1) Saving is a larger percentage of domestic output in DVCs than in IACs, but the
saving is put to poor use.
2) The equivalent of the aggregate supply curve in the aggregate expenditures model is
the 45-degree line.
3) Monetarists argue that government policy interference in the economy is the primary
cause of macroeconomic instability.
4) If the expected rates of return on investments increase, the loanable funds theory
predicts that the equilibrium interest rate would decrease.
5) In the U.S. in 2010, the top 1% of households held 35% of total wealth – leaving 65%
of wealth to the remaining 99% of households.
6) Unemployment that is the result of deregulation, corporate downsizing, and the
closure of military bases is best categorized as frictional unemployment.
7) We would expect the income elasticity of demand for steak to be positive, and that
for hamburger to be negative.
8) The terms “economic investment” and “financial investment” can be used
synonymously.
9) The “Buy American” policy is equivalent to a(n):
A.Tariff
B.Quota
C.Export subsidy
D.Voluntary export restriction
10) In 2012, which of the following sources of energy contributed the smallest share in
U.S. electricity generation?
A.Petroleum
B.Nuclear
C.Hydropower
D.Natural gas
11) The following table contains data for the U.S. balance of payments in a prior year.
Answer the question on the basis of this information. All figures are in billions of
dollars.
U.S. goods exports +$793
U.S. goods imports -1573
U.S. exports of service +280
U.S. imports of services -222
Net investment income +5
Net transfers -81
Capital account -5
Foreign purchases of assets in the U.S. +1198
U.S. purchases of foreign assets -395
Refer to the table above. There was a:
A.Trade deficit, but a current account surplus
B.Trade surplus, but a current account deficit
C.Trade surplus, and a current account surplus
D.Trade deficit, and a current account deficit
12) The Fed can induce banks to increase their reserve holdings by:
A.Increasing the discount rate
B.Reducing the required reserve ratio
C.Increasing the interest on reserves
D.Selling securities in the open market
13) If the interest rate is 10%, what is the present value of $25,000 received two years
from now?
A.$20,000
B.$20,661
C.$30,250
D.$30,000
14) Which of the following statements best reflects how a behavioral economist views
individual decision making?
A.Alex makes wrong decisions sometimes, but usually it is only when he has been
given bad information.
B.Kara carefully calculates and weighs the expected benefits and costs of every option
before making a decision.
C.Alicia may appear to care about others, but even her seemingly altruistic behaviors
are really about furthering her own interests.
D.Balin tries to make good, well-thought-out decisions, but his desire for utility in the
present means that he often gives in to costly temptations.
15) Which of the following is NOT a factor that increases short-run price stickiness?
A.Consumers tend to prefer stable prices
B.Stable prices make it easier for consumers to plan their spending
C.A firm can lower its price without fear that rival firms will also lower their prices
D.Firms try to avoid price wars
16) When loans are repaid at commercial banks:
A.Money is created
B.Money is destroyed
C.The assets of commercial banks increase
D.The net worth of commercial banks increases
17) Economic systems differ from one another based on who own the factors of
production and:
A.How much resources are available in the economy and where they are located
B.Who make decisions regarding what to produce and how it is produced
C.What kinds of products are produced in the economy and how plentiful they are
D.How big the population is, and the makeup of the population
18) Which of the following statements is correct?
A.Frictional unemployment is the result of friction between labor and management over
how best to perform work
B.Structural unemployment is unemployment resulting from changes in the structure of
consumer demand or technology
C.Cyclical unemployment is also called wait unemployment because this
unemployment depends on the timing of the business cycle
D.Search unemployment is the broadest unemployment category because it covers all
other types of unemployment
19) Describe the unemployment situation after the Great Recession.
20) What is the basic conclusion that is to be drawn from the chapter? On what two
facts is this conclusion based? What are the implications?
21) What is inverse dependency ratio? What does it mean for future worker
productivity?
22) Discuss how technology has transitioned music to a public good. How can the
music industry remain profitable?
23) D.
24) What effect does the increase of the price of corn have on the cost curves of a firm
producing items like corn-based cereal or tortillas?
25) What are some risk management techniques used by farmers to reduce the
uncertainty in farming?
26) D.
27) Differentiate between a normal (superior) and an inferior good.
28) If you know the marginal propensity to consume you can determine the marginal
propensity to save. How is that possible?