The prices of stocks and bonds move
a. in opposite directions to the Fed’s interest rate target
b. in opposite directions to the spending patterns of Congress
c. in similar directions to the Fed’s interest rate targets
d. in similar directions to the spending patterns of Congress
e. whenever the Open Market Committee threatens a change in the money supply
The scenario in which the dollar plummets in value is called the
a. soft-landing scenario.
b. hard-landing scenario.
c. fair-trade scenario.
d. free-trade scenario.
e. cap-and-trade scenario.
The income and expenditure approaches to calculating GDP will produce the same
result because for every dollars worth of output that is produced a dollars worth of
income will be generated as income for the owners of the factors of production used to
produce the output.
Which of the following is an implication of the classical model?
a. The supply of loanable funds curve is downward sloping.
b. The inflation rate is constantly rising.
c. Fiscal policy only changes the amount of consumption, investment and government
spending, not the amount of output produced.
d. Monetary policy can change both the interest rate and real output.
e. The interest rate can only be changed by monetary policy, not by changes in
government spending.
In a market economy,
The price elasticity of demand will be larger in absolute value if
If we knew that the price of goods rose, on average, by 5 percent last year and by 4
percent this year, we would know
a. nothing about the rate of inflation
b. that the inflation rate is rising
c. that the inflation rate is falling
d. that we are in a stagflation
e. that we are in a recession
You have two bonds, both with a face value of $7,000. One of them matures one year
from today, while the other matures one year after that. If the interest rate is 8 percent
(0.08) per year, what is the difference in value between the two bonds?
One reason why there may be a bias against free trade is that
a. those harmed by trade have a powerful incentive to lobby against it
b. people prefer domestically-produced goods to foreign-produced goods
c. people prefer foreign-produced goods to domestically-produced goods
d. the terms of trade are too low
e. the exchange rate is too high
Which of the following would be classified as a consumer nondurable?
a. New clothing
b. A new central heating system
c. A new car
d. A new bedroom suite
e. A new riding mower
After the Fed makes an open market purchase of bonds, the deposit-creation process
may continue only to the point where
a. the Fed reverses course and sells bonds
b. the Fed changes the required reserve ratio
c. all excess reserves have been converted into required reserves
d. all required reserves have been converted into excess reserves
e. the Fed raises interest rates
In Figure 15-17 above, which of the following most likely represents the long-run
aggregate supply curve?
a. A
b. B
c. C
d. D
e. None of the above.