Commercial banks:
A) conducts monetary policy.
B) are nonprofit organizations that lend and borrow funds.
C) are financial intermediaries that lend funds and accept deposits.
D) print all the money used in the US.
Refer to Figure 18.4. With an import ban, what is the equilibrium quantity of gloves in
Duckland?
A) 100
B) 80
C) 60
D) 40
For the purposes of GDP accounting, government purchases
A) are considered part of investment.
B) are considered part of consumption.
C) include transfer payments.
D) include wages and benefits paid to government workers.
Recall the Application about the possible link between the value of the U.S. dollar and
the worldwide increase in commodity prices to answer the following question(s).
Starting in the summer of 2010, there was a rise in prices of commodities such as oil
and food worldwide. Some economists suggested that monetary policy in the United
States was the cause of the worldwide commodity boom.Recall the Application. The
rise in commodity prices corresponded with ________ in interest rates, and this change
in interest rates would result in bond prices ________.
A) an increase; falling
B) an increase; rising
C) a decrease; falling
D) a decrease; rising
When determining an appropriate congestion tax, economists would use which of the
following elements of the economic way of thinking?
A) thinking at the margin
B) isolating variables
C) making assumptions
D) all of the above
The production function described in the chapter assumes that with a fixed capital
stock, increases in the labor input results in increases in output at a decreasing rate. This
relationship between labor and output is known as:
A) diminishing returns.
B) constant returns.
C) increasing returns.
D) effective returns.
Net national product (NNP) is equal to:
A) GDP minus depreciation.
B) GNP plus depreciation.
C) GNP minus depreciation.
D) GNP minus net investment.
Wages and prices throughout an economy are less than previous inflation rates when
what occurs?
A) Imports increase dramatically.
B) More goods are exported abroad.
C) Output exceeds potential output.
D) Output is less than potential output.
If the dollar to euro exchange rate moves from 1.1 to 0.9 dollars per euro, then the
dollar has ________ and the euro has ________.
A) depreciated; depreciated
B) depreciated; appreciated
C) appreciated; depreciated
D) appreciated; appreciated
If a economy’s planned expenditures turn out to be greater than production, then
inventories will be:
A) increasing, prompting firms to decrease production in the future.
B) increasing, prompting firms to increase production in the future.
C) decreasing, prompting firms to decrease production in the future.
D) decreasing, prompting firms to increase production in the future.