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Which of the following is the most liquid category of assets?
a. Large time deposits
b. Money market mutual fund balances
c. Small time deposits
d. Saving-type accounts
e. Demand deposits
The primary macroeconomic cost of unemployment is
a. higher prices
b. lost leisure time
c. lost output
d. domestic violence
e. mental illness (e.g., depression)
Which of the following shocks could trigger an expansion?
a. A large cut-back in military spending.
b. A large increase in the price of oil.
c. A sudden decrease in consumption.
d. A large military buildup.
e. A sudden decrease in investment.
In which of the following situations would a worker have the greatest real income?
a. She receives a pay cut and her nominal wage falls by 5 percent, while the CPI falls
by 20 percent.
b. She receives a pay cut and her nominal wage falls by 5 percent, while the CPI
increases by 10 percent.
c. Her nominal wage remains the same, as does the CPI.
d. She receives a raise and her nominal wage increases by 5 percent, while the CPI
increases by 10 percent.
e. She receives a raise and her salary increases by 5 percent, while the CPI falls by 5
percent.
In the short-run macro model, a decrease in the money supply will
a. lower the interest rate, increase spending, and increase GDP
b. lower the interest rate, reduce spending, and lower GDP
c. raise the interest rate, increase spending, and increase GDP
d. raise the interest rate, reduce spending, and lower GDP
e. raise the interest rate, reduce spending, and increase GDP
When a new discount retailer, like Wal-Mart, opens a store, people save money. The
CPI
a. completely ignores this
b. accounts for every implication of this
c. misses the reduction in what people pay when they shift but captures the effect from
that point on.
d. does not count sales at discount stores.
e. misses the reduction in what people pay only for stores in mid-sized cities.
The prices of which of the following goods would be included in the Consumer Price
Index?
a. Fighter planes
b. Iron ore
c. Tennis shoes
d. Firefighters' services
e. IBM stock
We could try to use a powerful computer to construct a macroeconomic model
including tens of thousands of demand and supply curves, for every market in the
economy. This would not be a useful undertaking because
a. it would not be worth the increased level of complication and effort needed to collect
all information
b. the model would be simplistic
c. the model would inevitably leave out important information
d. the suggested prices would inevitably be wrong in each market
e. the model would not be realistic
Gold, silver and furs, when used as money, are referred to as
a. fiat money
b. precious money
c. paper currency
d. commodity money
e. exchange money
During the Great Depression of the 1930s, the unemployment rate in the United States
peaked at around
a. 5 percent
b. 10 percent
c. 12 percent
d. 25 percent
e. 50 percent
An individual would be most likely to increase the amount of money he wants to hold if
a. the price level declines
b. the price level declines and the interest rate increases
c. his real income increases
d. the interest rate increases
e. the interest rate and his real income decrease
The long-run effect of reducing the government budget deficit would be
a. a higher price level and a lower level of output
b. a lower price level and a lower level of output
c. a higher price level and a higher level of output
d. a higher price level with unchanged output
e. a lower price level with unchanged output
Which of the following is the definition of autonomous consumption spending?
a. The effect of a change in wealth on consumption spending
b. The part of consumption spending that is independent of disposable income
c. The impact of disposable income on consumption spending
d. The part of consumption spending that is independent of wealth
e. The horizontal intercept of the consumption function.
How can the Fed reduce a continuing inflation?
a. By slowing the continuing downward shift of the aggregate supply curve
b. By increasing the money supply
c. By slowing the continuing leftward shift of the aggregate demand curve
d. By decreasing the required reserve ratio
e. By slowing the continuing rightward shift of the aggregate demand curve.
