If government spending increases, which of the following is most likely to occur?
a. GDP, money demand, the interest rate, and investment spending will all increase.
b. GDP, money demand, the interest rate, and investment spending will all decrease.
c. GDP, money demand and the interest rate will increase, while investment spending
will decrease.
d. GDP, money demand and the interest rate will decrease, while investment spending
will increase.
e. GDP and money demand will increase, but the interest rate will not change.
Infrastructure projects result in the most value from a fiscal stimulus but a problem is
that
a. there are technological issues that need to be solved.
b. they are too complex to implement.
c. most such projects are “prestige” projects, with little tangible value.
d. most such projects do not increase productivity long into the future.
e. most such projects are not ‘shovel ready” when the stimulus is needed.
If the pound-dollar exchange rate is 2 pounds per dollar, what is the rate of dollars per
pound?
a. 4 dollars/pound
b. 2 dollars/pound
c. 5 dollars/pound
d. 0.50 dollars/pound
e. 2.50 dollars/pound
If an economy has been operating below its potential output level,
a. frictional unemployment is too high
b. more individuals should begin entering the labor force
c. the government should create more jobs
d. unemployment is likely rising.
e. the production possibilities frontier will shift
Full employment occurs only when the unemployment rate is 0%.
Welfare recipients might not want the government to actively pursue economic growth
because
a. they benefit from a program that may be cut in a process of pursuing economic
growth
b. they believe that the methods of pursuing growth are not effective
c. they do not understand the benefits of economic growth
d. they will benefit most when the country does not experience economic growth
e. the economic growth will not affect their position in society
If an economy’s consumption spending is $5 trillion, investment is $2 trillion,
government spending is $1 trillion, net taxes are $1 trillion and household saving is $2
trillion, total income is
a. $3 trillion
b. $5 trillion
c. $7 trillion
d. $8 trillion
e. $11 trillion
All else equal, what is likely to happen to the unemployment rate during a recession?
a. It increases as real GDP increases.
b. It decreases as real GDP remains the same.
c. It increases as real GDP decreases.
d. It decreases as cyclical unemployment decreases.
e. It decreases as real GDP decreases.
Grant has four hours of time to divide between studying for a physics exam and a
geology exam. Figure 1-1 shows his estimates of the grades (on a scale of 0 to 100) that
he could earn from studying a particular number of hours on each subject. If he plans on
spending three hours studying physics, what would be his opportunity cost of an
additional hour studying physics?
a. 10 points on his geology exam
b. 20 points on his geology exam
c. 30 points on his geology exam
d. 25 points on his physics exam
e. 85 points on his physics exam
Which of the following mathematical statements is correct
a. Total Output=Productivity x Average Hours x the employment-population ratio x
Population
b. Total Output=Productivity / Average Hours x the employment-population ratio /
Population
c. Total Output=Productivity + Average Hours + the employment-population ratio +
Population
d. Total Output=(Productivity x Average Hours) / (the employment-population ratio x
Population)
e. Total Output=Productivity x Average Hours x the employment-population ratio
Which of the following will shift the aggregate supply curve upward?
a. A decrease in world oil prices
b. Bad weather, which increases farmers’ costs per unit of output
c. Increases in consumer spending
d. An increase in the price level
e. Technological changes that improve worker productivity.
If some piece of information causes buyers to expect the price of a good to rise in the
future, but sellers take the same information and believe it will have no impact on price,
the result is
a. a decrease in supply today
b. an increase in supply today
c. a decrease in quantity demanded today
d. an increase in demand today
e. an increase in quantity demanded today
If the prices of domestic consumer goods increased while the prices of imported
consumer goods decreased, and the demand for each remained the same, which of the
following would most likely occur?
a. The GDP price index would decrease while the CPI would increase.
b. Both the GDP price index and the CPI would decrease.
c. The GDP price index would increase more than the CPI.
d. The CPI would increase more than the GDP price index.
e. Both the GDP price index and the CPI would increase by the same amount.
Seasonal unemployment
a. is short-term joblessness experienced by those entering the labor market for the first
time
b. arises from a mismatch between available jobs and workers’ skills or geographic
location
c. is joblessness affecting people such as construction workers, farm workers and retail
sales clerks after the Christmas shopping season
d. is joblessness resulting from business cycle movements
e. does not exist when the economy is at full employment