The overall mortality rate in the United States has declined for the past 30 years.
Most economists believe that labor unions significantly increase the overall
unemployment rate in the United States.
The Fed has complete control over the money supply.
If purchasing power parity tells us that if the exchange rate is a pound for a dollar, then
price of a haircut in London should cost the same as a haircut in New York.
A quota is a numerical limit on the quantity of a good that can be imported.
Economist Robert Higgs showed that World War II brought great increase in the
number of consumer goods available to the typical person.
In the United States, corporate profits are taxed at the corporate level and then are taxed
again as personal income in the form of dividend payments.
The relative price of a country’s goods and services in terms of foreign goods and
services is the real exchange rate.
Stagflation occurs when short-run aggregate supply decreases.
If the opportunity cost of producing more of one good increases as more of that good is
produced, then the production method is inefficient.
The FOMC no longer sets targets for M1 and M2 to meet its goals of price stability and
high employment.
A decrease in the price of inputs will cause the supply curve for a product to shift to the
right.
When you purchase a new surfboard you do so in the
A) resource market.
B) product market.
C) input market.
D) factor market.
The quantity equation states that the
A) money supply divided by the velocity of money equals the price level divided by
real output.
B) money supply times the velocity of money equals the price level times real output.
C) money supply times the price level equals real output divided by the velocity of
money.
D) money supply times the price level equals real output times the velocity of money.
Deflation refers to
A) a decrease in the rate of inflation.
B) a falling price level.
C) Both A and B are correct.
D) None of the above is correct.
If planned aggregate expenditure is below potential GDP and planned aggregate
expenditure equals GDP, then
A) actual inventory investment will be less than planned inventory investment.
B) actual inventory investment will be greater than planned inventory investment.
C) the economy is in a recession.
D) the economy is at full employment.
All of the following are considered intellectual property except
A) books.
B) films.
C) software.
D) shares of stock.
The Federal Open Market Committee consists of the seven members of the ________,
the president of the Federal Reserve Bank of New York, and ________.
A) Federal Reserve’s Board of Governors; four members of the Council of Economic
Advisors
B) Federal Reserve’s Board of Governors; four presidents from the other 11 Federal
Reserve banks
C) Council of Economic Advisors; four presidents from the 11 Federal Reserve banks
D) Council of Economic Advisors; four members of the U.S. Banking Committee
Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He is
considering setting up his business as a sole proprietorship. What is one disadvantage to
Jeremy of setting up his business as a sole proprietorship?
A) As a sole proprietor, Jeremy would be taxed twice.
B) As a sole proprietor, Jeremy would not have control of the business.
C) As a sole proprietor, Jeremy would face unlimited liability.
D) As a sole proprietor, Jeremy would be subject to significant rules and regulations.
Figure 12-2
Refer to Figure 12-2. If the U.S. economy is currently at point K, which of the
following could cause it to move to point N?
A) The price level in the United States falls relative to the price level in other countries.
B) Congress abolishes investment tax incentives.
C) The interest rate rises.
D) Household wealth declines.
The opportunity cost of being unemployed tends to be the highest in which of the
following countries?
A) Canada
B) the United States
C) France
D) the United Kingdom
Figure 5-1
Figure 5-1 represents the market for vaccinations. Vaccinations are considered a benefit
to society, and the figure shows both the marginal private benefit and the marginal
social benefit from vaccinations.
Refer to Figure 5-1. The efficient equilibrium quantity is ________ thousand
vaccinations.
A) 200
B) 400
C) 600
D) >600
Figure 19-7
Refer to Figure 19-7. Which of the following is true?
A) U.S imports are more expensive at exchange rates greater than $.02/rupee than at the
equilibrium exchange rate.
B) The rupee is overvalued at exchange rates less than $.02/rupee.
C) To achieve an exchange rate greater than $.02/rupee, the Reserve Bank of India must
buy surplus dollars with rupees.
D) Indian exports to the United States are more expensive at exchange rates greater
than $.02/rupee than at the equilibrium exchange rate.
