Which of the following is not an aspect of Keynesian economics?
a. Wages and prices tend to be inflexible downward.
b. Supply does not necessarily generate its own demand.
c. The interest rate is important in determining the level of investment, but not as
important as other variables.
d. Unemployment above natural unemployment is always a brief and temporary
phenomenon.
According to Paul Romer, one way to produce more ideas and knowledge is by
a. investing in research and development.
b. giving the federal government more control over the direction of research.
c. giving businesses less control over federal research monies.
d. a, b and c
Which of the following statements is false?
a. The classical economists believed that government should manage the economy.
b. The classical economists believed in a policy of laissez-faire.
c. The classical economists believed that the economy was self-regulating.
d. The classical economists believed equilibrium output would be full-employment
output.
In the long run, changes in aggregate demand will affect the level of Real GDP (but not
the price level) in a self-regulating economy.
a. True
b. False
Under a marketing quota system,
a. the government sets a limit on the quantity of a product that a farmer is allowed to
bring to market.
b. farmers are paid to take part of their land out of cultivation.
c. farmers are given limits as to the number of acres that can be used to produce a
particular product.
d. farmers are paid the difference between the market price of their product and a
governmentally determined price that would maintain an established price parity.
e. the government establishes a minimum price that farmers will be paid for their
product, which causes the farmers to cut back on the number of acres planted.
Exhibit 39-3
If P3 is a target price, the price at which output will be purchased is
a. P1.
b. P2.
c. P3.
d. P3 – P2.
e. P1 – P2.
If peanuts were widely accepted for purposes of exchange, then
a. peanuts would be money.
b. peanuts would be less valuable than they are currently.
c. we would observe people using peanuts to purchase cars.
d. a and c
e. a and b
Exhibit 4-6
Suppose the minimum wage is set at $5. The result will be
a. unemployment.
b. a shortage of unskilled labor.
c. no impact on the unskilled labor market.
d. a prolonged surplus of unskilled labor.
e. none of the above
According to public choice theorists, the behavior of people employed in the public
sector is likely to differ from the behavior of people employed in the private sector
because
a. the two sectors are likely to attract people of different psychological profiles.
b. government employees are likely to exhibit more civic responsibility than
private-sector employees.
c. the same objective to maximize one’s net benefit will produce different behavior in
different institutional settings.
d. all of the above
e. a and b
If an economy can produce a maximum of 10 units of good X and the opportunity cost
of 1X is always 2Y, then what is the maximum units of good Y the economy can
produce?
a. 5
b. 200
c. 20
d. 500
e. none of the above
The acreage allotment program involves
a. no direct payments to farmers.
b. direct payments to farmers.
c. the government leasing land to farmers that is to be cultivated by the farmers.
d. the government leasing land from farmers that is to be cultivated by the government.
e. none of the above
The Federal Open Market Committee (FOMC)
a. has six members.
b. conducts open market operations.
c. is the policy-making body within the Treasury.
d. is the governing body of the Federal Reserve System.
e. a, b, and c