Which of the following are effects of an increased budget deficit?
a. the supply of loanable funds does not change; a higher interest rate reduces private
saving
b. the supply of loanable funds does not change; a higher interest rate raises private
saving
c. at any interest rate the supply of loanable funds is less; a higher interest rate reduces
private saving
d. at any interest rate the supply of loanable funds is less; a higher interest rate raises
private saving
Samuelson and Solow reasoned that when aggregate demand was high, unemployment
was
a. low, so there was upward pressure on wages and prices.
b. low, so there was downward pressure on wages and prices.
c. high, so there was upward pressure on wages and prices.
d. high, so there was downward pressure on wages and prices.
Which of the following terms is used to describe a situation in which the price of an
asset rises above what appears to be its fundamental value?
a. “random walk”
b. “random bubble”
c. ‘speculative bubble”
d. ‘speculative hedge”
If a tax shifts the demand curve downward (or to the left), we can infer that the tax was
levied on
a. buyers of the good.
b. sellers of the good.
c. both buyers and sellers of the good.
d. We cannot infer anything because the shift described is not consistent with a tax.
Table 3-4
Assume that the farmer and the rancher can switch between producing meat and
producing potatoes at a constant rate.
Labor Hours Needed
to Make 1 Pound of Pounds Produced
in 24 Hours
Refer to Table 3-4. Which of the following combinations of meat and potatoes could
the rancher not produce in 24 hours?
a. 2 pounds of meat and 3 pounds of potatoes.
b. 4 pounds of meat and 2 pounds of potatoes.
c. 6 pounds of meat and 1 pounds of potatoes.
d. 8 pounds of meat and 0.5 pound of potatoes.
If the exchange rate changes from 148 Kazakhstan tenge per dollar to 155 Kazakhstan
tenge per dollar, the dollar has
a. appreciated. Other things the same, it now takes fewer dollars to buy Kazakhstani
goods.
b. appreciated. Other things the same, it now takes more dollars to buy Kazakhstani
goods.
c. depreciated. Other things the same, it now takes fewer dollars to buy Kazakhstani
goods.
d. depreciated. Other things the same, it now takes more dollars to buy Kazakhstani
goods.
Table 10-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932.
Refer to Table 10-3. What is the GDP deflator and the inflation rate for 1931?
a. 9.16, -11.5
b. 9.16, -10.3
c. 1091.37, 10.3
d. 1091.37, 11.5
Corey deposits $1,000 in a savings account that pays an annual interest rate of 5
percent. Over the course of a year, the inflation rate is 1.7 percent. At the end of the
year, Corey has
a. $17 more in his account, and his purchasing power has increased by $10.
b. $30 more in his account, and his purchasing power has increased by $50.
c. $40 more in his account, and his purchasing power has increased by $33.
d. $50 more in his account, and his purchasing power has increased by $33.
If the MPC is 0, then the multiplier is
a. 0.
b. 1.
c. infinite.
d. None of the above is correct.
A duty of economists at the Department of Labor is to
a. analyze data on workers.
b. schedule federal holidays.
c. enforce the nation’s antitrust laws.
d. All of the above are correct.
Figure 8-12
Refer to Figure 8-12. Which of the following combinations will maximize the
deadweight loss from a tax?
a. supply 1 and demand 1
b. supply 2 and demand 2
c. supply 1 and demand 2
d. supply 2 and demand 1
Assuming the interest rate is 6 percent, which of the following has the greatest present
value?
a. $300 paid in two years
b. $150 paid in one year plus $140 paid in two years
c. $100 paid today plus $100 paid in one year plus $100 paid in two years
d. $285 today
Human capital is the
a. knowledge and skills that workers acquire through education, training, and
experience.
b. stock of equipment and structures that is used to produce goods and services.
c. total number of hours worked in an economy.
d. same thing as technological knowledge.
Small time deposits are included in
a. M1 but not M2.
b. M2 but not M1.
c. M1 and M2.
d. neither M1 nor M2.
Figure 3-10
Alice and Betty’s Production Possibilities in one 8-hour day.
Alice’s Production Possibilities Frontier Betty’s Production Possibilities Frontier
Refer to Figure 3-10. If point A represents Alice’s production and point B represents
Betty’s production,
a. Alice produces 200 pitchers of lemonade and 100 pizzas while Betty produces 180
pitchers of lemonade and 180 pizzas.
b. Alice produces 180 pitchers of lemonade and 180 pizzas while Betty produces 200
pitchers of lemonade and 100 pizzas.
c. Alice produces 100 pitchers of lemonade and 200 pizzas while Betty produces 180
pitchers of lemonade and 180 pizzas.
d. Only Alice can benefit from specialization and trade.
To increase the money supply, the Fed could
a. sell government bonds.
b. decrease the discount rate.
c. increase the reserve requirement.
d. None of the above is correct.
