The routes or channels that ripple effects created in the money market travel to impact
the goods-and-services market are known as
a. the transmission lag.
b. monetary policy.
c. the liquidity trap.
d. the transmission mechanism.
If GDP is $12,000 and velocity is 4, the money supply is
a. $27,000.
b. $12,000.
c. $4,000.
d. $3,000.
e. There is not enough information provided to answer this question.
In seeking to explain what determines GDP, monetarists focus on the money supply
while Keynesians focus on the spending components of total expenditures.
a. True
b. False
Exhibit 6-2
How many unemployed persons are there in year 1?
a. 25 million
b. 50 million
c. 75 million
d. 175 million
e. 200 million
For farmers as a group, increased productivity can lead to lower incomes.
a. True
b. False
When people in a barter economy began to accept the good that had greater
acceptability than all other goods, they weren’t trying to create the institution of money.
They were simply trying to __________.
a. get along with their neighbors.
b. become rich.
c. make trading easier for themselves.
d. pay lower prices.
e. none of the above
Activists hold that
a. activist monetary policy is flexible.
b. nonactivist monetary policy is inflexible.
c. the economy does not always return quickly enough to full-employment output.
d. a and b
e. all of the above
In an interview an economist states, “This problem should be of greater concern to the
federal government.” We can explicitly put this statement in the category of
a. microeconomics.
b. macroeconomics.
c. positive economics.
d. normative economics.
If the price of good X is $100 and the price of good Y is $40, it follows that the relative
price of one unit of good Y is ___________ unit(s) of good X.
a. 0.40
b. 0.20
c. 2.50
d. 4.00
e. There is not enough information to answer the question.
Some people see the government as being more heavily involved in taking sides than in
serving the common interest.
a. True
b. False
The purpose of the ceteris paribus assumption is to allow economists to
a. determine the relationship among several variables.
b. determine the impact of several variables on another variable.
c. isolate the impact of one variable on several variables.
d. isolate the relationship between two variables.
A decrease in the price level
a. shifts the SRAS curve to the right.
b. shifts the SRAS curve to the left.
c. causes an upward movement along the existing SRAS curve.
d. causes a downward movement along the existing SRAS curve.
e. none of the above
Which of the following is an example of automatic fiscal policy?
a. The government deliberately raises taxes.
b. The government deliberately lowers taxes.
c. The government deliberately increases spending.
d. The government deliberately decreases spending.
e. none of the above
Exhibit 3-6
If a decrease in income causes the demand for good X to shift from D1 to D2, then good
X is
a. a normal good.
b. an inferior good.
c. a substitute good.
d. a complementary good.
e. a neutral good.
Logrolling consists of
a. exchanging votes to gain support for legislation.
b. spreading the costs of a piece of special interest legislation over many millions of
people.
c. attempts directed at slowing down the growth of rational ignorance.
d. increasing taxes on some people and lowering taxes on other people.
e. none of the above
Crowding out results in a decrease in
a. transfer payments.
b. defense spending.
c. private spending.
d. government spending.
The dollar appreciates against foreign currencies. This makes foreign-produced goods
__________ for Americans and U.S.-produced goods __________ for foreigners. As a
result, U.S. __________ fall and U.S. __________ rise.
a. more expensive; cheaper; imports; exports
b. cheaper; more expensive; exports; imports
c. cheaper; more expensive; imports; exports
d. more expensive; cheaper; exports; imports