According to the Phillips curve, a more expansionary macro-policy that causes inflation
to be greater will:
a. place downward pressure on prices.
b. reduce unemployment.
c. reduce output.
d. reduce the natural rate of unemployment.
Which of the following is a normative statement?
a. A decrease in price leads to an increase in quantity consumed.
b. Incomes grow more rapidly in high-tax states than low-tax states.
c. People would be better off if government expenditures were higher.
d. People will buy less butter at $1.50 per pound than they will at $1 per pound.
Exhibit 4-3 Supply and demand curves
In Exhibit 4-3, an increase in demand would cause a movement from which equilibrium
point to another, other things being equal?
a. E1 to E2.
b. E1 to E3.
c. E4 to E1.
d. E1 to E4.
Bob is unemployed because his skills have become obsolete due to technological
advances. This is ____ unemployment.
a. frictional
b. structural
c. cyclical
d. abnormal
Exhibit 4-8 Demand and supply curves
In Exhibit 4-8, a movement from A to D is best described as a(n):
a. increase in the quantity demanded and an increase in supply.
b. increase in supply and demand.
c. increase in both the quantity demanded and supplied.
d. increase in the quantity supplied and in the demand.
e. decrease in the quantity demanded and a decrease in supply.
Personal income minus personal taxes is:
a. disposable personal income.
b. net national income.
c. proprietors’ income.
d. indirect business taxes.
e. savings income.
Exhibit 15-2 Balance Sheet of Springfield National Bank AssetsLiabilities
Total reserves $500 Demand deposits $1,000
Loans $500 In Exhibit 15-2, if Springfield National has excess reserves equal to $300,
and then its customers write checks for $200, its excess reserves will fall to:
a. $0.
b. $100.
c. $140.
d. $160.
e. $200.
If your disposable personal income increases from $33,000 to $41,000 and your
consumption increases from $8,000 to $12,000, your marginal propensity to consume
(MPC) is:
a. 0.2.
b. 0.4.
c. 0.5.
d. 0.8.
e. 1.0.
Expenditures for services such as tourism, income for foreign investment, and foreign
gifts are tabulated in the:
a. current account.
b. capital account.
c. official reserve account.
d. goods account.
Consider two people, Sandy Ross, who earns $25,000, and Gary Belcher, who earns
$50,000. If the flat-tax rate is 20 percent, then:
a. the government collects a total of $20,000.
b. Gary pays twice the tax amount Sandy pays.
c. Gary pays three times the tax amount Sandy pays.
d. Gary and Sandy pay exactly the same tax amount.
e. Gary pays $15,000 in taxes.
Which of the following would be an example of a public good?
a. A candy bar.
b. A painting by Monet.
c. A taxi cab.
d. A sunset.
e. The beach.
Exhibit 16-4 Aggregate demand and supply model
In Exhibit 16-4, which one of the following actions could the Fed use to shift the AD
curve from AD1 to AD2?
a. Raise the legal reserve requirement.
b. Raise the discount rate.
c. Lower the federal funds rate.
d. Buy government securities.
e. Print currency.
A tax on an imported good is called:
a. an export.
b. dumping.
c. a quota.
d. a tariff.
e. free trade.
Which of the following would shift the investment demand curve rightward?
a. Firms are operating their plants at less than full capacity.
b. A decrease in the interest rate.
c. A decrease in business taxes.
d. All of the above.
e. None of the above.
In economics, investment refers to the process of accumulating:
a. capital goods.
b. consumer goods.
c. money.
d. stocks and bonds.
Exhibit 1A-7 Straight line relationship
Which of the following would cause a shift in the relationship shown in Exhibit 1A-7?
a. A rise in people’s annual income.
b. A rise in people’s expenditure on air travel.
c. A rise in the price of air travel.
d. All of these would shift the line in the graph.