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Which of the following statements is false?
a. An upward-sloping supply curve graphically represents the law of supply.
b. A vertical supply curve graphically represents the law of supply.
c. If income rises and good X is a normal good, then the demand for good X will rise.
d. If income falls and good Y is an inferior good, then the demand for good Y will rise.
Exhibit 2-5
As more fax machines are produced, the opportunity
cost of producing them
a. increases.
b. decreases.
c. remains constant.
d. first decreases and then increases.
In the early 2000s, banks lowered lending standards to comply with the Community
Reinvestment Act.
a. True
b. False
The term auction facility (TAF) program was instituted by the Federal Reserve to deal
with the ________________________.This program gave banks ____________
options when it comes to borrowing from the Fed.
a. financial crisis of 2007-2009; more
b. Great Depression; more
c. financial crisis of 2007-2009; fewer
d. Great Depression; fewer
Suppose the money market is in the liquidity trap and the Fed increases the supply of
money. We expect that
a. people will end up willingly holding more money.
b. the excess money holdings will flow into the loanable funds market and there will be
a decrease in interest rates.
c. interest rates will increase, since the demand curve for money is upward sloping in
this case.
d. eventually, via the transmission mechanism, Real GDP will increase.
A futures contract is a contract in which the seller agrees to provide a given good to the
buyer on a predetermined future date at an agreed-upon price.
a. True
b. False
The Laffer curve illustrates that
a. there are two tax rates at which zero tax revenues are raised.
b. a decrease in tax rates can cause an increase in tax revenues.
c. an increase in tax rates can cause an increase in tax revenues.
d. an increase in tax rates can cause a decrease in tax revenues.
e. all of the above
The Keynesian aggregate supply curve is
a. vertical.
b. upward sloping.
c. horizontal until Natural Real GDP (QN) and vertical at QN.
d. sometimes upward sloping and sometimes horizontal.
e. downward sloping.
A __________ is a person who was employed in the civilian labor force and was either
fired or laid off.
a. new entrant
b. reentrant
c. job leaver
d. job fixer
e. none of the above
Exhibit 38-4
If the closing price of Black Motor's stock on the previous day was $76.95, what value
goes in blank (C)?
a. +1.95
b. -1.95
c. +0.95
d. -0.95
e. There is not enough information given to answer this question.
Exhibit 14-1
What sequence of points shows the short- and long-run consequences of a fall in
velocity under monetarist assumptions?
a. A-E-B
b. B-D-A
c. A-D-B
d. B-A
At a taxable income of $40,000 Mari's income tax is $7,400.When her taxable income
rises to $45,000 her income tax is $8,400. Based on this information, what is Mari's
marginal tax rate?
a. 18.7 percent
b. 39 percent
c. 10 percent
d. 30 percent
e. 20 percent
Greater wealth makes people _____________ willing to spend on consumption, causing
__________ the economy's AD curve.
a. more; movement down along
b. more; a rightward shift of
c. less; movement up along
d. less; a rightward shift of
Rational ignorance refers to voter-citizens choosing to be uninformed about politics
and government on an individual basis because
a. of apathy.
b. of ignorance.
c. of laziness.
d. they believe the benefits of becoming informed are greater than the costs.
e. they believe the benefits of becoming informed are less than the costs.
If the CPI is 220 and nominal income is $37,000, approximately what does real income
equal?
a. $81,400
b. $16,818
c. $76,500
d. $44,118
