b. The temperature is 105 degrees today.
c. It is too hot to jog today.
d. I enjoy summer evenings when it cools off.
A person who lives in a good-climate city says, “It’s expensive to live here, but at least
the climate is free.”In terms of a theory advanced in the textbook, this person has either
forgotten or is unaware that
a. New York City is not a good-climate city and it is expensive to live there. In other
words, not all good-climate cities are expensive and not all bad-climate cities are cheap.
b. part of the reason it’s expensive to live in the city is because of the good climate.
c. good-climate cities have more outdoor entertainment entities and activities and
thereforepeople have to pay higher taxes to support those entities and activities.
d. there is a sunshine tax in most of the country – the more hours of sunshine a day, the
higher the tax.
e. none of the above
Which of the following statements is false?
a. In some instances, simple majority voting leads to a project being undertaken even
though the total costs of the project exceed the total benefits.
b. Simple majority voting fails to take into account the intensity of individuals’
preferences.
c. Public choice economists often explain low voter turnouts in terms of the individual
costs and benefits of voting.
d. If an individual will only vote if he or she feels that his or her vote will make a
difference in the election, it is likely that he or she will vote.
In the business cycle, what is the difference between the recovery phase and the
expansion phase?
a. The expansion phase occurs in the rising portion of the business cycle, while the
recovery phase occurs in the falling portion of the business cycle.
b. The expansion phase occurs in the falling portion of the business cycle, while the
recovery phase occurs in the rising portion of the business cycle.
c. The expansion phase is the period when Real GDP increases beyond the recovery
phase.
d. The expansion phase must always come before the recovery phase.
Rational expectations are based on the past alone, while adaptive expectations are based
on the past, the present, and the future.
a. True
b. False
Every ____________ the U.S. government surveys ______________ of households to
gather information about the number of Americans unemployed.
a. month; millions
b. week; millions
c. week; thousands
d. month; thousands
The Friedman natural rate theory states that
a. in both the short run and the long run the economy stays at its natural rate of
unemployment.
b. the economy will not return to its natural rate of unemployment in either the short run
or the long run.
c. the economy stays at its natural rate of unemployment in the short run, but not in the
long run.
d. in the long run the economy returns to its natural rate of unemployment.