Figure 28-3
RefetoFigure28-3.If the government imposes a minimum wage of $4, how many
workers will be employed?
a. 3,000
b. 4,000
c. 5,000
d. 7,000
According to liquidity preference theory, if the quantity of money demanded is greater
than the quantity supplied, then the interest rate will
a. increase and the quantity of money demanded will decrease.
b. increase and the quantity of money demanded will increase.
c. decrease and the quantity of money demanded will decrease.
d. decrease and the quantity of money demanded will increase.
If a country sells more goods and services abroad than it purchases abroad, it has
positive net exports and a trade surplus.
a. True
b. False
In a perfectly competitive market, buyers and sellers are price setters.
a. True
b. False
A closed economy does not engage in international trade, therefore
a. national saving is less than investment (S < I).
b. net exports (NX) are zero.
c. Y – C – G > I.
d. national saving is zero.
If the U.S. imposes an import quota on clothing, then the
a. supply of dollars in the market for foreign-currency exchange shifts right.
b. supply of dollars in the market for foreign-currency exchange shifts left.
c. demand for dollars in the market for foreign-currency exchange shifts right.
d. demand for dollars in the market for foreign-currency exchange shifts left.
A rational decision maker takes an action only if the
a. marginal benefit is less than the marginal cost.
b. marginal benefit is greater than the marginal cost.
c. average benefit is greater than the average cost.
d. marginal benefit is greater than both the average cost and the marginal cost.
Suppose that some country had an adult population of about 25 million, a labor-force
participation rate of 60 percent, and an unemployment rate of 6 percent. How many
people were employed?
a. 0.9 million
b. 14.1 million
c. 15 million
d. 23.5 million
GDP
a. is used to monitor the performance of the overall economy but is not the single best
measure of a society’s
economic well-being.
b. is used to monitor the performance of the overall economy and is the single best
measure of a society’s
economic well-being.
c. is not used to monitor the performance of the overall economy but is the single best
measure of a society’s
economic well-being.
d. is not used to monitor the performance of the overall economy and is not the single
best measure of a
society’s economic wellbeing.
The efficient markets hypothesis implies
a. that all stocks are fairly valued all the time and that no stock is a better buy than any
other.
b. that all stocks are fairly valued all the time, but that some stocks may be better buys
than other.
c. that some stocks may be better buys than others and stock experts can determine
which ones.
d. that no stock is efficiently valued.
According to John Maynard Keynes,
a. the demand for money in a country is determined entirely by that nation’s central
bank.
b. the supply of money in a country is determined by the overall wealth of the citizens
of that country.
c. the interest rate adjusts to balance the supply of, and demand for, money.
d. the interest rate adjusts to balance the supply of, and demand for, goods and services.
Which of the following statements is true?
a. Natural resources per worker influence productivity only when those natural
resources are renewable.
b. The prices of most natural resources are stable or falling relative to other prices.
c. Technology requires greater use of natural resources.
d. The terms human capital and technological knowledge are used interchangeably.
In the open economy macroeconomic model, the amount of dollars demanded in the
market for foreign-currency exchange at a given real exchange rate increases if
a. either U.S. imports or exports increase.
b. either U.S. imports or exports decrease.
c. either U.S. imports increase or U.S. exports decrease.
d. either U.S. imports decrease or U.S. exports increase.
Both the standard of living and the growth of real GDP per person vary widely across
countries.
a. True
b. False
Figure 35-9. The left-hand graph shows a short-run aggregate-supply (SRAS) curve
and two aggregate-demand (AD) curves. On the right-hand diagram, “Inf Rate” means
“Inflation Rate.”
RefertoFigure35-9. A significant increase in the world price of oil could explain
a. the shift of the aggregate-supply curve from AS1to AS2, but it could not explain the
shift of the Phillips curve from PC1to PC2.
b. the shift of the Phillips curve from PC1to PC2, but it could not explain the shift of the
aggregate-supply curve from AS1to AS2.
c. both the shift of the aggregate-supply curve from AS1to AS2and the shift of the
Phillips curve from PC1to PC2.
d. neither the shift of the aggregate-supply curve from AS1to AS2nor the shift of the
Phillips curve from PC1to PC2.
A production point is said to be efficient if there is no way for the economy to produce
more of one good without producing less of another.
a. True
b. False
Country A has twice as many workers as Country B. Country A also has twice as much
physical capital, twice as much human capital, and access to twice as many natural
resources as Country B. Assuming constant-returns to scale, which of the following is
higher in Country A?
a. both output per worker and productivity
b. output per worker but not productivity
c. productivity but not output per worker
d. neither productivity nor output per worker
Most economists agree that eliminating unemployment insurance would increase the
nation’s overall level of wellbeing.
a. True
b. False
In fiscal year 2001, the U.S. government ran a surplus of about $127 billion. In fiscal
year 2002, the government ran a deficit of $159 billion. Other things the same, this
change would be expected to have
a. decreased interest rates and investment.
b. decreased interest rates and increased investment.
c. increased interest rates and investment.
d. increased interest rates and decreased investment.
Because the open-economy macroeconomic model focuses on the long run, it is
assumed that
a. GDP, but not the price level is given.
b. the price level, but not GDP is given.
c. both the price level and GDP are given.
d. the price level and GDP are variables to be determined by the model.
Max and Maddy charge people to park on their lawn while attending a nearby craft fair.
At the current price of $10, seven people park on their lawn. If they raise the price to
$15, they know that only five people will want to park on their lawn. Whether they have
seven or five cars parked on their lawn does not affect their costs. From this information
it follows that
a. they should leave the price at $10.
b. it does not matter if they charge $10 or $15.
c. they would do better charging $15 than $10.
d. they should raise the price even more.
Because almost all economists oppose policies that restrict trade among nations,
policymakers do not restrict imports of certain goods.
a. True
b. False
Suppose that M is fixed. According to the quantity equation, which of the following
would make the price level higher?
a. Y or Vrise
b. Y or Vfall
c. Y rises or V falls
d. Yfalls or Vrises
A surplus exists in a market if
a. there is an excess demand for the good.
b. quantity demanded exceeds quantity supplied.
c. the current price is above its equilibrium price.
d. All of the above are correct.
The present value of $100 to be paid in two years is less than the present value of $100
to be paid in three years.
a. True
b. False
The first number in any ordered pair is
a. the x-coordinate.
b. the y-coordinate.
c. the vertical location of the point.
d. the slope.
Table 28-2
Labor Data for Aridia
RefetoTable28-2.The labor-force participation rate of Aridia in 2011 was
a. 43.3%.
b. 54.2%.
c. 63.3%.
d. 68.4%.
In the simple circular-flow diagram, households
a. are the only decision makers.
b. own the factors of production.
c. are buyers of inputs.
d. consume only some of the goods and services that firms produce.
Advances in production technology typically reduce firms’ costs.
a. True
b. False
Which of the following statements is correct?
a. A corporation receives a monetary payment every time its shares of stock are traded
by stockholders on organized stock exchanges.
b. When a corporation sells bonds as a means of raising funds it is engaging in debt
finance.
c. A share of stock is an IOU.
d. The two most important financial markets in the economy are the stock market and
financial intermediaries.
The economy of the former Soviet Union is best described as a
a. primitive economy.
b. market economy.
c. hybrid economy.
d. centrally-planned economy.
Between 1980 and 1995 government debt as a percentage of GDP
a. increased from about 25% to 50%.
b. decreased from about 50% to 25%.
c. decreased from about 25% to almost zero.
d. increased from about 10% to 20%.