If you buy a book of U.S. postage stamps to use to mail love letters to your sweetheart,
the purchase is considered part of:
a. C.
b. I.
c. G.
d. X.
e. M.
When a recession hits, we would expect the government to run a budget deficit by
raising the level of its spending or by cutting taxes, or perhaps both. The Fed would be
expected to:
a. reduce the required reserve ratio, increase the discount rate, and buy securities on the
open market.
b. reduce the required reserve ratio, reduce the discount rate, and sell securities on the
open market.
c. reduce the required reserve ratio, reduce the discount rate, and buy securities on the
open market.
d. increase the required reserve ratio, reduce the discount rate, and sell securities on the
open market.
e. increase the required reserve ratio, increase the discount rate, and sell securities on
the open market.
Which of the following will be most likely to cause the production possibilities curve
for a country to shift inward?
a. an increase in the labor force
b. an increase in unemployment
c. development of an improved technological method of production
d. a decrease in the stock of physical capital
Which of the following will increase aggregate demand in the United States?
a. A higher price level.
b. An increase in the real interest rate.
c. An increase in wealth due to a substantial appreciation in the value of stocks.
d. A decrease in real income in Japan and Western Europe.
Net exports are:
a. $50 billion.
b. $15 billion.
c. $35 billion.
d. $65 billion.
The interest rate in the federal funds market:
a. is determined by the imposition of price controls imposed by the Fed.
b. rises when the quantity of funds demanded by banks seeking additional reserves
exceeds the quantity supplied by banks with excess reserves.
c. will fall if the Fed sells bonds and, thereby, reduces the reserves available to banks.
d. is an interest rate that is largely unaffected by the policies of the Fed.
Disposable personal income:
a. includes personal income taxes.
b. excludes personal income taxes.
c. excludes transfer payments.
d. is income spent for personal items such as homes and cars.
Economists estimate that the total lag for monetary policy is about:
a. 1-2 days.
b. 2 weeks to 1 month.
c. 3-12 months.
d. 2-4 years.
Which of the following is not a store of value?
a. Federal Reserve notes.
b. Credit card.
c. Debit card.
d. Passbook savings deposit.
For each of the following, explain a transaction that will have the following stated
effects on the accounting equation elements. A) Increase one asset, decrease one asset,
and increase a liability. B) Increase an asset and increase stockholders’ equity. C)
Decrease an asset and decrease a liability. D) Increase an asset and increase a liability.
E) Increase one asset and decrease another asset.
How will an increase in lumber prices influence the home construction market?
a. The demand for newly constructed homes will increase.
b. The demand for newly constructed homes will decrease.
c. The supply of newly constructed homes will increase.
d. The supply of newly constructed homes will decrease.
Which of the following is a positive statement?
a. I think we should pass a constitutional amendment to reduce the deficit.
b. President Clinton’s way of dealing with the economy is better than President Bush’s.
c. I hope interest rates come down soon.
d. If taxes are raised, unemployment will drop.
In a command economy, the basic economic questions are answered by:
a. central authority.
b. individual buyers and sellers.
c. the traditional methods.
d. none of these.
Gross domestic product that is based on existing prices is called:
a. nominal GDP.
b. current GDP.
c. money GDP.
d. all of these.
Exhibit 6-1 Business cycle
In Exhibit 6-1, the recession phase of the business cycle can be represented by point(s):
a. CDE.
b. BCD.
c. EFG.
d. A and E.
Which of the following is not a characteristic of most less-developed countries?
a. Inadequate human capital.
b. Inadequate capital goods.
c. High population growth rate.
d. Inadequate water supplies.
e. High productivity.
Assuming that professional and college football are substitutes, an increase in the ticket
price for professional football, other things being equal, will:
a. increase the demand for college football tickets.
b. decrease the demand for college football tickets.
c. not change the demand for college football tickets.
d. decrease the demand for professional football games.
Select the normative statement that completes the following sentence: If the minimum
wage is raised:
a. cost per unit of output will rise.
b. workers will gain their rightful share of total income.
c. the rate of inflation will increase.
d. profits will fall.
A price floor is:
a. the lowest price a producer will accept.
b. the lowest price a consumer will pay.
c. a minimum price set by the government above equilibrium price.
d. a maximum price set by the government above equilibrium price
e. usually set equal to equilibrium price.