The seven members of the Board of Governors of the Federal Reserve are appointed by
A) Congress.
B) the President.
C) the Governors of the States.
D) leaders in the banking industry.
E) the Treasury Department.
The aggregate demand curve illustrates the relationship between ________ and the
________, holding constant all other factors that affect aggregate expenditure.
A) the price level; quantity of planned aggregate expenditure
B) the inflation rate; quantity of planned aggregate expenditure
C) the price level; quantity of planned investment expenditure
D) the price level; quantity of consumption expenditure
The output of U.S. citizens who work in Canada would be included in the
A) gross domestic product of Canada.
B) gross national product of Canada.
C) gross domestic product of the United States.
D) gross national product of Canada and the gross national product of the United States.
The sum of the value added of every firm involved in producing all final goods and
services ________ gross domestic product.
A) equals
B) is greater than
C) is less than
D) is sometimes greater than and other times less than
An advantage of the personal consumption expenditures price index (PCE) over the
Consumer Price Index (CPI) as a measure of inflation is that the PCE
A) is a more narrow, focused measure of inflation.
B) is a chain-type price index that allows the mix of products to change each year.
C) includes the prices of industrial equipment.
D) includes the prices of goods, but not services.
Which of the following would cause the equilibrium price of ketchup to increase and
the equilibrium quantity of ketchup to decrease?
A) a decrease in the price of tomatoes
B) an increase in the price of tomatoes
C) an increase in the price of mustard, a substitute for ketchup
D) an increase in the price of french fries, a complement for ketchup
A central bank like the Federal Reserve in the United States can help banks survive a
bank run by
A) printing money.
B) acting as a lender of last resort.
C) raising the discount rate.
D) increasing the required reserve ratio.
If disposable income falls by $40 billion and consumption falls by $30 billion, then the
slope of the consumption function is
A) 1.33.
B) 0.75.
C) 0.4.
D) 0.3.
The supply curve for umbrellas
A) shows the supply of umbrellas consumers are willing and able to buy at any given
price.
B) is downward sloping.
C) shows the relationship between the quantity of umbrellas firms are willing and able
to supply and the quantity of umbrellas consumers are willing and able to purchase.
D) shows the relationship between the price of umbrellas and the quantity of umbrellas
supplied.
Assuming no change in the nominal exchange rate, how will a lower rate of inflation in
the United States relative to Canada affect the real exchange rate between the two
countries? (Assume the United States is the “domestic” country.)
A) The real exchange rate will rise.
B) The real exchange rate will fall.
C) The real exchange rate will be unaffected.
D) The impact on the real exchange rate cannot be predicted.
A recession tends to cause the federal budget deficit to ________ because tax revenues
________ and government spending on transfer payments ________.
A) increase; rise; falls
B) increase; fall; rises
C) decrease; rise; falls
D) decrease; fall; rises
Which of the following is an example of an activity undertaken by an entrepreneur?
A) choosing the color scheme for your renovated kitchen
B) being promoted to the position of Chief of Police
C) being appointed to the U.S. Supreme Court
D) starting your own snow cone business
The Danish currency, the krone, is pegged to the euro at a rate of 7.43 kroner (kroner is
the plural of krone) to the euro. At the pegged exchange rate, how many euros would be
exchanged for one krone?
A) 0.135
B) 1.00
C) 2.48
D) 7.43