The marginal propensity to save (MPS) is equal to
A) 1 – MPC.
B) MPC – 1.
C) MPC + 1.
D) 1 + MPC.
Recall Application 1, “Creating the U.S. Federal Fiscal System Through Debt Policy,”
to answer the following questions:
According to the Application, what was the reason why the federal government did not
bail the states that had fiscal difficulties in the 1840s?
A) The federal government did not want to enhance its control over the states.
B) The federal government wanted to force the states to have fiscal discipline.
C) A and B are correct.
D) A and B are both incorrect.
If the price of a stock equals the present value of expected future dividend payments,
then the price of the firm’s stock would be expected to decrease when:
A) competition increases.
B) firm predicts lower profits in the future.
C) the government intends to increase the tax collected from the firm.
D) All of the above can cause the price to decrease.
If the growth rate for GDP was 9 percent and GDP in year 1 was 100, then GDP in year
2 would be
A) 90
B) 109
C) 190
D) 199
If potential output is ________ than the current level of GDP, the unemployment rate is
________ the natural rate.
A) greater; above
B) greater; below
C) less; above
D) less; at
According to the text, economists identify that the reason why traffic congestions exists
and waste large amounts of resources in the economy is because:
A) the drivers are NOT mindful of the additional time they impose on other drivers if
they enter a highway.
B) the cars are too big.
C) the drivers are mindful of the additional time they impose on other drivers if they
enter a highway.
D) the roads are too small.
Recall Application 3, “A Closer Look at the 2009 Stimulus Package,” to answer the
following questions:
According to the Application, what was the reason why tax cuts did not promote
consumption spending?
A) Households increased saving.
B) The tax cuts were too small.
C) The government was slow in mailing the checks.
D) The tax cuts were only given to the rich.
If the MPS = 0.2, the multiplier would be
A) 0.5.
B) 1.
C) 2.
D) 5.
If the velocity of money is 6 and the money supply is $4 trillion, then nominal GDP is
A) $24 trillion.
B) $2 trillion.
C) $1.5 trillion.
D) $0.667 trillion.
Figure 4.4
Figure 4.4 illustrates the demand for guitars. An increase in the number of guitar
players in the market would bring about a movement from:
A) point B to point C.
B) point B to point A.
C) D1 to D0.
D) D1 to D2.
Selling government bonds through open market operations allows the Federal Reserve
to
A) decrease money in the Treasury.
B) decrease the money supply in the private sector.
C) receive discounts on future sales.
D) receive a high rate of interest on the bonds.
In the circular flow diagram, households demand ________ and supply ________.
A) inputs; inputs
B) goods and services; goods and services
C) goods and services; inputs
D) inputs; goods and services
BMW sells cars fully assembled in Germany to the United States. In GDP accounts,
BMW cars are included in U.S. ________ and Germany’s ________.
A) imports, exports
B) exports, imports
C) exports, exports
D) imports, imports.
In macroeconomics, the “long run” denotes the time period:
A) when some prices are sticky.
B) less than one year.
C) when all prices fully adjust.
D) within the same fiscal year.
An increase in the level of U.S. exports ________ the demand for goods and service
produced in the United States.
A) decreases
B) increases
C) increases or decreases
D) does not affect
The phenomenon which occurs when markets do not produce the most efficient
outcome on their own is known as
A) public goods.
B) imperfect information.
C) market failure.
D) economic certainty.
A wage rate that is adjusted for changes in the price level is known as the
A) real wage.
B) nominal wage.
C) minimum wage.
D) functional wage.
Figure 15.4
Refer to Figure 15.4. Suppose that the economy is originally in equilibrium at point a.
In the short run, as the supply of money decreases, the economy moves to point
A) a.
B) .
C) c.
D) e.
In the final two decades of the twentieth century, per capita income in sub-Saharan
Africa
A) increased by approximately 35 percent.
B) remained relatively unchanged.
C) decreased by approximately 6 percent.
D) increased by more than 75 percent.
The equation for GDP using the expenditure approach is:
A) GDP = Consumption + Investment + Government Purchases + Exports – Imports.
B) GDP = Consumption + Investment + Government Purchases + Imports – Exports.
C) GDP = Consumption + Investment + Government Purchases + Imports + Exports.
D) GDP = Consumption + Investment + Government Purchases – Imports – Exports.