Under adaptive expectations, the short-term effect of an unanticipated shift to a more
expansionary macroeconomic policy will be a:
a. temporary reduction in the unemployment rate.
b. permanent reduction in the unemployment rate.
c. temporary reduction in the inflation rate.
d. permanent reduction in the inflation rate.
Exhibit 11-6 Aggregate demand and supply model
In Exhibit 11-6, if the aggregate demand curve is at AD1, the government should:
a. raise taxes to move to AD2.
b. cut taxes to move to AD2.
c. cut taxes to move to AD3.
d. cut spending to move to AD2.
e. not change its behavior.
If the exchange rate of yen for dollars increases from 100 yen = $1 to 110 yen = $1,
then:
a. Japanese-produced goods would become more expensive.
b. the dollar has depreciated.
c. the yen has appreciated.
d. U.S.-produced goods would become more expensive.
e. U.S. exports would increase.
Exhibit 16A-2 Macro AD/AS Models
In Panel (b) of
Exhibit 16A-2, a Keynesian expansionary stabilization policy designed to move the
economy from Y1 to Y would attempt to shift the:
a. aggregate demand curve (AD) leftward. c. aggregate demand curve (AD) rightward.
b. SRAS curve leftward. d. LRAS curve rightward.
Exhibit 4-6 Demand and supply curves
If the market demand and supply curves
shift as given in Exhibit 4-6, the resulting new equilibrium will show a(n):
a. increase in market price and a decrease in the quantity exchanged.
b. decrease in market price and a decrease in the quantity exchanged.
c. increase in market price and an increase in the quantity exchanged.
d. decrease in market price and an increase in the quantity exchanged.
e. decrease in market price and no change in the quantity exchanged.
An increase in the demand for a good means that:
a. the demand curve has shifted to the left.
b. the good’s price has fallen and, as a result, consumers are buying more of the good.
c. the good has become scarce.
d. consumers are willing to purchase more of the good at each possible price.
Which of the following is true?
a. The size of the national debt currently is about the same size as it was during World
War II.
b. The national debt increases in size whenever the federal government has a surplus
budget.
c. The national debt’s size decreased steadily after 1980.
d. The current U.S. national debt is over $12.0 trillion.
Which of the following is not a component of the aggregate demand curve?
a. Government spending (G).
b. Investment (I).
c. Consumption (C).
d. Net exports (X-M).
e. Saving.
When net exports are negative,
a. exports are greater than investment.
b. depreciation is greater than net investment.
c. imports are greater than investment.
d. exports are greater than imports.
e. imports are greater than exports.
Nominal gross domestic product is based on:
a. the existing prices at which final goods and services are actually sold.
b. prices of final goods and services adjusted for inflation.
c. prices at which intermediate goods are sold.
d. none of these.
Scarcity is a(n):
a. problem only in industrialized economies.
b. condition measured by the quantity of goods available.
c. subjective concept that human wants can never be satisfied.
d. problem only in poor economies.
A market consequence of a price floor program is that:
a. a shortage of the product will develop.
b. producers will stop supplying the product.
c. some rationing device must then be instituted.
d. a surplus of the product will develop.
e. there will be an excess demand for the product.
Comparative advantage indicates that:
a. specialization and exchange will cause trading partners to reduce their joint output.
b. a nation can gain from trade even when it is at an absolute disadvantage in producing
all goods.
c. trade with low-wage countries will pull down the wages of workers in high-wage
countries.
d. all of these.
Consumer surplus:
a. is minimized in market equilibrium.
b. measures the value between the actual selling price of a product and the price at
which sellers are willing to sell the product.
c. measures the value between the price consumers are willing to pay for a product and
the price they actually pay.
d. measures the price at which sellers extract excess profits from consumers.
The spending multiplier is:
a. 1 / (1 – MPC).
b. 1 – MPC.
c. MPC.
d. MPC / (1 – MPC).
Exhibit 16-6 Money, investment and product markets
In Exhibit 16-6, an increase in the money supply from MS1 to MS2 causes:
a. interest rates to fall from i1 to i2 and the quantity demanded of investment to decrease
from I2 to I1.
b. interest rates to fall from i1 to i2 and aggregate demand to shift from AD2 to AD1.
c. interest rates to fall from i1 to i2 and the quantity demanded of investment to increase
from I1 to I2.
d. interest rates to rise from i2 to i1 and the quantity demanded of investment to remain
the same.
e. interest rates to rise from i2 to i1 and aggregate demand to shift from AD1 to AD2.
Foreachstatementprovided,choosetheletteroftheappropriatetermfromthelistthateachstate
mentbestdescribes.Sometermsmaybeusedmorethanonce,whileothersarenotusedatall.
a. Capital stock
b. Asset
c. Owners’ equity
d. Time period
e. Dividends
f. Economic entity concept
g. Expense
h. Retained earnings
i. Cost principle
j. Creditor
k. Liability
l. Revenue
m. Going concern
n. Monetary unit
o. Corporation
A future benefit.
The law of demand indicates that:
a. every physical good has a use.
b. when people want a good badly enough, they will find a way to pay for it.
c. the desire for a good is unrelated to its price.
d. the quantity of a good that people will buy is inversely related to the price of the
good.
If the MPC = .80, and investment rises from $100 to $150, real GDP will increase by:
a. $50.
b. $125.
c. $20.
d. $250.
e. $200.
A reduction in regulation will shift the aggregate:
a. supply curve leftward.
b. supply curve rightward.
c. demand curve leftward.
d. demand curve rightward.
A person who has lost his or her job because it is now performed by a robot is
structurally unemployed.
Business cycles vary greatly in duration and intensity.
is the type of accounting used by nonbusiness entities.
Describe in general terms four or five characteristics of less-developed countries.
Personal consumption expenditures are the largest component of GDP.