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A movement along a consumption function is caused by:
a. a change in households' real assets.
b. a change in interest rates.
c. changes in taxation policy.
d. expectations of price changes.
e. changes in households' disposable incomes.
If Japan has a current account surplus, then it must:
a. have an offsetting capital account deficit.
b. also have a surplus in its capital account.
c. import more goods than it exports.
d. have a positive balance of payments.
The "ceteris paribus" clause in the law of demand does not allow which of the
following factors to change?
a. Consumer tastes and preferences.
b. The prices of other goods.
c. Expectations.
d. All of these.
A market consequence of the establishment of a price floor program is that price will
be:
a. too low, and an excess supply will result.
b. too low, and a shortage will result.
c. too high, and an excess supply will result.
d. too high, and a shortage will result.
e. below the market equilibrium price.
Exhibit 2-18 Production possibilities curves
In Exhibit 2-18, the production
possibilities curves for a country are shown for the years Year X and Year Y. Suppose
this country was located at point A in Year X and point B in Year Y. This economy:
a. is worse off in Year Y than in Year X.
b. has stagnated production in this two year period.
c. is more efficient in Year Y than in Year X.
d. has shown growth between these two years.
e. has higher unemployment in Year Y than in Year X.
Which of the following is not a component of the aggregate demand curve?
a. Consumption (C).
b. Investment (I).
c. Government spending (G).
d. Net exports (X-M).
e. All of these are components.
A lower interest rate makes more investment projects profitable, meaning that:
a. there is a direct relationship between the rate of interest and the quantity of
investment spending.
b. there is an inverse relationship between the rate of interest and the quantity of
investment spending.
c. there is no relationship between the rate of interest and the quantity of investment
spending.
d. the demand curve for investment spending is horizontal.
e. the demand curve for investment spending is vertical.
Less-developed countries are poor for all of the following reasons except one. Which
one?
a. They do not produce many goods and services.
b. Labor productivity is low.
c. Investment funds tend to flow abroad
d. Investment in human capital is very low.
e. The labor force is too small.
Exhibit 1A-6 Straight line
In Exhibit 1A-6, the slope of straight line A-D is:
a. positive.
b. zero.
c. negative.
d. variable.
Exhibit 5-6
Use the table below to answer the following question(s). Nominal GDP GDP
Year (billions) deflator
2003 600 100.0
2008 1,000 133.3 Refer to Exhibit 5-6. Measured in terms of 2003 prices, real GDP in
2008 was:
a. 600.
b. 750.
c. 900.
d. 1,333.
Exhibit 2-13 Production possibilities curve
In Exhibit 2-13, the combination of
goods given by point H could:
a. never be achieved by this economy.
b. be achieved today if the economy achieved full employment.
c. be achieved today if the economy achieved maximum efficiency.
d. not be achieved today.
e. be achieved today with the proper allocation of resources.
Along the Keynesian range of the aggregate supply curve, an increase in the aggregate
demand curve will increase:
a. both the price level and real GDP.
b. only real GDP.
c. only the price level.
d. real GDP and reduce the price level.
Since classical economists and monetarists believe that the economy operates at full
employment, real GDP, that is, along the vertical segment of aggregate supply:
a. any increase in the money supply can only end up raising the price level.
b. any increase in the money supply can only end up lowering the price level.
c. any decrease in the money supply can only end up raising the price level.
d. changes in the money supply will not affect the price level.
e. any increase in the money supply will cause both nominal and real GDP to increase.
The Keynesian mechanism through which monetary policy affects the price level, real
GDP, and employment depends on the impact of the:
a. interest rate on savings.
b. inflation on investment.
c. interest rate on investment.
d. interest rate on bond prices.
Exhibit 6-3 Unemployment categories CategoryWorkers
Frictional unemployment 250
Structural unemployment 350
Cyclical unemployment 600
Discouraged workers 400
Underemployment 450 According to data in Exhibit 6-3 and assuming the total number
of workers is 8,400, the civilian labor force is:
a. 7,550.
b. 8,000.
c. 8,400.
d. 8,800.
e. 9,250.
The ease with which an asset can be converted into a medium of exchange is:
a. currency convertibility.
b. asset convertibility.
c. convertibility.
d. money convertibility.
e. liquidity.
SeveralitemsfromthefinancialstatementsofStandardTiresarelistedbelow.Usethefollowing
answerchoicestoidentifythetypeofaccountforeachitemlisted.Placeyouranswersinthespac
eprovided.
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Owners' equity Interest income
A rightward shift of a demand curve is called a(n):
a. increase in demand.
b. decrease in demand.
c. increase in quantity demanded.
d. decrease in quantity demanded.
e. increase in supply.
