Exhibit 14-1
What sequence of points shows the short- and long-run consequences of a rise in the
money supply under monetarist assumptions?
a. A-E-B
b. B-D-A
c. A-D-B
d. B-A
Suppose the economy is self-regulating, the price level is 120, the quantity demanded of
Real GDP and the quantity supplied of Real GDP in the short run both equal $5.7
trillion, and the quantity supplied of Real GDP in the long run is $5.2 trillion.Given all
of this information, we can conclude that the economy ____________ in short run
equilibrium, and that the price level in long run equilibrium will be _____________
than 120.
a. is not; less
b. is; greater
c. is; less
d. is not; greater
Fiscal policy refers to
a. efforts to balance a government’s budget.
b. changes in the money supply to achieve particular economic goals.
c. changes in government expenditures and taxation to achieve particular economic
goals.
d. the change in private expenditures that occurs as a consequence of changes in
government spending.
Which of the following statements represents a correct and sequentially accurate
economic explanation?
a. Business taxes rise, investment falls, total expenditures on goods and services falls,
AD rises, and the AD curve shifts rightward.
b. The dollar depreciates, net exports rise, total expenditures on goods and services
rises, AD rises, and the AD curve shifts rightward.
c. The interest rate falls, consumption rises, total expenditures on goods and services
rises, AD rises, and the AD curve shifts rightward.
d. b and c
e. a, b, and c
An example of expansionary fiscal policy is
a. increasing government expenditures.
b. increasing taxes.
c. decreasing government expenditures.
d. decreasing taxes.
e. a and d
One of the consequences of an agricultural price support program is
a. a surplus.
b. more exchanges made at the price support.
c. lower prices paid by consumers.
d. lower taxes for taxpayers.
e. a and c
Suppose the MPC = 0.60 and government purchases increase by $40 billion. In
Keynesian theory, which of the following is true?
a. The TE curve shifts downward by $40 billion and total spending decreases by $40
billion.
b. The TE curve shifts upward by $40 billion, and total spending increases by $40
billion.
c. The TE curve shifts downward by $40 billion, and total spending decreases by $100
billion.
d. The TE curve shifts upward by $40 billion, and total spending increases by $100
billion.
Buddy bought a bond last year for $10,000. His bond pays $1,000 a year. This year a
bond that sells for $10,000 pays $900 a year.If Buddy were to sell his (old) bond, its
price would be approximately
a. $11,111.
b. $10,120.
c. $9,000.
d. $12,000.
e. $9,500.
One can determine producers€ surplus if the minimum selling price and the
_____________ are known.
a. price received
b. price paid
c. tax paid
d. tax received
e. a and c
All economists agree that the economy is self-regulating.
a. True
b. False
Which of the following statements represents a correct and sequentially accurate
economic explanation?
a. Wage rates rise, SRAS rises, and the SRAS curve shifts to the left.
b. The prices of nonlabor inputs rise, SRAS decreases, and the SRAS curve shifts to the
right.
c. Labor productivity rises, SRAS increases, and the SRAS curve shifts to the right.
d. An adverse supply shock hits, SRAS decreases, and the SRAS curve shifts to the
right.
e. a and c
Exhibit 32-2
Two candidates are competing for an electorate consisting of 11 voters labeled A-K
shown positioned with respect to their ideological stands on issues. The median voter
theory would predict that candidates will assume the ideological position(s)
a. of voters K and G, respectively.
b. of voters H and J, respectively.
c. of voters I and A, respectively.
d. of voter E.