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Which of the following is notalways correct for a closed economy?
a. National saving equals private saving plus public saving.
b. Net exports equal zero.
c. Real GDP measures both income and expenditures.
d. Private saving equals investment.
Table24-7.The table below applies to an economy with only two goods hamburgers and
hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.
RefertoTable24-7. If the base year is 2010, then the consumer price index is
a. 100 in 2009, 109 in 2010, and 115 in 2011.
b. 95.90 in 2009, 100 in 2010, and 107.44 in 2011.
c. 90.91 in 2009, 100 in 2010, and 106.36 in 2011.
d. 88.82 in 2009, 100 in 2010, and 107.44 in 2011.
In an open economy, gross domestic product equals $3,500 billion, consumption
expenditure equals $2100 billion, government expenditure equals $400 billion,
investment equals $800 billion, and net exports equals $200 billion. What is national
savings?
a. $200 billion
b. $600 billion
c. $800 billion
d. $1,000 billion
You may be unwilling to buy a used car because you suspect the last owner found out
the car was a lemon. You may treat a car you rented with a little less care than you
would use on your own car.
a. Both examples primarily illustrate adverse selection.
b. Both examples primarily illustrate moral hazard.
c. The first example primarily illustrates adverse selection; the second primarily
illustrates moral hazard.
d. The first example primarily illustrates moral hazard; the second primarily illustrates
adverse selection.
Figure 28-4
RefetoFigure28-4.If the government imposes a minimum wage of $3, how many
workers will be unemployed?
a. 0
b. 2,000
c. 4,000
d. 6,000
Increases in both human capital per worker and physical capital per worker increase
productivity.
a. True
b. False
A downward-sloping demand curve illustrates
a. that demand decreases over time.
b. that prices fall over time.
c. the relationship between income and quantity demanded.
d. the law of demand.
Proponents of tax-law changes to encourage saving would
a. argue that corporate tax rates should be decreased.
b. increase the number of government benefits which are means-tested.
c. argue that state sales tax should be replaced with state income tax.
d. favor none of the above programs.
Suppose that an economy produces 30,000 units of good A which sells at $3 a unit and
60,000 units of good B which sells at $2 per unit. Production of good A contributes
a. 1/2 times as much to GDP as the production of good B.
b. 3/2 times as much to GDP as the production of good B.
c. 3/4 times as much to GDP as the production of good B.
d. 4/3 times as much to GDP as production of good B.
A leftward shift of a demand curve is called a(n)
a. increase in demand.
b. decrease in demand.
c. decrease in quantity demanded.
d. increase in quantity demanded.
An increase in the price of blue pens will increase both the equilibrium price and
quantity in the market for black pens.
a. True
b. False
A country reported nominal GDP of $100 billion in 2010 and $75 billion in 2009. It
also reported a GDP deflator of 125 in 2010 and 120 in 2009. Between 2009 and 2010,
a. real output and the price level both rose.
b. real output rose and the price level fell.
c. real output fell and the price level rose.
d. real output and the price level both fell.
The Dow Jones Industrial Average is now based on the prices of the stocks of
a. 30 major U.S. corporations.
b. 100 major U.S. corporations.
c. 500 representative U.S. corporations.
d. 1,000 representative U.S. corporations.
Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services. The consumer
price index was 220 for 2009 and 231 for 2014. Harry's 2009 spending in 2014 dollars
is about
a. $43,290.
b. $37,143.
c. $40,950.
d. $40,857.
Surpluses drive price up, while shortages drive price down.
a. True
b. False
If the Fed wants to reverse the effects of a favorable supply shock on the inflation rate,
it should
a. increase the money supply growth rate which also moves unemployment closer to its
natural rate.
b. increase the money supply growth rate, but this moves unemployment further from
its natural rate.
c. decrease the money supply growth rate which also moves unemployment closer to its
natural rate.
d. decrease the money supply growth rate, but this moves unemployment further from
its natural rate.
Table 3-23
Assume that the farmer and the rancher can switch between producing pork and
producing tomatoes at a constant rate.
RefertoTable3-23. The opportunity cost of 1 pound of tomatoes for the farmer is
a. 1/2 pound of pork.
b. 2 hours of labor.
c. 2 pounds of pork.
d. 4 hours of labor.
