The primary tool the Federal Reserve uses to increase the money supply is
A) printing more money.
B) lowering the required reserve ratio.
C) buying Treasury securities.
D) lowering the discount rate.
As was demonstrated in 2007, firms in the shadow banking system
A) were very vulnerable to bank runs.
B) were protected from financial ruin by federal deposit insurance.
C) were well insulated from bank runs.
D) were more insulated from the financial crisis than were commercial banks.
What is a secondary market?
A) a market where factory seconds and damaged merchandise are sold
B) a market where newly issued bonds are sold to initial buyers by the borrowing firm
C) a market where a newly issued stocks are sold to initial buyers by the borrowing
firm
D) a market where you can sell any stocks you own as a private investor
A good can serve as money only if
A) government mandates that the good must be accepted in payment of debts.
B) it is declared by authorities to be legal tender.
C) it has intrinsic value or if it is backed by precious metals.
D) citizens accept the good as a means of payment for transactions and debts.
When you buy previously-issued shares of Facebook stock, this transaction takes place
in the
A) primary market.
B) bond market.
C) secondary market.
D) bear market.
By making exchange ________, money allows for ________ and higher ________.
A) harder; specialization; costs
B) easier; specialization; productivity
C) harder; generalization; productivity
D) easier; specialization; costs
Figure 2-4
Figure 2-4 shows various points on three different production possibilities frontiers for
a nation.
Refer to Figure 2-4. Consider the following events:
a. a decrease in the unemployment rate
b. general technological advancement
c. an increase in consumer wealth
Which of the events listed above could cause a movement from V to X ?
A) a only
B) a and b only
C) b and c only
D) a, b, and c
Which of the following describes a characteristic of a perfectly competitive market?
A) There are many buyers but few sellers.
B) There are many sellers but few buyers.
C) There are many buyers and sellers.
D) Equilibrium is achieved when demand for the product sold in the market equals the
supply.
If you put $100 into a bank account that earns five percent interest per year, what is the
formula you should use to determine the account’s future value in one year?
A) Future value equals the present value divided by the rate of interest.
B) Future value equals the present value multiplied by the rate of interest.
C) Future value equals the present value multiplied by one plus the rate of interest in
decimals.
D) All of these yield the same answer.
Table 9-16
Refer to Table 9-16. Looking at the table above, real wages ________ from 2011 to
2012, and real wages ________ from 2012 to 2013.
A) rose; rose
B) rose; fell
C) fell; rose
D) fell; fell
If a country’s real GDP is rising by 3% per year while its population is rising at 5% per
year, which of the following is true?
A) The country’s standard of living is falling.
B) The country’s standard of living is rising.
C) Growth in nominal GDP outweighs growth in the population.
D) Growth in nominal GDP is less than the growth in the population.
Monetary policy has ________ impact on the long-run Phillips curve.
A) a positive
B) a negative
C) an unpredictable
D) no
Given the fact that the productivity slowdown of the mid-1970s to the mid-1990s
affected all industrial countries, which of the following explanations for the
productivity slowdown in the United States is not likely to be correct?
A) A deterioration of the U.S. education system caused a decline in the quality of labor.
B) high oil prices
C) Services have become a larger fraction of GDP.
D) stricter environmental regulations
Employees at the university have negotiated a 5 percent increase in wages for the next
year, based on their inflation expectations. If inflation is actually 6 percent over the next
year, which of the following will occur?
A) Unemployment of university employees will rise.
B) Real wages for university employees will fall.
C) Inflation will be 5 percent the following year.
D) The increase in inflation is expected.
An appreciating yen makes Japanese products
A) more expensive in foreign markets.
B) less expensive in foreign markets.
C) more expensive in the Japanese market.
D) more expensive in both foreign markets and the Japanese market.
Figure 13-2
Refer to Figure 13-2. Ceteris paribus, a decrease in the expected price of an important
natural resource would be represented by a movement from
A) SRAS1 to SRAS2.
B) SRAS2 to SRAS1.
C) point A to point B.
D) point B to point A.
Some economists argue that the federal government should normally run a deficit at
potential GDP, with the borrowed funds applied to
A) consumption goods.
B) investment goods.
C) social security benefits.
D) health care costs.