What government agency has the option to purchase government bonds issued by the
U.S. Treasury?
A) the IRS
B) the Federal Reserve
C) the Commerce Department
D) the Congressional Budget Office
Let C = 550 + 0.8y and I = 75. Assume no government or foreign sectors. If investment
increases by 100, the equilibrium output increases by a total of
A) 60.
B) 175.
C) 500.
D) 800.
The Asian crisis in 1997 started because of large capital flows into Asia.
If incomes increase and electricity is a normal good, then:
A) the demand for electricity increases.
B) the demand for electricity decreases.
C) the quantity demanded for electricity decreases.
D) the quantity demanded for electricity increases.
A(n) ________ in U.S. interest rates will cause a decrease in the demand for U.S.
dollars and a(n) ________ in the (per dollar) exchange rate.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Recall Application 6, “Culture, Evolution, and Economic Growth,” to answer the
following questions:
According to the application, the differences in the survival rates of the rich and the
poor in England caused a change in culture in the form of:
A) increased thrift and prudence.
B) increased hard work.
C) reduced violent behaviors.
D) All of the above are correct.
One way that the government can encourage economic growth is by implementing
policies that encourage:
A) saving and investment.
B) population growth.
C) consumption.
D) none of the above
When deciding whether to engage in an activity or how much to do, people should
follow:
A) the principle of microeconomics.
B) the principle of macroeconomics.
C) the marginal principle.
D) the law of supply and demand.
London reduced its road congestion by:
A) banning cars in the inner city during the daytime.
B) making city buses free.
C) raising the fare for the London subway system, the Underground.
D) imposing a daytime driving tax.
In the United States, the temporary tax surcharge of 1968
A) had no impact on consumer spending.
B) decreased consumer spending by less than was originally estimated.
C) decreased consumer spending by more than was originally estimated.
D) actually increased consumer spending.
What event led economists to question the usefulness of classical models in explaining
how the true economy works?
A) the Great Depression
B) World War II
C) World War I
D) the Revolutionary War
A deficit is defined as
A) the excess of total expenditures over total revenues.
B) the excess of total revenues over total expenditures.
C) government spending plus transfer payments.
D) the sum of all past borrowing by the government.
Suppose workers negotiate for a 5 percent nominal wage increase and expect a 8
percent inflation rate. If the actual inflation rate is 4 percent, then workers
A) and firms are both better off.
B) are better off and firms are worse off.
C) are worse off and firms are better off.
D) and firms are both worse off.
Assets that are easily convertible into money on short notice are referred to as being
A) adaptable.
B) liquid.
C) diversified.
D) durable.
An increase in the employment tax will have no effect on output if the labor supply
curve
A) has a negative slope.
B) is perfectly vertical.
C) is perfectly horizontal.
D) has a positive slope.
Suppose that the economy is currently at full employment. When the country ends its
war in Afghanistan and reduces the military spending needed to support it, crowding in
will take the form of:
A) an increase in investment spending.
B) an increase in consumption spending.
C) A and B are both correct.
D) neither A nor B is correct.
Accelerator theory refers to the theory of
A) investment that emphasizes that current investment spending depends positively on
the expected future growth of government spending.
B) investment that emphasizes that current investment spending depends positively on
the expected future growth of GDP.
C) consumption that emphasizes that current consumer spending depends positively on
the expected future growth of GDP.
D) consumption that emphasizes that increases in consumption spending will result,
through the multiplier effect, in greater increases in GDP.
Rent control is an example of the government imposing:
A) a price ceiling.
B) an equilibrium price.
C) a price floor.
D) a minimum supply price.
A product produced in the home country and sold in another country is:
A) an export.
B) an import.
C) savings.
D) investment.