Which of the following annual real GDP growth rates would be needed just to maintain
output per capita in the United States?
a. 10.0 percent
b. 2.5 percent
c. 1.0 percent
d. 7.0 percent
e. 3.5 percent
In the classical model, we include unintended inventory changes.
If you believe that the inflation rate is likely to be high over the next ten years, you
would want to
a. have a pension with raises indexed to the CPI if you were going to be retiring
b. obtain a variable rate mortgage
c. not obtain any fixed rate consumer loans
d. pay off all of your existing fixed rate loans
e. be a shareholder of a bank because their profits are going to increase dramatically
An increase in the supply of labor will, everything else equal,
a. increase the real wage rate and increase employment
b. increase the real wage rate and decrease employment
c. reduce the real wage rate and increase employment
d. reduce the real wage rate and decrease employment
e. increase the demand for labor and increase employment
In the long run,
a. continuing budget surpluses cause interest rates to fall, thereby stimulating
investment spending
b. any deviation from a balanced budget will plunge the economy into recession
c. there can be no economic growth unless the government’s budget is in surplus
d. there can be no economic growth unless the government’s budget is balanced
e. government spending must increase as a fraction of GDP
Approximately how often is the Consumer Price Index (CPI) market basket updated?
a. Every 10 years
b. Every 25 years
c. Every year
d. Every 2 years
e. Every 5 years
If a life can be saved for $250 using Method A and $260 using Method B,
a. it would be efficient to shift resources from A to B
b. it would be efficient to shift resources from B to A
c. both methods should be pursued to the maximum extent possible
d. neither method should be used if methods with higher dollar values are available
e. both methods are on the economy’s production possibilities frontier
Figure 2-5 shows five different combinations of rockets and cruise ships that a country
could manufacture. Suppose it decided to produce 18 rockets and 12 cruise ships.
Which of the following would be true?
a. This combination could not be produced.
b. The country will be at point B.
c. The country will be at point C.
d. The country will not be fully utilizing its resources.
e. The country will be at the midpoint of points B and D.
When households and businesses interact in resource markets money
a. is not exchanged
b. is flowing toward businesses
c. is flowing toward households
d. is not used at all
e. is flowing to both businesses and households
The monthly Household Survey by the United States Census Bureau (on behalf of the
Bureau of Labor Statistics) has a national sample size of
a. 8,000 households
b. 400,000 households
c. 150,000 households
d. 60,000 households
e. 20,000 households
If the Fed conducts open market purchases, we should expect to see the money supply
a. decrease, the interest rate increase, autonomous consumption decrease, business
investment decrease, and real GDP decrease
b. increase, the interest rate decrease, autonomous consumption decrease, business
investment decrease, and real GDP decrease
c. increase, the interest rate decrease, autonomous consumption increase, business
investment increase, and real GDP increase
d. decrease, the interest rate decrease, autonomous consumption increase, business
investment increase, and real GDP decrease
e. decrease, the interest rate increase, autonomous consumption increase, business
investment increase, and real GDP increase
In the 1970s and 1980s policies that required retirement of people over age 65 were
repealed. Which variable would this directly affect?
a. The employment-population ratio
b. Productivity
c. Average hours
d. Population
e. Technology
Why does a change in GDP affect unit costs and the price level?
a. as GDP increases, productivity increases.
b. as GDP increases the price of non-labor inputs increases and the nominal wage tends
to increase.
c. as GDP decreases, there are efficient gains
d. as GDP increases, economies of scale allow for lower unit costs.
e. as GDP increases the price of non-labor inputs decreases and the nominal wage tends
to increase.
The aggregate production function shows how much output the economy can produce
a. with different quantities of labor, land, capital and states of technology
b. with different quantities of labor and capital, for given amounts of land and a given
state of technology
c. with different quantities of labor, for given amounts of land and capital, and a given
state of technology
d. with a given amount of money
e. with different amounts of money and given amounts of land, labor, capital, and a
given state of technology
Which of the following is an injection into the circular flow?
a. household saving and government spending
b. business investment and household saving
c. net taxes and household saving
d. government spending and business investment
e. net taxes and government spending
Suppose a computer manufacturer purchases a $100 case from a supplier, a $300
computer chip from another supplier, and sells the computers for $1000. How much did
the company contribute to GDP?
a. $1000
b. $900
c. $700
d. $600
e. $400
Refer to Figure 14-1. If the economy is currently at point X, a decrease in the interest
rate will
a. increase the quantity of money demanded (moving the economy toward point A)
b. decrease the quantity of money demanded (moving the economy toward point B)
c. increase money demand (shifting the curve toward curve C)
d. decrease money demand (shifting the curve toward curve D)
e. leave the economy at point X
Suppose the quantity of bonds demanded exceeds the quantity supplied at a given
interest rate. What will happen to restore equilibrium?
a. Bond prices will increase and the interest rate will rise.
b. Bond prices will decrease and the interest rate will fall.
c. Bond prices will increase and the interest rate will fall.
d. Bond prices will decrease and the interest rate will rise.
e. Bond prices will increase and the interest rate will stay the same, as bond prices are
independent of the interest rate.
If the dollar-pound exchange rate is $1.00 per pound, then a shirt priced at 25 pounds
will cost an American
a. $25
b. $50
c. $26
d. $27
e. an amount that cannot be calculated without additional information.
The short-run macro model
a. is an attempt to explain why the economy tends to perform better in the short run
than in the long run
b. was developed during the Great Depression to explain the economy’s continuing poor
performance
c. lost its popularity during the 1950s
d. was developed during the early 19th century
e. explains the forces that work to drive the economy to full employment