Which of the following individuals serve a four-year term?
a. the members of the Board of Governors
b. the Chair of the Board of Governors
c. the members of the FOMC
d. All of the above are correct.
The gains from trade are
a. evident in economic models, but seldom observed in the real world.
b. evident in the real world, but impossible to capture in economic models.
c. a result of more efficient resource allocation than would be observed in the absence
of trade.
d. based on the principle of absolute advantage.
Thomas, a U.S. citizen, works only in Canada. The value of the output he produces is
a. included in both U.S. GDP and U.S. GNP.
b. included in U.S. GDP, but it is not included in U.S. GNP.
c. included in U.S. GNP, but it is not included in U.S. GDP.
d. included in neither U.S. GDP nor U.S. GNP.
The aggregate demand and aggregate supply graph has
a. quantity of output on the horizontal axis. Output can be measured by the GDP
deflator.
b. quantity of output on the horizontal axis. Output can be measured by real GDP.
c. quantity of output on the vertical axis. Output can be measured by the GDP deflator.
d. quantity of output on the vertical axis. Output can be measured by real GDP.
Table 24-9
The table below lists the per gallon prices of gas and milk for the months of April, May,
and June. Assume that the typical consumer buys 60 gallons of gas and 4 gallons of
milk each month, and that April is the base period.
RefertoTable24-9. What is the consumer price index for May?
a. 60
b. 132
c. 166
d. 123
The aggregate demand curve shifts left if either
a. speculators gain confidence in U.S. assets or foreign countries enter into recession.
b. speculators gain confidence in U.S. assets or recessions in foreign countries end.
c. speculators lose confidence in U.S. assets or foreign countries enter into recession.
d. speculators lose confidence in U.S. assets or recessions in foreign countries end.
The Fed’s primary tool to change the money supply is
a. changing the interest rate on reserves.
b. changing the reserve requirement.
c. conducting open market operations.
d. redeeming Federal Reserve notes.
Figure 4-18
RefertoFigure4-18. At the equilibrium price,
a. 200 units would be supplied and demanded.
b. 400 units would be supplied and demanded.
c. 600 units would be supplied and demanded.
d. 600 units would be supplied, but only 200 would be demanded.
In a closed economy, each unit of output is either consumed by households or invested.
a. True
b. False
When a union raises the wage above the equilibrium level, it reduces the quantity of
labor supplied and raises the quantity of labor demanded, resulting in unemployment.
a. True
b. False
Net exports equal
a. exports plus imports.
b. imports minus exports.
c. Y – (C + I + G).
d. Y – (C – I – G).
England can benefit from trade
a. only with nations that can produce goods England cannot produce.
b. only with less developed nations.
c. only with nations outside of Europe.
d. with any nation.
In the open-economy macroeconomic model, the market for loanable funds equates
national saving with
a. domestic investment.
b. net capital outflow.
c. the sum of national consumption and government spending.
d. the sum of domestic investment and net capital outflow.
The Bureau of Labor Statistics is part of the U.S. Department of Labor.
a. True
b. False
If the government were to intervene and set the rent for apartments in New York City
below the market rent, then we would expect, relative to the market outcome,
a. an increase in the number of people wanting to live in apartments in New York City.
b. a decrease in the number of people wanting to live in apartments in New York City.
c. an increase in the number of apartments available for rent in New York City.
d. None of the above is correct.
The quantity demanded of a good is the amount that buyers are
a. willing to purchase.
b. willing and able to purchase.
c. willing, able, and need to purchase.
d. able to purchase.
Data show that at least 10 percent of U.S. manufacturing jobs are destroyed every year.
a. True
b. False
Assume the MPCis 0.65. Assuming only the multiplier effect matters, a decrease in
government purchases of $20 billion will shift the aggregate demand curve to the
a. left by about $30.77 billion.
b. left by about $57.1 billion.
c. right by about $57.1 billion.
d. right by about $30.77 billion.
Charisse is of the opinion that the interest rate depends on the economy’s saving
propensities and investment opportunities. Most economists would say that Charisse’s
opinion is
a. Keynesian in nature, and that her view is more valid for the long run than for the
short run.
b. classical in nature, and that her view is more valid for the long run than for the short
run.
c. Keynesian in nature, and that her view is more valid for the short run than for the
long run.
d. classical in nature, and that her view is more valid for the short run than for the long
run.
