As the price level rises, ceteris paribus, people holding some of their wealth in
monetary form become
a. less wealthy and they buy less.
b. more wealthy and they buy more.
c. less wealthy and they buy more.
d. more wealthy and they buy less.
The law of increasing opportunity cost helps to explain why PPF€s are typically
bowed-outward.
a. True
b. False
As the dollar price of a foreign currency (for example, dollars per yen) decreases,
foreign goods will be __________ expensive, __________ foreign goods will be
purchased, and __________ foreign currency will be demanded.
a. less; more; more
b. less; more; less
c. more; fewer; less
d. more; fewer; more
Exhibit 10-6
If total production (TP) is greater than total expenditures (TE), the economy is currently
producing a level of Real GDP that is
a. equal to or lower than Q3.
b. equal to or greater than Q3.
c. less than Q2.
d. between Q2 and Q1.
e. greater than Q3.
Suppose that 1982 is the base year for the Consumer Price Index (CPI) and in 2014 the
CPI was 190. What does this “190” mean?
a. What cost $100 in 1982 on average cost 190 times as much in 2014.
b. What cost $100 in 1982 on average cost $190 in 2014.
c. What cost $100 in 1982 on average cost 0.19 times as much in 2014 (that is, it cost
$19 in 2014).
d. What cost $100 in 1982 on average cost $19 more in 2014.
Which of the following statements is true?
a. Interest rates are directly related to the price of old or existing bonds.
b. The monetarist transmission mechanism is indirect whereas the Keynesian
transmission mechanism is direct.
c. The interest rate is the opportunity cost of holding money.
d. a and b
e. a, b and c
Which of the following statements is false?
a. There are always opportunity costs to making choices.
b. Because of scarcity, choices must be made.
c. Elementary education at public schools is free.
d. When government builds a new highway, taxpayers end up with less of some of the
things they would otherwise have.
The answer is: “After a policy measure is implemented, it takes time to affect the
economy.” What is the question?
a. What is the wait-and-see lag?
b. What is the data lag?
c. What is the effectiveness lag?
d. What is the transmission lag?
e. What is the legislative lag?
Dumping occurs when a firm sells goods abroad at a price below their cost and below
the price charged in their domestic market.
a. True
b. False
A bank with a leverage ratio of 9 to 1 has
a. $9 in assets for every $1 in liabilities.
b. $9 in assets for every $1 in capital.
c. $1 in assets for every$9 in capital.
d. $1 in assets for every $9 in liabilities.
Which of the following would NOT be considered a macroeconomic topic?
a. the reasons for a decline in the price of crude oil
b. the cause of a downturn in the economy
c. the effect of the government budget deficit on inflation
d. the causes of inflation and unemployment
A futures contract
a. gives the owner the right, but not the obligation, to buy shares of a stock at a
specified price within the time limits of the contract.
b. gives the owner the right, but not the obligation, to sell shares of a stock at a
specified price within the time limits of the contract.
c. is a contract in which the seller agrees to provide a particular good to the buyer on a
specified future date at an agreed-upon price.
d. gives the owner the right, but not the obligation, to buy or sell shares of a stock at a
specified price within the time limits of the contract.
Those economists who argue that a significant amount of crowding out exists believe
that the impact of expansionary fiscal policy will be _________________ by the
crowding out.Their reasoning is that if the government increases purchases, and
finances that spending by borrowing money, spending in the private sector will
_______________, leading ultimately to _____________ in aggregate demand.
a. strengthened; fall; little or no change
b. strengthened; rise; a significant rise
c. weakened; fall; little or no change
d. weakened; rise; a significant rise