If Pdenotes the price of goods and services measured in terms of money, then
a. 1/Prepresents the value of money measured in terms of goods and services.
b. Pcan be regarded as the “overall price level.”
c. an increase in the value of money is associated with a decrease in P.
d. All of the above are correct.
If a dollar buys more rice in the China. than in the U.S., then
a. the real exchange rate is greater than 1; a profit might be made by buying rice in the
U.S. and selling it in China.
b. the real exchange rate is greater than 1; a profit might be made by buying rice in
China. and selling it in the U.S.
c. the real exchange rate is less than 1; a profit might be made by buying rice in the U.S.
and selling it in China.
d. the real exchange rate is less than 1; a profit might be made by buying rice in China
and selling it in the U.S.
Efficiency wages contribute to
a. frictional unemployment and the natural rate of unemployment.
b. frictional unemployment but not the natural rate of unemployment.
c. structural unemployment and the natural rate of unemployment.
d. structural unemployment but not the natural rate of unemployment.
Ann, a U.S. citizen, uses some previously obtained euros to purchase a bond issued by a
Spanish company. This transaction
a. increases U.S. net capital outflow by more than the value of the bond.
b. increases U.S. net capital outflow by the value of the bond.
c. does not change U.S. net capital outflow.
d. decreases U.S. net capital outflow.
Figure 4-5
RefertoFigure4-5.Which of the following would cause the demand curve to shift from
Demand A to Demand B in the market for oranges in the United States?
a. a freeze in Florida
b. a technological advance that allows oranges to ripen faster
c. a decrease in the price of apples
d. an announcement by the FDA that oranges prevent heart disease
The average person’s share of the U.S. government debt as a percentage of lifetime
income is
a. less than 2 percent.
b. about 5 percent.
c. about 10 percent.
d. over 12 percent.
The dictator of Turan has recently begun to arbitrarily seize farms belonging to his
political opponents, and he has given the farms to his friends. His friends don’t know
much about farming. The courts in Turan have ruled that the seizures are illegal, but the
dictator has ignored the rulings. Other things equal, we would expect that the growth
rate in Turan will
a. fall temporarily, but will return to where it was when the new owners learn how to
farm.
b. increase because the total amount of human capital in the country will increase as the
new owners learn how to farm.
c. fall and remain lower for a long time.
d. not be affected unless widespread civil disorder or civil war results.
A decrease in the money supply might indicate that the Fed had
a. purchased bonds to increase banks reserves.
b. purchased bonds to decrease banks reserves.
c. sold bonds to increase banks reserves.
d. sold bonds to decrease banks reserves.
Changes in the producer price index are often thought to be useful in predicting changes
in
a. stock prices.
b. the consumer price index.
c. the unemployment rate.
d. the rate of output of goods and services.
For the Fed to fully eliminate the costs of inflation, how low does the inflation rate need
to be?
a. 0 percent
b. 3 percent
c. 5 percent
d. 6 percent
Which of the following is consistent with moving from a shortage to equilibrium in the
market for foreign currency exchange?
a. the exchange rate falls so foreign residents want to buy more U.S. goods and services
b. the exchange rate falls so foreign residents want to buy fewer U.S. goods and
services
c. the exchange rate rises so foreign residents want to buy more U.S. goods and services
d. the exchange rate rises so foreign residents want to buy fewer U.S. goods and
services
Figure27-1. The figure shows a utility function.
RefertoFigure27-1. Let 0A represent the distance between the origin and point A; let
AB represent the distance between point A and point B; etc. Which of the following
ratios best represents the marginal utility perdollarwhen wealth increases from $400 to
$600?
Marcia has four savings accounts. Which account has the largest balance?
a. $100 deposited 1 year ago at an 8 percent interest rate
b. $100 deposited 2 years ago at a 4 percent interest rate
c. $100 deposited 4 years ago at a 2 percent interest rate
d. $100 deposited 8 years ago at a 1 percent interest rate
Economists
a. agree that the costs of moderate inflation are small. The increase in unemployment
from reducing inflation will be smaller if inflation expectations remain high.
b. agree that the costs of moderate inflation are small. The increase in unemployment
from reducing inflation will be larger if inflation expectations remain high.
c. disagree about the costs of moderate inflation. The increase in unemployment from
reducing inflation will be smaller if inflation expectations remain high.
d. disagree about the costs of moderate inflation. The increase in unemployment from
reducing inflation will be larger if inflation expectations remain high.
