For this question, assume that policy makers are pursuing a fixed exchange rate regime
and that output is initially less than the natural level of output. The economy will tend
to move toward the natural level of output when which of the following occur?
A) an increase in the price level
B) a devaluation of the currency
C) an increase in the domestic interest rate
D) a reduction in the foreign price level
E) none of the above
Which of the following is an example of the “shoe-leather costs” of inflation?
A) a rise in the cost of primary raw materials, like leather for shoes
B) an artificial rise in the capital gains tax
C) the need to take more trips to the bank
D) miscalculations due to money illusion
E) All of the above
The existence of inflation does which of the following?
A) facilitates the downward adjustment of real wages
B) reduces shoe-leather costs
C) reduces tax distortions
D) reduces the costs associated with money illusion
Which of the following represents the participation rate?
A) the ratio of the number employed to the size of the labor force
B) the ratio of the number employed to the civilian noninstitutional population
C) the ratio of the labor force to the civilian noninstitutional population
D) the ratio of the labor force to the total number of employed and unemployed workers
The main debate during the 1960s was
A) between Keynesians and classicals.
B) between new Keynesians and new classicals.
C) between Keynesians and monetarists.
D) between new Keynesians and monetarists.
Based on our understanding of the model presented in Chapter 3, we know that a
reduction in c1 (where C = c0 + c1YD) will cause
A) the ZZ line to become steeper and a given change in autonomous consumption (c0)
to have a smaller effect on output.
B) the ZZ line to become steeper and a given change in autonomous consumption (c0)
to have a larger effect on output.
C) the ZZ line to become flatter and a given change in autonomous consumption (c0) to
have a smaller effect on output.
D) the ZZ line to become flatter and a given change in autonomous consumption (c0) to
have a larger effect on output.
Which of the following would tend to make the multiplier smaller?
A) an increase in the marginal propensity to consume
B) an increase in the marginal propensity to save
C) a reduction in taxes
D) a reduction in government spending
E) none of the above
Given the broadest interpretation of technology, technology will include which of the
following?
A) how well firms are run
B) the organization and sophistication of markets
C) the political environment
D) the list of blueprints defining the types of products and the techniques available to
produce them
E) all of the above
A consol bond promises to pay $1000 each year, forever, starting next year. If the
nominal interest rate is 5%, the present discounted value of this consol is
A) $900.00.
B) $995.00.
C) $2,500.00.
D) $20,000.00.
E) $25,000.00.
In the absence of technological progress, which of the following remains constant in the
steady state equilibrium?
A) investment per worker
B) output per worker
C) saving per worker
D) all of the above
E) only A and B