Which of the following is a source of frictional unemployment?
a. changes in the composition of demand among industries or regions
b. minimum wages
c. labor unions
d. None of the above is correct.
The adult population in the town of Shelbyville is 150 thousand. If 100 thousand people
are employed and 20 thousand are unemployed, then the labor force participation rate is
approximately
a. 67%.
b. 80%.
c. 16%.
d. 13%.
Which of the following is included in GDP?
a. medical marijuana purchased from a government-run pharmacy by a glaucoma
patient
b. recreational marijuana purchased from a drug dealer by a college student
c. recreational marijuana produced and consumed by a man in his attic
d. All of the above are included in GDP.
During recessions, automatic stabilizers tend to make the government’s budget
a. move toward deficit.
b. move toward surplus.
c. move toward balance.
d. not necessarily move the budget in any particular direction.
Which of the following both shift aggregate demand left?
a. a decrease in taxes and at a given price level consumers feel more wealthy
b. a decrease in taxes and at a given price level consumers feel less wealthy
c. an increase in taxes and at a given price level consumers feel more wealthy
d. an increase in taxes and at a given price level consumers feel less wealthy
International trade can make some individuals within a country worse off, even as it
makes the country as a whole better off.
a. True
b. False
Table 28-6
RefetoTable28-6. What is the U-2 measure of labor underutilization?
a. 1.5%
b. 3.1%
c. 4.7%
d. 6.2%
Suppose you make jewelry. If the price of gold falls, then we would expect you to
a. be willing and able to produce less jewelry than before at each possible price.
b. be willing and able to produce more jewelry than before at each possible price.
c. face a greater demand for your jewelry.
d. face a weaker demand for your jewelry.
Which of the following is the correct way to compute the future value of $100 put into
an account that earns 4 percent interest for 10 years?
a. $100(1 + .0410)
b. $100(1 + .04 × 10)
c. $100× 10 × (1 + .04)
d. $100(1 + .04)10
Table 23-9
A country produces only ice cream and pie. Quantities and prices of these goods for the
last several years are shown below. The base year is 2008.
Prices and Quantities
RefertoTable23-9.This country’s inflation rate from 2009 to 2010 to the nearest tenth
was
a. 2.9%
b. 8.8%
c. 13.3%
d. None of the above is correct.
Which of the following can tax cuts influence?
a. aggregate demand and aggregate supply
b. aggregate demand but not aggregate supply
c. aggregate supply but not aggregate demand
d. neither aggregate demand nor aggregate supply
A tax credit for purchases of capital goods causes the interest rate to increase and the
exchange rate to appreciate.
a. True
b. False
Other things the same,if the U.S. price level rises, then
a. the supply of dollars in the market for foreign-currency exchange increases, and net
exports fall.
b. the supply of dollars in the market for foreign-currency exchange increases, and net
exports rise.
c. the supply of dollars in the market for foreign-currency exchange decreases, and net
exports fall.
d. the supply of dollars in the market for foreign-currency exchange decreases, and net
exports rise.
When a country imposes an import quota, its
a. imports fall and its net exports rise.
b. imports fall and its net exports are unchanged.
c. imports rise and its net exports are unchanged.
d. imports and exports are unchanged.
All else equal, if there are diminishing returns, then what happens to productivity if
both capital and labor increase?
a. Productivity will definitely fall.
b. Productivity will definitely be unchanged.
c. Productivity will definitely rise.
d. None of the above are necessarily correct.
An economic expansion caused by a shift in aggregate demand causes prices to
a. rise in the short run, and rise even more in the long run.
b. rise in the short run, and fall back to their original level in the long run.
c. fall in the short run, and fall even more in the long run.
d. fall in the short run, and rise back to their original level in the long run.
Figure 4-24
The diagram below pertains to the demand for turkey in the United States.
RefertoFigure4-24.All else equal, the premature deaths of thousands of turkeys would
cause a move from
a. DAto DB.
b. DBto DA.
c. x to y.
d. y to x.
Table 23-1
The table below contains data for Chereaux for the year 2015.
RefertoTable23-1. Personal income for Chereaux in 2015 is
a. $178.
b. $201.
c. $259.
d. $196.
When the interest rate is above the equilibrium level,
a. the quantity of money that people want to hold is less than the quantity of money that
the Federal Reserve has supplied.
b. people respond by buying interest-bearing bonds or by depositing money in
interest-bearing bank accounts.
c. bond issuers and banks respond by lowering the interest rates they offer.
d. All of the above are correct.
Other things the same, when the real exchange rate of the dollar appreciates, U.S. goods
become more desirable to U.S. residents, but less desirable to foreign residents.
a. True
b. False
Which of the following decrease if the U.S. imposes an import quota on computer
components?
a. U.S. exports and U.S. imports
b. U.S. exports but not U.S. imports
c. U.S. imports but not U.S. exports
d. neither U.S. exports nor U.S. imports
When Congress reduces spending in order to balance the government’s budget, it needs
to consider
a. both the short-run effects on aggregate demand and aggregate supply, and the
long-run effects on saving and growth.
b. only the short-run effects on aggregate demand and aggregate supply.
c. only the long-run effects on saving and growth.
d. only the long-run effects on aggregate demand and aggregate supply.
