M1 refers to:
a. Federal Reserve Notes and gold certificates.
b. Currency held by the public plus checking account balances.
c. The largest of the money-supply definitions.
d. None of these.
Demand-pull inflation is associated with:
a. decreasing total spending (demand).
b. increasing total spending (demand).
c. decreasing costs of production (supply).
d. increasing costs of production (supply).
In the presence of positive externalities, a free market will choose a price which is too
____ and produce an output which is too ____ compared with the social optimum.
a. high; low
b. low; low
c. high; high
d. low; high
e. marginal; inequitable
When OPEC caused the price of oil to rise in the early 1970s, the:
a. aggregate supply curve shifted to the right.
b. aggregate supply curve shifted to the left.
c. aggregate demand curve shifted to the right.
d. aggregate demand curve shifted to the left.
e. price level in the economy fell.
Suppose that X and Y are complementary goods. If the price of good X decreases, we
can expect the:
a. demand for good X to increase.
b. quantity demanded of good Y to decrease.
c. quantity demanded of good Y to increase.
d. demand for good Y to decrease.
e. demand for good Y to increase.
If market supply decreases and, simultaneously, market demand increases, the new
equilibrium will show:
a. market price will decrease, and market quantity exchanged will increase.
b. market price will increase, and market quantity exchanged will decrease.
c. market price will increase, and the quantity exchanged could increase, decrease, or
remain the same.
d. market price could increase, decrease, or remain the same, and quantity exchanged
will increase.
e. market price will increase, decrease, or remain the same, and quantity exchanged will
decrease.
The consumption function has a slope less than one because:
a. as disposable income increases, the real rate of interest will decline.
b. saving and consumption are equal at all levels of income.
c. as disposable income increases, consumption expenditures increase by an amount
less than the increase in income.
d. as disposable income increases, consumption expenditures increase by an amount
greater than the increase in income.
The largest component of the M1 definition of the money supply is:
a. traveler’s checks.
b. savings accounts.
c. money market accounts.
d. checkable deposits
An outward shift of an economy’s production possibilities curve is caused by:
a. an increase in capital.
b. an increase in labor.
c. an advance in technology.
d. all of these.
A price floor that sets the price of a good above market equilibrium will cause:
a. a decrease in quantity demanded of the good.
b. an increase in quantity supplied of the good.
c. a surplus of the good.
d. all of these.
The Consumer Price Index compares the:
a. prices of all goods and services in the economy compared to the prices of those goods
and services in a base year.
b. prices of consumer goods and services that a household purchases to the prices of
those goods and services purchased in a base year.
c. prices of producer goods and services that are made for consumers to the prices of
those goods and services in a base year.
d. prices of goods and services that are purchased by producers to the prices of those
goods and services in a base year.
e. prices of goods and services that are purchased by consumer manufacturers to the
prices of those goods and services in a base year.
Who is recognized as the founder of public choice theory?
a. James Buchanan.
b. Steve Forbes.
c. Joseph Pechman.
d. Adam Smith.
Louise is unemployed due to a decrease in the demand for workers with a knowledge of
a certain word processing language. This is an example of:
a. cyclical unemployment.
b. frictional unemployment.
c. involuntary unemployment.
d. structural unemployment.
Which of the following falls when bond prices rise?
a. Stock prices.
b. Interest rates.
c. Money demand.
d. Money supply.
In economics, the demand for a good refers to the amount of the good people:
a. would like to have if the good were free.
b. are willing to buy at various prices.
c. need to achieve a minimum standard of living.
d. will buy at alternative income levels.
An increase in demand:
a. results in a leftward shift of the demand curve.
b. could be caused by a decrease in the price of the good.
c. could be caused by an increase in the price of a substitute good.
d. is shown as movement down along a demand curve.
Exhibit 8-10 Consumption function
In Exhibit 8-10, the level of autonomous consumption for C’ is:
a. $50.
b. $100.
c. $150.
d. $200.
e. $0.
Exhibit 3-2 Demand curves
In Exhibit 3-2, which of the following
could not have caused the shift in the demand curve from D1 to D2?
a. Decrease in the number of consumers.
b. Increase in expected future prices.
c. Increase in the price of a substitute.
d. Decrease in the price of a complement.
e. Increase in income.