In recent years, the Chinese government€s actions have had an impact on interest rates
in the United States.
a. True
b. False
The average tariff rate in the US today is about 40 percent, but it was only 1.6 percent
in 1946.
a. True
b. False
The answer is: “A tax on imports.” What is the question?
a. What is comparative advantage?
b. What is a quota?
c. What is a tariff?
d. What reduces consumers’ surplus?
e. c and d
If a liquidity trap exists, people are likely to be thinking that
a. bond prices are so low that they have nowhere to go but up; given this, now is a good
time to be holding bonds.
b. bond prices are so high that they have nowhere to go but down; given this, it is better
not to be holding bonds.
c. bond prices will soon rise so it is better to get out of bonds now.
d. interest rates will soon fall.
According to the text, farming today in the U.S. is __________ productive compared to
a century ago, resulting in there being __________ farmers today than at the turn of the
previous century.
a. about as; fewer
b. about as; more
c. much more; fewer
d. much more; more
Which of the following items is a final good?
a. mustard in a deli
b. tin purchased by a tin can company
c. a sweater purchased by someone in a department store
d. a and b
e. a, b, and c
The predetermined-money-growth-rate rule states that the annual growth rate in the
money supply will be constant at the average annual growth rate of Real GDP.
a. True
b. False
An example of offshoring is when a foreign country sets up operations in the United
States and employs American employees.
a. True
b. False
People should buy bonds when they think that interest rates are as high as they will go.
a. True
b. False
If the dollar appreciates and the U.S. AD curve shifts _______________ by an amount
less than the U.S. SRAS curve shifts __________________, then Real GDP will
_________________________.
a. rightward; leftward; increase
b. rightward; leftward; decrease
c. leftward; rightward; increase
d. leftward; rightward; decrease
The _____________ the size of the potential customer base for a given product (for
example, music), the ______________ is the variety of goods we are likely to see.
a. larger; greater
b. smaller; smaller
c. larger; smaller
d. smaller; greater
e. a and b
The government spending multiplier is the number that, when multiplied by the
a. budget deficit, gives us the change in total spending.
b. budget deficit, gives us the change in the public debt.
c. change in taxes, gives us the change in total spending.
d. change in government spending, gives us the change in total spending.
Tariffs raise the price of imported goods, but quotas rarely do.
a. True
b. False
The marginal propensity to consume (MPC) refers to the proportion of disposable
income that is spent on consumption.
a. True
b. False
Here is a consumption function: C = C0 + MPC(Yd). If C0 = $300, then we know that
a. if Yd rises by $1, then Co rises by $1.
b. if Yd rises by $1, then C rises by $300.
c. as C0 rises by $15, C rises by $15.
d. as C0 rises by $15, Yd rises by $15.
An individual buys a bond for $1,000 and sells it one year later for $1,050. What is the
annual interest rate return that this individual has received on this bond?
a. 5.0 percent
b. 50.0 percent
c. 7.5 percent
d. 4.0 percent
e. 0.05 percent
Smith says that if government purchases rise by $100 billion, the AD curve will shift to
the right. Jones says that if government purchases rise by $100 billion, the AD curve
will not shift to the right. It follows that
a. Smith believes there will be zero or complete crowding out and Jones believes there
will be complete crowding out.
b. Smith believes there will be incomplete or zero crowding out and Jones believes
there will be complete crowding out.
c. Smith believes there will be complete crowding out and Jones believes there will be
zero crowding out.
d. Both Smith and Jones believe there will be incomplete crowding out, although Jones
believes there will be more incomplete crowding out than Smith believes there will be.
e. none of the above