Which of the following is included in M2 but not in M1?
a. demand deposits
b. corporate bonds
c. large time deposits
d. money market mutual funds
Today’s demand curve for gasoline could shift in response to a change in
a. today’s price of gasoline.
b. the expected future price of gasoline.
c. the number of sellers of gasoline.
d. All of the above are correct.
In general, the longest lag for
a. both fiscal and monetary policy is the time it takes to change policy.
b. both fiscal and monetary policy is the time it takes for policy to affect aggregate
demand.
c. monetary policy is the time it takes to change policy, while for fiscal policy the
longest lag is the time it takes for policy to affect aggregate demand.
d. fiscal policy is the time it takes to change policy, while for monetary policy the
longest lag is the time it takes for policy to affect aggregate demand.
Figure 5-8
Refer to Figure 5-8. For prices above $5, demand is price
a. elastic, and raising price will increase total revenue.
b. inelastic, and raising price will increase total revenue.
c. elastic, and lowering price will increase total revenue.
d. inelastic, and lowering price will increase total revenue.
In a small closed economy investment is $50 billion and private saving is $55 billion.
What are public saving and national saving?
a. $60 billion and $5 billion
b. $50 billion and -$5 billion
c. $5 billion and $60 billion
d. -$5 billion and $50 billion
Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay
for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three
buyers of oranges, and only three oranges can be supplied per day.
Refer to Table 7-5. If the market price of an orange increases from $0.70 to $1.40, then
consumer surplus
a. increases by $2.50.
b. decreases by $0.80.
c. decreases by $2.60.
d. decreases by $3.40.
Figure 8-12
Refer to Figure 8-12. Which of the following statements is not correct?
a. Supply 2 is more elastic than supply 1.
b. Demand 2 is more elastic than demand 1.
c. Supply 1 is more inelastic than supply 2.
d. Demand 2 is more inelastic than supply 2.
A bank has a 10 percent reserve requirement, $5,000 in deposits, and has loaned out all
it can given the reserve requirement.
a. It has $50 in reserves and $4,950 in loans.
b. It has $500 in reserves and $4,500 in loans.
c. It has $555 in reserves and $4,445 in loans.
d. None of the above is correct.
Table 3-4
Assume that the farmer and the rancher can switch between producing meat and
producing potatoes at a constant rate.
Labor Hours Needed
to Make 1 Pound of Pounds Produced
in 24 Hours
Refer to Table 3-4. The farmer has an absolute advantage in the production of
a. meat.
b. potatoes.
c. both goods.
d. neither good.
Other things the same, as the maturity of a bond becomes longer, the bond will pay
a. a lower interest rate because it has less risk.
b. a lower interest rate because it has more risk.
c. a higher interest rate because it has more risk.
d. the same interest rate, because there is no relationship between term and risk.
In 1980, the combination of inflation and unemployment the U.S. was experiencing
a. resulted from a leftward shift of the short-run Phillips curve.
b. was consistent with feasible inflation-unemployment combinations provided by the
Phillips curve of the 1960s.
c. followed two supply shocks that were triggered by the Organization of Petroleum
Exporting Countries.
d. All of the above are correct.
If the reserve ratio is 8 percent, then $4,500 of additional reserves can create up to
a. $4,500 of new money.
b. $48, 913 of new money.
c. $56,250 of new money.
d. $75,000 of new money.
Unions contribute to
a. structural unemployment but not the natural rate of unemployment.
b. the natural rate of unemployment but not structural unemployment.
c. both structural unemployment and the natural rate of unemployment.
d. neither structural unemployment nor the natural rate of unemployment.
Consumer surplus in a market can be represented by the
a. area below the demand curve and above the price.
b. distance from the demand curve to the horizontal axis.
c. distance from the demand curve to the vertical axis.
d. area below the demand curve and above the horizontal axis.
A politician blames the Federal Reserve for being ‘soft on unemployment” and claims
that a permanently higher money supply growth rate will lead to a permanent reduction
in the unemployment rate. The politician’s argument is
a. consistent with the long-run Phillips curve. Further, the long-run Phillips curve
implies that such a policy would not increase inflation.
b. consistent with the long-run Phillips curve. However, the long-run Phillips curve
implies that such a policy would increase inflation.
c. inconsistent with the long-run Phillips curve. However, the long-run Phillips curve
implies that such a policy would not increase inflation.
d. inconsistent with the long-run Phillips curve. Further, the long-run Phillips curve
implies that such a policy would increase inflation.
Larry buys stock in A to Z Express Company. Curly Corporation builds a new factory.
Whose transaction would be an act of investment in the language of macroeconomics?
a. only Larry’s
b. only Curly Corporation’s
c. Larry’s and Curly Corporation’s
d. neither Larry’s nor Curly Corporation’s
If a Brazilian. company opens a new factory in Peru, it makes
a. foreign direct investment. The factory will make a bigger impact on Peru’s GDP than
on its GNP.
b. foreign direct investment. The factory will make a bigger impact on Peru’s GNP than
on its GDP.
c. foreign portfolio investment. The factory will make a bigger impact on Peru’s GDP
than on its GNP.
d. foreign portfolio investment. The factory will make a bigger impact on Peru’s GNP
than on its GDP.
