When two variables move in the same direction, the curve relating them is
a. upward sloping, and we say the variables are positively related.
b. upward sloping, and we say the variables are negatively related.
c. downward sloping, and we say the variables are positively related.
d. downward sloping, and we say the variables are negatively related.
Suppose that a well-respected study published in ChildPsychologyTodayfinds that a
very high proportion of children raised by stay-at-home fathers are accepted to Harvard
University. If a large number of previously working fathers quit their jobs and become
stay-at-home dads, which of the following will occur, all else equal?
(i) The unemployment rate will decrease.
(ii) The size of the labor force will decrease.
(iii) The number of unemployed people will increase.
(iv) The unemployment rate will increase.
a. (i) and (ii) only
b. (ii) and (iv) only
c. (i), (ii), and (iii) only
d. (ii), (iii), and (iv) only
Economists speaking like scientists make
a. normative statements.
b. prescriptive statements.
c. claims about how the world is.
d. claims about how the world should be.
A country’s human capital increases
a. if its workers become better educated or healthier.
b. only if its workers become better educated.
c. only if its workers become healthier.
d. None of the above is correct.
In 2010 the U.S. government was running a large deficit. Some were concerned that
pressures might be put on the Federal Reserve to purchase government bonds to help
the government finance this deficit. If the Fed were to buy government bonds to help
the government finance its expenditures, then
a. the price level would fall, so the value of money would fall.
b. the price level would fall, so the value of money would rise.
c. the price level would rise, so the value of money would fall.
d. the price level would rise, so the value of money would rise.
Suppose that the money supply increases. In the short run this decreases unemployment
according to
a. both the short-run Phillips curve and the aggregate demand and aggregate supply
model.
b. neither the short-run Phillips curve nor the aggregate demand and aggregate supply
model.
c. the short-run Phillips curve, but not according to the aggregate demand and supply
model.
d. the aggregate demand and aggregate supply model, but not according to the short-run
Phillips curve.
Which of the following restrictions implies that saving and investment are equal for a
closed economy?
a. Private saving is equal to zero.
b. Public saving is equal to zero.
c. The economy’s government is running neither a surplus nor a deficit.
d. No restriction is necessary; saving and investment are equal for all closed economies.
If the CPI was 127 in 1972 and is 324 today, then $10 in 1972 purchased the same
amount of goods and services as
a. $3.92 purchases today.
b. $25.51 purchases today.
c. $207.00 purchases today.
d. $324.00 purchases today.
At the broadest level, the financial system moves the economy’s scarce resources from
a. the rich to the poor.
b. financial institutions to business firms and government.
c. households to financial institutions.
d. savers to borrowers.
Assume the MPCis 0.625. Assume there is a multiplier effect and that the total
crowding-out effect is $12 billion.
An increase in government purchases of $30 billion will shift aggregate demand to the
a. left by $60 billion.
b. left by $36 billion.
c. right by $68 billion.
d. right by $36 billion.
If the central bank increases the money supply, in the short run, the price level
a. and unemployment rise.
b. rises and unemployment falls.
c. falls and unemployment rises.
d. and unemployment fall.
The value of Austria’s exports minus the value of Austria’s imports is called
a. Austria’s net exports.
b. Austria’s net imports.
c. Austria’s foreign portfolio investment
d. Austria’s foreign direct investment.
Figure30-3. On the graph, MS represents the money supply and MD represents money
demand. The usual quantities are measured along the axes.
RefetoFigure30-3. Suppose the relevant money-supply curve is the one labeled MS1;
also suppose the economy’s real GDP is 30,000 for the year. If the money market is in
equilibrium, then the velocity of money is approximately
a. 3.0
b. 6.0
c. 9.0
d. 1.5
While vacationing in Italy, you see an interesting meal on a menu. The price is 24
euros.
A. If the exchange rate is .80 euros per dollar, how many dollars would you have to
give up to buy the meal?
B. If the dollar appreciated against the euro, but the price of the meal remained 24 euro,
would the meal cost more or fewer dollars? Explain.
Which of the following is an observation made by economist Michael Kremer?
a. World growth rates increased as the population increased.
b. Technological progress allows for increasing population because of advances in
agriculture.
c. World population is growing so rapidly that soon it will outstrip natural resources and
our standard of living will decline.
d. All of the above are observations made by Kremer.
