Recall the Application about the market for meteorites to answer the following
question(s).
According to the Application, people in Morocco bring meteorites picked up in the
desert to local dealers, who then sell them to the public through Websites. If the
Moroccan government decided to intervene in this market by requiring all meteorites be
turned over to the government, and then the government decides who is allowed to
purchase the meteorites and at what prices, this best describes an example of
A) a market system.
B) central planning.
C) a barter economy.
D) comparative advantage.
The relative amounts of the goods that will be exchanged for each other in trade refers
to the nations’
A) absolute advantages.
B) terms of trade.
C) production possibilities.
D) autarky status.
In order to increase the size of markets, and so promote faster technological innovation,
countries could:
A) deregulate the food and drug industry.
B) liberalize their international trade.
C) subsidize the export of electric and electronic goods.
D) lower taxes on stock dividends.
If the consumption function is C = 100 + 0.8Y, then the multiplier is:
A) 5.
B) 4.
C) 8.
D) .9.
Which of the following statements is correct?
A) Investment represents household purchases of assets.
B) Consumption is spending by firms and households on new capital.
C) Net exports are imports minus exports.
D) The purchase of a new home is treated as investment.
An example of a public good is:
A) a levee.
B) a monopoly.
C) profit.
D) imperfect information.
Which of the following is NOT a macroeconomic question?
A) Should we have a constitutional amendment requiring the federal government to
balance the budget each year?
B) Should restaurants be required to list the number of calories for each product on their
menus?
C) How does a fiscal stimulus package affect gross domestic product?
D) Should Congress enact tougher immigration laws to reduce unemployment?
Figure 2.3 In Figure 2.3, the move from production possibility curve YZ to production
possibility curve XV, could be caused by:
A) increased unemployment.
B) more land, labor or capital.
C) a decline in technology.
D) all of the above.
A company produced 10 dishwasher machines in 2011. The company sold 8 in 2011
and added 2 to its inventories. The market value of the dishwasher machines in 2011
was $200 per unit. What is the value of this company’s output that will be included in
the 2011 GDP?
A) $1,600
B) $400
C) $2,000
D) $1,800
Figure 4.7 If supply increases 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 required reserve ratio is 15%. The money multiplier is:
A) 5.67.
B) 8.12.
C) 5.54.
D) 6.67.
As of 2012, banks have been required to keep ________ percent of deposits exceeding
$71 million as reserves.
A) 10
B) 3
C) 7
D) 20
If you go to the bank for a loan, and you were quoted an interest rate equal to 7 percent
per year, that interest rate is:
A) the real interest rate.
B) the nominal interest rate.
C) the net interest rate.
D) the present discounted interest rate.
You have an hour between your economics and math classes. What is the opportunity
cost of that time if you use it to complete your math homework instead of your
economics homework?
A) the economics homework you could have completed
B) the math homework you chose to complete
C) the cost of your calculator and math textbook
D) zero, because it doesn’t cost any money to do your math homework
If the demand for jelly increases, and the price of grapes (used to make jelly) rises
A) the equilibrium price of jelly rises and the equilibrium quantity of jelly might rise or
fall.
B) the equilibrium price of jelly falls and the equilibrium quantity of jelly might rise or
fall.
C) the equilibrium price of jelly falls and the equilibrium quantity of jelly rises.
D) the equilibrium quantity of jelly falls and the equilibrium price of jelly might rise or
fall.
If the economy is at potential output, and people’s expectations about inflation is
correct, then the actual inflation:
A) is greater than expected inflation.
B) equals expected inflation.
C) is less than expected inflation.
D) equals the natural rate of unemployment.
Suppose that a vehicle is invented such that it emits no pollutants into the atmosphere.
To achieve an efficient market outcome, the government must:
A) allow other vehicles that emit pollutants into the atmosphere, as long as vehicle
owners pay all the costs associated with their pollution.
B) outlaw SUV and other vehicles that pollute the environment.
C) be the sole producer of that vehicle.
D) require all auto makers to produce the vehicles that produces zero emissions.
Investment spending tends to be
A) procyclical.
B) anticyclical.
C) unrelated to GDP.
D) a periodic variable.
Recall the Application about the effectiveness of committees in making decisions about
monetary policy to answer the following question(s). Former Fed vice-chairman Alan
Blinder developed an experiment to see whether individuals or groups make better
decisions, and who makes them more rapidly. The experiment tested how quickly
individuals and groups could distinguish changes in underlying trends from random
events, such as if a one-month unemployment rate increase was a temporary aberration
or the possible beginning of a recession, and their decisions as to changing monetary
policy as a reaction to the events.
Recall the Application. If the Federal Reserve was making a decision on changing
interest rates
A) the chairman, acting alone, would typically make a better decision than the Board of
Governors.
B) the Board of Governors would typically make a better decision than the chairman
acting on his own.
C) the Board of Governors would typically make an equally good decision as would the
chairman acting on his own.
D) neither the Board of Governors nor the chairman, acting alone, would tend to make
accurate predictions.