Which of the following is a liability of a bank and an asset of its customers?
a. deposits of its customers and loans to it customers
b. deposits of its customers but not loans to its customers
c. loans of its customers but not the deposits of its customers
d. neither the deposits of its customers nor the loans to its customers
Figure 7-15
Refer to Figure 7-15. If the government imposes a price ceiling of $60 in this market,
then total surplus will be
a. $187.50.
b. $212.50.
c. $250.00.
d. $266.67.
Other things the same, if the price level rises, then domestic interest rates
a. rise, so domestic residents will want to hold more foreign bonds.
b. rise, so domestic residents will want to hold fewer foreign bonds.
c. fall, so domestic residents will want to hold more foreign bonds.
d. fall, so domestic residents will want to hold fewer foreign bonds.
Figure 8-6
The vertical distance between points A and B represents a tax in the market.
Refer to Figure 8-6. When the tax is imposed in this market, consumer surplus is
a. $600.
b. $900.
c. $1,500.
d. $3,000.
“Other things equal, when the price of a good rises, the quantity demanded of the good
falls, and when the price falls, the quantity demanded rises.” This relationship between
price and quantity demanded is referred to as
a. equilibrium.
b. the law of demand.
c. the relationship between supply and demand.
d. the definition of an inferior good.
Which of the following is not an example of scarcity?
a. Only some people can afford to buy a Ferrari.
b. Every individual in society cannot attain the highest standard of living to which he or
she might aspire.
c. Doug has an unlimited supply of apples in his orchard.
d. Each member of a household cannot get everything he or she wants.
Suppose that U.S. citizens purchase more cars made in Korea, and Koreans purchase
more bonds issued by U.S. corporations. Other things the same, these actions
a. raise both U.S. net exports and U.S. net capital outflows.
b. raise U.S. net exports and lower U.S. net capital outflows.
c. lower both U.S. net exports and U.S. net capital outflows.
d. lower U.S. net exports and raise U.S. net capital outflows.
Janelle offers you $1,000 today or $1,500 in 5 years. You would prefer to take the
$1,500 in 5 years if the interest rate is
a. 8 percent.
b. 9 percent.
c. 10 percent.
d. All of the above are correct.
Use the (hypothetical) information in the following table to answer the following
questions.
Table 18-2
Refer to Table 18-2. Which currency(ies) is(are) less valuable than predicted by the
doctrine of purchasing-power parity?
a. boloviano and dinar
b. yen and kroner
c. baht and kroner
d. baht
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
Refer to Figure 8-4. The per-unit burden of the tax on buyers is
a. $3.
b. $4.
c. $5.
d. $8.
You deposit X dollars into a 3″year certificate of deposit that pays 4.75 percent annual
interest. At the end of the 3 years you have $4,310.16. What number of dollars, X, did
you deposit?
a. $3,680.00
b. $3,712.77
c. $3,750.00
d. $3,772.57
When the price of a good or service changes,
a. the supply curve shifts in the opposite direction.
b. the demand curve shifts in the opposite direction.
c. the demand curve shifts in the same direction.
d. there is a movement along a given demand curve.
Suppose that money supply growth increases. In the long run, this increases
employment according to
a. both the long-run Phillips curve and the aggregate demand and aggregate supply
model.
b. neither the long-run Phillips curve nor the aggregate demand and aggregate supply
model.
c. the long-run Phillips curve, but not the aggregate demand and aggregate supply
model.
d. the aggregate demand and aggregate supply model, but not the long-run Phillips
curve
Two variables that have a positive correlation move in the same direction.
The only way to rationalize an upward slope for the short-run aggregate-supply curve is
to argue that wages are sticky in the short run.
When quantity supplied exceeds quantity demanded at the current market price, the
market has a surplus, and market price will likely rise in the future to eliminate the
surplus.
If the wage is kept above the equilibrium level because of minimum-wage laws, then
the result is unemployment; if the wage is kept above the equilibrium level for some
other reason, the result need not be unemployment.
A binding minimum wage raises the incomes of some workers, but it lowers the
incomes of workers who cannot find jobs.
Domestic consumers gain and domestic producers lose when the government imposes a
tariff on imports.
Other things equal, in countries with higher levels of real GDP per person, life
expectancy and literacy rates are higher than in countries with lower levels of real GDP
per person.
Economists at the U.S. Department of the Treasury help design U.S. coins and paper
money.
To counter the recession of 2008-2009 President Obama and congress created a large
increase in government expenditures.
The production possibilities frontier shows the trade-offs that the producer faces but
does not identify the choice the producer will make.
Draw a simple T-account for First National Bank which has $5,000 of deposits, a
required reserve ratio of 10 percent, and excess reserves of $300. Make sure your
balance sheet balances.
In the circular-flow diagram, households and firms are the decision makers.
The Bureau of Labor Statistics’ household survey and establishment survey both yield
the same results about total employment.
The Bureau of Labor Statistics’ U-5 measure of joblessness is the official
unemployment rate.
Not all sellers benefit from a binding price floor.
Supply and demand both tend to be more elastic in the long run and more inelastic in
the short run.
Why is productivity related to the standard of living? In your answer be sure to explain
what productivity and standard of living mean. Make a list of things that determine
labor productivity.
When a production possibilities frontier is bowed outward, the opportunity cost of one
good in terms of the other is constant.
The minimum wage has its greatest impact on the market for teenage labor.