Table 26-2
RefertoTable26-2.Which company had the highest dollar dividend per share?
a. Boeing Co.
b. Eli Lilly and Co.
c. Kraft Foods Group
d. Kellogg Co.
When the money market is drawn with the value of money on the vertical axis, if the
Federal Reserve buys bonds, then the money supply curve
a. shifts rightward, causing the value of money measured in terms of goods and services
to rise.
b. shifts rightward, causing the value of money measured in terms of goods and services
to fall.
c. shifts leftward, causing the value of money measured in terms of goods and services
to rise.
d. shifts leftward, causing the value of money measured in terms of goods and services
to fall.
The equation: quantity of output supplied = natural rate of output + a(actual price level
– expected price level), where
ais a positive number, represents
a. an upward-sloping short-run aggregate supply curve
b. a vertical short-run aggregate supply curve
c. a downward-sloping aggregate demand curve
d. None of the above is correct.
During a recession the economy experiences
a. rising income and unemployment.
b. rising income and falling unemployment.
c. falling income and rising unemployment.
d. falling income and unemployment.
According to the loanable funds model, which of the following events would result in
higher interest rates and greater saving?
a. Firms become pessimistic about the future and, as a result, they cut back on their
plans to buy new equipment and build new factories.
b. The government goes from running a budget deficit to running a budget surplus.
c. Congress passes a reform of the tax laws that encourages greater saving.
d. Congress passes a reform of the tax laws that encourages greater investment.
In the open-economy macroeconomic model, if the supply of loanable funds shifts
right, then
a. net capital outflow increases so the demand for dollars in the market for
foreign-currency exchange shifts right.
b. net capital outflow increases so the supply of dollars in the market for
foreign-currency exchange shifts right.
c. net capital outflow decreases so the demand for dollars in the market for
foreign-currency exchange shifts left.
d. net capital outflow decreases so the supply of dollars in the market for
foreign-currency exchange shifts right.
Table 24-4
The table below pertains to Studious, an economy in which the typical consumer’s
basket consists of 5 books and 10 calculators.
RefertoTable24-4.The cost of the basket
a. increased by $8 from 2012 to 2013.
b. increased by $41 from 2012 to 2013.
c. increased by $50 from 2012 to 2013.
d. increased by $60 from 2012 to 2013.
Assume a market is perfectly competitive. When a new producer enters the market, the
a. price in the market increases.
b. price in the market decreases.
c. price in the market does not change.
d. market is no longer a competitive market.
Suppose over the last five years that the price of recycled aluminum increased from
$800 a ton to $900 a ton. Over the same time a measure of the overall price level
increased from 120 to 138. The real price of recycled aluminum
a. increased, so it became scarcer
b. increased, so it became less scarce
c. decreased, so it became scarcer
d. decreased, so it became less scarce
Over the past 80 years, prices in the U.S. have risen on average about
a. 2 percent per year.
b. 4 percent per year.
c. 3.6 percent per year.
d. 6 percent per year.
U.S. GDP excludes the production of most illegal goods.
a. True
b. False
The slope of a line that passes through the points (5, 8) and (12, 12) is
a. -7/4.
b. -4/7.
c. 4/7.
d. 7/4.
First National Bank (FNB) has a reserve ratio of 20 percent, a required reserve ratio of
10 percent, and deposits of $1,000. If FNB receives an additional deposit of $100,
a. then it has required reserves of $210 and holds excess reserves of $10.
b. then it has required reserves of $10 and holds excess reserves of $20.
c. then it has required reserves of $110 and holds excess reserves of $190.
d. then it has required reserves of $110 and holds excess reserves of $0.
Other things the same,if the U.S. price level rises, then
a. the supply of dollars in the market for foreign-currency exchange increases, so the
exchange rate rises.
b. the supply of dollars in the market for foreign-currency exchange increases, so the
exchange rate falls.
c. the supply of dollars in the market for foreign-currency exchange decreases, so the
exchange rate rises.
d. the supply of dollars in the market for foreign-currency exchange decreases, so the
exchange rate falls.
Which of the following is generally an opportunity cost of investment in human capital?
a. future job security
b. forgone present wages
c. increased earning potential
d. All of the above are correct.
