Exhibit 7-2
GDP in 1990 is
a. $49.
b. $51.
c. $86.
d. $92.
e. impossible to calculate without the CPI.
Use the information provided in Exhibit 11-4
What is the marginal tax rate on the 23,000th of dollar of taxable income earned?
a. 15%
b. 20%
c. 25%
d. 30%
e. There is not enough information provided to answer this question.
In a two-country world, a decrease in foreign input prices, ceteris paribus,
a. shifts the SRAS curve leftward, causing the price level to increase.
b. shifts the SRAS curve leftward, causing the price level to decrease.
c. shifts the SRAS curve rightward, causing the price level to increase.
d. shifts the SRAS curve rightward, causing the price level to decrease.
e. does not affect the SRAS curve or the price level.
Agriculture productivity has increased more rapidly in the U.S. than has nonagriculture
productivity.
a. True
b. False
Which of the following variables is capable of continually increasing aggregate demand
with no offsetting influence on any of the components of total spending?
a. the inflation rate
b. the interest rate
c. government spending
d. the money supply
e. the wage rate
Keynesian macroeconomists believe that the time it takes for falling wages and prices
to eliminate a recessionary gap is __________ enough to say that the economy is
__________.
a. long; not self-regulating
b. long; self-regulating
c. short; not self-regulating
d. short; self-regulating
When productivity increases in the production of agricultural products, the supply curve
for agricultural products shifts rightward.
a. True
b. False
Exhibit 32-1
The exhibit shows the breakdown of benefits and costs for a four-person town
considering the purchase of an additional $1,200 worth of books for the public library.If
simple majority voting determines the outcome, the books will
a. be purchased because more persons are for it than against it.
b. be purchased because the total benefits are greater than the total costs.
c. not be purchased even though total benefits exceed total costs.
d. not be purchased because the total costs are greater than the total benefits.
Which of the following would cause a rightward shift in the AD curve?
a. an increase in the price level
b. a decrease in the price level
c. an increase in imports
d. a decrease in the quantity of money available in the economy
e. an increase in government purchases of goods and services
When the Fed increases the required reserve ratio, a bank’s
a. excess reserves are unaffected.
b. excess reserves are increased.
c. excess reserves are decreased.
d. required reserves are decreased.
e. b and d
The change in disposable income is $200 and the change in saving is $50.What is the
marginal propensity to consume (MPC)?
a. 0.25
b. 0.50
c. 0.66
d. 0.75
e. There is not enough information to answer the question.
If you thought the share price of a stock was going to fall, would you be more likely to
buy a call option or a put option?
a. a call option
b. a put option
c. a call option and a put option
d. There is not enough information given to answer this question.
A line is parallel to the vertical axis. The slope of the line is
a. zero.
b. infinite.
c. indicative of an inverse relationship between two variables.
d. indicative of a direct relationship between two variables.
e. b and d
The more dollars that must be given up to buy one British pound, the __________
American goods are for the British and the __________ American goods the British
will buy; thus __________ dollars will be demanded.
a. more expensive; fewer, more
b. less expensive; more, more
c. more expensive; fewer, fewer
d. less expensive; fewer, more
e. none of the above
When we speak of the Fed’s responsibility to supervise member banks, we are saying
that the
a. Fed’s advisory board will help member banks manage their assets and liabilities.
b. Fed’s Open Market Committee will advise member banks regarding the purchase and
sale of government securities.
c. Fed’s Board of Governors will advise member banks regarding the appropriate
interest rates to be charged on various loans.
d. Fed will advise member banks regarding the nature of loans and compliance with
regulations.
e. Fed will advise member banks about the proper control of each individual bank’s
money supply.
Exhibit 8-1
Assume that the economy is originally in equilibrium at point A.If foreign real national
income rises, at which point is the economy most likely to end up in the short run?
a. A
b. B
c. C
d. D
e. A change in foreign real national income would have no impact on the domestic
economy.
Tobacco production is one of the more heavily subsidized industries in the United
States. Suppose that as a result of intense lobbying from health-related concerns,
Congress repeals the tobacco firms’ subsidies. Which of the following scenarios would
likely occur?
a. The tobacco firms’ supply curve would shift rightward, as it would now be cheaper to
produce each level of output.
b. The tobacco firms’ supply curve would shift leftward, since it would now cost more
to produce each level of output.
c. The tobacco firms would not experience any shift in their supply curves; subsidies
don’t affect output.
d. There would be a movement along the supply curve for tobacco, but the supply curve
would not shift.
If market interest rates increase, the prices of existing bonds will
a. decrease.
b. not change.
c. increase.
d. decrease if Real GDP decreases and increase if Real GDP increases.
According to Keynes, aggregate demand could be too low in an economy. What does
this mean?
a. It means there is not enough purchasing power in the economy to maintain stable
prices.
b. It means there are too many of some goods produced and too few of other goods
produced.
c. It means spending in the economy is too low to bring about full employment.
d. It means that wages may get stuck in a recessionary gap because there is not enough
demand (in the economy) to increase them.
e. none of the above
According to the classical economists, which of the following statements is false?
a. There is a direct relationship between the amount individuals save and the interest
rate.
b. There is a direct relationship between the amount business firms invest and the
interest rate.
c. As the interest rate rises, the quantity supplied of loanable funds rises.
d. Interest rate flexibility will ensure that saving is equal to investment.