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If the current Real GDP is less than Natural Real GDP, then the economy is
a. in long-run equilibrium.
b. in a recessionary gap.
c. in an inflationary gap.
d. possibly in short-run equilibrium.
e. b and d
When consumers start to spend less and save more, classical macroeconomists believe
that interest rates will then ______________ resulting in a(n) ________________ in
investment.
a. rise; increase
b. fall; increase
c. fall; decrease
d. rise; decrease
On a supply-and-demand diagram, quantity demanded equals quantity supplied
a. only at the single equilibrium price.
b. at every price at or above the equilibrium price.
c. at every price at or below the equilibrium price.
d. at every price.
According to Friedman, in which of the following situations is the economy in long-run
equilibrium?
a. The average inflation rate over the past five years is 2 percent and the expected
inflation rate is 2 percent.
b. The expected economic growth rate is 3 percent and the actual inflation rate is 3
percent.
c. The expected economic growth rate is 2 percent and the expected inflation rate is 2
percent.
d. The expected inflation rate is 3 percent and the actual inflation rate is 3 percent.
Exhibit 39-1
Given the target price PT, the total deficiency payment made by the government is the
area of
a. 0P1CQ2.
b. 0PTBQ2.
c. PTBCP1.
d. PTBEP2.
There is evidence that __________ were the main lobbyists behind passage of the
Factory Acts which put restrictions on women and children working in early 19th
century England.
a. male workers
b. female workers
c. child-care advocates
d. factory owners
If there is freeway congestion at 8 a.m., we can reduce (or eliminate) the congestion by
a. building more freeways.
b. raising the price to drive on the freeway at 8 a.m.
c. encouraging workers to carpool..
d. a and b
e. a, b,and c
Economist B says all of the following: Expansionary fiscal policy is needed to raise
aggregate demand and remove the economy from a recessionary gap.The choice of
fiscal policy measures is between more government spending and a ___________ in
taxes.Since I am in favor of smaller government, I choose a __________________ in
__________________.
a. rise; decrease; government spending
b. rise; cut; taxes
c. decrease; rise; government spending
d. decrease; cut; taxes
e. none of the above
One of the arguments in favor of trade restrictions is the foreign export subsidies
argument.
a. True
b. False
Resource X is necessary to the production of good Y. If the price of resource X rises,
a. the supply curve of Y shifts leftward.
b. the supply curve of Y shifts rightward.
c. the supply curve of Y is unaffected.
d. there is a movement down the supply curve of Y.
e. there is a movement up the supply curve of Y.
Last year, Leah bought a bond for $1,000 that promises to pay $105 a year. This year, a
person who buys a bond for $1,000 receives $95 a year. If Leah were to sell her (old)
bond, its price would be approximately
a. $818.
b. $846.
c. $905.
d. $1,105.
e. $1,273.
Exhibit 5-2
If the tuition is set at $40, there will need
to be some kind of non-price rationing device used for
a. 8 a.m. classes.
b. 10 a.m. classes.
c. a and b
d. none of the above
The larger a percentage of the population a person is, the ______________ likely that
person will have to further engage with people she meets.This implies that she will
generally be ____________ likely to behave unethically and poorly with the people in
her town as the population of her town increases.
a. more; less
b. less; less
c. more; more
d. less; more
Special interest groups
a. often gain from public policies that may not be in accord with the interests of the
general public.
b. never gain from public policies that are not in accord with the interests of the general
public.
c. always gain from public policies that are not in accord with the interests of the
general public.
d. never lobby for public policies that are not in accord with the interests of the general
public.
e. always lobby for public policies that are not in accord with the interests of the general
public.
In a self-regulating economy, inflationary and recessionary gaps
a. never occur.
b. are eliminated by forces internal to the economy, without government intervention.
c. are eliminated by timely actions of government policymakers.
d. are the desirable results of microeconomic price adjustments.
