In the short run, an increase in the money supply will
a. decrease the interest rate, increase real GDP, and decrease the price level
b. increase the interest rate, decrease real GDP, and decrease the price level
c. result in decreases in the interest rate and real GDP, which are then followed by
increases in the interest rate which offset some of the change in real GDP
d. result in decreases in the interest rate and increases in real GDP, which are then
followed by increases in the interest rate which offset some of the increase in real GDP
e. result in an increase in the interest rate and a decrease in real GDP, which are then
followed by decreases in the interest rate which offset some of the decrease in real GDP
If the firms in a monopolistically competitive market are earning short-run economic
profits, then
Which panel in Figure 5-2 shows the effect of an increase in the price of oranges, other
things constant?
If the aggregate expenditure line has shifted downward, which of the following is the
most likely cause?
a. There have been reports of good economic news.
b. The Fed has conducted an open market sale of bonds.
c. Income tax rates have been lowered.
d. The Fed has conducted an open market purchase of bonds.
e. Exports have increased.
If the Fed moves the economy upward along the short-run Phillips curve from an initial
inflationary equilibrium, what is happening?
a. Unemployment is rising above the natural rate, output is decreasing, and inflation is
decreasing.
b. Unemployment is falling below the natural rate, output is decreasing, and inflation is
increasing.
c. Unemployment is rising above the natural rate, output is increasing, and inflation is
decreasing.
d. Unemployment is falling below the natural rate, output is increasing, and inflation is
increasing.
e. Unemployment is falling below the natural rate, output is increasing, and inflation is
decreasing.
Market structure is determined by the
Which of the following limits the price a monopolist charges?
What is the major cost associated with fighting ongoing inflation?
a. Higher interest rates.
b. Lost potential output.
c. Lower price level.
d. Higher price level.
e. None of the above.
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
The table below describes a lawn mowing company’s revenues from different numbers
of lawn mowers. If the price of a lawn mower is $1,200, how many mowers should the
company buy?
The unit of value function of money refers to how we think about and record a
transaction, whereas the means of payment function refers to how we actually pay for
the items.
If the dollars per euro exchange rate increased,
a. Americans would purchase fewer European goods
b. more U.S. firms would want to relocate to Europe
c. more American tourists would travel to Europe
d. the demand for euros would increase
e. Europeans would become more highly respected
Which of the following best describes the foreign exchange market? It is a market
where one country’s
a. exports are traded for another country’s imports
b. currency is traded for that of another
c. goods are traded for another country’s services
d. imports are traded for another country’s exports
e. services are traded for another country’s goods
Which of the following would not increase autonomous consumption spending?
a. Expectations of greater future income
b. A lower interest rate
c. Reduced consumer debt
d. Increased household wealth
e. Increased disposable income
Which of the following is not another way of describing the marginal propensity to
consume?
a. MPC
b. The slope of the consumption function
c. The change in real consumption spending divided by the change in real disposable
income
d. The amount by which real consumption spending rises when real disposable income
increases by one dollar
e. Autonomous consumption spending
Which of the following is a reason why the money demand curve might shift?
a. an increase in the interest rate
b. a change in the money supply
c. open market purchases of bonds by the Federal Reserve
d. changes in the required reserve ratio
e. new methods of making payments that replace money
An efficient economy
Under the total revenue and total cost approach to profit maximization,
A fluctuating rate of inflation
a. will cause a downturn in the housing sector
b. redistributes income from creditors to debtors
c. redistributes income from the employed to the unemployed
d. was the problem that originally led to the creation of the Federal Reserve System
e. interferes with long-run planning
Which of the following is not a basic characteristic of a perfectly competitive market?