A critical assumption differs from a simplifying assumption in that a critical assumption
a. is a means of getting rid of extraneous details in the model
b. cannot affect the conclusions of the model
c. can affect the conclusions of the model
d. is rarely used in economic models
e. is never a fundamental assumption
Why is inflation considered a problem?
a. Firms gain too much economic power.
b. It is always very high when it exists.
c. People prefer falling prices.
d. It is costly for society.
e. Government gains too much economic power..
In 2008, the government bought $2,883 billion worth of goods and services that were
part of GDP, representing about _________ of the total.
a. half
b. a third
c. a fifth
d. a quarter
e. two fifths.
Complementary goods
a. are usually used in conjunction with each other
b. are usually used in place of one another
c. do not adhere to the law of demand
d. are goods whose demand rises as incomes rise
e. are goods whose demand falls as wealth falls
Which of the following is the main reason why many countries with low living
standards remain in that state?
a. The citizens of these countries often spend all of their resources on consumption
goods instead of capital goods
b. The citizens of these countries often spend all their resources on capital goods instead
of consumption goods
c. The citizens of these countries often spend all their resources on exported goods
d. Insufficient population growth
e. Lack of foreign aid.
If you observed that the both the wage rate and employment increased, which of the
following would be a possible explanation?
a. A decrease in labor demand
b. An increase in labor demand that outpaced an increase in labor supply
c. A decrease in labor demand coupled with an increase in labor supply
d. A decrease in labor supply
e. An increase in labor supply that outpaced an increase in labor demand
Which of the following indicates that the average standard of living is rising?
a. Real GDP decreases faster than the price level.
b. Real GDP increases faster than the price level.
c. The population increases.
d. Real GDP increases faster than the population.
e. Population increases faster than real GDP.
All items on a bank’s balance sheet are stock variables.
An individual’s wealth constraint is determined by
a. the individual’s level of education
b. the facts that wealth is given and so she must give up one kind of wealth in order to
acquire another
c. overall conditions in the economy
d. the amount of wealth the individual chooses to hold in the form of money
e. the value of corporate stock.
An investment tax credit will lead to
a. a lower equilibrium interest rate in equilibrium
b. a decrease in household consumption spending in equilibrium
c. slower economic growth
d. lower equilibrium investment in physical capital
e. a increase in household consumption spending
An increase in government spending can lead to a decrease in GDP if the interest rate
changes enough.
Which of the following can occur simultaneously?
a. An increase in the national debt and a budget surplus
b. A decrease in the national debt and a balanced budget
c. An unchanged national debt and a budget deficit
d. Positive national debt and a budget surplus
e. A decreasing national debt and a budget deficit.
Refer to Figure 9-16. If the economy is operating at point A and investment spending
increases, the economy will move toward point
a. B
b. C
c. D
d. E
e. F.
Which of the following is a reason why an American would demand British pounds?
a. To purchase British real estate
b. To purchase Japanese semiconductors
c. To purchase French government bonds
d. To purchase stocks on the New York Stock Exchange
e. To purchase a ticket to see a British film in the U.S.