In the long run,
A) GDP = potential GDP.
B) unemployment is below its natural rate.
C) LRAS and SRAS lie on the same line.
D) unemployment is above its natural rate.
Which of the following is a true statement about the multiplier?
A) The multiplier rises as the MPC rises.
B) The smaller the MPC, the larger the multiplier.
C) The multiplier is a value between zero and one.
D) The multiplier effect does not occur when autonomous expenditure decreases.
A normal rate of return refers to the ________ that investors must earn on the funds
they invest in a firm, expressed as a percentage of the amount invested.
A) minimum amount
B) maximum amount
C) total amount
D) profit
The economic analysis of minimum wage involves both normative and positive
analysis. Consider the following consequences of a minimum wage:
a. The minimum wage law causes unemployment.
b. Unemployment would be lower without a minimum wage law.
c. Minimum wage laws benefit some workers and harm others.
d. The minimum wage should be more than $7.25 per hour.
Which of the consequences above are positive statements and which are normative
statements?
A) a, b, and c are positive statements and d is a normative statement.
B) a and b are positive statements, c and d are normative statement.
C) Only a is a positive statement, b, c and d are normative statements.
D) a and c are positive statements, b and d are normative statements.
To offset the effect of households and firms deciding to hold less of their money in
checking account deposits and more in currency, the Federal Reserve could
A) raise the required reserve ratio.
B) buy Treasury securities.
C) raise the discount rate.
D) lower bank taxes.
If the quantity demanded for a product exceeds the quantity supplied, the market price
will rise until
A) the quantity demanded equals the quantity supplied. The product will then no longer
be scarce.
B) quantity demanded equals quantity supplied. The equilibrium price will then be
greater than the market price.
C) only wealthy consumers will be able to afford the product.
D) quantity demanded equals quantity supplied. The market price will then equal the
equilibrium price.
Table 2-6
Table 2-6 shows the output per week of two people, James and Lucy. They can either
devote their time to making bracelets or making necklaces.
Refer to Table 2-6. Which of the following statements istrue?
A) Lucy has an absolute advantage in making both products.
B) James has an absolute advantage in making both products.
C) Lucy has an absolute advantage in making wagons and James in making tricycles.
D) James has an absolute advantage in making tricycles and Lucy in making wagons.
Parker Hannifin benefitted when the Federal Reserve ________ in 2008. This Fed
action would help increase demand for its machinery components, which allowed
Parker Hannifin to increase employment and increase prices.
A) drove down interest rates
B) increased the discount rate
C) lowered the required reserve rate
D) implemented a series of open market sales of Treasury bonds
Which of the following statements about the importance of trade to the U.S. economy is
false?
A) Since 1950, both exports and imports have steadily increased as a fraction of U.S.
gross domestic product.
B) Overall, about 20 percent of U.S. manufacturing jobs depend directly or indirectly
on exports.
C) The United States is the second largest exporter in the world.
D) The U.S. economy is highly dependent on international trade for growth in its gross
domestic product.
A “long-run exploitable Phillips curve” refers to a Phillips curve that in the long run is
________ rather than ________.
A) vertical; horizontal
B) upward sloping; vertical
C) horizontal; upward sloping
D) downward sloping; vertical
Before its IPO, Facebook was an example of a private firm. As a private firm, Facebook
was
A) not subject to government regulations and taxation.
B) run by stockholders and a board of directors.
C) run by its founder, Mark Zuckerberg.
D) not legally allowed to raise funds through venture capital firms.