The initial impact of the repeal of an investment tax credit is to shift
a. aggregate demand right.
b. aggregate demand left.
c. aggregate supply right.
d. aggregate supply left.
The consumer price index and the GDP deflator are two alternative measures of the
overall price level. Which of the following statements about the two measures is
correct?
a. The CPI involves a base year; the GDP deflator does not involve a base year.
b. The CPI can be used to compute the inflation rate; the GDP deflator cannot be used
to compute the inflation rate.
c. The CPI reflects the prices of goods and services produced domestically; the GDP
deflator reflects the prices of all goods and services bought by consumers.
d. The CPI reflects a fixed basket of goods and services; the GDP deflator reflects
current production of goods and services.
If the minimum wage were currently above the equilibrium wage, then a decrease in the
minimum wage that kept it above the equilibrium wage would
a. increase the surplus of labor.
b. reduce the surplus of labor.
c. increase the shortage of labor.
d. reduce the shortage of labor,
Evaluating normative statements involves values as well as facts.
a. True
b. False
Table 24-6
The table below pertains to Napandsnack, an economy in which the typical consumer’s
basket consists of 2 pillows and 15 hotdogs.
RefertoTable24-6. If the base year is 2010, then the economy’s inflation rate in 2010
was
a. 10.5 percent.
b. 15.0 percent.
c. 20.0 percent.
d. 25.00 percent.
A decrease in the price of creamer will increase the equilibrium price and decrease the
equilibrium quantity in the market for coffee.
a. True
b. False
Suppose that Congress were to repealan investment tax credit. What would happen in
the market for loanable funds?
a. The demand and supply of loanable funds would shift right.
b. The demand and supply of loanable funds would shift left.
c. The supply of loanable funds would shift right.
d. The demand for loanable funds would shift left.
The real interest rate measures the change in dollar amounts.
a. True
b. False
Table 3-20
Assume that Brad and Theresa can switch between producing wheat and producing beef
at a constant rate.
RefertoTable3-20.Brad has an absolute advantage in the production of
a. wheat and Theresa has an absolute advantage in the production of beef.
b. beef and Theresa has an absolute advantage in the production of wheat.
c. both goods and Theresa has an absolute advantage in the production of neither good.
d. neither good and Theresa has an absolute advantage in the production of both goods.
An increase in the saving rate would, other things the same,
a. increase growth more for a poor country than for a rich country, and raise growth
permanently.
b. increase growth more for a poor country than for a rich country, but raise growth
temporarily.
c. increase growth more for a rich country than for a poor country, and raise growth
permanently.
d. increase growth more for a rich country than for a poor country, but raise growth
temporarily.
Table 24-5
The table below pertains to Wrexington, an economy in which the typical consumer’s
basket consists of 20 pounds of meat and 10 toys.
RefertoTable24-5.If the base year is 2004, then the CPI in 2005 was
a. 88.9.
b. 90.
c. 100.
d. 112.5.
How do outward-oriented policies affect a nation’s productivity?
Some countries have experienced an extraordinarily high rate of inflation known as.
This is usually due to governments using money creation as a way to pay for their
spending. The revenue the government raises by creating money is called the .
The Fed increases the money supply growth rate. Assuming inflation expectations
remain constant, use a Phillips curve diagram to show the shortrun effects of the Fed’s
policy.
Make a list of expenditures whose sum equals GDP.
The increase in the overall level of prices is known as.
If the price of beef rises and consumers buy more chicken and less beef, what kind of
bias does the consumer price index exhibit?
Scenario 1-4 You have the afternoon free. You have a choice between going to the
movies with a friend or studying economics for three hours. If you go to the movies,
you will spend $12.00 on a ticket and $4.75 on popcorn. If you choose to study
economics for three hours, you will raise your exam grade by 15 points.
RefertoScenario1-4.What is your opportunity cost of going to the movies?
While vacationing in Agra, India, the price of one night’s stay at your hotel room rises
from 6600 rupees to 7200 rupees. If the exchange rate was previously 55 rupees per
dollar, what would the exchange rate need to be now in order for the number of dollars
you pay for your room to remain the same? Does this imply the rupee depreciated or
appreciated against the dollar?
If a savings account pays 7% interest, then according to the rule of 70 how long will it
take for the account balance to double?
If the real value of an item bought ten years ago is less than it’s nominal value at that
time, what can one infer about the change in the overall price level during this ten year
period?
Mark can produce 24 footballs or 48 basketballs in 8 hours. Maria can produce 64
basketballs in 8 hours. In order for Maria to have a comparative advantage producing
basketballs, the number of footballs she can produce in 8 hours has to be less than .
The institution that sets the nation’s monetary policy is called the
A decrease in what variable will raise the quantity of goods and services supplied, and
shift only the short run aggregate supply curve to the right?
You earn a nominal return of 6% on your savings and the tax rate is 20%. If the rate of
inflation is 2%, what are the before-tax real interest rate and your after-tax rate of
return?
Explain how it is possible for the government debt to grow forever.
According to the law of demand, when price increases the quantity demanded of a good