In the open-economy macroeconomic model, the supply of loanable funds comes from
a. national saving.
b. private saving.
c. domestic investment.
d. the sum of domestic investment and net capital outflow.
Which of the following is consistent with moving from a surplus to equilibrium in the
market for foreign currency exchange?
a. the exchange rate falls causing U.S. residents to import more
b. the exchange rate falls causing U.S. residents to import less
c. the exchange rate rises causing U.S. residents to import more
d. the exchange rate rises causing U.S. residents to import less
If a country has a positive net capital outflow, then
a. on net it is purchasing assets from abroad. This adds to its demand for domestically
generated loanable funds.
b. on net it is purchasing assets from abroad. This subtracts from its demand for
domestically generated loanable funds.
c. on net other countries are purchasing assets from it. This adds to its demand for
domestically generated loanable funds.
d. on net other countries are purchasing assets from it. This subtracts from its demand
for domestically generated loanable funds.
The French expression used by free-market advocates, which literally translates as
“allow them to do,” is
a. laissez-faire.
b. je ne sais pas.
c. si’l vous plait.
d. tête-à-tête.
When the price level rises more than expected, a firm with a sticky price will sell its
output at a price that is
a. less than it desires and increase its production.
b. less than it desires and decrease its production.
c. more than it desires and increase its production.
d. less than it desires and decrease its production.
Table 3-7
Assume that Japan and Korea can switch between producing cars and producing
airplanes at a constant rate.
Hours Needed
to Make 1 Quantity Produced
in 2400 Hours
Refer to Table 3-7. Japan should specialize in the production of
a. cars and import airplanes.
b. airplanes and import cars.
c. both goods and import neither good.
d. neither good and import both goods.
Which of the following is not an explanation for the existence of unemployment in the
long run?
a. it takes time for workers to search for the jobs that are best suited for them
b. minimum-wage laws
c. unions
d. the business cycle
Figure 6-20
Refer to Figure 6-20. The price paid by buyers after the tax is imposed is
a. $24.
b. $21.
c. $18.
d. $16.
Which of the following statements is true?
a. Productivity is calculated as hours worked divided by output produced.
b. Americans have a higher standard of living than Indonesians because American
workers are more productive than Indonesian workers.
c. Both A and B are correct.
d. None of the above are correct.
Figure 7-11
Refer to Figure 7-11. If the government imposes a price ceiling of $70 in this market,
then producer surplus will decrease by
a. $50.
b. $125.
c. $150.
d. $200.
Jenna is searching for a job that suits her tastes about where to live. Mary is looking for
a job that makes best use of her skills.
a. Jenna and Mary are both frictionally unemployed.
b. Jenna and Mary are both structurally unemployed.
c. Jenna is frictionally unemployed, and Mary is structurally unemployed.
d. Jenna is structurally unemployed, and Mary is frictionally unemployed.
Which of the following is not a result of rent control?
a. fewer new apartments offered for rent
b. less maintenance provided by landlords
c. bribery
d. higher quality housing
During some year a country had exports of $30 billion, imports of $40 billion, and
domestic investment of $60 billion. What was its saving during the year?
a. $70 billion
b. $50 billion
c. $10 billion
d. -$10 billion
According to the theory of liquidity preference, the money supply
a. and money demand are positively related to the interest rate.
b. and money demand are negatively related to the interest rate.
c. is negatively related to the interest rate while money demand is positively related to
the interest rate.
d. is independent of the interest rate, while money demand is negatively related to the
interest rate.
Net capital outflow is defined as the purchase of
a. foreign assets by domestic residents minus the purchase of domestic assets by foreign
residents.
b. foreign assets by domestic residents minus the purchase of foreign goods and
services by domestic residents.
c. domestic assets by foreign residents minus the purchase of domestic goods and
services by foreign residents.
d. domestic assets by foreign residents minus the purchase of foreign assets by domestic
residents.
An increase in the budget deficit would cause a
a. shortage of loanable funds at the original interest rate, which would lead to falling
interest rates.
b. surplus of loanable funds at the original interest rate, which would lead to rising
interest rates.
c. shortage of loanable funds at the original interest rate, which would lead to rising
interest rates.
d. surplus of loanable funds at the original interest rate, which would lead to falling
interest rates.
Which of the following would be included as investment in the GDP accounts?
a. the government buys goods from another country
b. someone buys stock in an American company
c. a firm increases its capital stock
d. All of the above are correct.
Table 10-6
The table below contains data for the country of Batterland, which produces only
waffles and pancakes. The base year is 2009.
Prices and Quantities
Refer to Table 10-6. In 2008, this country’s nominal GDP was
a. $300.
b. $390.
c. $400.
d. $540.
