Economists will always reach the same conclusion in their positive analyses.
The inside lags for monetary policy are relatively long compared to those for fiscal
policy.
If one variable A falls as the other variable B falls, then a line generated by putting
variable A on the x-axis and variable B on the y-axis should be upward sloping.
Ceteris paribus is the same as rise / run.
An increase in taxes shifts aggregate demand to the left.
If a market is in equilibrium, there is not any pressure to change the price upward or
downward. Is this a true or false assumption?
There are 12 members of the FOMC.
If the cost of producing a product goes down, this will cause the equilibrium price of
the product to go down and the equilibrium quantity of the product to go up.
The GDP deflator measures how prices change over time.
An increase in the velocity of money can cause an increase in real GDP.
In a traditional gold standard, an individual can present money to the government and
receive its stated value in gold.
In order for the classical economic model to work, prices and wages must be fully
flexible.
Capital gains are the profits earned by investors from the sale of stocks, bonds, real
estate, or other assets.
There is little evidence to support the view that political parties have different goals and
preferences.
Table 3.2
Consider two individuals, Rose and Sharon, who produce fish and coconuts. Rose and
Sharon’s hourly productivity are shown in Table 3.2. Sharon’s opportunity cost of
producing 1 fish is:
A) 3/4 coconut.
B) 1 1/3 coconuts.
C) 3 coconuts.
D) 4 coconuts.
Table 11.1
Refer to Table 11.1. What is the equilibrium level of output, y*?
A) 1,775
B) 2,375
C) 7,100
D) 9,500
Recall the Application about the use of fertilizer and its impact on crop yields to
answer the following question(s). The table is taken from this Application. Fertilizer
and Corn Yield
Refer to the table above. After applying the second bag of fertilizer, the farmer
experienced
A) increasing returns.
B) diminishing returns.
C) constant returns.
D) negative returns.
In 1929-1933, the U.S. real GDP contracted by more than:
A) 65 percent.
B) 33 percent.
C) 50 percent.
D) 90 percent.
Double taxation of corporate profits, first through the corporate tax on profits and later
through the personal income tax on dividends, is likely to lead to:
A) additional issues of stock shares, instead of additional issues of bonds.
B) larger capital gains, if the corporations pay dividends.
C) less efficient investments, but more lightly taxed ones.
D) smaller capital inflows into real estate investment.
Recall the Application about the impact that home equity values have on consumer
spending and wealth to answer the following question(s). From 1997 to mid-2006,
housing prices rose nationally by approximately 90 percent and consumer wealth
increased by $6.5 trillion, but in the summer of 2006, housing prices began to fall.
Home equity is the single largest component of net wealth for most families in the
United States, and changes in the value of home equity affect consumer spending.
According to this Application, studies estimated that a decrease of consumer wealth of
$1 would ________ consumption spending by somewhere between ________.
A) lower; $0.02 and $0.07
B) raise; $0.21 and $0.72
C) lower; $0.21 and $0.72
D) raise; $0.10 and $0.50
Of the 4 components of GDP, which one is most volatile?
A) investment expenditures
B) consumption expenditures
C) net exports
D) government purchases
Recall Application 4, “Intangible Capital,” to answer the following questions:
Based on the information presented in the Application, which of the following correctly
ranks the factors that affects economic growth from greatest to least?
A) intangible capital; tangible capital; technological progress
B) tangible capital; technological progress; intangible capital
C) technological progress; intangible capital; tangible capital
D) intangible capital; technological progress; tangible capital
Entrepreneurs play a key role in which type of economy?
A) centrally planned economy
B) market economy
C) command economy
D) all of the above
The saying that “There is no such thing as a free lunch” refers to:
A) the principle of reality in a modern world.
B) the price of fast food in today’s economy.
C) the principle of diminishing returns.
D) the principle of opportunity cost.
Table 6.1
Refer to Table 6.1. The labor force equals:
A) 14,000.
B) 16,000.
C) 13,500.
D) 16,500.
Using aggregate demand and aggregate supply curves, graphically illustrate the effect
of an increase in government spending on the price level and equilibrium level of
output in the long run. Assume that the economy is initially in long-run equilibrium at
full employment.
Explain how the multiplier process works if there is an increase in investment spending.
As the marginal propensity to consume increases, what happens to the size of the
multiplier? Why?
Give an example of income in the United States that is taxed twice.
Identify three key factors that can cause a shift in the aggregate demand curve.
Explain how an economy can grow without an increases in the labor force and the stock
of capital.
Consider two individuals, Phil and Oprah, who produce toy trucks and flowers. Phil and
Oprah’s hourly productivity are as follows:
Who has the absolute advantage or comparative advantage in the production of flowers
or trucks?