If an international currency speculator expects that country A will soon be forced to
devalue its currency, the speculator will
a. buy as much of that currency as possible.
b. sell all of his holdings of that currency.
c. not be concerned because the devaluation will affect only the domestic prices of
goods within country A’s borders, not international prices.
d. not be concerned because only a revaluation will affect his or her profits.
Exhibit 13-2
What word (up or down) should go in the place of blank (3) and blank (4), respectively?
a. up; up
b. up; down
c. down; up
d. down; down
Some economists believe that government bailouts privatize the benefits of doing
business and socialize the costs, leading to more companies needing to be bailed out.
a. True
b. False
Which of the following is consistent with the equation of exchange?
a. Total spending must equal the total sales revenues of business firms.
b. The money supply multiplied by velocity must equal GDP.
c. The money supply multiplied by velocity must equal the price level times Real GDP.
d. a and b
e. a, b and c
Suppose the price level in Germany falls, ceteris paribus.This _________________
United States net exports, ultimately shifting the United States AD curve
__________________.
a. stimulates; rightward
b. stimulates; leftward
c. depresses; rightward
d. depresses; leftward
According to rational expectations theory,
a. every day is a new day and yesterday’s occurrences have no bearing on today’s
decisions.
b. when making decisions a person will consider only information based on past
experience.
c. even though a person considers information related to future events as potentially
important for decision making, he realizes that such information is unreliable and
worthless.
d. past experience is a good guide for decision making, but so is information related to
possible future outcomes.
An agricultural price support is an example of a price ceiling.
a. True
b. False
Which of the following increases the quantity supplied of agricultural goods?
a. acreage allotments
b. assigning market quotas
c. agricultural price supports
d. a, b, and c
Each of the governors of the Federal Reserve System is appointed for a term of
__________ years. The Board of Governors is comprised of _____________ members
and the FOMC is comprised of __________ members.
a. 12; 7; 19
b. 14; 6; 22
c. 6; 5; 14
d. 14; 7; 12
e. 12; 6; 12
Suppose health-care reform X makes it unlawful for insurance companies to deny
insurance to persons with a preexisting disease.One unintended effect of this reform is
that some people
a. will buy more health insurance than they would have without reform X.
b. may wait until they have a particular disease before they buy health insurance.
c. will try to work longer hours, to earn more income, to pay for increasing health
insurance premiums.
d. a and c
e. none of the above
Those economists who believe that the economy is self-regulating argue that wages are
flexible, so they think that the economy can remove itself from a recessionary gap
without government intervention.
a. True
b. False
Exhibit 34-11
A tariff raises the price in the market from PW to PW + T. As a result, U.S. domestic
sales rise from __________.
a. Q1 to Q4
b. Q3 to Q2
c. Q1 to Q3
d. Q4 to Q2
e. Q3 to Q4
Exhibit 3-17
At a price of $20, the quantity demanded of good X is ____________ than the quantity
supplied of good X, and economists would use this information to predict that the price
of good X would soon ______________.This would push the price __________ the
equilibrium price.
a. greater; fall; toward
b. greater; rise; toward
c. less; fall; toward
d. less; rise; away from
e. less; fall; away from
Which of the following statements about a tariff and a quota is true?
a. With a tariff the government collects revenues, but not with a quota.
b. With a quota the quantity of imports falls, but not with a tariff.
c. With a tariff the domestic price of the good increases, but not with a quota.
d. With a quota the domestic production of the good increases, but not with a tariff.
e. all of the above
A decrease in the quantity of resources available causes a movement down along a
given PPF.
a. True
b. False
Which of the following is not a major responsibility of the Fed?
a. controlling the money supply
b. serving as the federal government’s banker
c. determining tax rates
d. acting as a lender of last resort
Total reserves are
a. equal to required reserves plus excess reserves.
b. equal to vault cash plus bank deposits at the Federal Reserve.
c. an asset to banks.
d. both b and c
e. all of the above
The answer is: “When the official price of a currency is lowered.” What is the question?
a. What is overvaluation?
b. What is revaluation?
c. What is appreciation?
d. What is depreciation?
e. none of the above
Exhibit 15-3
The economy is currently at point 7. If the economy self-regulates, it will end up at
point __________, whereas if contractionary monetary policy is effective, it will end up
at point __________.
a. 8; 6
b. 9; 6
c. 9; 5
d. 9; 3
e. 3; 9
Exhibit 2-1
The movement from point A to point B is a movement from
a. a productive efficient point to a productive inefficient point.
b. a point with more guns and less butter to a point with more butter and even
more guns.
c. a productive efficient point to another productive efficient point.
d. a productive inefficient point to a productive efficient point.