If the yen to dollar exchange rate moves from 105 to 115 yen per dollar, then the dollar
has ________ and the yen has ________.
A) depreciated; depreciated
B) depreciated; appreciated
C) appreciated; depreciated
D) appreciated; appreciated
Recall Application 2, “What Have Been the Local Effects of Chinese Imports?” to
answer the following questions:
According to the Application, what effects of the Chinese imports were
disadvantageous to local communities?
A) more workers receiving unemployment insurance
B) more workers receiving disability payments
C) more workers relying on food stamps from the government
D) All of the above are correct.
Table 5.1
Refer to Table 5.1. Assume that this economy produces only two goods: Good X and
Good Y. If year 2 is the base year, the value for this economy’s real GDP in year 2 is:
A) $100.
B) $120.
C) $176.
D) $200.
An import ban results in:
A) a decrease in the supply of the product.
B) an increase in the product’s price.
C) a decrease in the quantity of the product bought and sold.
D) all of the above.
If no foreign companies produce in a country, but many of the country’s companies
produce abroad, then it is probably true:
A) the country’s GNP exceeds its GDP.
B) the country’s GDP exceeds its GNP.
C) the country’s GNP and GDP are equal.
D) the country’s GDP equals its domestic income.
The Federal Reserve is ________ the U.S. Treasury.
A) independent of
B) a part of
C) a creation of
D) under the control of
An example of an automatic stabilizer is:
A) the food stamp program.
B) changing the tax laws to increase the marginal tax rates.
C) the indexation of social security benefits to the consumer price index.
D) the interest the government pays on loans.
Figure 11.3 Refer to Figure 11.3 to answer the following questions. Suppose the
economy is initially at point a. An increase in investments, holding everything else
constant, will bring the economy back to equilibrium at point:
A) a.
B) b.
C) c.
D) d.
Recall the Application about the impact that home equity values have on consumer
spending and wealth to answer the following question(s). From 1997 to mid-2006,
housing prices rose nationally by approximately 90 percent and consumer wealth
increased by $6.5 trillion, but in the summer of 2006, housing prices began to fall.
Home equity is the single largest component of net wealth for most families in the
United States, and changes in the value of home equity affect consumer spending.
According to this Application, the decrease in consumer wealth due to decreases in the
value of home equity has
A) decreased consumer spending.
B) increased consumer saving.
C) decreased the marginal propensity to save.
D) increased short-run aggregate supply.
Allowing the Fed to set its own inflation targets:
A) would make the Fed even more independent from Congress.
B) would require a constitutional amendment.
C) would diminish the Fed’s authority and control over the economy.
D) would eliminate the need for the Treasury Department.
For a nation to have a comparative advantage in a good it must have:
A) more resources.
B) better resources.
C) a lower opportunity cost of producing that good.
D) a straight-line production possibilities curve.
Quantity of Frozen Latte-On-A-Stick Supplied
Table 4.1
Refer to Table 4.1, which shows Flo’s and Rita’s individual supply schedules for frozen
latte-on-a-stick. Assuming Flo and Rita are the only suppliers in the market, what is the
market quantity supplied at a price of $2?
A) 0
B) 2
C) 3
D) 5
An inferior good is defined as a good for which demand decreases when:
A) the price increases.
B) income increases.
C) the price decreases.
D) income decreases.
All of the following can cause technological progress EXCEPT
A) research and development.
B) education.
C) free trade.
D) population decreases.
The Q-theory of investment was originally developed by
A) Paul Samuelson.
B) John Maynard Keynes.
C) James Tobin.
D) Dale Jorgenson.
If France can produce grapes at a lower opportunity cost than any other nation, France
is said to have a(n) ________ in the production of grapes.
A) autarky
B) absolute advantage
C) comparative disadvantage
D) comparative advantage