Under a fractional-reserve banking system, banks
a. hold more reserves than deposits.
b. generally lend out a majority of the funds deposited.
c. cause the money supply to fall by lending out reserves.
d. All of the above are correct.
Which of the following is an example of a nonrenewable resource?
a. corn
b. oil
c. livestock
d. All of the above are correct.
Since the end of World War II, the U.S. has almost always had rising prices and an
upward trend in real GDP. To explain this
a. it is only necessary that long-run aggregate supply shifts right over time.
b. it is only necessary that aggregate demand shifts right over time.
c. both aggregate demand and long-run aggregate supply must be shifting right and
aggregate demand must be shifting farther.
d. None of the above cases would produce rising prices and growing real GDP over
time.
According to 2012 data on the U.S. population, which of the following groups of
teenagers (ages 16-19) had the lowest labor-force participation rate?
a. white males
b. white females
c. black males
d. black females
According to John Maynard Keynes, an economist must possess a rare combination of
skills including being a mathematician, historian, statesman, and philosopher.
a. True
b. False
For an economy as a whole, net exports must equal minus one times net capital outflow.
a. True
b. False
The supply of money increases when
a. the value of money increases.
b. the interest rate increases.
c. the Federal Reserve purchases bonds.
d. velocity increases.
The CPI is a measure of the overall cost of the goods and services bought by
a. a typical consumer, and the CPI is computed and reported by the Department of the
Treasury.
b. typical consumers and typical business firms, and the CPI is computed and reported
by the Department of the Treasury.
c. a typical consumer, and the CPI is computed and reported by the Bureau of Labor
Statistics.
d. typical consumers and typical business firms, and the CPI is computed and reported
by the Bureau of Labor Statistics.
Table 3-21
Assume that Jamaica and Norway can switch between producing coolers and producing
radios at a constant rate. The following table shows the number of coolers or number of
radios each country can produce in one day.
RefertoTable3-21.Jamaica’s opportunity cost of one cooler is
a. 0.5 radios, and Norway’s opportunity cost of one cooler is 0.125 radios.
b. 0.5 radios, and Norway’s opportunity cost of one cooler is 8 radios.
c. 2 radios, and Norway’s opportunity cost of one cooler is 0.125 radios.
d. 2 radios, and Norway’s opportunity cost of one cooler is 8 radios.
Lydia, a citizen of Italy, produces scarves and purses that she sells to department stores
in the United States. Other things the same, these sales
a. increase U.S. net exports and have no effect on Italian net exports.
b. decrease U.S. net exports and have no effect on Italian net exports.
c. increase U.S. net exports and decrease Italian net exports.
d. decrease U.S. net exports and increase Italian net exports.
Which of the following is the best explanation for why President Harry Truman once
said that he wanted to find a one-armed economist?
a. President Truman received input from so many economists that he only wanted one
view from each.
b. President Truman thought economists should analyze policies but not make or
enforce them.
c. Economists understand that most policy decisions involve trade-offs so they are
likely to present multiple views of policies.
d. A one-armed economist would conduct only positive analysis and no normative
analysis.
Recessions in Canada and Mexico would cause
a. the U.S. price level and real GDP to rise.
b. the U.S. price level and real GDP to fall.
c. the U.S. price level to rise and real GDP to fall.
d. the U.S. price level to fall and real GDP to rise.
For most students, the largest single cost of a college education is
a. the wages given up to attend school.
b. tuition, fees, and books.
c. room and board.
d. transportation, parking, and entertainment.
Table 3-36
RefertoTable3-36.What is Antigua’s opportunity cost of one towel?
a. 3/5 umbrellas
b. 2/3 umbrellas
c. 3/2 umbrellas
d. 5/3 umbrellas
Suppose a basket of goods and services has been selected to calculate the CPI and 2014
has been selected as the base year. In 2012, the basket’s cost was $50; in 2014, the
basket’s cost was $52; and in 2016, the basket’s cost was $58. The value of the CPI in
2016 was
a. 106.0.
b. 104.0.
c. 111.5.
d. 116.0.