Contractionary monetary policy causes
A) aggregate demand to rise and the price level to rise.
B) aggregate demand to fall and the price level to fall.
C) aggregate demand to rise and the price level to fall.
D) aggregate demand to fall and the price level to rise.
Most employees ________ on the value of health insurance provided by employers, and
most people ________ when buying individual health insurance policies.
A) pay taxes; get a tax break
B) pay taxes; do not get a tax break
C) do not pay taxes; get a tax break
D) do not pay taxes ; do not get a tax break
Table 2-7
Table 2-7 shows the output per week of two people, Minnie and Mickey. They can
either devote their time to making hats or making umbrellas.
Refer to Table 2-7. What is Mickey’s opportunity cost of making a hat?
A) 1/10 of an umbrella
B) 1/5 of an umbrella
C) 5 umbrellas
D) 10 umbrellas
Figure 3-5
Refer to Figure 3-5. At a price of $20, the quantity sold
A) is 0 units.
B) is 4 units.
C) is 8 units.
D) cannot be determined.
The “new economy” that emerged in the mid-1990s is based on
A) manufacturing.
B) financial services.
C) information technology.
D) retail sales.
Table 7-6
Production and
Consumption Production
Without Trade With Trade
Estonia and Morocco can produce both swords and belts. Table 7-6 shows the
production and consumption quantities without trade, and the production numbers with
trade.
Refer to Table 7-6. All of the following are terms of trade that could possibly benefit
both countries except
A) 2/3 of a belt : 1 sword
B) 3/5 of a belt : 1 sword
C) 7/10 of a belt : 1 sword
D) 1/4 of a belt : 1 sword
in the United States since 1900, life expectancy at birth has ________ and the death rate
has ________.
A) increased; increased
B) increased; decreased
C) decreased; increased
D) decreased; decreased
Government intervention in agricultural markets in the U.S. began
A) during World War II to ensure that enough food was available for domestic
consumption.
B) after World War I in order to assist farmers to adjust from a war-time economy to a
peace-time economy.
C) during the Great Depression.
D) during the Korean War.
Between 1960 and 2010, deaths among children have
A) declined in most high-income countries and have risen in most low-income
countries.
B) declined in nearly all countries, including most low-income countries.
C) remained relatively unchanged in most high-income countries and have declined in
most low-income countries.
D) declined in most high-income countries and have remained relatively unchanged in
most low-income countries.
The ________ shows the relationship between the price level and quantity of real GDP
demanded.
A) consumer price index
B) aggregate expenditure line
C) 45-degree line
D) aggregate demand curve
The real wage equals the nominal wage ________ the CPI, all times 100.
A) divided by
B) times
C) minus
D) plus
Article Summary
In a September 2013 speech to the Independent Bankers Association of Texas, Federal
Reserve Bank of Dallas president Richard Fisher stated that the Fed’s credibility was
harmed when it announced the previous week that it would continue its large bond
purchasing program. In June, Fed Chairman Ben Bernanke had stated that that the
program could begin to be cut back later in the year, and several other Fed officials
expressed being open to the announced timing of this policy. Bernanke’s change in his
announced timeline of the Fed’s intentions regarding the bond purchasing program
brought criticism that the Fed had misled investors. In his speech, Fisher stated “I
disagreed with the decision of the committee and argued against it. Doing nothing at
this meeting would increase uncertainty about the future conduct of policy and call the
credibility of our communications into question. I believe that is exactly what has
occurred, though I take no pleasure in saying so.” Fisher has been a long-time opponent
of the Fed’s bond purchasing program, claiming it is ineffective and may well lead to
future inflation, and had been calling for the Fed to begin phasing out this program in
September.
Source: “Fisher: Standing pat on policy hurt Fed’s credibility,” Reuters, September 23,
2013.
Refer to the Article Summary. Richard Fisher brought the Fed’s credibility into question
when it decided to continue with its bond purchasing program despite leading many to
believe that the program would begin to be phased out. Prior to this, over the past two
decades whenever a change in Fed policy had been announced, the change has
________ taken place, leading to ________ credibility.
A) rarely; greater
B) actually; greater
C) rarely; less
D) actually; less
Figure 3-4
Refer to Figure 3-4. At a price of $20, how many units will be sold?
A) 400
B) 500
C) 600
D) 800
MPC + MPS =
A) 0.
B) 0.5.
C) 1.
D) 100.
Figure 17-2
Refer to Figure 17-2. Suppose the economy is at point A. The Fed uses expansionary
monetary policy to lower the unemployment rate permanently below the level
associated with A. Which of the following will occur?
A) Inflation will accelerate in the long run.
B) Inflationary expectations will decline.
C) Unemployment will rise above the natural rate.
D) Unemployment will accelerate in the long run.