The largest component of GDP as measured by the expenditure approach is:
a. wages and salary earnings.
b. personal consumption.
c. net profits of corporations.
d. gross private investment.
A technological breakthrough lowers the cost of manufacturing DVDs. As a result, the
market changes to a new equilibrium because of a(n):
a. upward movement along the demand curve for DVDs.
b. rightward shift in the demand curve for DVDs.
c. rightward shift in the supply curve for DVDs.
d. shortage of DVDs.
If aggregate expenditures exceed real GDP, then:
a. employment falls.
b. the economy will have deflation.
c. firms are depleting their inventories.
d. the money supply will increase.
If MPC = 0.8 and the economy is in equilibrium $500 below full-employment
equilibrium, how much should government spending change to achieve full
employment?
a. -100.
b. +80.
c. -80.
d. +500.
e. +100.
Which of the following is not a problem for less-developed countries?
a. Poor health and nutrition.
b. Shortages of labor.
c. High unemployment rates.
d. Low labor productivity.
e. low life expectancy
Exhibit 4-7 Demand and supply schedules for movie tickets PriceQuantity
DemandedQuantity
Supplied
$10 200 500
8 240 470
6 370 420
4 390 390
2 410 310 In Exhibit 4-7, a 100 decrease in quantity demanded at every price level
would cause the new equilibrium price to become:
a. $10.
b. $8.
c. $6.
d. $4.
e. $2.
The stock of money people hold to take advantage of expected future changes in the
price of bonds, stocks, or other nonmoney financial assets is the:
a. unit-of-account motive for holding money.
b. precautionary motive for holding money.
c. speculative motive for holding money.
d. transactions motive for holding money.
There are apartments in Chicago whose rooftops overlook Wrigley Field. On game day
you can find free riders on the roof enjoying ____.
a. free property rights
b. an externality
c. a public good
d. excess utility
GDP overstates the productive capacity of a country when:
a. economic bads like pollution are produced and then must be cleaned up.
b. there is a sizable underground economy.
c. nonmarket production represents a large portion of the economy.
d. working conditions improve, allowing jobs to be completed safer and faster.
Assume a fixed demand for money curve and the Fed decreases the money supply. In
response, people will:
a. sell bonds, thus driving up the interest rate.
b. sell bonds, thus driving down the interest rate.
c. buy bonds, thus driving up the interest rate.
d. buy bonds, thus driving down the interest rate.
Which of the following statements is correct?
a. Slope is the ratio of the vertical change (the rise or fall) to the horizontal change (the
run).
b. A direct relationship is one in which two variables change in the same direction.
c. An inverse relationship is one in which two variables change in opposite directions.
d. An independent relationship is one in which two variables are unrelated.
e. All of these.
Which of the following assets is most liquid?
a. Funds in a checking account.
b. A car.
c. A home.
d. A municipal bond.
If a surplus of a product currently exists in the market,
a. the market price is too low.
b. the quantity demanded exceeds the quantity supplied at the current price.
c. the quantity supplied exceeds the quantity demanded at the current price.
d. there is a shortage of the product.
e. there will be a tendency for the price to rise.