Countries like _________ have no reserve requirements at all.
a. England
b. Canada
c. Australia
d. all of the above
e. none of the above.
In a typical economy, the dollar value of the total output for a period will equal the sum
of consumption spending, planned investment spending, government spending, and net
tax revenue.
Which of the following is assumed constant along the demand curve for gasoline?
a. the price of gasoline and the prices of related goods
b. the price of gasoline, buyers’ incomes, and tastes
c. all variables affecting demand other than the price of gasoline
d. all variables affecting demand other than the supply of gasoline
e. buyers’ incomes and tastes, but not the prices of related goods
In what way is the result of a subsidy given to either demanders or suppliers similar to
the result of a price ceiling?
a. The amount that consumers pay for the good will be less than they previously paid
b. The amount of the good that will be traded in the market will be less than previously
traded
c. both price ceilings and subsidies create excess demand
d. The amount that consumers pay for the good will be greater than they previously paid
e. both price floors and excise taxes create excess supply
Of the following, which is most likely to be a normal good?
a. hamburger
b. automobiles
c. used clothing
d. low-rent housing units
e. macaroni and cheese
Some of the inaccuracies in measuring GDP are attributable to
a. monopolization
b. ignoring production by U.S.-owned plants abroad
c. the underground economy and quality changes
d. tax evasion and inflation
e. short-term changes in spending
If the Federal Reserve sells $1,000 in bonds and the required reserve ratio is 0.1
(assume banks hold no excess reserves) what will be the total change in reserves at all
banks?
a. $10,000
b. $1,000
c. -$10,000
d. -$1,000
e. -$1,100
If the total amount of demand deposits in the country increases by $12,000 after the Fed
purchases $6,000 in bonds, what is the required reserve ratio?
a. 0.4
b. 0.1
c. 0.2
d. 0.5
e. 0.3
In the factor payments approach, owners of land receive
a. wages
b. user fees
c. rent
d. interest
e. profit
The 1990-91 recession was caused by a Federal Reserve policy change designed to
minimize the adverse economic effects of the Gulf War.
Refer to Figure 8-1. What would be the effect if the real wage was $2 above the
equilibrium wage?
a. There would be a shortage of 40 million workers and the wage rate would rise.
b. There would be a shortage of 20 million workers and the wage rate would rise.
c. There would be a surplus of 40 million workers and the wage rate would fall.
d. There would be a surplus of 20 million workers and the wage rate would fall.
e. The government would set a minimum wage.
If an economy’s production possibilities frontier shifted to the right, this would illustrate
a. increasing opportunity cost
b. decreasing opportunity cost
c. a fall in resource utilization
d. economic growth
e. a rise in resource utilization
Use the table below to calculate the CPI in 2007. Assume the base year is 2007 and the
cost of the market basket in the base year is $275.50.
The CPI in 2007 is
a. 100
b. 126
c. 115
d. 230
e. 200
The large U.S. government budget deficits in the early 1980s were caused by
a. wasteful military spending
b. declining transfer payments triggered by more expenditures on education and
training
c. President Reagan’s attitude toward deficits
d. a recession, expanded military spending, and income tax cuts
e. recessionary gaps in GDP
Real output per capita is calculated by
a. multiplying the population by GDP
b. dividing nominal GDP by the population
c. dividing the population by nominal GDP
d. dividing real GDP by the population
e. dividing the population by real GDP
What are the three important macroeconomic goals about which most economists, and
society at large, agree?
a. economic growth, full employment, and low interest rates
b. economic growth, full employment, and stable prices
c. economic growth, zero unemployment, and falling prices
d. economic growth, low unemployment, and a balanced budget
e. economic growth, a balanced budget, and balanced international trade
Which of the following would cause the real interest rate to be negative?
a. When the nominal interest rate is greater than the inflation rate
b. When the nominal interest rate is greater than the rate of deflation
c. When the nominal interest rate is smaller than the rate of deflation
d. When the nominal interest rate is smaller than the inflation rate
e. When the nominal interest rate is equal to the inflation rate