Minimum wage laws are examples of:
A) price ceilings.
B) equilibrium prices.
C) price floors.
D) minimum supply prices.
During the Kennedy Era, the tax cut implemented resulted in:
A) stimulating economic growth.
B) facilitating a recession.
C) driving the economy deeper into a depression.
D) pushed the economy into stagflation.
________ is the situation where the central bank buys or sells foreign currencies to
affect the country’s exchange rate.
A) Foreign exchange market intervention
B) Capital flight
C) Expansionary monetary policy
D) Revaluation
Inflation in the long run is positively correlated with:
A) nominal wages and nominal interest rates.
B) neither nominal wages nor nominal interest rates.
C) nominal wage growth, but not nominal interest rates.
D) nominal interest rates, but not nominal wages.
Suppose that between 1960 and 2010, Mexico, Pakistan and Zambia GNP per capita
grew by 4.5%, 1.5% and 1.0%, respectively. Using only the information presented,
which of the following countries have GNP per capita that is converging?
A) Mexico and Pakistan
B) Mexico and Zambia
C) Pakistan and Zambia
D) The question can not be answered using the information provided.
When an individual quits his/her job and decides to stay at home for a while and not
looking for work, the labor-force participation rate:
A) decreases.
B) increases.
C) stays the same.
D) may increase or decrease, depending on the length of time he/she stays at home.
Assume that the consumption function is C = 200 + 0.8Y. The marginal propensity to
consume is:
A) 0.9.
B) 0.2.
C) 0.8.
D) 1.0.
Additional Application NEETS ARE THE NEW DISCOURAGED WORKERS IN
JAPAN
Who are the new discouraged workers in Japan?
In Japan, there is growing concern about young people who are not joining the labor
force. Young workers who have given up looking for work and often receive support
from their parents are known as NEETs—“not in education, employment, or training.”
Because Japan has an aging population and does not encourage immigration, it is
concerned about labor shortages and has focused attention on the NEETs. Many in
Japan are concerned over this phenomenon because it potentially signals a change in the
strong Japanese work ethic. However, the number of individuals in this category is quite
small, only 2 percent of Japan’s 33 million young people between the ages of 15 and 34.
Nonetheless, the fact that the Japanese decided to name this group suggests that it is
socially significant to them. In the United States, individuals not seeking work and
supported by their parents would be out of the labor force and possibly marginally
attached workers. SOURCE: Ginny Parker Woods, “In Aging Japan, Young Slackers
Stir Up Concerns” Wall Street Journal, December 29,
2005, p. A1.
Labor shortages in Japan increased focus on the NEETs. This labor shortage is caused
by:
A) an aging population.
B) a recession.
C) a strong work ethic.
D) a population boom.
Individual income tax is the ________ single component of federal revenue.
A) largest
B) second largest
C) smallest
D) least important
When Tom’s income decreases, he purchases more hamburgers. We can conclude that
for Tom, hamburger is a(n) ________ good.
A) substitute
B) complementary
C) normal
D) inferior
A $100 million increase in government spending causes:
A) an equal amount of change in equilibrium output in an open and a closed economy.
B) a larger change in equilibrium output in an open economy than in a closed economy.
C) a larger change in equilibrium output in a closed economy than in an open economy.
D) a larger change in equilibrium output in a closed economy than in an open economy
if the marginal propensity to import is zero.
The single largest expenditure component in GDP is:
A) government purchases.
B) private investment expenditures.
C) consumption expenditures.
D) net exports.
If the inflation rate is 3 percent and the real interest rate is 5 percent, then the nominal
interest rate is:
A) 2 percent.
B) 10 percent.
C) 4 percent.
D) 8 percent.
Suppose the public expects a 7 percent inflation rate, and both the money supply and
money demand grow at 7 percent a year. The Federal Reserve decides to keep the
money growth rate at 7 percent. In the short run, we expect that
A) real interest rates will remain constant.
B) real interest rates may increase or decrease.
C) real interest rates will decrease.
D) real interest rates will increase.
Table 11.6 Refer to Table 11.6. In this example, the government
spending multiplier is:
A) 2.
B) -2.
C) 0.5.
D) 1.
When we calculate the percent change in the real GDP between 2008 and 2009, we:
A) subtract 2008 real GDP from 2009 real GDP, and express the difference as a
proportion of 2008 real GDP.
B) subtract 2008 real GDP from 2009 real GDP.
C) divide 2008 real GDP with 2009 real GDP.
D) take the average of 2008 and 2009 real GDP.
You borrow money to buy a house in 2006 at a variable interest rate of 6.5%. Your
interest rate is always 2% more than the rate of inflation. By 2009, the inflation rate has
risen to 8.5%. Considering only your mortgage, is inflation good news or bad news for
you?
A) bad news, because inflation hurts everyone
B) good news, because it makes the real value of your mortgage payments decrease
C) bad news, because it makes the nominal value of your mortgage payments increase
D) neither, because your interest rate is tied to the rate of inflation
Recall the Application about the Fed increasing bank reserves during the financial crisis
in 2008 to answer the following question(s). During the height of the financial crisis in
September 2008, The Fed injected large amounts of reserves into banks, and in the next
month, they started paying interest to banks on these reserves. Prior to this time, banks
earned no interest on either required or excess reserves.
According to this Application, the Fed injected large amounts of reserves into banks
during the 2008 financial crisis. The Fed needs to make sure that, in the long run, banks
do not loan out too many of these reserves or the result will be
A) higher inflation.
B) higher interest rates.
C) additional unemployment.
D) a smaller money multiplier.
As interest rates fall, the
A) price of bonds rises.
B) price of bonds falls.
C) face values of bonds fall.
D) promised payments of bonds fall.
In the Employment Act of 1946, the federal government was broadly charged to:
A) pursue maximum employment, production and purchasing power.
B) achieve zero unemployment.
C) encourage all citizens to get a job.
D) maximize income and government revenue.