If the Federal Reserve targets the interest rate and the money demand curve shifts to the
left, then the Fed
A) cannot maintain the interest rate target.
B) can maintain the interest rate target, but at a lower quantity of the money supply.
C) can maintain the interest rate target, but at a higher quantity of the money supply.
D) can maintain the interest rate target with no change in the money supply.
Specializing in the production of a good or service in which one has a comparative
advantage enables a country to do which of the following?
A) never have to engage in trade with other nations
B) increase the variety of products that it can produce with a decrease in resources
C) consume a combination of goods that lies outside its own production possibilities
frontier
D) produce a combination of goods that lies outside its own production possibilities
frontier
Which of the following statements about the underground economy is true?
A) The underground economy in developing countries amounts to less than 10% of
measured GDP.
B) Most transactions that occur in the underground economy are included in the
calculation of GDP.
C) Excluding underground economy production from measured GDP causes errors in
GDP growth estimates in the long run.
D) Income that is earned but not reported as income for tax purposes is included in the
calculation of GDP.
Jake sells Star Wars memorabilia on eBay. His annual revenue is $42,000 per year, and
the explicit costs of his business are $10,000. What is his accounting profit?
A) $10,000
B) $22,000
C) $32,000
D) $42,000
Which of the following describes the Soviet Union’s economy through most of the
second half of the 20th century?
A) The Soviet economy grew rapidly in the later half of the 20th century.
B) The Soviet economy increased capital per worker very slowly from 1950 through
1980.
C) The Soviet economy grew slowly because of the slow rate of technological change.
D) The Soviet economy grew because it added labor through immigration policy in the
1950s.
Cassie’s Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent
$800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell
for $1,500 once she is finished. After having spent $800, Cassie discovers that she
would need some special period fabric that would cost her $200 in material and time in
order to complete the task. Alternatively, she can sell the quilt “as is” now for $900.
What is her marginal benefit if she sells the quilt “as is” now?
A) $100
B) $900
C) She makes a marginal loss of $600, not a marginal benefit.
D) The marginal benefit cannot be determined.
Table 8-30
Refer to Table 8-30. Based on the table above, what is personal income for this
economy?
A) $1,950 billion
B) $2,250 billion
C) $2,450 billion
D) $5,130 billion
The simple deposit multiplier is the ratio of the amount of
A) new reserves created by the banks to the amount of deposits.
B) new reserves created by the banks to the amount of loans.
C) deposits created by the banks to the amount of new reserves.
D) loans issued by the banks to deposits created by the banks.
Expansionary monetary policy to prevent real GDP from falling below potential real
GDP would cause the inflation rate to be ________ and real GDP to be ________.
A) higher; higher
B) higher; lower
C) lower; higher
D) lower; lower
Monetary policy has a ________ effect on aggregate demand in a(n) ________
economy, and fiscal policy has a ________ effect on aggregate demand in a(n)
________ economy.
A) weaker; open; weaker; open
B) weaker; closed; weaker; closed
C) stronger; open; weaker; open
D) stronger; closed; weaker; open
A monetary policy target is a variable that
A) the Fed can affect directly.
B) equals one of the Fed’s main policy goals.
C) the Fed has no ability to change.
D) the Fed cannot affect directly.
Table 4-1
Refer to Table 4-1. The table above lists the highest prices three consumers, Curly,
Moe, and Larry, are willing to pay for a bottle of champagne. If the price of the
champagne falls from $24 to $14
A) consumer surplus increases from $32 to $53.
B) Curly will buy four bottles; Moe will buy two bottles, and Larry will buy one bottle.
C) consumer surplus will increase from $80 to $95.
D) Larry and Moe will receive more consumer surplus than Curly.
Table 7-1
Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where
they had to find and make their own food. Rob and Bill spent one day each fishing and
picking berries. The table lists the pounds of output Rob and Bill produced.
Refer to Table 7-1. Use the table above to select the statement that accurately interprets
the data in the table.
A) Bill has a comparative advantage in catching fish.
B) Rob has a comparative advantage in picking berries.
C) Rob has a comparative advantage in catching fish and picking berries.
D) Bill has a comparative advantage in picking berries.
When net capital flows are negative,
A) capital inflows are less than capital outflows.
B) net foreign investment is negative.
C) capital outflows are less than capital inflows.
D) A and B are both correct.
If prices are rising on average, then
A) real GDP will always be equal to nominal GDP.
B) real GDP will be greater than nominal GDP in the years after the base year.
C) real GDP will be less than nominal GDP in the years before the base year.
D) real GDP will be greater than nominal GDP in the years before the base year.
If Californians increase their purchases of Italian wine, assuming all else remains
constant, this will ________ of the United States.
A) decrease the balance of trade
B) increase net exports
C) increase the current account balance
D) decrease the trade deficit
E) decrease the balance of payments
The long-run aggregate supply curve is ________, while the long-run Phillips curve is
________.
A) positively sloped; negatively sloped
B) vertical; negatively sloped
C) vertical; also vertical
D) positively sloped; positively sloped
The provision of the Patient Protection and Affordable Care Act (ACA) Insurance
companies are required to participate in a high-risk pool that will insure individuals
with pre-existing medical conditions who have been unable to buy health insurance for
at least six months is the ________ provision.
A) employer mandate
B) state health exchanges
C) individual mandate
D) regulation of health insurance