If the quantity of money demanded is less than the quantity of money supplied, then the
A) interest rate stays the same.
B) interest rate will increase.
C) interest rate will decrease.
D) effect on the interest rate is indeterminate.
Which one of the following statements is true?
A) In the short run, the level of output is determined by demand.
B) In the long run, the level of output is determined by demand.
C) In the long run, the aggregate supply curve is horizontal.
D) Where aggregate demand and aggregate supply intersect is always the
full-employment level of output.
Table 11.3 Refer to Table 11.3 At an aggregate output level of $2,000 million, what will
change in order to bring the economy to equilibrium?
A) Output must increase.
B) Investment must decrease.
C) Inventories must increase.
D) Consumption must decrease.
Which of the following is not included in the U.S. current account?
A) exports of services
B) change in private U.S. assets held abroad
C) net investment income
D) imports of goods
The stored value of money over time should not change significantly as long as the
level of inflation is
A) high.
B) low.
C) adjusted by the government.
D) less than your pay increases.
A decrease in Swiss prices will cause
A) an increase in the demand for U.S. dollars and an increase in the exchange rate of
Swiss francs per dollar.
B) a decrease in the demand for U.S. dollars and a decrease in the exchange rate of
Swiss francs per dollar.
C) an increase in the supply of U.S. dollars and a decrease in the exchange rate of Swiss
francs per dollar.
D) a decrease in the supply of U.S. dollars and an increase in the exchange rate of Swiss
francs per dollar.
Which of the following is an example of risk diversification?
A) an insurance company writing earthquake insurance only for the Los Angeles area
B) an individual investing all of her savings in a single, new firm
C) an individual purchasing only IBM stock
D) a lumber mill purchasing trees from various forests across the western United States
If the U.S. economy experienced a large deflation, what would most likely happen to
U.S. banks?
A) U.S. bank profits would decline as more borrowers default.
B) U.S. banks would experience large profits.
C) U.S. banks would not be affected by the deflation.
D) U.S. banks will find themselves making more loans.
Figure 15.2
Refer to Figure 15.2. This economy cannot continue to produce at point B because:
A) the price of raw material and wages will increase shifting the aggregate supply curve
to .
B) the price of inputs will decrease shifting the aggregate supply curve to .
C) the price of raw material will increase shifting the aggregate demand curve to .
D) all of the above
In the savings function S = -725 + 0.25y, 0.25 is the
A) MPC.
B) MPS.
C) slope of the consumption function.
D) vertical intercept of the savings function.
According to the International Monetary Fund statistics, the U.S.:
A) government consumes a higher fraction of its GDP than Germany.
B) consumes a lower fraction of its GDP than China or Germany.
C) invests a lower fraction of its GDP than China or France.
D) invests a higher fraction of its GDP than Germany.
When the government prints more money to finance debt, it is actually creating a
situation that could result in
A) inflation.
B) devaluing of the dollar in markets.
C) lowering foreign spending.
D) increasing domestic spending.
A specialized worker doesn’t spend time switching from one task to another. This source
of productivity increase is called
A) continuity.
B) innovation.
C) functionality.
D) repetition.
The principle of diminishing returns implies that when one input increases while the
other inputs are held fixed, output: beyond some point will exhibit:
A) increases at an increasing rate.
B) increases at a decreasing rate.
C) decreases at a decreasing rate.
D) decreases at an increasing rate.
If an economy is producing a level of output which is lower than the equilibrium level,
planned expenditures ________ total output and ________ goods and services are being
produced than are being demanded.
A) exceed; more
B) exceed; fewer
C) are less than; more
D) are less than; fewer