Figure 22-3. The left-hand graph shows a short-run aggregate-supply (SRAS) curve
and two aggregate-demand (AD) curves. On the left-hand diagram, Y represents output
and on the right-hand diagram, U represents the unemployment rate.
Refer to Figure 22-3. Assume the figure charts possible outcomes for the year 2018. In
2018, the economy is at point A on the left-hand graph, which corresponds to point A on
the right-hand graph. The price level in the year 2017 was
a. 144.
b. 150.
c. 152.
d. 156.
If the United States threatens to impose a tariff on Honduran blueberries if Honduras
does not remove agricultural subsidies, the United States will be
a. better off no matter how Honduras responds.
b. better off if Honduras gives in, and will be no worse off if it doesn’t.
c. worse off if Honduras doesn’t give in to the threat.
d. worse off no matter how Honduras responds.
Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef
at a constant rate.
Minutes Needed to Make 1
Refer to Table 3-1. What is Zardia’s opportunity cost of producing one pound of beef?
a. 2/3 bushel of wheat
b. 3/4 bushel of wheat
c. 5/6 bushel of wheat
d. 3/2 bushels of wheat
Once the demand curve for a product or service is drawn, it
a. remains stable over time.
b. can shift either rightward or leftward.
c. is possible to move along the curve, but the curve will not shift.
d. tends to become steeper over time.
Holding all other forces constant, when the price of gasoline rises, the number of
gallons of gasoline demanded would fall substantially over a ten-year period because
a. buyers tend to be much less sensitive to a change in price when given more time to
react.
b. buyers tend to be much more sensitive to a change in price when given more time to
react.
c. buyers will have substantially more real income over a ten-year period.
d. the quantity supplied of gasoline increases very little in response to an increase in the
price of gasoline.
Which of the following will cause a decrease in producer surplus?
a. the imposition of a binding price ceiling in the market
b. an increase in the number of buyers of the good
c. income increases and buyers consider the good to be normal
d. the price of a complement decreases
According to purchasing power parity, if over the course of a year the price level in the
U.S. rises more than in Canada, then which of the following rises?
a. the U.S. real exchange rate, but not the U.S. nominal exchange rate
b. the U.S. nominal exchange rate, but not the U.S. real exchange rate
c. the U.S. nominal exchange rate and the U.S. real exchange rate
d. neither the real exchange rate nor the nominal exchange rate
Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the
same, these sales
a. increase U.S. net exports and has no effect on Mexican net exports.
b. increase U.S. net exports and decrease Mexican net exports.
c. decrease U.S. net exports and have no effect on Mexican net exports.
d. decrease U.S. net exports and increase Mexican net exports.
Figure 8-10
Refer to Figure 8-10. Suppose the government imposes a tax that reduces the quantity
sold in the market after the tax to Q2. Without the tax, the consumer surplus is
a. (P0-P2) x Q2.
b. x (P0-P2) x Q2.
c. (P0-P5) x Q5.
d. x (P0-P5) x Q5.
In the last part of the 1800’s
a. deflation made it harder for farmers to pay off their debt.
b. deflation made it easier for farmers to pay off their debt.
c. inflation made it harder for farmers to pay off their debt.
d. inflation made it easier for farmers to pay off their debt.
Figure 3-6
Maxine’s Production Possibilities Frontier Daisy’s Production Possibilities
Frontier
Refer to Figure 3-6. At which of the following prices would both Maxine and Daisy
gain from trade with each other?
a. 4 tarts for 2 pies
b. 8 tarts for 12 pies
c. 12 tarts for 28 pies
d. Maxine and Daisy could not both gain from trade with each other at any price.
The purchase of U.S. government bonds by Egyptians is an example of
a. U.S. imports.
b. U.S. exports.
c. foreign portfolio investment by Egyptians.
d. foreign direct investment by Egyptians.
GDP does not directly measure those things that make life worthwhile, but it does
measure our ability to obtain many of the inputs into a worthwhile life.
The recession of 2008-2009 was in many ways the worst macroeconomic event in more
than half a century.
Measuring the amount of unemployment in the economy is a straightforward task.
The unemployment that results from the process of matching workers and jobs is called
structural unemployment.
Examples of graphs of a single variable include pie charts, bar graphs, and time-series
graphs.
For any given quantity, the price on a demand curve represents the marginal buyer’s
willingness to pay.
It is possible that the cost of inflation reduction might be quite large compared to the
annual costs of moderate inflation.
Over the period 1870-2008, the United States experienced an average annual growth
rate of real GDP per person of about 4 percent per year.
Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the
quantity demanded of Ho-Ho’s decreased from 120 to 100. What would be the
appropriate elasticity to compute? Using the midpoint method, compute this elasticity.
What does your answer tell you?
Unemployment insurance reduces the incentive for the unemployed to find and take
new jobs.