In which of the following cases does the aggregate-demand curve shift to the right?
a. The price level rises, causing the interest rate to fall.
b. The price level falls, causing the interest rate to fall.
c. The money supply increases, causing the interest rate to fall.
d. The money supply decreases, causing the interest rate to fall.
Derek decides to forego a major appliance purchase and save the money. He transfers
$2,100 from his checking account to his money market mutual fund. As a result of this
transfer,
a. both M1 and M2 decrease by $2,100.
b. M1 increases by $2,100 and M2 increases by $2,100.
c. M1 decreases by $2,100 and M2 increases by $2,100.
d. M1 decreases by $2,100 and M2 stays the same.
When the money market is drawn with the value of money on the vertical axis, as the
price level decreases, the value of money
a. increases, so the quantity of money demanded increases.
b. increases, so the quantity of money demanded decreases.
c. decreases, so the quantity of money demanded decreases.
d. decreases, so the quantity of money demanded increases.
The nominal interest rate is 6 percent and the inflation rate is 3 percent. What is the real
interest rate?
a. 9 percent
b. 2 percent
c. 18 percent
d. 3 percent
In fiscal year 1997, the U.S. government ran a deficit of about $21.9 billion. In fiscal
year 1998, the government ran a surplus of about $69.3 billion. Other things the same,
we would expect this change
a. decreased interest rates and investment.
b. decreased interest rates and increased investment.
c. increased interest rates and investment.
d. increased interest rates and decreased investment.
According to the efficient market hypothesis
a. changes in the prices of stocks are predictable. Evidence shows that managed funds
typically do better than indexed funds.
b. changes in the prices of stocks are predictable. Evidence shows that indexed funds
typically do better than managed funds.
c. changes in the prices of stocks are not predictable. Evidence shows that managed
funds typically do better than indexed funds.
d. changes in the prices of stocks are not predictable. Evidence shows that indexed
funds typically do better than managed funds.
If a study by medical researchers finds that eating brown rice causes weight loss while
eating white rice causes weight gain, then we likely would see
a. an increase in demand for brown rice and a decrease in demand for white rice.
b. a decrease in demand for brown rice and an increase in demand for white rice.
c. an increase in demand for both brown and white rice.
d. no change in demand for either type of rice because weight loss is not a determinant
of demand.
Market failure refers to a situation in which the market does not allocate resources
efficiently.
a. True
b. False
Figure 28-3
RefetoFigure28-3.If the government imposes a minimum wage of $4, then
employment will decrease by
a. 0 workers.
b. 2,000 workers.
c. 3,000 workers.
d. 4,000 workers.
For the purpose of calculating the consumer price index, the basket of goods
a. is kept the same from year to year so that the effects of price changes are isolated
from the effect of any quantity changes that might be occurring at the same time.
b. is kept the same from year to year; otherwise, the value of the index would remain
constant from year to year.
c. varies from year to year; otherwise, the value of the index would remain constant
from year to year.
d. varies from year to year so that consumers’ buying patterns are updated in a timely
fashion.
If Congress instituted an investment tax credit
a. it would make buying bonds more desirable, so the demand for loanable funds would
shift.
b. it would make buying capital goods more desirable, so the demand for loanable funds
would shift.
c. it would make buying bonds more desirable, so the supply of loanable funds would
shift.
d. it would make buying capital goods more desirable, so the supply of loanable funds
would shift.
You are expecting to receive $3,500 at some time in the future. Which of the following
would unambiguously increase the present value of this future payment?
a. Interest rates rise and you get the payment sooner.
b. Interest rates rise and you have to wait longer for the payment.
c. Interest rates fall and you get the payment sooner.
d. Interest rates fall and you have to wait longer to get the payment.
Suppose the incomes of buyers in a market for a particular normal good decrease and
there is also a reduction in input prices. What would we expect to occur in this market?
a. Equilibrium price would decrease, but the impact on equilibrium quantity would be
ambiguous.
b. Equilibrium price would increase, but the impact on equilibrium quantity would be
ambiguous.
c. Equilibrium quantity would decrease, but the impact on equilibrium price would be
ambiguous.
d. Equilibrium quantity would increase, but the impact on equilibrium price would be
ambiguous.
Proponents and opponents of balanced-budget policies agree that the government debt
cannot continue to increase forever.
a. True
b. False
It is only among the least skilled and least experienced members of the labor force that
minimum-wage laws cause unemployment.
a. True
b. False