Open-market purchases by the Fed
a. make the price level and value of money fall.
b. make the price level rise, and make the value of money fall.
c. make the price level and make the value of money rise.
d. make the price level fall, and make the value of money rise.
A country has I = $200 billion, S = $400 billion, and purchased $600 billion of foreign
assets, how many of its assets did foreigners purchase?
a. $0
b. $200 billion
c. $400 billion
d. $800 billion
A market supply curve shows how the total quantity supplied of a good varies as
a. production technology varies.
b. price varies.
c. input prices vary.
d. demand varies.
Suppose that garbage collectors and landscaping workers have no unions. Now suppose
that garbage collectors form unions. What does this do the labor supply and wages of
landscaping workers?
a. Both labor supply and wages increase.
b. Labor supply increases, and wages decrease.
c. Labor supply decreases, and wages increase.
d. Both labor supply and wages increase.
Table 24-3
The table below pertains to Iowan, an economy in which the typical consumer’s basket
consists of 4 pounds of pork and 3 bushels of corn.
RefertoTable24-3. If 2012 is the base year, then the inflation rate in 2013 was
a. 24.7 percent.
b. 54.0 percent.
c. 32.8 percent.
d. 38.0 percent.
A Big Mac in Japan costs 400 yen while it costs $4.50 in the U.S.. The nominal
exchange rate is 100 yen per dollar. Which of the following would both make the real
exchange rate move towards purchasing-power parity?
a. the price of Big Macs in the U.S. falls, the nominal exchange rate falls
b. the price of Big Macs in the U.S. falls, the nominal exchange rate rises
c. the price of Big Macs in the U.S. rises, the nominal exchange rate falls
d. the price of Big Macs in the U.S. rises, the nominal exchange rate rises
If the nominal exchange rate eis foreign currency per dollar, the domestic price is P, and
the foreign price is P*, then the real exchange rate is defined as
a. P*/(Pe).
b. P/(P*e).
c. e(P*/P).
d. e(P/P*),
In the CPI, goods and services are weighted according to
a. how long a market has existed for each good or service.
b. the extent to which each good or service is regarded by the government as a
necessity.
c. how much consumers buy of each good or service.
d. the number of firms that produce and sell each good or service.
If the quantity of loanable funds supplied is greater than the quantity demanded, then
there is a
a. shortage of loanable funds and the interest rate will fall.
b. shortage of loanable funds and the interest rate will rise.
c. surplus of loanable funds and the interest rate will fall.
d. surplus of loanable funds and the interest rate will rise.
Which of the following is an example of the “brain drain?”
a. A country’s most highly educated workers emigrate to rich countries.
b. A country has such a poor educational system that human capital falls over time.
c. The population of a country grows so fast that the educational system can’t keep up.
d. A country steals patented technology from another country.
The quantity of aggregate goods and services demanded rises when the
a. price level rises, because the interest rate rises.
b. price level rises, because the interest rate falls.
c. price level falls, because the interest rate rises.
d. price level falls, because the interest rate falls.
Reduced barriers to trade help explain an increase in U.S. exports and imports relative
to GDP since 1950.
a. True
b. False
Which of the following correctly describes actions of the U.S. government during the
recession of 2008-2009?
a. It refused to provide banks funding and made no significant changes in government
spending.
b. It refused to provide banks funding but made a large increase in government
spending.
c. It became part owner of some banks but made no significant change in government
spending
d. It became part owner of some banks and made a large increase in government
spending.
If there is an improvement in the technology used to produce a good, then the supply
curve for that good will shift to the left.
a. True
b. False
Figure 3-20
Refer to Figure3-20. Mexico would incur an opportunity cost of 8 units of Good X if it
increased its production of Good Y by
a. 2 units.
b. 4 units.
c. 6 units.
d. 8 units.
If the unemployment rate rises, which policies would both be appropriate to reduce it?
a. increase taxes, increase government spending
b. increase taxes, decrease government spending
c. decrease taxes, increase government spending
d. decrease taxes, decrease government spending
Which of the following is correct?
a. The Fed can control the money supply precisely.
b. The amount of money in the economy does not depend on the behavior of depositors.
c. The amount of money in the economy depends in part on the behavior of banks.
d. None of the above is correct.
Figure27-5. The figure shows a utility function for Dexter.
RefertoFigure27-5.Suppose Dexter begins with $1,300 in wealth. Starting from there,
a. the pain of losing $500 of his wealth would equal the pleasure of adding $500 to his
wealth.
b. the pain of losing $500 of his wealth would exceed the pleasure of adding $500 to his
wealth.
c. the pleasure of adding $500 to his wealth would exceed the pain of losing $500 of his
wealth.
d. This cannot be determined from the graph.
Fluctuations in employment and output result from changes in
a. aggregate demand only.
b. aggregate supply only.
c. aggregate demand and aggregate supply.
d. neither aggregate demand nor aggregate supply.
