The efficiency-wage theory of worker health is
a. more relevant for explaining unemployment in less developed countries than in rich
countries.
b. more relevant for explaining unemployment in rich countries than in less developed
countries.
c. equally relevant for explaining unemployment in less developed countries and in rich
countries.
d. not relevant for explaining unemployment.
Nancy would like to double the money in her retirement account in five years.
According to the rule of 70, what rate of interest would she need to earn to attain her
objective?
a. 5 percent
b. 7 percent
c. 10 percent
d. 14 percent
Figure 5-5
Refer to Figure 5-5. At a price of $30 per unit, sellers’ total revenue equals
a. $150.
b. $200.
c. $288.
d. $450.
Figure 7-1
Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to
consumers amounts to $325 if the price of the good is
a. $200.
b. $150.
c. $125.
d. $100.
If the interest rate is above the Fed’s target, the Fed should
a. buy bonds to increase the money supply.
b. buy bonds to decrease the money supply.
c. sell bonds to increase the money supply.
d. sell bonds to decrease the money supply.
Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
Refer to Figure 8-8. One effect of the tax is to
a. reduce consumer surplus from $180 to $72.
b. reduce producer surplus from $96 to $24.
c. create a deadweight loss of $72.
d. All of the above are correct.
In 2009 President Obama and Congress increased government spending. Some
economists thought this increase would have little effect on output. Which of the
following would make the effect of an increase in government expenditures on
aggregate demand smaller?
a. the MPC is small and changes in the interest rate have a small effect on investment
b. the MPC is small and changes in the interest rate have a large effect on investment
c. the MPC is large and changes in the interest rate have a small effect on investment
d. the MPC is large and changes in the interest rate have a large effect on investment
Other things the same, an increase in the price level makes consumers feel
a. less wealthy, so the quantity of goods and services demanded falls.
b. less wealthy, so the quantity of goods and services demanded rises.
c. more wealthy, so the quantity of goods and services demanded rises.
d. more wealthy, so the quantity of goods and services demanded falls.
Rachel babysits for her sister for no pay. When she babysits for someone else she
charges $8 an hour. When is Rachel’s babysitting included in GDP?
a. When she babysits for her sister and when she babysits for someone else.
b. When she babysits for her sister, but not when she babysits for someone else.
c. When she babysits for someone else, but not when she babysits for her sister.
d. Neither when she babysits for her sister nor for someone else.
In the open-economy macroeconomic model, the purchase of a capital asset by
domestic residents adds to the demand for loanable funds
a. only if the asset is located at home.
b. only if the asset is located abroad.
c. whether the asset is located at home or abroad.
d. None of the above is correct.
Suppose that foreign citizens decide to purchase more U.S. pharmaceuticals and U.S.
citizens decide to buy more stock in foreign 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.
For an imaginary economy, the consumer price index was 62.50 in 2004, 100.00 in
2005, and 100 in 2006. Which of the following statements is correct?
a. If the basket of goods that is used to calculate the CPI cost $80 in 2004, then that
basket of goods cost $128 in 2005.
b. If the basket of goods that is used to calculate the CPI cost $90 in 2005, then that
basket of goods cost $150 in 2006.
c. The overall level of prices increased by 97.5 percent between 2004 and 2006.
d. All of the above are correct.
By purchasing shares in a mutual fund that holds a portfolio of stocks, a person can
a. benefit from fundamental analysis, since the mutual fund requires its shareholders to
perform fundamental analysis on their own.
b. benefit from fundamental analysis, since the mutual fund hires one or more
individuals to perform fundamental analysis for the fund.
c. eliminate market risk.
d. reduce the standard deviation of his or her portfolio to zero.
When a tax is imposed on the buyers of a good, the demand curve shifts
a. upward by the amount of the tax.
b. downward by the amount of the tax.
c. upward by less than the amount of the tax.
d. downward by less than the amount of the tax.
An example of normative analysis is studying
a. how market forces produce equilibrium.
b. surpluses and shortages.
c. whether equilibrium outcomes are socially desirable.
d. income distributions.
