If a country’s goods exports are less than its goods imports, then it experiences a:
a. balance of payments surplus.
b. balance of payments deficit.
c. balance of trade surplus.
d. balance of trade deficit.
Actual GDP will be below potential GDP:
a. when the economy is at full employment.
b. during an economic boom.
c. when resources are fully utilized.
d. during a recession.
The net exports effect is the inverse relationship between net exports and the ____ of an
economy.
a. potential real GDP
b. chain-price deflator
c. price level
d. consumption spending
Exhibit 1A-2 Straight line
As shown in Exhibit 1A-2, the slope of
straight line CD:
a. decreases with increases in X.
b. increases with increases in X.
c. increases with decreases in X.
d. remains constant with changes in X.
Answer the following questions: a. If aggregate expenditures falls by $5 million, and
the MPC is 0.80, explain the process that will drive the economy to a new equilibrium
level.
b. What will be the final result of this initial change?
The existence of an externality is proof that there is a(n):
a. market failure.
b. undervaluation of a good.
c. undervaluation of a cost.
d. property dispute.
e. free-rider problem
If the Japanese price level falls relative to the price level in the United States, then:
a. Japanese buy less U.S. exports.
b. the demand for dollars decreases.
c. the supply of dollars increases.
d. the value of the dollar falls.
e. all of these are true.
Using the income approach, indirect business taxes have to be added to get gross
domestic product because the:
a. selling price of a product includes these taxes, which are income to the government
representing the public interest of households.
b. selling price of a product includes these taxes, which are resource payments.
c. selling price of a product excludes these taxes and therefore they have to be added.
d. selling price includes these taxes which are actually not income to any sector of the
economy.
The marginal propensity to save is:
a. the change in saving induced by a change in consumption.
b. (change in S) / (change in Y).
c. 1 – MPC / MPC.
d. (change in Y – bY) / (change in Y).
e. 1 – MPC.
The Secretary of Labor states that wage rates in the country have risen by 2 percent this
past year. The head of a local labor union states that wage gains have not kept pace with
the 3 percent rate of inflation. The Secretary’s statement is a (n) ____ economic
statement, and the labor head’s statement is a (n) ____ economic statement.
a. normative; normative
b. normative; positive
c. positive; normative
d. positive; positive
e. proper; improper
A cut in government spending, a decrease in income abroad, an increase in taxes, or an
expectation that future consumer income will fall will all cause aggregate:
a. demand to shift rightward.
b. demand to shift leftward.
c. supply to shift rightward.
d. supply to shift leftward.
e. supply and aggregate demand to both shift equally inward.
Exhibit 2-15 Production possibilities curve
In Exhibit 2-15, if the economy produces no
capital goods, what is the maximum number of consumer goods that can be produced?
a. 50.
b. 48.
c. 40.
d. 25.
e. 0.
Rent controls create distortions in the housing market by:
a. increasing rents received by landlords
b. raising property values.
c. encouraging landlords to overspend for maintenance.
d. discouraging new housing construction.
e. increasing the supply of housing in the long run.
While waiting in line to buy two tacos at 80 cents each and a medium drink for 90
cents, Jordan notices that the restaurant has a value meal containing three tacos and a
medium drink all for $3. For Jordan, the marginal cost of the third taco would be:
a. zero.
b. 50 cents.
c. 80 cents.
d. $1.
Which of the following is the best example of a microeconomic topic?
a. The impact that the money supply has on inflation.
b. The reasons for increases in the price of soft drinks.
c. The effect that federal budget deficits have on the interest rate.
d. The tradeoff between inflation and unemployment.
Economic development encompasses which of the following measures?
a. Economic growth.
b. The political environment.
c. Education.
d. All of these.
An example of a price ceiling would be:
a. a ration coupon.
b. a guarantee of a target price for farm products.
c. parity pricing.
d. rent control.
e. the soil bank program.
Based on the circular flow model, goods and services flow from:
a. households to businesses in product markets.
b. businesses to households in product markets.
c. households to businesses in factor markets.
d. businesses to households in factor markets.
Assuming the economy is in a recession, Keynesian economists predict that:
a. wages will remain fixed.
b. monetary policy will sell government securities.
c. higher wages will shift the short-run aggregate supply curve leftward.
d. lower wages will shift the short-run aggregate supply curve rightward.
A change in supply cannot be caused by a change in:
a. resource prices.
b. technology.
c. prices of other goods.
d. the price of the good itself.
e. the number of suppliers.
The required reserve ratio is required reserves stated as a percentage of checkable
deposits.
If X and Y are substitutes, the demand curve for X will shift to the right when the price
of Y decreases.
To be counted as unemployed, a person must be looking for a job.
Policies to determine the price of troll dolls are a concern of macroeconomics.
The debt ceiling places a legal limit on the size of the national debt.
The federal income tax is progressive because poor people pay little or no taxes.