Recall the Application about the increase in Chinese demand for pecans to answer
the following question(s). Between 2006 and 2009, Chinese imports of U.S. pecans
increased from 9 million pounds per year to 88 million pounds per year, and as a
result of the increase in demand, the equilibrium price increased by about 50
percent. The increase in demand was caused in part by widespread reports in the
Chinese media extolling the health benefits of pecans. Recall the Application. If
consumer income in China increased and as a result the demand for pecans decreased,
this would indicate that in China, pecans would be considered ________ goods.
A) normal
B) inferior
C) substitute
D) complementary
During hyperinflation, the value of money drops so quickly that people would not want
to hold money balances for very long. This will cause:
A) velocity to increase.
B) the nominal interest rate to decrease.
C) the inflation to decrease.
D) the money supply to decrease.
Suppose the public expects a 7 percent inflation rate, and both the money supply and
money demand grow at 7 percent a year. Suddenly the Federal Reserve unexpectedly
allows the money growth rate to be 4 percent. In the short run, we expect that
investment spending by firms will ________ and consumer durable spending will
________.
A) decrease; decrease
B) increase; decrease
C) decrease; increase
D) increase; increase
Figure 4.3 illustrates the demand for tacos. An increase in the demand for tacos is
represented by the movement from
A) point a to point .
B) point c to point .
C) D2 to D1.
D) D0 to D1.
The demand for refrigerators falls when the economy enters a downturn. If a
refrigerator manufacturer lays off workers during an economic downturn, this would be
an example of:
A) frictional unemployment.
B) natural unemployment.
C) structural unemployment.
D) cyclical unemployment.
Table 5.4
Refer to Table 5.4. Suppose this economy produces only the two goods X and Y. If year
2 is the base year, Real GDP in year 3 is:
A) $230.
B) $300.
C) $387.
D) $456.
Figure 2.1
The production possibilities curve in Figure 2.1 illustrates the notion of:
A) increased factory goods production.
B) increased farm produce production.
C) diminishing resources.
D) opportunity cost.
Figure 18.1 Refer to Figure 18.2. After trade and specialization begin, the maximum
amount of cheese that Pizzaland can consume is:
A) 150.
B) 90.
C) 120.
D) 60.
The opportunity cost of something is
A) the cost of the labor used to produce it.
B) what you sacrifice to get it.
C) the price charged for it.
D) the search cost required to find it.
How many quarters (3-month periods) must the “real” GDP decline to have the
economy considered to be in a recession?
A) 1
B) 2
C) 3
D) 4
Figure 18.1 Refer to Figure 18.2. In autarky, the maximum amount of cheese that
Pizzaland can produce is:
A) 150.
B) 90.
C) 80.
D) 120.
Which of the following is an example of how a business owner uses macroeconomics to
make informed business decisions?
A) A business owner can use macroeconomics to determine whether college graduates
are better employees than non-college graduates.
B) A business owner can use macroeconomics to predict whether the Fed will increase
or decrease the interest rates in the future in order to determine whether to borrow
money now or later.
C) A business owner can use macroeconomics to predict whether television prices will
be higher today or in the future.
D) A business owner can use macroeconomics to predict it should sell more red t-shirts
as opposed to white t-shirts.
According to classical economists, a reduction in aggregate demand should result in:
A) a reduction in the price level.
B) a decrease in real GDP.
C) an increase in the unemployment rate.
D) all of the above.
Daily Output of Scotland and Poland
Table 18.1 Refer to Table 18.1. The opportunity cost of
a bagpipe in Scotland is:
A) 2 accordions.
B) 1/2 accordion.
C) 6 accordions.
D) 1/3 accordion.
The Q-theory of investment
A) suggests that a downturn in real GDP will lead to a sharp fall in investment, which
leads to further reductions in GDP through the multiplier.
B) links investment spending to stock prices.
C) emphasizes that current investment spending depends positively on the expected
future growth of GDP.
D) emphasizes the role of real interest rates and taxes.
Recall Application 5, “The Role of Political Factors in Economic Growth,” to answer
the following questions:
According to the application, China’s political institution is considered:
A) authoritarian.
B) participatory.
C) democratic.
D) nonexistent.
When using the formula PV = K/(1+i)t to calculate the present value of a future
payment, a higher K implies:
A) a lower present value.
B) a higher interest rate.
C) a higher present value.
D) a lower interest rate.