An increase in the marginal propensity to import will cause the aggregate expenditure
line to:
A) become flatter.
B) become steeper.
C) shift upwards.
D) shift downwards.
Suppose that in the time it takes for him to bake a cake, Bob can produce sew 5 pairs of
jeans. In the time it takes for Joe to bake a cake, he can produce sew 8 pairs of jeans
day. In this example, who has the absolute advantage in baking a cake?
A) Joe
B) both Bob and Joe
C) Bob
D) There is insufficient information to answer this question.
Decreases in consumption, investment, or net exports caused by an increase in
government purchases are known as
A) diminishing returns.
B) demand-side effects.
C) crowding out.
D) strategic substitution.
Table 5.1
Refer to Table 5.1. Assume that this economy produces only two goods: Good X and
Good Y. If year 2 is the base year, the value for this economy’s real GDP in year 3 is:
A) $100.
B) $176.
C) $200.
D) $241.
The reason why spammers find it profitable to spam is because:
A) it does not cost the spammer anything to send a million emails.
B) it does not cost the spammer anything to receive a million emails.
C) it does not benefit the spammer anything to send a million emails.
D) it does not cost nor benefit the spammer anything to send a million emails.
Deciding if a power company will generate electricity from wind power or coal answers
the economic question of
A) who consumes the products produced.
B) what products will be produced.
C) where will the products be consumed.
D) how will the products be produced.
The stock of capital ________ with any gross investment and ________ with any
depreciation.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
The profit from IBM’s production in Italy is included in the U.S. ________ and in the
Italian ________.
A) GDP; GDP
B) GNP; GNP
C) GNP; GDP
D) GDP; GNP
Suppose that an economy is experiencing continuously rising prices. If 2000 is the base
year, then the real GDP in 2000 is ________ the nominal GDP.
A) less than
B) equal to
C) greater than
D) There is insufficient information to answer this question.
Which of the following is a correct sequence of events during a recession?
A) Unemployment falls, income falls, tax revenue falls, unemployment benefits rise,
and the budget deficit rises.
B) Unemployment rises, income falls, tax revenue falls, unemployment benefits rise,
and the budget deficit rises.
C) Unemployment rises, income falls, tax revenue rises, unemployment benefits fall,
and the budget deficit falls.
D) Unemployment rises, income rises, tax revenue rises, unemployment benefits rise,
and the budget deficit rises.
Daily Output of Scotland and Poland
Table 18.1 Refer to Table 18.1. The nation with a
comparative advantage in bagpipes is:
A) both Scotland and Poland.
B) neither Scotland nor Poland.
C) Poland.
D) Scotland.
Which of the following is not a tool available to the Fed to change the supply of
money?
A) the open market operations
B) the required reserve ratio
C) the federal funds rate
D) the discount rate
Figure 4.6
Figure 4.6 illustrates a set of supply and demand curves for a product. When the
economy moves from point E to point A, there has been:
A) an increase in supply and an increase in demand.
B) an increase in supply and an increase in quantity demanded.
C) an increase in quantity supplied and an increase in demand.
D) an increase in quantity supplied and an increase in quantity demanded.
Figur
e 15.3 Refer to Figure 15.3 If this economy is initially in a recession, the change in
price level which would bring the economy back to full employment would also change
the money demand and interest rates. The change in interest rates will change
investment spending, which is reflected by the movement from
A) e to f.
B) I1 to I0.
C) 1 to 0.
D) P1 to P0.
Suppose the United States is in the midst of a recession. What will happen to the value
of the mpi?
A) It will increase.
B) It will decrease.
C) It will not change.
D) It will fall to zero.