If suppliers expect the price of their product to fall in the future, then they will
a. decrease supply now.
b. increase supply now.
c. decrease supply in the future but not now.
d. increase supply in the future but not now.
Which of the following helps to explain why the inflation fallacy is a fallacy?
a. Increases in the price level can be created by increases in money demand.
b. Nominal incomes tend to rise at the same time that the price level is rising.
c. As the price level rises, the value of a dollar falls.
d. Inflation only changes nominal variables.
Which of the following would shift the supply of dollars in the market for
foreign-currency exchange of the open-economy macroeconomic model to the left?
a. The exchange rate rises.
b. The exchange rate falls.
c. The expected rate of return on U.S. assets rises.
d. The expected rate of return on U.S. assets falls.
Grapes are considered intermediate goods
a. whether the purchaser uses them to make wine to sell or eats them.
b. if the purchaser uses them to make wine to sell others but not if the purchaser eats
them.
c. if the purchaser eats them, but not if the purchaser uses to them to make wine to sell.
d. None of the above is correct.
In the open-economy macroeconomic model, as the exchange rate rises,
a. desired net exports fall, so the quantity of dollars supplied rise.
b. desired net exports fall, so the quantity of dollars demanded falls.
c. desired net exports rise ,so the quantity of dollars supplied falls.
d. desired net exports rise, so the quantity of dollars demanded rises.
If a country raises its budget deficit, then in the market for foreign-currency exchange
a. supply shifts left.
b. supply shifts right.
c. demand shifts left.
d. supply shifts right.
A policy change that changes the natural rate of unemployment changes
a. neither the long-run Phillips curve nor the long-run aggregate supply curve.
b. both the long-run Phillips curve and the long-run aggregate supply curve.
c. the long-run Phillips curve, but not the long-run aggregate supply curve.
d. the long-run aggregate supply curve, but not the long-run Phillips curve.
Justin builds fences for a living. Justin’s out-of-pocket expenses (for wood, paint, etc.)
plus the value that he places on his own time amount to his
a. producer surplus.
b. producer deficit.
c. cost of building fences.
d. profit.
Figure 9-5
Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by
a. $60.
b. $75.
c. $135.
d. $210.
Within a country, the domestic price of a product will equal the world price if
a. trade restrictions are imposed on the product.
b. the country allows free trade.
c. the country chooses to import, but not export, the product.
d. the country chooses to export, but not import, the product.
Suppose that when income rises, the demand curve for doctor’s visits shifts to the right.
In this case, we know doctor’s visits are
a. inferior goods.
b. normal goods.
c. perfectly competitive goods.
d. durable goods.
When a union raises the wage above the equilibrium level, it
a. reduces both the quantity of labor supplied and the quantity of labor demanded.
b. reduces the quantity of labor supplied and raises the quantity of labor demanded.
c. raises the quantity of labor supplied and reduces the quantity of labor demanded.
d. raises both the quantity of labor supplied and the quantity of labor demanded.
Which of the following is correct? Price controls
a. always help those they are designed to help.
b. never help those they are designed to help.
c. often hurt those they are designed to help.
d. always hurt those they are designed to help.
If a nonbinding price floor is imposed on a market, then the
a. quantity sold in the market will decrease.
b. quantity sold in the market will stay the same.
c. price in the market will increase.
d. price in the market will decrease.
Table 4-9
The demand schedule below pertains to sandwiches demanded per week.
Refer to Table 4-9. Suppose Harry, Darby, and Jake are the only demanders of
sandwiches. Also suppose the following:
x = 2.
The current price of a sandwich is $3.00.
The market quantity supplied of sandwiches is 4.
The slope of the supply curve is 2.
Then there is currently a
a. shortage of 6 sandwiches, and the equilibrium price of a sandwich is less than $3.00.
b. shortage of 6 sandwiches, and the equilibrium price of a sandwich is $5.00.
c. surplus of 6 sandwiches, and the equilibrium price of a sandwich is less than $3.00.
d. surplus of 6 sandwiches, and the equilibrium price of a sandwich is $5.00.