Most financial assets other than money function as
a. a medium of exchange, a unit of account, and a store of value.
b. a medium of exchange and a store of value, but not a unit of account.
c. a store of value and a unit of account, but not a medium of exchange.
d. a store of value, but not a unit of account nor a medium of exchange
Figure 4-5
RefertoFigure4-5.Which of the following would cause the demand curve to shift from
Demand C to Demand A in the market for tennis balls in the United States?
a. an increase in the price of tennis balls
b. a decrease in the price of tennis racquets
c. an expectation by buyers that their incomes will increase in the very near future
d. a decrease in the number of people in the United States under age 70
There is no longer much debate among economists concerning the severity of and the
solution to the problems in using the CPI to measure the cost of living.
a. True
b. False
Table 2-4
ProductionPossibilitiesforPicnicland
Refer to Table2-4. What is the opportunity cost to Picnicland of increasing the
production of hotdogs from 450 to 900?
a. 150 burgers
b. 225 burgers
c. 300 burgers
d. 450 burgers
As the reserve ratio decreases, the money multiplier
a. increases.
b. does not change.
c. decreases.
d. could do any of the above.
If the nominal interest rate is 5 percent, and the rate of inflation is 3 percent, then the
real interest rate is equal to
a. 2 percent.
b. 0.6 percent.
c. 1.7 percent.
d. 15 percent.
The primary purpose of the aggregate demand and aggregate supply model is to
demonstrate the classical dichotomy.
a. True
b. False
The long-run response to a decrease in the money supply growth rate is shown by
shifting
a. the short-run and long-run Phillips curves left.
b. the short-run and long-run Phillips curves right.
c. only the short-run Phillips curve left.
d. only the short-run Phillips curve right.
Other things the same, an increase in aggregate demand reduces unemployment and
raises inflation in the short run.
a. True
b. False
Country A had a population of 1,000, of whom 600 worked an average of 8 hours a day
and had a productivity of 2.5. Country B had a population of 800, of whom 560 worked
8 hours a day and had productivity of 3.0. Country
a. A had the higher level of real GDP and real GDP per person.
b. A had the higher level of real GDP and Country B had the higher level of real GDP
per person
c. B had the higher level of real GDP and Country A had the higher level of real GDP
per person
d. B had the higher level of real GDP and real GDP per person.
Figure 28-4
RefetoFigure28-4.If the government imposes a minimum wage of $6, how many
workers will be unemployed?
a. 0
b. 2,000
c. 4,000
d. 6,000
When there is an increase in government expenditures, which of the following raises
investment spending?
a. the investment accelerator and crowding out
b. the investment accelerator but not crowding out
c. crowding out but not the investment accelerator
d. neither the investment accelerator or crowding out
In the U.S., each additional year of schooling has historically raised a person’s wage on
average by about
a. 5 percent. In less developed countries the gap between the wages of educated and
uneducated workers is smaller.
b. 10 percent. In less developed countries the gap between the wages of educated and
uneducated workers is smaller.
c. 5 percent. In less developed countries the gap between the wages of educated and
uneducated workers is larger.
d. 10 percent. In less developed countries the gap between the wages of educated and
uneducated workers is larger.
A large and sudden movement of funds out of a country is called
a. arbitrage.
b. capital flight.
c. crowding out.
d. capital mobility.
Suppose that U.S. citizens start saving more. What does this imply about the supply of
loanable funds and the equilibrium real interest rate? What happens to the real exchange
rate?
The prices of goods at a grocery store are listed in dollars. Which function of money
does this illustrate?
Table 3-41
Refer to Table3-41. If the two countries decide to trade with each other, which country
should specialize in producing compasses?
Explain the concept of externality and give an example.
Explain how an increase in the price level changes interest rates. How does this change
in interest rates lead to changes in investment and net exports?
What does the maturity of a bond indicate?
Suppose you place $1,000 into a savings account that will pay you 4% interest per year.
What will be the future value of the savings account in 10 years?
When someone borrows to purchase capital goods, he is using someone else’s to fund
his .
When the federal funds rate is below the target rate, the Fed willbonds.
This action willthe money supply.
Table 4-15
The following table shows the number of cases of water each seller is willing to sell at
the prices listed.
RefertoTable4-15.Assuming these are the only four suppliers in this market, the
function for market supply can be written as QS=
Table 4-15
The following table shows the number of cases of water each seller is willing to sell at
the prices listed.
RefertoTable4-15.Assuming these are the only four suppliers in this market and the
function for market demand is QD=1000-100P, where QDis the quantity demanded and
P is the price, what is the equilibrium quantity?
What is the change in the money supply when the Fed purchases $100 worth of bonds
in a 100-percent-reserve banking system?
List the four ways to explain unemployment in the long run.
How does adverse selection affect the insurance market?
Most economists agree that a large federal budget deficit has what type of effect on the
economy?
Write the mathematical expression that summarizes the three alternative explanations
for the upward slope of the short run aggregate supply curve.
Figure 3-26
RefertoFigure3-26.Who has a comparative advantage in making cookies?
Budget Reform
Due to concerns about a rising level of debt relative to GDP, Congress and the President
cut expenditures and raise taxes.
RefertoBudgetReform. What does this policy change do to the equilibrium values of
the interest rate and the quantity of loanable funds?
Figure 2-3
RefertoFigure2-3.What do the rectangles represent in the figure?