Other things being equal, the effects of an increase in the price of computers would best
be represented by which of the following?
a. A movement up along the demand curve for computers.
b. A movement down along the demand curve for computers.
c. A leftward shift in the demand curve for computers.
d. A rightward shift in the demand curve for computers.
Exhibit 2-13 Production possibilities curve
In Exhibit 2-13, if the economy
decides to locate at point E, then:
a. this is the best choice for this economy.
b. the maximum number of consumption goods is being produced.
c. the economy has not achieved full employment.
d. the economy could not survive because no food is being produced.
e. the economy has not achieved maximum efficiency.
Given the consumption function C = $500 billion + 0.80Y, an increase in disposable
income from $6,000 billion to $7,000 billion will cause consumption to increase by:
a. $800 billion.
b. $1,000 billion.
c. $1,300 billion.
d. $1,500 billion.
e. $1,800 billion.
Exhibit 1A-2 Straight line
In Exhibit 1A-2, the slope of straight line
CD is:
a. 3.
b. 1.
c. -1.
d. 1/2.
Since World War II, the average length of recessions in the United States has been:
a. 2 months.
b. 11 months.
c. 2 years.
d. 3 1/2 years.
Exhibit 11-3 Aggregate demand and supply model
Beginning at equilibrium E1 in
Exhibit 11-3, when the government increases spending or cuts taxes the economy will
experience:
a. an inflationary recession.
b. stagflation.
c. cost-push inflation.
d. demand-pull inflation.
Exhibit 16-6 Money, investment and product markets
In Exhibit 16-6, a move from MS1 to MS2:
a. increases the money supply, causing the interest rate to rise from i2 to i1.
b. increases the money supply, causing the interest rate to fall from i1 to i2.
c. decreases the money supply, causing the interest rate to rise from i2 to i1.
d. decreases the money supply, causing the interest rate to fall from i1 to i2.
e. has no effect on the money supply or the interest rate.
Imagine that Odyssey National is a brand new bank, and that its required reserve ratio is
10 percent. If it accepts a $1,000 deposit, then its required reserves balance will be:
a. $0.
b. $90.
c. $100.
d. $900.
e. $910
Which of the following will not cause a change in demand for crackers?
a. A change in consumers’ income.
b. A change in the price of crackers.
c. A change in the price of cheese.
d. A change in the number of cracker-eaters.
e. A change in consumers’ tastes for crackers.
When there is market failure due to a negative externality,
a. innocent people will suffer since it cannot be corrected.
b. setting price equal to marginal social cost will solve it.
c. the free market produces too little output.
d. externalities have been taken into account.
e. the best solution eliminates the externality entirely.
Which of the following statements is true?
a. The speculative demand for money at possible interest rates gives the demand for
money curve its upward slope.
b. There is an inverse relationship between the quantity of money demanded and the
interest rate.
c. According to the quantity theory of money, any change in the money supply will have
no effect on the price level.
d. All of these.
Assuming that beef and chicken are substitutes, an increase in the price of beef, other
things being equal, will:
a. increase the demand for chicken.
b. decrease the demand for chicken.
c. not change the demand for chicken.
d. decrease the demand for beef.
Which one of the following is part of the official money supply in the United States?
a. Federal Reserve Notes.
b. Gold bars.
c. Common stock.
d. Silver coins.
An increase in demand and a decrease in supply cause which of the following?
a. Equilibrium price change is indeterminate.
b. Equilibrium quantity decreases.
c. Equilibrium price falls.
d. Equilibrium price rises.
e. Equilibrium quantity increases.
Juanita, a lawyer, can type faster than Jill, her secretary. Jill, on the other hand, does not
have the ability or skills to practice law. Applying the principles of international trade to
this situation, an economic consultant advises Juanita to:
a. fire Jill, practice law during the day, and do her own typing at night.
b. practice law and leave all the typing to the secretary.
c. divide her time equally between typing and practicing law.
d. quit practicing law and take a job as a secretary.
e. have Jill attend law school.
The production possibilities curve shows that:
a. some of one good must be given up to get more of another good in an economy that
is operating efficiently.
b. no output combination is impossible.
c. an economy that is operating efficiently can have more of one good without giving up
some of another good.
d. scarcity can be eliminated.
GDP measures the economy’s production of:
a. final goods and services.
b. intermediate goods.
c. consumer goods and services.
d. capital goods.
A change in real GDP divided by a change in investment is called the:
a. spending multiplier.
b. demand multiplier.
c. equilibrium multiplier.
d. investment multiplier.
e. spending multiplier
A tax multiplier equal to -4.30 would imply that a $100 tax increase would lead to a:
a. $430 decline in real GDP.
b. $430 increase in real GDP.
c. 4.3 percent increase in real GDP.
d. 4.3 percent decrease in real GDP.
e. 43 percent decrease in real GDP.
The federal government agency with the ultimate authority to determine the rules in
preparing statements for companies whose stock is sold to the public is the
__________________________________________________.
The government’s main statistic for forecasting business cycles is the index of
coincident indicators.
The government’s chief forecasting gauge for business cycles is the chained real GDP
indicators.
The various methods, rules, practices, and other procedures that have evolved over time
in response to the need to regulate the preparation of financial statements are called
__________________________________________________.
The percentage of the national debt held by foreigners is approximately 25 percent.
The Federal Reserve System is a branch of the Treasury Department.
A mixed economy cannot exist without a politically free society.
The “WIN” button approach to breaking a wage-price spiral was proposed by President
Nixon to a joint session of Congress.