Suppose the market basket consists of 100X, 200Y, and 300Z. Current-year prices are
$5 for each unit of X, $2 for each unit of Y, and $3 for each unit of Z. Base-year prices
are $2 for each unit of X, Y, and Z. What is the approximate CPI in the current year?
a. 15
b. 70.20
c. 1,200
d. 150
John Maynard Keynes wrote which of the following?
a. Das Kapital
b. The Scope and Method of Political Economy
c. Wealth of Nations
d. The General Theory of Employment, Interest and Money
e. all of the above
The economy is in equilibrium, TP = TE, and Real GDP is $4,555 billion. The MPC is
0.80, the multiplier is operative, and idle resources exist at each expenditure round.
Government purchases rise by $10 billion. As a result, the __________ curve shifts
__________, inventory levels unexpectedly __________, business firms ___________
the quantity of goods and services they produce, and Real GDP __________ by
__________.
a. TE; downward; fall; increase; rises; $10 billion.
b. TP; rightward; fall; decrease; falls; $50 billion
c. TE; upward; fall; increase; rises; $50 billion
d. TE; downward; rise; increase; rises, $50 billion
According to new classical theory, if the public correctly anticipates a government
policy to increase aggregate demand, then the
a. short-run Phillips curve will be upward sloping, but the long-run Phillips curve will
be downward-sloping.
b. long-run Phillips curve will be upward sloping, but the short-run Phillips curve will
be downward-sloping.
c. short-run Phillips curve will be upward sloping, but the long-run Phillips curve will
be vertical.
d. long run Phillips curve will be upward sloping, but the short-run Phillips curve will
be vertical.
e. short- and long-run Phillips curves will be vertical.
Studies show that as real income has been rising in the United States, the per-capita
demand for food has been increasing by
a. much less, which means the demand for food is income inelastic.
b. much more, which means the demand for food is income elastic.
c. much more, which means the demand for food is income inelastic.
d. as much, which means the demand for food is unit elastic.
e. none of the above
In 2013, U.S. federal government revenues (made up of taxes and fees), totaled
________ trillion.
a. $4.3
b. $3.3
c. $2.7
d. $1.3
As the interest rate falls, the quantity
a. demanded of money falls.
b. demanded of money rises.
c. supplied of money rises.
d. supplied of money falls.
The worker-misperception explanation of the SRAS curve is used to explain why
a. SRAS curves shift to the right
b. SRAS curves shift to the left
c. the AD curve cannot change the price level if the SRAS curve is operational.
d. the SRAS curve slopes downward.
e. none of the above
A call option is a contract
a. that gives the owner the right, but not the obligation, to buy shares of a stock at a
specified price within the time limits of the contract.
b. that gives the owner the right, but not the obligation, to sell shares of a stock at a
specified price within the time limits of the contract.
c. in which the seller agrees to provide a particular good to the buyer on a specified
future date at an agreed-upon price.
d. that gives the owner the right, but not the obligation, to buy or sell shares of a stock
at a specified price within the time limits of the contract.
Reserves held beyond the required amount are called __________ reserves.
a. redundant
b. precautionary
c. excess
d. surplus
Demand refers to
a. how much of a good people are willing and able to buy at a particular price.
b. the different quantities of a good people are willing and able to buy at different
prices.
c. the different quantities of a good people are willing and able to buy at a particular
price.
d. how much of a good people are willing to buy at different prices.
e. none of the above
Is it possible for a country with a relatively large GDP to have a relatively small
per-capita GDP?
a. Yes, since the country with a relatively large GDP could also have a relatively large
population.
b. No, since countries with a relatively large GDP (such as the United States and Japan)
also have a relatively high per-capita GDP.
c. Yes, but only under the condition that the country “produces” relatively more “bads”
than other countries.
d. Yes, since government transfer payments may be exorbitantly high in the country
with the relatively high GDP.
e. There is not enough information to answer this question.
People who buy houses in good-weather locations receive this benefit absolutely for
free.
a. True
b. False
Congressman A promises to vote for a bill that Congressmen B and C are sponsoring,
and in return both B and C promise to vote for a future bill that A is sponsoring. This
practice is called
a. cutting “red tape.”
b. chasing the median voter.
c. rational ignorance.
d. logrolling.
The structural unemployment rate is 1.3 percent, the frictional unemployment rate is 2.1
percent, and the economy’s current unemployment rate is 4.9 percent. The economy is
in
a. a recessionary gap producing less than Natural Real GDP.
b. an inflationary gap producing more than Natural Real GDP.
c. long-run equilibrium.
d. an inflationary gap producing Natural Real GDP.
e. a recessionary gap producing more than Natural Real GDP.
An increase in investment caused by a factor other than a change in the price level
a. shifts the AD curve to the right.
b. shifts the AD curve to the left.
c. causes an upward movement along the existing AD curve.
d. causes a downward movement along the existing AD curve.
e. none of the above
Exhibit 9-8
Suppose that at a given price level the following values exist in a hypothetical
economy:
Consumption = $7,000 billion
Investment = $1,900 billion
Government Purchases = $1,700 billion
Exports = $300 billion
Imports = $300 billion
Assume that the level of total expenditures is equal to the value of goods and services
that suppliers want to sell.
If saving increases by $500 billion, the new level of consumption will equal
______________.According to classical economists investment would
_______________ and total expenditures would ________________________.
a. $6,500 billion; then decrease by $500 billion; fall by $500 billion
b. $6,500 billion; then increase by $500 billion; fall by $500 billion
c. $7,500 billion; remain constant; fall by $500 billion
d. $6,500 billion; then increase by $500 billion; remain constant
Suppose that a television studio has two shows, X and Z, and that tickets for viewing
the taping of each show is free.The equilibrium price for a ticket to view the taping of
show X is $25 and the equilibrium price for a ticket to view the taping of show B is
-$20.It is likely that tickets to show ________ will need to be rationed on a
first-come-first-served basis, while the producers of show ________ will have a much
more difficult time filling the seats in the studio since the equilibrium price for tickets
to that show is a __________ dollar amount.
a. Z; X; positive
b. Z; X; negative
c. X; Z; positive
d. X; Z; negative