The General Agreement on Tariffs and Trade (GATT) was initiated in response to
a. in increase in exports of low-priced goods from developing countries to developed
countries.
b. the replacement of manufacturing jobs with service jobs in developed countries.
c. economic dislocations caused by the North American Free Trade Agreement
(NAFTA) in the 1990s.
d. high tariffs imposed during the Great Depression of the 1930s.
Samuelson and Solow believed that the Phillips curve
a. implied that low unemployment was associated with low inflation.
b. indicated that the aggregate supply and aggregate demand model was incorrect.
c. offered policymakers a menu of possible economic outcomes from which to choose.
d. All of the above are correct.
Recently, the U.S. national income accounts have switched to calling government
purchases
a. government spending and transfer payments.
b. transfer payments and gross investment by government.
c. government consumption expenditure and gross investment.
d. government wages, salaries, and investment expenditure.
In the ordered pair (17, 75), 75 is the
a. horizontal location of the point.
b. the slope.
c. the x-coordinate.
d. the y-coordinate.
The highest form of competition is called
a. arbitrage.
b. monopolistic competition.
c. equilibrium.
d. perfect competition.
Which of the following defer payments?
a. credit cards and debit cards
b. neither credit cards nor debit cards
c. credit cards but not debit cards
d. debit cards but not credit cards
If a tax is levied on the buyers of a product, then the supply curve will
a. not shift.
b. shift up.
c. shift down.
d. become flatter.
For an economy as a whole, income must equal expenditure because
a. the number of firms is equal to the number of households in an economy.
b. individuals can only spend what they earn each period.
c. every dollar of spending by some buyer is a dollar of income for some seller.
d. every dollar of saving by some consumer is a dollar of spending by some other
consumer.
The Laffer curve illustrates that
a. deadweight loss rises by the square of the increase in a tax.
b. deadweight loss rises exponentially as a tax increases.
c. tax revenue first rises, then falls as a tax increases.
d. Both a) and b) are correct.
If at a given real interest rate desired national saving were $50 billion, domestic
investment were $40 billion, and net capital outflow were $20 billion, then at that real
interest rate in the loanable funds market there would be a
a. surplus; the real interest rate would rise.
b. surplus; the real interest rate would fall.
c. shortage; the real interest rate would rise.
d. shortage; the real interest rate would fall.
If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for
the good, then for that consumer, consumer surplus amounts to
a. $4.
b. $16.
c. $20.
d. $36.
A reduction in U.S net exports would shift U.S. aggregate demand
a. rightward. In an attempt to stabilize the economy, the government could raise taxes.
b. rightward. In an attempt to stabilize the economy, the government could cut taxes.
c. leftward. In an attempt to stabilize the economy, the government could raise taxes.
d. leftward. In an attempt to stabilize the economy, the government could cut taxes.
Other things the same, as the price level rises, the real value of money
a. and the exchange rate rise.
b. and the exchange rate fall.
c. rises and the exchange rate falls.
d. falls and the exchange rate rises.
Table 6-2
Refer to Table 6-2. A price floor set at $20 will
a. be binding and will result in a surplus of 50 units.
b. be binding and will result in a surplus of 100 units.
c. be binding and will result in a surplus of 250 units.
d. not be binding.
Suppose sellers of liquor are required to send $1.00 to the government for every bottle
of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to
rise by $0.80 per bottle. Which of the following statements is correct?
a. This tax causes the supply curve for liquor to shift upward by $1.00 at each quantity
of liquor.
b. The effective price received by sellers is $0.20 per bottle less than it was before the
tax.
c. Eighty percent of the burden of the tax falls on buyers.
d. All of the above are correct.
At an annual interest rate of 10 percent, about how many years will it take $100 to triple
in value?
a. 8
b. 10
c. 12
d. 14
Speculative bubbles may arise in part because the value of the stock to a stockholder
depends on the final sale price.
A tax on sellers shifts the supply curve but not the demand curve.
Trade allows each person to specialize in the activities he or she does best, thus
increasing each individual’s productivity.
Consumer surplus measures the benefit to buyers of participating in a market.
When the market price is below the equilibrium price, the quantity of the good
demanded exceeds the quantity supplied.
A “Just Say No” drug education policy that successfully educates consumers to reduce
their demand for drugs will lower drug prices and reduce the quantity of drugs
demanded.
In the open-economy macroeconomic model, if the real exchange rate of the U.S. dollar
were above its equilibrium level, the real exchange rate of the U.S. dollar would
appreciate.
A tax on buyers shifts the demand curve and the supply curve.
A tax burden falls more heavily on the side of the market that is less elastic.
Just as the aggregate-demand curve slopes downward only in the short run, the trade-off
between inflation and unemployment holds only in the long run.
Consumer price index =
In comparison to the situation in the late 1970s, the United States experienced lower
nominal interest rates and higher real interest rates in the late 1990s.
The scientific method is the dispassionate development and testing of theories about
how the world works.
The deadweight loss of a tax rises even more rapidly than the size of the tax.
The income elasticity of demand is defined as the percentage change in quantity
demanded divided by the percentage change in income.
Tax cuts proposed by the Kennedy and Reagan administrations were followed by robust
economic growth.