Structural unemployment:
A) results when there are more job hunters than jobs.
B) affects those entering the labor force for the first time.
C) is zero when the economy is in full employment.
D) is caused by short-run economic fluctuations.
The assumption ceteris paribus in a model means “other things equal.”
A) True
B) False
Businesses buy resources used to produce goods and services in the:
A) factor market.
B) product market.
C) market for goods and services.
D) foreign exchange market.
If real GDP is $1,000 billion and the aggregate expenditure is $850 billion, then the
change in inventories will be:
A) “$150 million.
B) $1,850 million.
C) $150 million.
D) “$1,850 million.
When the San Francisco city manager faces a complaint that the city council chamber
podium is not accessible to individuals with disabilities, he responds that the $1 million
improvement will not happen because “that money could be spent building 70 curb
ramps.” This statement best represents this economic concept:
A) Resources are scarce.
B) The real cost of something is what you must give up to get it.
C) “How much” is a decision at the margin.
D) When markets don’t achieve efficiency, government intervention can improve
society’s welfare.
The demand curve for money will shift to the right because of a:
A) fall in the interest rate.
B) rise in real GDP.
C) rise in the interest rate.
D) fall in real GDP.
Long-run growth is:
A) a sustained upward trend in the economy’s overall output per person, which
generates higher incomes and a higher standard of living for its members.
B) an increase in the rate of inflation across time, which reduces real salaries.
C) an increase in the overall output of the economy over a three- or four-year period.
D) a reduction in the price level over decades.
During rapid price inflation, firms must frequently change prices. The cost of changing
listed prices is known as the _____ cost.
A) menu
B) real interest rate
C) shoe-leather
D) unit-of-account
Scenario: Aggregate Consumption Function
Suppose the aggregate consumption function is given by C= 1,000 + 0.75YD, where Cis
consumption and YDis disposable income.
Look at the scenario Aggregate Consumption Function. If aggregate disposable income
equals $1,000, then aggregate consumption equals:
A) $1,000.
B) $1,750.
C) $2,000.
D) $1,075.
If a country has the comparative advantage in producing cloth, in the market for cloth
the autarky price would be _____ the world price and the country would _____ cloth.
A) less than; export
B) greater than; export
C) less than; import
D) the same as; export
Figure: The Market for Melons in Russia II
Look at the figure The Market for Melons in Russia II. As a result of a tariff that raises
the world price from $10 to $15, the country has a deadweight loss equal to:
A) $10.
B) $150.
C) $50.
D) $5.
Table: Unemployment and Employment Data
Look at the table Unemployment
and Employment Data. If marginally attached workers are included in the labor force
and in the unemployment rate, the unemployment rate in this economy is:
A) 8.4%.
B) 7.8%
C) 5%.
D) 3%.
Actual investment equals:
A) planned investment plus unplanned investment.
B) planned investment minus unplanned investment.
C) unplanned investment minus planned investment.
D) planned investment in a free market economy.
Income”expenditure equilibrium real GDP is the level of real GDP at which:
A) the unemployment rate is zero.
B) GDP equals planned aggregate spending.
C) there is no savings.
D) autonomous consumption equals planned inventory investment.
During periods of low inflation, the short-run aggregate supply curve is:
A) vertical.
B) horizontal.
C) upward sloping.
D) downward sloping.
An expansionary fiscal policy:
A) usually decreases a government budget deficit or increases a government budget
surplus.
B) may include decreases in government spending.
C) may include increases in taxes.
D) may include decreases in taxes.
Which of the following is TRUE of an inferior good?
A) When income increases, demand remains unchanged.
B) When income increases, demand decreases.
C) When income increases, demand increases.
D) Income and demand are unrelated.
An expansionary fiscal policy:
A) in the presence of a budget deficit would decrease the government debt.
B) would shift AD to the right and increase the government budget deficit.
C) would shift AD to the left and decrease the government budget deficit.
D) would not be effective in the presence of a budget surplus.
Which of the following schools of thought believe that expansionary monetary policy
has very little or no effect on output?
I. Keynesian macroeconomics
II. Great Moderation consensus
A) I only
B) II only
C) I and II
D) neither I nor II
What distinction did Zimbabwe achieve in June 2008?
A) It was the first African nation to become a democracy.
B) It ended apartheid.
C) It had the world’s highest inflation rate.
D) It had the world’s highest unemployment rate.
Growth accounting is a fast-growing industry that assists taxpayers in filing their taxes
online.
A) True
B) False
Figure: The Domestic Market for Digital Cameras
Look at the figure The Domestic Market for Digital Cameras. Assume that PAis the
autarky price and PWis the world price. Total surplus before international trade is equal
to the area:
A) A + B + C.
B) A + B.
C) A + B ” D ” E.
D) A.
The consumer price index in 1979 was 72.6. In 1980 it was 82.4. What was the rate of
inflation from 1979 to 1980?
A) 13.5%
B) 11.89%
C) 17.6%
D) 9.8%
In the Keynesian model, prices and nominal wages are _____, the short-run aggregate
supply curve is upward sloping, and as a result, an increase in the money supply leads
to _____ in the aggregate price level.
A) sticky; a less than proportional decrease
B) flexible; a proportional decrease
C) sticky; a less than proportional increase
D) flexible; a proportional increase
Which statement is CORRECT?
A) The budget deficit equals tax revenues plus transfer payments.
B) Government spending equals private savings plus the budget deficit.
C) Tax revenues equal national savings plus the budget deficit.
D) The budget deficit equals government spending minus tax revenues.
What is the budget balance as a percentage of GDP in Southlandia?
A) “10%
B) 0%
C) 10%
D) 20%
Figure: AD”ASModel II
Look at the figure AD”AS Model II. Which of the following will raise the price level?
A) SRAS curve shifts to the left.
B) SRAS curve shifts to the right.
C) AD curve shifts to the left.
D) The economy moves down the aggregate demand curve.
Assume that the United States imposes an import quota on Columbian coffee. Relative
to the equilibrium world price that would prevail in the absence of import quotas, it is
likely that the equilibrium price of coffee in the United States will _____ and the
equilibrium price of coffee in Columbia will _____.
A) decrease; remain the same
B) remain the same; increase
C) increase; increase
D) increase; decrease
Following the 2008 financial crisis, commercial banks:
A) borrowed an amount equal to 14 times their total reserves before the crisis.
B) avoided borrowing from the Fed.
C) preferred to sell large amounts of their assets to raise cash to avoid bank runs rather
than borrow from the Fed.
D) insisted that market forces be allowed to work to resolve the crisis rather than accept
loans from the Fed.
The primary cause of the Spanish recession following the 2008 financial crisis was a:
A) stock market crash.
B) housing bubble.
C) public debt crisis.
D) devaluation of Spain’s currency, the peseta.
An economy is efficient if it is:
A) possible to produce more of all goods and services.
B) possible to produce more of one good without producing less of another.
C) not possible to produce more of one good without producing less of another good.
D) producing a combination of goods.
Paper money in the United States, which has no intrinsic value but can be converted to
a valuable good on demand and is used as a medium of exchange, is an example of:
A) fiat money.
B) commodity-backed money.
C) a stock.
D) a bond.