When an economist evaluates a positive statement, he or she is primarily
a. examining evidence.
b. acting as a scientist.
c. concerned with verifying how the world is.
d. All of the above are correct.
The Federal Reserve primarily uses open-market operations to change the money
supply.
a. True
b. False
Recently, the U.S. national income accounts have switched to calling government
purchases
a. government spending and transfer payments.
b. transfer payments and gross investment by government.
c. government consumption expenditure and gross investment.
d. government wages, salaries, and investment expenditure.
Economists who are primarily responsible for advising Congress on economic matters
work in which agency?
a. the Federal Reserve
b. the Congressional Budget Office
c. the Department of the Treasury
d. the Department of Commerce
A Japanese bank buys bonds sold by Minnesota Manufacturing. Minnesota
Manufacturing then uses these funds to buy machinery from Canada. Which of the
following decreases?
a. U.S. net exports but not US net capital outflow
b. U.S. net capital outflow but not U.S. net exports
c. U.S. net exports and U.S. net capital outflow
d. neither U.S. net exports nor U.S. net capital outflow
Which of the following is a correct way to measure productivity?
a. Divide the number of hours worked by the quantity of output.
b. Divide the quantity of output by the number of hours worked.
c. Determine how much output is produced in a given time.
d. Determine how much time it takes to produce a unit of output.
Given the following information, what are the values of M1 and M2?
a. M1 = $3,150 billion, M2 = $6,200 billion.
b. M1 = $1,350 billion, M2 = $5,600 billion.
c. M1 = $1,400 billion, M2 = $6,200 billion.
d. M1 = $1,300 billion, M2 = $5,600 billion.
As banks create money, they create wealth.
a. True
b. False
The primary determinant of a country’s standard of living is
a. the country’s ability to prevail over foreign competition.
b. the country’s ability to produce goods and services.
c. the total supply of money in the economy.
d. the average age of the country’s labor force.
Which of the following is included in the investment component of GDP?
a. spending on new business equipment such as power tools and spending on stocks and
bonds
b. spending on new business equipment such as power tools but not spending on stocks
and bonds
c. spending on stocks and bonds but not spending on new business equipment such as
power tools
d. neither spending on new business equipment such as power tools nor spending on
stocks and bonds
The present value of a payment to be made in the future falls as
a. the interest rate rises and the time until the payment is made increases.
b. the interest rate rises and the time until the payment is made decreases.
c. the interest rate falls and the time until the payment is made increases.
d. the interest rate falls and the time until the payment is made decreases.
Other things the same, an increase in velocity means that
a. transactions per dollar increase so the price level rises.
b. transactions per dollar increase so the price level falls.
c. transactions per dollar decrease so the price level rises.
d. transactions per dollar decrease so the price level falls.
Both the value of hamburgers sold by a restaurant and the value of the beef it used to
make these hamburgers are included in GDP.
a. True
b. False
Table 3-38
Assume that England and Spain can switch between producing cheese and producing
bread at a constant rate.
RefertoTable3-38.England should export
a. cheese and import bread.
b. bread and import cheese.
c. both goods and import neither good.
d. neither good and import both goods.
In the open-economy macroeconomic model, the supply of loanable funds comes from
a. the sum of domestic investment and net capital outflow.
b. the sum of national saving and net capital outflow.
c. national saving.
d. net exports
The sum of all the individual supply curves for a product is called
a. total supply.
b. market supply.
c. aggregate supply.
d. total output.
Table 29-9
Metropolis National Bank is currently holding 2% of its deposits as excess reserves.
RefetoTable29-9. Metropolis National Bank is currently holding 2% of deposits as
excess reserves. What is the reserve requirement?
a. 12 percent
b. 10 percent
c. 8 percent
d. 6 percent
Which of these statements about economic models is correct?
a. For economists, economic models provide insights about the world.
b. Economic models are built with assumptions.
c. Economic models are often composed of equations and diagrams.
d. All of the above are correct.