Everything else equal, as increase in investment in physical and human capital will
mean lower living standards in the present, because the opportunity cost of investment
is foregone consumer goods.
Which of the following is not included in the M1 money stock?
a. money market funds
b. demand deposits
c. checking account deposits
d. travelers’ checks
e. cash in the hands of the public
If the quantity of money demanded exceeds the quantity of money supplied at a given
interest rate, what will happen to restore the market to equilibrium?
a. The public will try to buy bonds, the price of bonds will increase, and the interest rate
will fall until equilibrium is attained where the money demand and supply curves
intersect at the market interest rate.
b. The public will try to sell bonds, the price of bonds will decrease, and the interest rate
will rise until equilibrium is attained where the money demand and supply curves
intersect at the market interest rate.
c. The public will try to sell bonds, the price of bonds will increase, and the interest rate
will fall until equilibrium is attained where the money demand and supply curves
intersect.
d. The public will try to buy bonds, the price of bonds will increase, and the interest rate
will rise until equilibrium is attained where the money demand and supply curves
intersect.
e. The public will try to buy bonds, the price of bonds will decrease, and the interest
rate will fall until equilibrium is attained where the money demand and supply curves
intersect.
A corporation has been steadily losing money on one of its product lines. The factory
used to produce that brand cost $20 million to build. The firm now is considering an
offer to buy that factory for $15 million. Which of the following statements about the
decision to sell or not is correct?
Refer to Figure 17-1. Assume the equilibrium exchange rate is $0.008 per yen at point
A. If U.S. consumers decide to purchase more automobiles from Japan, then
a. nothing will happen
b. the supply curve will shift to S’ and the demand curve will shift to D’
c. the supply curve will shift to S’
d. the demand curve will shift to D’
e. exchange rate will return to $0.008 as soon as the market adjusts.
If some of unemployed individuals became discouraged workers, which of the
following would result?
a. The labor force would decrease and the unemployment rate would decrease.
b. The labor force would decrease and the unemployment rate would remain the same.
c. The labor force would increase and the unemployment rate would decrease.
d. The labor force would decrease and the unemployment rate would increase.
e. The labor force would increase and the unemployment rate would remain the same.
What is the relationship between the government’s budget deficit and its tax revenue?
a. Budget deficit = government spending + tax revenue
b. Budget deficit = government spending – tax revenue
c. Government spending = budget deficit / tax revenue
d. Tax revenue = government spending + budget deficit
e. Budget deficit = tax revenue – government spending
A monopoly is a
Which of the following is a stock variable?
a. Saving
b. Consumption
c. Income
d. Investment
e. Money
In a foreign exchange market, one country’s currency is exchanged for another’s.
A payment that is periodically adjusted in proportion to a price index such as the CPI is
known as a(n)
a. unionized payment.
b. indexed payment.
c. scaled payment.
d. inflated payment.
e. adjusted payment.
A firm’s explicit costs are
If Bill Gates voluntarily gives some of his money to a destitute family, it would be a
Pareto improvement.
Suppose that a large dairy farmer is able to raise the market price of milk by
withholding milk supply from the market. In this instance,
Although economists use different methods to calculate GDP, each method should lead
to the same number for GDP.
The automobile market is an example of a perfectly competitive market.
Which of the following factors would be considered by a fundamental analyst when
predicting a firm’s stock price?
If the demand for a good is price inelastic, a decrease in total revenue from the good
would result from a(n)
The characteristics that create a vicious cycle of poverty in less developed countries are
a. low levels of current production and a declining population
b. stagnant production, poor infrastructure, and a declining population
c. low current output per capita, high population growth rates, and poor infrastructure
d. inefficient governments, low current production, and low tax rates
e. political instability and low population growth
Which of the following is a reason why a bank may hold excess reserves?
a. It earns more interest on reserves than on loans.
b. It is required to do so.
c. It may want flexibility to increase its loans if interest rates rise in the near future.
d. Banks often expect a drop in the required reserve ratio.
e. Banks often expect a rise in the required reserve ratio.