The percentage of checkable deposits that banks and other financial intermediaries are
required to keep in cash reserves is known as:
a. the fractional reserve requirement.
b. the excess reserve requirement.
c. the required reserve ratio.
d. the discount rate.
e. M1.
According to adaptive expectations theory, which of the following would be the result
of expansionary monetary and fiscal policies?
a. There is a short-run reduction in unemployment.
b. There is a long-run trade off between inflation and unemployment.
c. The inflation rate falls in the long run.
d. The economy always operates at the natural rate of unemployment
Which of the following items is included when computing M1?
a. Coins in circulation.
b. Currency in circulation.
c. Checking accounting entries.
d. All of the above.
e. None of the above
Farmers can choose to produce eggs or milk. If there is an increase in the price of milk
then what will be the effect in the egg market?
a. The quantity of eggs demanded will increase.
b. Egg demand will decrease.
c. Egg supply will increase.
d. Egg supply will decrease.
If more people enter medical school, we can expect:
a. the demand for doctors to increase.
b. the supply of doctors to increase.
c. the demand for doctors to decrease.
d. the supply of doctors to decrease.
e. no effect on the supply or demand of doctors¾just a movement along the curves.
If one U.S. dollar can be exchanged for 5 Swiss francs, then 1 franc can be exchanged
for:
a. 5 cents.
b. 20 cents. c. 50 cents.
d. 2 dollars.
Exhibit 15-3 Balance sheet of Tucker National Bank Assets Liabilities
Required reserves $ 20,000 Checkable deposits $100,000
Excess reserves 0
Loans 80,000
Total $100,000 Total $100,000 Assume the Fed purchases a government security from a
private dealer and pays with a Fed check of $100,000. If this check is deposited by the
dealer in the bank shown in Exhibit 15-3, the bank can extend new loans in the amount
of:
a. $20,000.
b. $80,000.
c. $100,000.
d. $120,000.
International trade has the potential to ____ the availability of goods and services to
____.
a. increase; those nations who export more than they import
b. increase; nations that have an absolute advantage in the production of a good or
service
c. increase; all nations
d. decrease; all nations
Which of the following statements is true?
a. The doctrine of laissez-faire advocates an economic system with extensive
government intervention and little individual decision-making.
b. In capitalism income is distributed on the basis of need.
c. Adam Smith was the father of socialism.
d. Most real-world economies are mixed economic systems.
e. The “invisible hand” refers to government economic control.
Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss
As shown in Exhibit 3A-2, if the market price
falls from P1 to P2, then:
a. consumer surplus increases.
b. producer surplus increases.
c. deadweight loss is eliminated.
d. all of these are true.
John Maynard Keynes’s central proposition that a dollar increase in disposable income
would increase consumption, but by less than the increase in disposable income, means
the marginal propensity to consume (MPC) is:
a. greater than or equal to one.
b. equal to one.
c. less than one, but greater than zero.
d. negative.
Exhibit 18-6 Dollars per British pound Quantity
DemandedDollars
per PoundQuantity
Supplied
200 5 600
240 4 480
300 3 410
360 2 360
390 1 330 In Exhibit 18-6, the equilibrium exchange rate is:
a. 5.
b. 4.
c. 3.
d. 2.
e. 1.
An example of frictional unemployment is a(n):
a. textile worker permanently laid off due to jobs lost to imports.
b. engineer permanently laid off due to advances in technology.
c. fast-food restaurant worker who quits work and attends college.
d. computer programmer who leaves one job and accepts a new job.
At low levels of employment, the Keynesian aggregate supply curve:
a. tilts downward to the right.
b. tilts upward to the right.
c. is vertical.
d. shows a constant price level.
e. shows a rising price level.
Find the BLS’s rate of unemployment from the following data: frictional unemployment
= 150, structural unemployment = 200, cyclical unemployment = 225, discouraged
workers = 25, underemployed workers = 75, fully employed workers = 850, total
population = 2,000.
a. 17.5 percent
b. 23.3 percent
c. 24.6 percent
d. 28.8 percent
e. 38.3 percent
According to the law of demand, when will higher corn prices reduce the quantity
demanded of corn?
a. Always.
b. When the supply of corn is fixed.
c. When nonprice determinants, like income and the number of buyers, are unchanged.
d. When there are no shortages or surpluses of corn.
Purchases of foreign assets by U.S. residents are tabulated in the U.S. balance of
payments as a:
a. capital inflow.
b. capital outflow.
c. current account outflow.
d. unilateral transfer.
Exhibit 2-13 Production possibilities curve
In Exhibit 2-13, point D:
a. is preferred to point A.
b. is a point of maximum production for this economy this year.
c. is not achievable this year because of limited resources.
d. could result from some degree of unemployment of inefficiency.
e. is preferred to point H.
Which of the following will not shift the demand curve for grapefruit?
a. An announcement that eating a grapefruit before every meal will induce weight loss.
b. A technical development that allows machines to replace the workers who harvest
grapefruit.
c. An announcement that eating lots of grapefruit causes skin problems.
d. A newspaper story reporting that the preference for oranges has skyrocketed.
e. An announcement that grapefruit will definitely cost more next week.