Suppose that some country had an adult population of about 46 million, a labor-force
participation rate of 75 percent, and an unemployment rate of 8 percent. How many
people were unemployed?
a. 2.54 million
b. 2.76 million
c. 3.68 million
d. 8 million
Which of the following policies would be advocated by proponents of stabilization
policy when the economy is experiencing severe unemployment?
a. a decrease in the money supply
b. an increase in tax rates
c. an increase in government purchases
d. an increase in interest rates.
Table 24-1
The table below lists annual consumer price index and inflation rates for a country over
the period 2005-2010. Assume the year 2005 is used as the base year.
RefertoTable24-1. What belongs in space E?
a. 60%
b. 6%
c. 3.9%
d. 6.7%
In general, if a consumer good is produced domestically and consumed domestically, a
decrease in its price will have which of the following effects?
a. The consumer price index will decrease relatively more than will the GDP deflator.
b. The consumer price index and the GDP deflator will decrease by the same amount.
c. The consumer price index will decrease relatively less than will the GDP deflator.
d. One cannot generalize about the decrease in the consumer price index relative to the
decrease in the GDP deflator.
If a firm sells a total of 100 shares of stock, then
a. the supply of, and demand for, those shares determine the price per share.
b. each share represents ownership of 1 percent of the firm.
c. the firm is engaging in equity finance.
d. All of the above are correct.
In the first few years of the Great Depression, unemployment rose to about
a. 10 percent, and prices rose about 14 percent.
b. 15 percent, and prices rose about 22 percent.
c. 20 percent, and prices fell about 14 percent.
d. 25 percent, and prices fell about 22 percent.
Sticky wages leads to a positive relationship between the actual price level and the
quantity of output supplied in
a. both the short and long run.
b. the short run, but not the long run.
c. the long run, but not the short run.
d. neither the short nor the long run.
Menu costs refers to
a. resources used by people to maintain lower money holdings when inflation is high.
b. resources used to price shop during times of high inflation.
c. the distortion in incentives created by inflation when taxes do not adjust for inflation.
d. the cost of more frequent price changes induced by higher inflation.
Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing
toasters at a constant rate.
Refer to Table3-25. At which of the following prices would both Maya and Miguel
gain from trade with each other?
a. 4 mixers for 7 toasters
b. 8 mixers for 10 toasters
c. 12 mixers for 18 toasters
d. Maya and Miguel could not both gain from trade with each other at any price.
The consumer price index is used to
a. monitor changes in the level of wholesale prices in the economy.
b. monitor changes in the cost of living over time.
c. monitor changes in the level of real GDP over time.
d. monitor changes in the stock market.
Suppose that a U.S. dollar buys more gold in Australia than it buys in Russia. What
does purchasing-power parity imply should happen?
Adam Smith was the author of the 1776 book
AnInquiryintotheNatureandCausesoftheWealthofNations.
a. True
b. False
Other things the same, a decrease in the U.S. real interest rate induces
a. Americans to buy more foreign assets, which increases U.S. net capital outflow.
b. Americans to buy more foreign assets, which reduces U.S. net capital outflow.
c. foreigners to buy more U.S. assets, which reduces U.S. net capital outflow.
d. foreigners to buy more U.S. assets, which increases U.S. net capital outflow.
RefertoFigure4-27. Panel (a) shows which of the following?
a. an increase in demand and an increase in quantity supplied
b. an increase in demand and an increase in supply
c. an increase in quantity demanded and an increase in quantity supplied
d. an increase in quantity demanded and an increase in supply
Which of the following firms is likely to have the greatest market power?
a. an electric company
b. a farmer
c. a grocery store
d. a local electronics retailer
Phoenix furniture uses 12 workers, each working eight hours, to produce 192 rocking
chairs. What is Phoenix's productivity?
a. 192 rocking chairs
b. 24 rocking chairs per hour
c. 2 rocking chairs per hour
d. 2 hours per rocking chair
You are better off choosing $400 in 4 years rather than $300 today if the interest rate is
a. lower than about 5.5 percent.
b. higher than about 5.5 percent.
c. lower than about 7.5 percent.
d. higher than about 7.5 percent.
Allen Steel Company is considering whether to build a new mill. If the interest rate
rises,
a. the present value of the returns from the mill will fall, so Allen will be less likely to
build the mill.
b. the present value of the returns from the mill will fall, so Allen will be more likely to
build the mill.
c. the present value of the returns from the mill will rise, so Allen will be less likely to
build the mill.
d. the present value of the returns from the mill will rise, so Allen will be more likely to
build the mill.