The actual real wage is lower than the expected real wage if
A) actual inflation is less than expected inflation.
B) expected inflation is less than actual inflation.
C) actual unemployment is less than expected unemployment.
D) actual unemployment is less than actual inflation.
A relationship that depends on the basic behavior of consumers and firms and remains
unchanged over long periods is called a ________ relationship.
A) frictional
B) structural
C) cyclical
D) dynamic
Figure 2-9
Figure 2-9 shows the production possibilities frontiers for Greenland and Iceland. Each
country produces two goods, snow cones and popsicles.
Refer to Figure 2-9. What is the opportunity cost of producing 1 snow cone in Iceland?
A) 2/3 of a popsicle
B) 3/4 of a popsicle
C) 1 1/2 popsicles
D) 180 popsicles
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 an umbrella?
A) 1/5 of a hat
B) 5 hats
C) 10 hats
D) 50 hats
The short-run Phillips curve will shift if there is
A) an increase in the unemployment rate.
B) an increase in inflation that is unanticipated.
C) a decrease in inflation that is unanticipated.
D) a change in inflation expectations.
An increase in ________ shifts the production function ________, and makes it
possible to produce a higher level of GDP with ________ capital per hour worked.
A) technology; down; the same amount of
B) technology; up; the same amount of
C) consumption; up; a lesser amount
D) labor productivity; down; the same amount of
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. Which country has an absolute advantage in producing swords?
A) Estonia
B) Morocco
C) both countries
D) neither country
Which of the following explains the changes in the U.S. adult male labor force
participation rate since 1948?
A) More men are joining the military as compared to the past.
B) More men are retiring later in life as compared to the past.
C) Fewer men consider themselves discouraged workers as compared to the past.
D) Younger men are remaining in school longer as compared to the past.
Figure 15-11
Refer to Figure 15-11. In the dynamic model of AD–AS in the figure above, the
economy is at point A in year 1 and is expected to go to point B in year 2, and the
Federal Reserve pursues policy. This will result in
A) unemployment rates higher than what would occur if no policy had been pursued.
B) inflation higher than what would occur if no policy had been pursued.
C) real GDP lower than what would occur if no policy had been pursued.
D) short-term interest rates higher than what would occur if no policy had been
pursued.
Use a graph to show the effects of a contractionary monetary policy to reduce inflation
and move an economy back to potential real GDP. Explain what happens to aggregate
demand, real GDP, and the price level.
What happens to national saving when the government runs a budget surplus? What
happens to national saving when the government runs a budget deficit?
What does it mean to say that workers and firms have rational expectations?
Use the money demand and money supply model to show graphically and explain the
effect on interest rates of the Federal Reserve’s open market purchase of Treasury
securities.
Assuming a fixed amount of taxes and a closed economy, calculate the value of the
government purchases multiplier, the tax multiplier, and the balanced budget multiplier
if the marginal propensity to consume equals 0.5.
Explain how a stock market crash has the potential to lead to a recession in an economy.
The federal budget exhibited a $128.7 billion surplus in 2001 but moved to a deficit of
$157.8 billion in 2002. Some argued the deficit was opened up because of the Bush
2001 tax cuts, but others argued that the deficit grew because of the recession suffered
in 2001. Evaluate the validity of the second argument.
If the rate of inflation in the economy is steady at 5 percent per year, how does the
short-run Phillips curve predict that the unemployment rate will be changing, if at all?
Does your answer change if inflation in the economy is 0 percent? Illustrate your
answer with a Phillips curve.
According to the theory of purchasing power parity, if the inflation rate in the United
States is greater than the inflation rate in Canada, explain what should happen to the
exchange rate between the U.S. dollar and the Canadian dollar.
The Bureau of Labor Statistics counts as employed people who work part-time, but
would prefer to work full-time. Suppose the people who had part-time jobs, but wanted
full-time jobs, were counted as unemployed. Explain how the unemployment rate and
the labor force participation rate would change.