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If the PPF for two goods is a downward-sloping straight line, the resources used to
produce those goods are equally well suited to the production of both goods.
a. True
b. False
Exhibit 34-8
Assume that the current price of sugar in the United States is $300 per ton (which
includes a $100 per ton tariff on sugar imports). The removal of the $100 per ton tariff
would cause a(n) __________ in imports of __________ million tons.
a. increase; 5
b. increase; 10
c. increase; 15
d. decrease; 5
e. decrease; 10
The economy is in long-run equilibrium when there is a correctly anticipated increase in
aggregate demand. According to new classical theory, the price level will __________
and Real GDP will __________.
a. fall; rise
b. rise; fall
c. fall; remain unchanged
d. rise; remain unchanged
e. remain unchanged; remain unchanged
Opportunity cost is the __________ alternative forfeited when a choice is made.
a. least-valued
b. most highly-valued
c. most convenient
d. most recently considered
Exhibit 16-5
If the economy is at point 3, and the natural unemployment rate exists at points 1, 4,
and 5, it follows that
a. Real GDP is greater than Natural Real GDP.
b. Real GDP is less than Natural Real GDP.
c. Real GDP is the same as Natural Real GDP.
d. the economy is in a recessionary gap.
e. b and d
Tenth National Bank holds $285 million in checkable deposits and $35 million in
reserves. With a required reserve ratio of 11 percent, how much in excess reserves is
Tenth National holding?
a. $250 million
b. $3.65 million
c. $35.2 million
d. 3.85 million
In an economy with a population of 100 million persons, 50 million hold civilian jobs
and 20 million are not working but are looking for a job. The number of persons in the
civilian labor force is
a. 50 million.
b. 70 million.
c. 170 million.
d. 180 million..
Exhibit 4-3
If P1 is a price ceiling, the maximum (per-unit) amount buyers are willing to pay to
purchase Q1 units is
a. P1.
b. P2.
c. P3.
d. P1 + P2.
e. P3 - P1.
The rules-based monetary policy that some nonactivists have proposed to maintain
price stability reads this way:
a. The annual growth rate in the money supply will equal the average annual growth
rate in Real GDP minus the growth rate in velocity.
b. The annual growth rate in the money supply will equal the average annual growth
rate in Real GDP plus the growth rate in velocity.
c. The annual growth rate in the money supply will equal the average annual growth
rate in Real GDP divided by the growth rate in velocity.
d. The annual growth rate in the money supply will equal the average annual growth
rate in Real GDP times the growth rate in velocity.
Suppose the civilian non-institutional population equals 250,000; there are 132,500
employed persons and 10,000 unemployed persons. How many persons are not in the
labor force?
a. 122,500
b. 77,500
c. 63,500
d. 107,500
Exhibit 3-5
In the market shown, a rightward shift in demand from D1 to D2 could have been
caused by
a. an increase in the number of sellers in the market.
b. an improvement in technology in the production of this good.
c. a decrease in buyers' income (assuming the good is an inferior good).
d. a decrease in buyers' income (assuming the good is a normal good).
e. a and b
Exhibit 3-1
At a price of $6 there is a
a. surplus of 100 units.
b. surplus of 150 units.
c. surplus of 200 units.
d. shortage of 150 units.
e. shortage of 200 units.
A bank is solvent as long as its liabilities are greater than its assets.
a. True
b. False
__________ flows from government to households.
a. A transfer payment
b. A tax payment
c. The Laffer Curve
d. Crowding out
A required reserve ratio of 12 percent gives rise to a simple deposit multiplier of
a. 12.
b. 83.33.
c. 6.67.
d. 8.33.
Exhibit 34-10
Who has the comparative advantage when it comes to cleaning the house?
a. Danielle
b. Jason
c. neither Jason nor Danielle
d. both Danielle and Jason
A budget surplus
a. occurs when government expenditures exceed tax revenues.
b. occurs when tax revenues exceed government expenditures.
c. occurs when tax revenues exceed transfer payments.
d. occurs when monetary policy works in the opposite direction of fiscal policy.
e. is an impossibility.
