Flexible exchange rates require the coordination of economic policies between
countries.
All topics concerning taxes are within the realm of macroeconomics.
A country that experiences population growth (holding K constant) will experience real
GDP growth.
When the public expects inflation, real and nominal rates of interest will be the same.
Evidence shows that the more independent a central bank is, the higher the inflation the
country experiences.
When a student is thinking at the margin, he analyzes how many more points he would
get on his economics final exam if he devotes one more hour for studying.
As the number of discouraged workers increases, we would expect that the
unemployment rate would increase.
The key idea of the real business theory is that potential output itself will remain stable
over time.
If a firm produces components of its goods and services in other countries, it is said to
be outsourcing.
From the perspective of consumers, a quota is preferred to a tariff.
Recall Application 2, “Do European Soccer Stars Change Clubs to Reduce Their
Taxes?” to answer the following questions:
According to the Application, European soccer stars changed clubs to reduce their taxes
only in years prior to 1995.
Any change in demand from ________ will also change aggregate demand.
A) households
B) firms
C) the foreign sector
D) all of the above
From the Application, we can infer that if the government stops intervening in the
market, then the:
A) prices will drop.
B) prices will rise.
C) the supply will decrease.
D) the demand will increase.
Capital gains are a type of income earned from
A) interest on savings accounts.
B) the sale of assets.
C) employment in a factory.
D) all of the above.
Recall Application 2, “Two Approaches to Determining the Causes of Recessions,” to
answer the following questions:
According to the application, a recession caused by a decrease in aggregate supply
occurred in:
A) 1981.
B) 1979.
C) 1929.
D) All of the above were caused by a decrease in aggregate supply.
When there is a change in the quantity demanded it means that the:
A) hours the customer can buy products each day have increased.
B) number of products in inventory have increased.
C) quantity a consumer is willing to buy changes when the price changes.
D) selling price of the products has not changed.
If it takes more U.S. dollars to get a euro, then:
A) the U.S. dollar depreciates and the euro appreciates.
B) the U.S. dollar and the euro appreciates.
C) the U.S. dollar and the euro depreciates.
D) the U.S. dollar appreciates and the euro depreciates.
Economists in the United States today estimate the natural unemployment rate to be:
A) between 5 percent and 6.5 percent.
B) between 6 percent and 8 percent.
C) between 3 percent and 5 percent.
D) between 0 percent and 1 percent.
If the income from investments by Americans abroad is less than the income from
investments by non-Americans in the U.S., then net income from abroad is:
A) positive.
B) negative.
C) zero.
D) decreasing.
In bringing an economy out of a recession, a government will often resort to ________
fiscal policies, which often results in budget deficits.
A) innovative
B) contractionary
C) expansionary
D) conservative
Interest rates decrease in the United States. This will cause a(n):
A) increase in the supply of pounds.
B) decrease in the supply of pounds.
C) increase in the demand for pounds.
D) decrease in the demand for pounds.
Which of the following affects a country’s net international investment position?
A) real interest rates paid on foreign assets
B) real interest rates paid on domestic assets
C) government policies that affect foreign ownership of domestic assets
D) all of the above
When you voluntarily accept a job and exchange your labor for money:
A) you and your employer expect to be better off.
B) you and your employer expect to be worse off.
C) you expect to be better off while your employer expect to be worse off.
D) you expect to be worse off while your employer expect to be better off.
Suppose that consumption of oat bran is found to reduce cholesterol and improve
health. The result is that:
A) the demand for oat bran decreases.
B) the demand for oat bran increases.
C) the supply of oat bran increases.
D) Both A and C are correct.
Suppose that someone deposits $10,000 into a bank. Assuming a reserve requirement
ratio of 20 percent, what will be the eventual increase in checking account balances?
Consider a nation that has a comparative advantage in the production of goods using
unskilled labor. What types of workers will benefit from increased trade, and what type
will lose?
If the economy goes into a recession, the automatic stabilizers are likely to increase the
budget deficit. Why might such a deficit be beneficial?
What two factors need to increase in order to increase potential output in an economy?
Explain how the wealth effect can affect aggregate demand.
Name at least three variables that can affect the demand for a product and the market
equilibrium.
The capital deepening model developed by Robert Solow shows the links among which
three items?
List three things that could shift the short run aggregate supply curve to the right.
Explain the concept of “crowding in.”
Explain what effect a reduction in the U.S. interest rate would have on the exchange
rate.