Figure 28-2
RefetoFigure28-2. What do the two lines in the figure measure?
a. The top line is the labor force participation rate, and the bottom line is the
unemployment rate.
b. The top line is the labor force participation rates of the college-educated population,
and bottom line is the labor force participation rates of the high-school-educated
population.
c. The top line is the foreign labor force participation rate, and the bottom line is the
domestic labor force participation rate.
d. The top line is the labor force participation rates of men, and the bottom line is the
labor force participation rates of women.
Reserve requirements are regulations concerning
a. the amount banks are allowed to borrow from the Fed.
b. the amount of reserves banks must hold against deposits.
c. reserves banks must hold based on the number and type of loans they make.
d. the interest rate at which banks can borrow from the Fed.
Which of the following is not an assumption of the productions possibilities frontier?
a. A country produces only two goods or types of goods.
b. Technology does not change.
c. The amount of available resources does not change.
d. There is a fixed quantity of money.
Investment in
a. physical capital, unlike investment in human capital, has an opportunity cost.
b. physical capital, like investment in human capital, has an opportunity cost.
c. human capital is particularly attractive because it involves no externalities.
d. human capital has been shown to be relatively unimportant, relative to investment in
physical capital, for a country’s longrun economic success.
In the circular-flow diagram, firms produce
a. goods and services using factors of production.
b. output using inputs.
c. factors of production using goods and services.
d. Both (a) and (b) are correct.
Other things the same, continued increases in technology lead to
a. continued increases in the price level and real GDP.
b. continued decreases in the price level and real GDP.
c. continued increases in real GDP and continued increases in the price level.
d. continued increases in real GDP and continued decreases in the price level.
You pay for cheese and bread from the deli with currency. Which function of money
does this best illustrate?
a. medium of exchange
b. unit of account
c. store of value
d. liquidity
When a firm wants to borrow directly from the public to finance the purchase of new
equipment, it does so by selling bonds.
a. True
b. False
Figure 3-21
RefertoFigure3-21.Azerbaijan’s opportunity cost of one bolt is
a. 1/4 nail and Uzbekistan’s opportunity cost of one bolt is 1/2 nail.
b. 1/4 nail and Uzbekistan’s opportunity cost of one bolt is 2 nails.
c. 4 nails and Uzbekistan’s opportunity cost of one bolt is 1/2 nail.
d. 4 nails and Uzbekistan’s opportunity cost of one bolt is 2 nails.
Which of the three functions of money are commonly met by each of the following
assets in the U.S. economy?
a. paper dollar
b. precious metals
c. collectibles such as baseball cards, stamps, and antiques
Suppose an economy produces only burgers and bags of fries. In 2010, 4000 burgers are
sold at $3 each and 6000 bags of fires are sold at $1.50 each. In 2008, the base year,
burgers sold for $2.50 each and bags of fries sold for $2 each.
a. nominal GDP is $22,000, real GDP is $21,000, and the GDP deflator is 95.45.
b. nominal GDP is $22,000, real GDP is $21,000, and the GDP deflator is 104.77.
c. nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 95.45.
d. nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 104.77.
A risk-averse person has
a. a utility function whose slope gets flatter as wealth rises. This means they have
increasing marginal utility of wealth.
b. a utility function whose slope gets flatter as wealth rises. This means they have
diminishing marginal utility of wealth.
c. a utility function whose slope gets steeper as wealth rises. This means they have
increasing marginal utility of wealth.
d. a utility function whose slope gets steeper as wealth rises. This means they have
diminishing utility of wealth.
Table 29-2.
The information in the table pertains to an imaginary economy.
RefetoTable29-2. What is the M1 money supply?
a. $705 billion
b. $570 billion
c. $505 billion
d. $585 billion
When economists refer to intangible items, they are referring to such things as
a. illegal goods, and the value of such items is included in GDP.
b. illegal goods, and the value of such items is excluded from GDP.
c. hair styling and dental care, and the value of such items is included in GDP.
d. hair styling and dental care, and the value of such items is excluded from GDP.
In 2002 it looked like the Argentinean government might default on its debt (which
eventually it did). The open- economy macroeconomic model predicts that this should
have
a. raised Argentinean interest rates and caused the Argentinean currency to appreciate.
b. raised Argentinean interest rates and caused the Argentinean currency to depreciate.
c. lowered Argentinean interest rates and caused the Argentinean currency to appreciate.
d. lowered Argentinean interest rates and caused the Argentinean currency to depreciate.
