Which of the following combinations of factors comes closest to describing the
situation in agriculture?
a. elastic demand for agricultural products and large swings in supply
b. elastic demand for agricultural products and small swings in supply
c. inelastic demand for agricultural products and constant supply
d. inelastic demand for agricultural products and large swings in supply
e. none of the above
What does annual economic growth refer to?
a. annual increases in GDP
b. annual increases in consumption spending
c. annual increases in investment spending
d. annual increases in Real GDP
e. none of the above
In the 1970s and early 1980s, the U.S. economy experienced
a. stagflation.
b. low inflation and low unemployment.
c. high inflation and low unemployment.
d. high inflation and high unemployment.
e. a and d
The change in the purchasing power of dollar-denominated assets (such as cash
holdings) is the
a. money effect.
b. interest rate effect.
c. asset effect.
d. real balance effect.
e. none of the above
Smith says that criminals are rational and that they consider both the benefits and costs
of criminal activity.Jones disagrees.He says criminals are irrational and can’t possibly
be considering both the benefits and costs of criminal activity.If they did, he argues,
they wouldn’t be criminals.An economist who wants to figure out if criminals are
rational, would most likely build a
a. falsifiable theory built on a rational criminal and then test the theory.
b. non-falsifiable theory built on a rational criminal and then test the theory.
c. falsifiable theory built on a rational criminal, but not test the theory.
d. non-falsifiable theory built on a rational criminal, but not test the theory.
A market basket is made up of three goods, 10X, 12Y, and 18Z. The prices in the base
year are $1.20, $2.10, and $3.25, respectively. The prices in the current year are $1.44,
$2.23, and $3.88. What is the approximate consumer price index in the current year?
a. 103
b. 111
c. 116
d. 110
e. 96
Which of the following statements is true?
a. A budget deficit occurs when government expenditures exceed tax receipts during
any single year.
b. The public debt is the total amount the federal government owes its creditors.
c. The public debt is greater than the net public debt.
d. b and c
e. a, b, and c
Government purchases rise by $100 billion and the MPC equals 0.75. Assuming that
idle resources exist at each expenditure round, and the multiplier is operative, the
change in Real GDP equals
a. $40 billion.
b. $75 billion.
c. $400 billion.
d. $750 billion.
e. $250 billion.
According to the Keynesian transmission mechanism, an increase in the money supply
will __________ the interest rate, causing a __________ in investment, which then
__________ Real GDP.
a. raise; fall; raises
b. raise; rise; lowers
c. raise; fall; lowers
d. lower; fall; lowers
e. lower; rise; raises
The value of the consumer price index (CPI) is always equal to ______________ in the
base year.
a. 1
b. 10
c. 100
d. 1,000
e. There is not enough information given to answer this question.
Which of the following will cause a movement from one point on an AD curve to
another point on the same AD curve?
a. a change in consumption
b. a change in government expenditures
c. a change in net exports
d. a change in the price level
e. all of the above
If the United States buys inputs from France and the dollar appreciates relative to the
euro, then Americans will have to pay ________________ for foreign inputs, and the
U.S. SRAS curve will shift __________________.
a. less; rightward
b. less; leftward
c. more; rightward
d. more; leftward
The slope of a (nonlinear) curve varies from one point to another.
a. True
b. False
Which of the following is a positive microeconomics statement?
a. The central bank should increase the nation’s money supply.
b. The increase in the nation’s money supply helped push the nation’s unemployment
rate down in the short run.
c. Ford Motor Company’s new advertising campaign ended up hurting General Motors’s
sales.
d. The local government ought to spend more on recreational activities.
If a college sets its tuition __________ the equilibrium tuition, then it will have to use
some form of nonprice-rationing device to determine who will be accepted for
admission to the college.
a. above
b. below
c. equal to
d. all of the above
The range of laws, rules, and regulations that define the allowed forms of use and
transfer of resources is called the __________ structure of the economy.
a. monetary
b. property rights
c. microeconomic
d. macroeconomic
Rational ignorance is
a. a result of our educational system.
b. the curtain, or wall, of knowledge between the persons that are educated and those
that are not.
c. the curtain behind which people choose to hide to avoid knowledge about poverty
and, in general, the unequal distribution of income.
d. the curtain separating educated voters from uneducated voters.
e. none of the above
A decrease in the supply of an agricultural product will increase the total revenue of
farmers if the demand for the agricultural product is
a. income elastic.
b. income inelastic.
c. price elastic.
d. price inelastic.
e. none of the above
Exhibit 9-4
Assume the economy is currently in long-run equilibrium with the price level equal to
P3. If foreigners begin to buy more U.S. goods, the economy will, in the short run,
move to which of the following equilibrium combinations of price level and Real GDP?
a. P2, Q4.
b. P3, Q3.
c. P4, Q2.
d. P4, Q4.
e. P5, Q3.
With a decrease in the budget deficit, the open-economy outcome compared to the
closed-economy outcome features a ___________ in Real GDP.
a. larger increase
b. smaller increase
c. larger decrease
d. smaller decrease