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If the number of sellers in a market increases, then the
a. demand in that market will increase.
b. supply in that market will increase.
c. supply in that market will decrease.
d. demand in that market will decrease.
The cost of inflation reduction is a large, permanent increase in unemployment.
a. True
b. False
RefertoFigure4-27. Which of the four panels illustrates an increase in quantity
supplied?
a. Panel (a)
b. Panel (b)
c. Panel (c)
d. Panel (d)
In essence, a consumption tax puts all saving into tax-advantaged savings accounts.
a. True
b. False
Productivity can be computed as the number of hours worked divided by output.
a. True
b. False
Assume Leo buys coffee beans in a competitive market. It follows that
a. Leo has a limited number of sellers from which to buy coffee beans.
b. Leo will negotiate with sellers whenever he buys coffee beans.
c. Leo cannot influence the price of coffee beans even if he buys a large quantity of
them.
d. None of the above is correct.
If the MPCis 0, then the multiplier is
a. 0.
b. 1.
c. infinite.
d. None of the above is correct.
A permanent reduction in inflation would
a. permanently reduce the frequency of price changes and permanently lower
unemployment.
b. permanently reduce the frequency of price changes and temporarily raise
unemployment.
c. temporarily reduce the frequency of price changes and temporarily lower
unemployment.
d. temporarily reduce the frequency of price changes and temporarily raise
unemployment.
On a given short-run Phillips curve which of the following is notheld constant?
a. the level of GDP
b. the position of the aggregate-supply curve
c. expected inflation
d. the expected growth rate of the money supply
Suppose the economy is in long-run equilibrium. Senator A succeeds in getting taxes
raised. At the same time,
Senator B succeeds in getting major restrictions on logging removed. In the short run
a. real GDP will rise and the price level might rise, fall, or stay the same.
b. real GDP will fall and the price level might rise, fall, or stay the same.
c. the price level will rise, and real GDP might rise, fall, or stay the same.
d. the price level will fall, and real GDP might rise, fall, or stay the same.
All else equal, when people become more optimistic about a company's future, the
a. supply of the stock and the price will both rise.
b. supply of the stock and the price will both fall.
c. demand for the stock and the price will both rise.
d. demand for the stock and the price will both fall.
During the last half of 2012, the U.S. unemployment rate was just under 8 percent.
Historical experience suggests that this is
a. above the natural rate, so real GDP growth was likely low.
b. above the natural rate, so real GDP growth was likely high.
c. below the natural rate, so real GDP growth was likely low.
d. below the natural rate, so real GDP growth was likely high.
Proprietary technology is knowledge that is
a. known but no longer used much.
b. known, but only recently discovered.
c. known mostly by only those in a certain profession.
d. known only by the company that discovered it.
Minimum-wage laws
a. create frictional unemployment, while firms paying wages above equilibrium to
reduce worker turnover creates structural unemployment.
b. create structural unemployment, while firms paying wages above equilibrium to
reduce worker turnover creates frictional unemployment.
c. and firms paying wages above equilibrium to reduce worker turnover both create
structural unemployment.
d. and firms paying wages above equilibrium to reduce worker turnover both create
frictional unemployment.
Since 1960, the natural rate of unemployment in the U.S. has been between
a. 0% and 1%.
b. 5% and 6%.
c. 10% and 12%.
d. 12% and 24%.
The BLS reports the U-6 measure of labor underutilization. Which of the following is
how it computes U-6?
a. (total unemployed + marginally attached workers)/adult population
b. (total unemployed + marginally attached workers + part-time employed for economic
reasons)/adult population
c. (total unemployed + marginally attached workers)/(labor force + marginally attached
workers)
d. (total unemployed + marginally attached workers + part time employed for economic
reasons)/(labor force + marginally attached workers)
Dividends
a. are the rates of return on mutual funds.
b. are cash payments that companies make to shareholders.
c. are the difference between the price and present value per share of a stock.
d. are the rates of return on a company's capital stock.
Samuelson and Solow reasoned that when aggregate demand was low, unemployment
was
a. high, so there was upward pressure on wages and prices.
b. high, so there was downward pressure on wages and prices.
c. low, so there was upward pressure on wages and prices.
d. low, so there was downward pressure on wages and prices.
In the circular-flow diagram,
a. profit flows from households to firms.
b. labor flows from households to firms.
c. services flow from households to firms.
d. All of the above are correct.
