The four components of the aggregate expenditures model are:
a. consumption, investment, inventories, and government purchases.
b. consumption, planned investment, unplanned changes in inventory, and exports.
c. consumption, investment, government purchases, and net exports.
d. consumption, investment, exports, and imports.
Which of the following is a macroeconomics topic?
a. Wages of textile workers in the Northeast.
b. The cost of producing 10,000 bookcases.
c. The economy’s annual growth rate.
d. National demand for fish.
e. Effects of farm subsidies on food prices.
Threeorganizationsimportanttoaccountingarelistedbelow.Selecttheorganizationthatmost
closelyachievestheroledescribed.
a. American Institute of Certified Public Accountants (AICPA)
b. Financial Accounting Standards Board (FASB)
c. Securities and Exchange Commission (SEC) An agency of the federal government.
The definition of a model is a:
a. description of all variables affecting a situation.
b. positive analysis of all variables affecting an event.
c. simplified description of reality to understand and predict an economic event.
d. data adjusted for rational action.
Price ceilings set below the equilibrium create:
a. externalities.
b. unemployment.
c. shortages.
d. surpluses.
According to adaptive expectations theory, which of the following would be the result
of expansionary monetary and fiscal policies?
a. The economy self-corrects to the natural rate of unemployment.
b. There is no long-run trade off between inflation and unemployment.
c. The inflation rate rises.
d. All of these.
Suppose a market basket of goods and services costs $400 in the base year and $500
this year. The consumer price index (CPI) for this year is:
a. 25.
b. 100.
c. 125.
d. 500.
The number of times per year each dollar is used to transact an exchange is the:
a. quantity theory of money.
b. velocity of money.
c. equation of exchange.
d. turnover rate.
e. expenditure rate.
Compared to most other industrialized countries shown in the text, the national debt as
a percentage of GDP in the United States is:
a. substantially larger.
b. the same.
c. slightly larger.
d. substantially smaller.
Income tax collections:
a. fall during periods of prosperity, thus increase federal budget deficits.
b. rise during periods of prosperity, thus reduce federal budget deficits.
c. fall during recessions, thus increase the problem of unemployment.
d. rise during recessions, thus increase the problem of unemployment.
Suppose in 2000, GDP was $7,242 billion and the GDP chain price index is 117.5. Real
GDP in constant 1996 dollars is:
a. $5,488 billion.
b. $6,163 billion.
c. $6,740 billion.
d. $7,789 billion.
An increase in the demand for tattoos will lead to a:
a. higher price and a larger quantity sold.
b. lower price and a larger quantity sold.
c. higher price and a smaller quantity sold.
d. lower price and a smaller quantity sold
According to the classical view,
a. velocity is constant, which means changes in price will cause changes in price or
quantity.
b. quantity is constant, which means changes in the money supply could cause either
changes in velocity or changes in prices.
c. velocity and price are constant so that changes in the money supply causes changes in
quantity.
d. velocity and quantity are constant so that changes in the money supply cause changes
in prices.
e. velocity is constant while quantity is variable so that changes in the money supply
change both price and quantity.
The government can reduce unemployment or reduce inflation by:
a. manipulating aggregate demand.
b. manipulating the availability of natural resources.
c. manipulating the availability of capital goods.
d. manipulating the availability of qualified workers.
e. curbing the level of immigration.
Other things being equal, the effects of an increase in the price of orange juice would
best be represented by a(n):
a. upward movement along the demand curve for orange juice.
b. leftward shift in the demand curve for orange juice.
c. downward movement along the demand curve for orange juice.
d. rightward shift in the demand curve for orange juice.
Money is:
a. valuable because it is backed by gold.
b. any items used in barter.
c. an illiquid asset.
d. none of these.
Assets may be used to satisfy business obligations and to carry on business operations.
a. True
b. False
Consider the market for chicken. Assuming that chicken and beef are substitutes, an
increase in the price of beef will:
a. decrease the demand for chicken creating a lower price and a smaller amount of
chicken purchased in the market.
b. decrease the supply of chicken creating a higher price and a smaller amount of
chicken purchased in the market.
c. increase the demand for chicken creating a higher price and a greater amount of
chicken purchased in the market.
d. increase the supply of chicken creating a lower price and a greater amount of chicken
purchased in the market.
The idea that higher prices reduce the purchasing power of financial assets and lead to
less consumption is known as the:
a. real balances effect.
b. interest rate effect.
c. foreign purchases effect.
d. income effect.
e. aggregate demand effect.
Exhibit 9-4 Keynesian aggregate expenditures model
In Exhibit 9-4, equilibrium real GDP
is:
a. $500 billion.
b. $800 billion.
c. $900 billion.
d. $1,000 billion.