Assume there is no government or foreign sector. If the multiplier is 5, a $10 billion
increase in investment will cause equilibrium output to increase by:
A) $5 billion.
B) $10 billion.
C) $50 billion.
D) $200 billion.
Figure 9.5 Refer to Figure 9.5. Suppose the economy is a point B. A large ________ in
the price level will move the economy to ________.
A) increase; point C
B) decrease; point C
C) increase; point A
D) decrease; AS0
The real interest rate tells you:
A) how fast the number of dollars in your bank account increases over time.
B) how fast the purchasing power of your bank account increases over time.
C) the number of dollars in your bank account.
D) the purchasing power of your bank account.
Table 11.1
Refer to Table 11.1. At the equilibrium level of output, y*, what is the level of imports?
A) 266.25
B) 356.25
C) 1065.00
D) 1425.00
If you save $20 when you experience a $200 rise in your income:
A) your marginal propensity to save is 0.2.
B) your marginal propensity to consume is 0.9.
C) your marginal propensity to consume is 0.1.
D) your marginal propensity to save is 0.8.
“Growth accounting” is concerned with explaining which of the following?
A) sources of inflation
B) sources of unemployment
C) sources of output growth
D) sources of interest rate changes
Recall the Application about the possibility that the Federal Reserve’s loose monetary
policy was responsible for the housing boom during the 2000s to answer the following
question(s).
Recall the Application. When applying the Taylor Rule to the decade of 2000,
economist John Taylor found that past experience showed that from 2001 to 2004, the
Fed should have ________ interest rates instead of ________ interest rates.
A) lowered; raising
B) raised; lowering
C) not changed; lowering
D) raised; not changing
Under a fixed exchange rate system, if the inflation rate of the United States is less than
the inflation rate of other nations, the
A) dollar will depreciate.
B) dollar will appreciate.
C) United States will develop a trade deficit.
D) United States will develop a trade surplus.
The output level where planned expenditures equals GDP is called the:
A) equilibrium output.
B) optimum output.
C) full employment.
D) natural output.
Figure 4.5 illustrates a set of supply and demand curves for hamburgers. A decrease in
supply and a decrease in demand are represented by a movement from
A) point c to point a.
B) point to point d.
C) point d to point a.
D) point a to point .
Figure 4.7 If supply decreases in Figure 4.7, then the equilibrium:
A) price and quantity rise.
B) price rises and quantity falls.
C) price falls and quantity rises.
D) price and quantity fall.
The Federal Reserve influences the level of interest rates in the short run by changing
the
A) demand for money through open market operations.
B) demand for money through changes in reserve requirements.
C) supply of money through open market operations.
D) supply of money through changes in stock market operations.
Figure 9.6 Refer to Figure 9.6. In the short run, an improvement in the technology will
move the equilibrium to:
A) point D.
B) point E.
C) point F.
D) point H.
Which of the following individuals can be classified as a marginally attached worker?
A) Bob, stops looking for a job as a 5th grade teacher after looking for a job the last 6
months.
B) Jane was looking for a job but stopped looking because of her inability to find a
babysitter for her 2-year-old son.
C) Jane is currently looking for a job and has not found one.
D) A and B are correct.
Assume the stock of capital is held constant. Table 7.1
Refer to Table 7.1. As labor inputs increase from 5 to 6, output
A) increases by 16 units.
B) increases by 98 units.
C) increases at a negative rate.
D) increases by 12 units.