How did the influential economist John Maynard Keynes explain his remark that
though economics is an easy subject compared with the higher branches of philosophy
or pure science, it is a subject at which few excel?
a. Most people who study economics are not very bright.
b. Good economists must possess a rare combination of gifts.
c. Economics is quite boring; hence, people tend to lose interest in it before mastering
it.
d. Good thinkers become frustrated with economics because it does not make use of the
scientific method.
At an annual interest rate of 10 percent, about how many years will it take $100 to
double in value?
a. 5
b. 7
c. 9
d. 11
Price will rise to eliminate a surplus.
a. True
b. False
A decrease in the price of a complement will shift the demand curve for a good to the
left.
a. True
b. False
You could borrow $1,000 today from Bank A and repay the loan, with interest, by
paying Bank A $1,060 one year from today. Or, you could borrow $1,500 today from
Bank B and repay the loan, with interest, by paying Bank B $1,600 one year from
today. Which of the following statements is correct?
a. The interest rate on the loan from Bank A is higher than the interest rate on the loan
from Bank B.
b. The interest rate on the loan from Bank A is lower than the interest rate on the loan
from Bank B.
c. The interest rates on the two loans are the same.
d. There is not enough information to determine which loan has the higher interest rate.
Diversification can reduce firm-specific risk.
a. True
b. False
The money supply increases when the Fed
a. lowers the discount rate. The increase will be larger the smaller the reserve ratio is.
b. lowers the discount rate. The increase will be larger the larger the reserve ratio is.
c. raises the discount rate. The increase will be larger the smaller the reserve ratio is.
d. raises the discount rate. The increase will be larger the larger the reserve ratio is.
Which of the following is notcorrect?
a. In the short run, policymakers face a tradeoff between inflation and unemployment.
b. Events that shift the long-run Phillips curve right shift the long-run aggregate supply
curve left.
c. Unemployment can be changed only by the use of government policy.
d. The decrease in output associated with reducing inflation is less if the policy change
is announced ahead of time and is credible.
A decrease in the availability of an important major resource such as oil shifts
a. aggregate supply right.
b. aggregate supply left.
c. aggregate demand right.
d. aggregate demand left.
If banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign
currencies of other countries, but foreigners do not desire to increase their holdings of
U.S. dollars, then U.S. net exports would
a. rise and aggregate demand would shift left.
b. rise and aggregate demand would shift right.
c. fall and aggregate demand would shift left.
d. fall and aggregate demand would shift right.
Diversification of a portfolio
a. can eliminate market risk, but it cannot eliminate firm-specific risk.
b. can eliminate firm-specific risk, but it cannot eliminate market risk.
c. increases the portfolio's standard deviation.
d. is not necessary for a person who is risk averse.
You know that a candy bar cost five cents in 1962. You also know the CPI for 1962 and
the CPI for today. Which of the following would you use to compute the price of the
candy bar in today's prices?
a. five cents (1962 CPI / today's CPI)
b. five cents ((today's CPI - 1962 CPI)/1962 CPI)
c. five cents (today's CPI / 1962 CPI)
d. five cents today's CPI - five cents 1962 CPI.
Table 23-10
A hypothetical country of Lahland produces only movies and popcorn. Quantities and
prices of these goods for the last several years are shown below. The base year is 2015 .
RefertoTable23-10.What was this country's nominal GDP in 2014?
a. $9,500
b. $10,000
c. $10,200
d. $10,500
Which of the following changes would decrease the present value of a future payment?
a. a decrease in the size of the payment
b. an increase in the time until the payment is made
c. an increase in the interest rate
d. All of the above are correct.
Table 4-12
A country club usually only allows members to purchase tickets for its celebrity golf
tournament, but the club is considering allowing non-members to purchase tickets this
year. The demand and supply schedules are as follows:
RefertoTable4-12.If both members and non-members are allowed to purchase tickets
to this year's celebrity golf tournament and the country club sets the ticket price at $30,
then there will be
a. a shortage of 300 tickets.
b. a surplus of 300 tickets.
c. 600 tickets sold.
d. 600 tickets unsold.
Which of the following is an example of U.S. foreign portfolio investment?
a. Disney builds a new amusement park near Barcelona, Spain.
b. A U.S. citizen buys bonds issued by the British government.
c. A Dutch hotel chain opens a new hotel in the United States.
d. A citizen of Singapore buys a bond issued by a U.S. corporation.