Table 4-4
RefertoTable4-4.Suppose the market consists of Adam, Barb, and Carl. If the price
falls by $2, the quantity demanded in the market increases by
a. 4 units.
b. 6 units.
c. 8 units.
d. 10 units.
International studies of the relationship between GDP per person and quality of life
measures such as life expectancy and literacy rates show that larger GDP per person is
associated with
a. longer life expectancy and a lower percentage of the population that is literate.
b. longer life expectancy and a higher percentage of the population that is literate.
c. very nearly the same life expectancy and a lower percentage of the population that is
literate.
d. very nearly the same life expectancy and a higher percentage of the population that is
literate.
After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring
Break destination this year. However, Spring Break is still months away, and you may
reverse this decision. Which of the following events would prompt you to reverse this
decision?
a. The marginal benefit of going to Cancun increases.
b. The marginal cost of going to Cancun decreases.
c. The marginal benefit of going to Ft. Lauderdale decreases.
d. The marginal cost of going to Ft. Lauderdale decreases.
When box office receipts are notcorrected for inflation,
a. TheSoundofMusicranks as the most popular movie of all time.
b. GonewiththeWinddoes not rank as one of the 50 most popular movies of all time.
c. Titanicranks as the most popular movie of all time.
d. Avatadoes not rank as one of the 50 most popular movies of all time.
Opponents of active stabilization policy
a. generally don’t believe, even in theory, that fiscal policy can stabilize the economy.
b. generally agree that fiscal policy has no impact in the long run.
c. believe some effects of monetary policy may be long-lived.
d. think the Fed should simply try to fine tune the economy.
Table 23-5
The country of Caspir produces only cereal and milk. Quantities and prices of these
goods for the last several years are shown below. The base year is 2015.
Prices and Quantities
RefertoTable23-5.In 2018, this country’s
a. real GDP was $1080, and the GDP deflator was 156.3.
b. real GDP was $1080, and the GDP deflator was 177.8.
c. real GDP was $1920, and the GDP deflator was 177.8.
d. real GDP was $1920, and the GDP deflator was 156.3.
An increase in demand shifts the demand curve to the left.
a. True
b. False
Every month, the Bureau of Labor Statistics surveys 160,000 business establishments to
help determine the
a. number of people unemployed.
b. number of jobs the economy has gained or lost.
c. size of the labor force.
d. number of people who own their own businesses.
Kurt decided to increase the number of stocks in his portfolio. In doing so, Kurt reduced
a. both the firm-specific risk and the market risk of his portfolio.
b. the firm-specific risk, but not the market risk of his portfolio.
c. the market risk, but not the firm-specific risk of his portfolio.
d. neither the market risk nor the firm-specific risk of his portfolio.
In the long run, policy that changes aggregate demand changes
a. both unemployment and the price level.
b. neither unemployment nor the price level.
c. only unemployment.
d. only the price level.
For a country producing two goods, the opportunity cost of one good will be the inverse
of the opportunity cost of the other good.
a. True
b. False
The amount of currency per person in the United States is about
a. $110.
b. $300.
c. $2,450.
d. $4,490.
When a country’s government budget deficit increases,
a. the real exchange rate of its currency and its net exports increase.
b. the real exchange rate of its currency and its net exports decrease.
c. the real exchange rate of its currency increases and its net exports decrease.
d. the real exchange rate of its currency decreases and its net exports increase.
In the open-economy macroeconomic model, a higher domestic interest rate reduces the
quantity of loanable funds demanded
a. True
b. False
When net capital outflow is negative, it means that on net the value of domestic assets
purchased by foreigners exceeds the value of foreign assets purchased by domestic
residents.
a. True
b. False
In responding to the Phillips curve hypothesis, Friedman argued that the Fed can peg
the
a. unemployment rate.
b. inflation rate.
c. growth rate of real national income.
d. All of the above are correct.
If an economy’s GDP falls, then it must be the case that the economy’s
a. income falls and saving rises.
b. income and saving both fall.
c. income falls and expenditure rises.
d. income and expenditure both fall.
A country’s trade balance will fall if
a. either investment or saving rise.
b. either investment falls or saving rises.
c. either saving falls or investment rises.
d. either investment or saving fall.
Productivity is defined as the quantity of
a. labor required to produce a nation’s GDP.
b. labor required to produce one unit of goods and services.
c. goods and services produced from each unit of labor input.
d. goods and services produced per unit of time.