When interest rates in a given economy are reduced, it causes firms to employ
__________ capital goods.In terms of the production function (graphed with labor on
the horizontal axis and Real GDP on the vertical axis), this then
causes____________________ .
a. more; the production function to shift upward
b. less; the production function to shift downward
c. more; a movement up along a given production function
d. more; a movement down along a given production function
The AD curve shifts to the right with an increase in taxes or a decrease in government
purchases.
a. True
b. False
Elaine’s taxable income increases by $1 and her tax payment increases by $0.28. Her
marginal tax rate is
a. 72 percent.
b. 28 percent.
c. 56 percent.
d. There is not enough information to answer the question.
According to real business cycle theorists, changes in Real GDP are the result of initial
changes in
a. aggregate demand.
b. the money supply.
c. the expected inflation rate.
d. prices.
e. none of the above
In a simple majority vote, the losses to the losers are greater than the gains to the
winners. It follows that the
a. outcome of the vote is efficient.
b. outcome of the vote is inefficient.
c. outcome of the vote will be nullified (most likely by the Courts).
d. vote has generated net benefits.
e. none of the above
In general, there is a ______________ relationship between the number of hours spent
studying for a test and the grade earned on the test.
a. independent
b. direct
c. inverse
d. smooth
The Federal Reserve System began operations in
a. 1834.
b. 1896.
c. 1914.
d. 1935.
An economy can produce the following combinations of goods: 50X and 0Y, 40X and
10Y, 30X and 20Y, 20X and 30Y, 10X and 40Y, and 0X and 50Y. The production
possibilities frontier (PPF) for the economy is
a. concave downward because the opportunity cost of producing the 10th unit of Y is
greater than the opportunity cost of producing the first unit of Y.
b. a straight (downward-sloping) line because the opportunity cost of producing the two
goods is constant.
c. concave downward because the opportunity cost of producing the 40th unit of Y is
less than the opportunity cost of producing the 10th unit of Y.
d. a straight (downward-sloping) line because the opportunity cost of producing the
10th unit of X is greater than the opportunity cost of producing the 40th unit of X.
e. a straight (downward-sloping) line because the opportunity cost of producing the
30th unit of Y is greater than the opportunity cost of producing the 30th unit of X.
A French firm sells its good at a lower price in England than in France. It follows that
the French firm is necessarily
a. dumping.
b. saving domestic jobs.
c. being subsidized by the French government.
d. part of an infant industry.
e. none of the above
According to the simple quantity theory of money, if the money supply falls by 20
percent,
a. the price level will fall by 20 percent.
b. Real GDP will rise by less than 20 percent.
c. GDP will fall by 20 percent.
d. velocity will rise.
e. a and c
One of the ideas that found a permanent place in macroeconomics after Milton
Friedman’s presidential address to the American Economic Association in 1967 was that
a. there is not only a temporary tradeoff between inflation and unemployment, but a
permanent tradeoff as well.
b. the tradeoff between unemployment and inflation exists only in the long run, but not
in the short run.
c. people’s expectations about economic events affect economic outcomes.
d. a and b
Suppose that net exports are -$300 billion and exports are $500 billion.Imports must be
equal to
a. $800 billion.
b. $400 billion.
c. $200 billion.
d. -$200 billion.
e. There is not enough information to answer this question.
As the dollar depreciates, the dollar price of imported goods _________, ultimately
shifting the United States AD curve __________________.
a. rises; rightward
b. rises; leftward
c. falls; rightward
d. falls; leftward
Exhibit 34-6
Which of the following terms of trade would both countries agree on?
a. 1 unit of wine = 2.5 units of cheese
b. 1 unit of wine = 1.5 units of cheese
c. 2.5 units of wine = 1 unit of cheese
d. 1.5 units of wine = 1 unit of cheese
e. none of the above
There is zero crowding out and the federal budget is balanced at the time government
purchases are increased. It follows that the __________ curve shifts to the __________,
and in the short run both the price level and Real GDP __________.
a. AD; left; rise
b. AD; right; fall
c. AD; right; rise
d. AD; left; fall
e. SRAS; right; rise
Suppose that the production function for an economy is graphed with Real GDP on the
vertical axis and labor on the horizontal axis.When the level of capital in this economy
rises, it causes ____________________which shifts the LRAS curve ____________
resulting in ______________________.
a. a movement down along a given production function; leftward; a shrinking economy
b. the production function to shift downward; leftward; a shrinking economy
c. a movement up along a given production function; rightward; economic growth
d. the production function to shift upward; rightward; economic growth