Even though households may have unlimited wants, they have to allocate their spending
carefully because they
a. do not want their credit card bills to be too high
b. worry about their taxes
c. have limited intelligence
d. have limited incomes
e. basically want to become wealthy
If two goods are substitutes, then a(n)
a. increase in the demand for one of them will cause its price to fall
b. increase the supply of one of them will cause its price to rise
c. increase in the price of one of them will cause the demand for the other to increase
d. increase in the price of one of them will cause the supply of the other to increase
e. decrease in the price of one of them will cause the demand for the other to increase
Consider the market represented by Figure 3-9. If the price of the good is currently
$50.00, the price will
a. fall, causing the quantity demanded to fall
b. fall, causing the quantity supplied to fall
c. rise, causing the demand curve to shift to the right
d. rise, causing the supply curve to shift to the left
e. fall, causing the supply curve to shift to the right
Which of the following determines the exchange rate between two currencies in the
long run?
a. Relative interest rates
b. Relative output levels
c. Expectations of future exchange rates
d. Relative price levels
e. Expectations of future interest rates.
In the factor payments approach to GDP, owners of capital receive
a. wages
b. salaries
c. rent
d. interest
e. profit
According the AS/AD model, in the long run, expansionary monetary policy will
a. increase both real GDP and the price level.
b. decrease both real GDP and the price level.
c. decrease the price level and leave real GDP unchanged.
d. increase the price level and leave real GDP unchanged.
e. increase real GDP and reduce the price level.
If the U.S. inflation rate is 3 percent annually and the Swiss inflation rate is 5 percent
annually, by what percent would the dollar price of francs need to change according to
purchasing power parity?
a. Depreciate by 5 percent
b. Appreciate by 3 percent
c. Appreciate by 5 percent
d. Depreciate by 2 percent
e. Appreciate by 2 percent.
In its day-to-day operations, the Fed focuses on
a. an unemployment rate target
b. an inflation rate target
c. an interest rate target
d. a money demand curve target
e. several economic targets together
An increase in the demand for bonds will increase both the price of bonds and the
quantity of bonds held.
Inflation doves lean in the direction of milder recessions and are more willing to
tolerate higher inflation.
In the classical model, which of the following is treated as independent of the interest
rate?
a. the quantity of loanable funds demanded by government
b. the quantity of loanable funds demanded by businesses
c. the total quantity of loanable funds demanded
d. household saving
e. the total quantity of loanable funds supplied
An economic model can be described as
a. an abstract representation of reality
b. a detailed description of some economic phenomenon
c. something that is often more complex than the real-world phenomenon it represents
d. a vehicle for making positive economic statements
e. a vehicle for making normative economic statements
Opportunity costs exist because
a. there is a price attached to virtually every good or service
b. technology is not fixed in the economy
c. people have different tastes and preferences
d. limited resources cannot satisfy all of the wants in society
e. the production possibilities frontier is bowed in with respect to the origin