Figure30-2. On the graph, MS represents the money supply and MD represents money
demand. The usual quantities are measured along the axes.
RefetoFigure30-2. If the relevant money-demand curve is the one labeled MD1, then
the equilibrium value of money is
a. 0.5 and the equilibrium price level is 2.
b. 2 and the equilibrium price level is 0.5.
c. 0.5 and the equilibrium price level cannot be determined from the graph.
d. 2 and the equilibrium price level cannot be determined from the graph.
Suppose that the U.S. imposed an import quota on beef. Sales of U.S. beef producers
would
a. rise and exports of other industries would increase.
b. rise and exports of other industries would decrease.
c. not change, exports of other industries would increase.
d. not change, exports of other industries would decrease.
As the price level falls, the value of money falls.
a. True
b. False
Over extended periods of time, population growth
a. has no effect on the standard of living.
b. has uncertain effects on the standard of living.
c. clearly raises the standard of living.
d. clearly lowers the standard of living.
Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow
a lawn in three hours or he can trim a tree in two hours.
a. Travis has an absolute advantage over Ricardo in trimming trees.
b. Travis has a comparative advantage over Ricardo in mowing lawns.
c. Ricardo has a comparative advantage over Travis in trimming trees.
d. All of the above are correct.
Refer to Figure3-4. If the production possibilities frontiers shown are each for one year
of working, then which of the following combinations of jackets and sweaters could
Lisa and Bryce together produce in a given year?
a. 1 sweater and 22 jackets
b. 2 sweaters and 20 jackets
c. 4 sweaters and 12 jackets
d. 5 sweaters and 7 jackets
Figure 28-3
RefetoFigure28-3.If the government imposes a minimum wage of $8, then how many
workers will be employed?
a. 3,000
b. 4,000
c. 5,000
d. 7,000
Frictional unemployment is
a. not inevitable; rather, it can be reduced to zero by well-designed public policies.
b. not inevitable; rather, it could be reduced to zero if by the elimination of
unemployment insurance.
c. inevitable, because at any given time, jobs are being created in some firms and
destroyed in other firms.
d. inevitable, because in some industries, wages are always set above the level that
brings supply and demand into equilibrium.
Betty’s Bakery bakes fresh bread every morning. Any bread not sold by the end of the
day is thrown away. A loaf of bread costs Betty $2.00 to produce, and she prices loaves
of bread at $3.50 per loaf. Suppose near the end of one day Betty still has 12 loaves of
bread on hand. Which of the following is correct?
a. Betty should only sell the remaining bread for $3.50 per loaf since that is the regular
price.
b. Betty should only sell the remaining bread for $2.00 per loaf or more since that is
what the bread costs to make.
c. Betty should be willing to sell the remaining bread for any price above $0 per loaf
since she will have to throw it away if she does not sell it for something.
d. Betty should just throw the bread away and change the price of her bread starting
tomorrow to make sure she sells all of her bread each day.
You have driven 800 miles on a vacation and then you notice that you are only 15 miles
from an attraction you hadn”t known about, but would really like to see. In computing
the opportunity cost of visiting this attraction you had not planned to visit, you should
include
a. both the cost of driving the first 800 miles and the next 15 miles.
b. the cost of driving the first 800 miles, but not the cost of driving the next 15 miles.
c. the cost of driving the next 15 miles, but not the cost of driving the first 800 miles.
d. neither the cost of driving the first 800 miles nor the cost of driving the next 15
miles.
The Federal Reserve
a. designs tax policy.
b. enforces the nation’s antitrust laws.
c. sets the nation’s monetary policy.
d. analyzes data on workers.
Consider five individuals with different occupations.
Which of the following pairs of individuals has a double coincidence of wants?
a. Mary and Clark
b. Clark and Nathan
c. Nathan and Polly
d. Polly and Paul
If prices in the U.S. rise faster than prices in the United Kingdom, then according to the
doctrine of purchasing- power parity the U.S. nominal exchange rate should rise
a. True
b. False
Which of the following contains a list only of things that increase when the budget
deficit of the U.S. decreases?
a. U.S. supply of loanable funds, U.S. net capital outflow, U.S. domestic investment
b. U.S. supply of loanable funds, U.S. exports, the real exchange rate of the dollar
c. U.S. interest rates, the real exchange rate of the dollar, U.S. domestic investment
d. the real exchange rate of the dollar, U.S. net capital outflow, U.S. net exports
Technological knowledge
a. is the same thing as human capital.
b. can be discovered but it can never be kept secret.
c. is a determinant of productivity.
d. does not play a role in the relationship that economists call the productiofunctio.
The aggregate demand and aggregate supply model implies monetary neutrality
a. only in the short run.
b. only in the long run.
c. in both the short run and the long run.
d. in neither the short run nor long run.