According to Nobel laureate Douglass North, one reason why the Industrial Revolution
occurred in England before many other countries was because the king in England
consistently maintained control over the court system and the government.
Price floors are illegal in the United States.
The model of purchasing power parity is the only way to determine whether a country’s
currency is undervalued or overvalued.
A borrower defaults on a loan when he stops making payments on the loan.
Even if expectations of inflation are rational, sluggish adjustment of wages and prices
will still create a short-run trade-off between inflation and unemployment.
The natural rate of unemployment consists of frictional unemployment plus cyclical
unemployment.
If workers and firms ignore inflation or form their inflation expectations adaptively,
expansionary monetary policy will lower unemployment permanently.
The lower-income industrial countries are catching up to the higher-income industrial
countries in terms of economic growth.
Suppose the extra cost for a plumber to keep her shop open for one extra hour is $145.
Then, the plumber should not stay open for the extra hour if she can only generate
additional revenue of $145 for that hour.
International flows of capital increase both efficiency and growth in countries around
the world.
If consumption is defined as C = 4,500 + 0.75Y, then the marginal propensity to save is
0.25.
Empirical evidence shows that the short-run Phillips curve was vertical during the
1950s and 1960s.
All renters benefit from rent control and all landlords lose.
Public saving equals taxes minus government spending minus transfer payments.
In 2012, foreign purchases of U.S. corporate stocks and bonds
A) doubled.
B) fell.
C) grew at a faster pace than foreign investment in U.S. government bonds.
D) grew at a faster pace than foreign investment in U.S. corporate bonds.
Which of the following is considered a durable good?
A) medical care
B) clothing
C) food
D) a washing machine
The broadest measure of the price level that includes all final goods and services is
A) the producer price index .
B) the consumer price index.
C) the GDP deflator.
D) the wholesale price index.
Suppose a transaction changes the balance sheet of Wells Fargo bank as indicated in the
following T-account.
At this point, what percentage of the new deposits does Wells Fargo hold in reserves?
A) 100 percent
B) 10 percent
C) 5 percent
D) 1 percent
________ means the supply curve has shifted to the right, while ________ refers to a
movement along a given supply curve in response to an increase in price.
A) An increase in supply; a decrease in supply
B) A decrease in supply; an increase in supply
C) An increase in supply; an increase in quantity supplied
D) A decrease in supply; a decrease in quantity supplied
The Taylor rule links the Federal Reserve’s target for the
A) money supply to shifts in money demand.
B) money supply to changes in interest rates.
C) federal funds rate to economic variables.
D) federal funds rate to the money supply.
If the marginal propensity to consume is 0.75, the marginal propensity to save is
A) 0.25.
B) 0.5.
C) 1.
D) 3.
Which of the following is not part of the “taxes” provision of the Patient Protection and
Affordable Care Act (ACA)?
A) Pharmaceutical firms and health insurance firms will pay new taxes.
B) Investors earning more than $200,000 will pay a new tax on their investment
income.
C) Beginning in 2018, all taxes on employer-provided health insurance plans will be
reduced or eliminated.
D) Workers earning more than $200,000 will have their share of the Medicare payroll
tax increase.
Of the different types of businesses, a corporation has the ________ government rules
and the ________ government regulations affecting it.
A) least; least
B) least; most
C) most; least
D) most; most
Under pressure from Japan, the United States and Europe, China announced it switched
from pegging the yuan against the dollar to linking the value of the yuan to a ‘basket’ of
currencies. The result of this change was
A) the value of the yuan increased slightly relative to the dollar.
B) the value of the yuan has become very responsive to changes in demand and supply
in the foreign currency market.
C) the value of the yuan has increased dramatically and is beginning to remove the
trade imbalance between the United States and China.
D) the value of the yuan has decreased dramatically and has further spurred Chinese
exports.
The United States has a trade ________ with all its major trading partners and a trade
________ with every region of the world except for Latin America.
A) deficit; deficit
B) deficit; surplus
C) surplus; deficit
D) surplus; surplus
E) deficit; balance
The existence of ________ increases the risk of buying stock in a corporation.
A) the principal-agent problem
B) corporate governance
C) unlimited personal liability
D) employee-owned corporations
What is asymmetric information?
If the GDP deflator is less than 100, which will be higher: nominal GDP or real GDP?
Why?
Calculate the value of the government purchases multiplier if the marginal propensity to
consume equals 0.9, the tax rate equals 0.25, and the marginal propensity to import
equals 0.15.
Explain and show graphically how a decrease in government spending affects the
equilibrium interest rate and equilibrium quantity of loanable funds in the market for
loanable funds.
In much of Europe, the legal age to obtain a driver’s license is 18. If the legal driving
age in the United States was changed to 18, how would this affect the market for new
automobiles? The market for automobile insurance?
Suppose you withdraw $1,000 from your savings account and put it under your
mattress. Briefly explain how this will affect M1 and M2.