The amount of income that households keep after paying taxes is
A) national income.
B) personal income.
C) personal disposable income.
D) value added income.
Which of the following situations will arise in the domestic market following the
imposition of an import quota?
A) Imports increase, domestic production decreases, prices decrease.
B) Imports decrease, domestic production increases, prices decrease.
C) Imports decrease, domestic production decreases, prices increase.
D) Imports decrease, domestic production increases, prices increase.
Figure 11.1
Refer to Figure 11.1. If the expenditures in the economy correspond to C + I, what
should businesses do to get back to equilibrium if the economy is at point b?
A) increase production, because expenditures exceed production
B) decrease production, because expenditures exceed production
C) increase production, because expenditures are less than production
D) decrease production, because expenditures are less than production
Daily Output of Scotland and Poland
Table 18.1 Refer to Table 18.1. If Poland produces 50
bagpipes, how many accordions can they produce for the rest of the day?
A) 50
B) 125
C) 25
D) 75
A U.S. company is attempting to cut costs by shifting some of its services to Thailand.
This process of shifting production of products or services overseas to cut costs often
results in
A) greater potential for market failure for those products and services.
B) greater economic uncertainty in the market for those products and services.
C) lower consumer prices on those products or services.
D) lower production quantities of those products or services.
Which of the following is correct? The unemployment rate is:
A) (unemployed/population) x 100.
B) ((employed – unemployed)/labor force) x 100.
C) ((labor force – employed)/labor force) x 100.
D) ((employed – labor force)/employed) x 100.
If a nation’s interest rates steadily increases compared to those of other countries, then
the exchange rate of its currency will tend to:
A) depreciate as the demand for its currency increases.
B) depreciate as the demand for its currency decreases.
C) appreciate as the demand for its currency decreases.
D) appreciate as the demand for its currency increases.
The international effect explanation of the downward slope of the AD operates through
which component of aggregate demand?
A) net exports
B) consumption
C) investment
D) government purchases
Figure 18.1 Refer to Figure 18.1. The terms of trade for Duckland is:
A) 1 pair of sunglasses for 6/5 umbrellas.
B) 1 pair of sunglasses for 2/3 umbrellas.
C) 1 pair of sunglasses for 5/6 umbrellas.
D) 1 pair of sunglasses for 3/2 umbrellas.
As the result of a decrease in capital, the demand for labor would ________, the supply
of labor would ________, and the real wage would ________.
A) decrease; decrease; decrease
B) decrease; remain the same; decrease
C) decrease; remain the same; increase
D) decrease; increase; remain the same
What happens to U.S. GDP when foreign countries experience prosperity?
A) It increases because the United States will export more product to those countries.
B) It decreases because the foreign countries will now buy more of their own products.
C) It decreases because the foreign countries will be able to export more at a lower cost.
D) It does not change because U.S. GDP is not affected by other countries’ prosperity.
When Bob incorrectly believed that his real wage went up when his nominal wages
increased because he failed to factor in the effects of inflation, then economists say that
he is a victim of:
A) money illusion.
B) unemployment.
C) the discouraged worker effect.
D) inflation injustice.
Figure 18.4
Refer to Figure 18.4. With free trade, what is the equilibrium quantity of artichokes in
Duckland?
A) 85
B) 75
C) 65
D) 30
Which of the following is an example of an automatic stabilizer?
A) Congress authorizes spending increases during a recession.
B) Congress increases the tax rate during an expansion.
C) More unemployment benefits are paid during a recession.
D) Welfare payments decrease during a recession.
The neoclassical theory of investment was pioneered by
A) Paul Samuelson.
B) John Maynard Keynes.
C) James Tobin.
D) Dale Jorgenson.
Joseph Stiglitz, a Nobel Laureate, attributed the entire Asian crisis in 1997-1998 to:
A) a market overreaction.
B) overvalued exchange rates.
C) weak financial systems.
D) large current account deficits.
Recall Application 2, “World Savings and the U.S. Current Account Deficits,” to answer
the following questions:
According to the application, Russia has been a major player in international
investments because:
A) Russia has lots of energy reserves and energy prices have risen over the last few
years, giving Russia substantial new current account revenue.
B) Russia has been selling lots of military equipment over the last few years, giving it
substantial current account revenue.
C) Russia has been attracting a lot of investors into the country, creating a substantial
source of financial account revenues.
D) Russia has been selling a lot of its patents to other countries, creating a substantial
source of capital account revenue.
A decrease in the reserve requirement
A) increases the money supply, which leads to increased interest rates and a fall in
investment spending.
B) increases the money supply, which leads to decreased interest rates and a rise in
investment spending.
C) decreases the money supply, which leads to increased interest rates and a fall in
investment spending.
D) decreases the money supply, which leads to decreased interest rates and a rise in
investment spending.