Someone who has a job but is absent from work because she is on vacation is counted
as “employed.”
a. True
b. False
Unions are often thought to cause conflict between different groups of workers —
between the insiders who benefit from high union wages and the outsiders who do not
get the union jobs.
a. True
b. False
Inflation is the primary determinant of a country’s living standards.
a. True
b. False
If the central bank decreases the money supply, then output
a. and unemployment rises.
b. rises and unemployment falls.
c. falls and unemployment rises.
d. and unemployment falls.
Which of the following equations will always represent GDP in an open economy?
a. S= I– G
b. I= Y– C+ G
c. Y= C+ I+ G
d. Y= C+ I+ G+ NX
Suppose a basket of goods and services has been selected to calculate the CPI. In 2002,
the basket’s cost was $80; in 2008, the basket’s cost was $92; and in 2010, the basket’s
cost was $108. The base year must be
a. 2002.
b. 2008.
c. one of the years between 2008 and 2010.
d. The base year cannot be determined from the given information.
You have been promised a payment of $250,000 in the future. In which case is the
present value of this payment highest?
a. You receive the payment 3 years from now and the interest rate is 8 percent.
b. You receive the payment 3 years from now and the interest rate is 6 percent.
c. You receive the payment 2 years from now and the interest rate is 8 percent.
d. You receive the payment 2 years from now and the interest rate is 6 percent.
Other things the same, if the price level falls, people
a. increase foreign bond purchases, so the dollar appreciates.
b. increase foreign bond purchases, so the dollar depreciates.
c. increase domestic bond purchases, so the dollar appreciates.
d. increase domestic bond purchases, so the dollar depreciates.
A recession has traditionally been defined as a period during which
a. nominal GDP declines for two consecutive quarters.
b. nominal GDP declines for four consecutive quarters.
c. real GDP declines for two consecutive quarters.
d. real GDP declines for four consecutive quarters.
According to the Phillips curve, policymakers could reduce both inflation and
unemployment by
a. increasing the money supply.
b. increasing government expenditures.
c. raising taxes.
d. None of the above is correct.
Consternation Corporation has an agreement with its workers to index completely the
wage of its employees using the CPI. Consternation Corporation currently pays its
production line workers $7.50 an hour and is scheduled to index their wages today. If
the CPI is currently 130 and was 125 a year ago, the firm should increase the hourly
wages of its workers by
a. $0.04.
b. $0.29.
c. $0.30.
d. $0.50.
The country of Sylvania has a GDP of $900, investment of $200, government purchases
of $200, and net capital outflow of -$100. What is consumption?
a. $700
b. $600
c. $500
d. $300
If macaroni and cheese is an inferior good, what would happen to the equilibrium price
and quantity of macaroni and cheese if consumers’ incomes rise?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
Which of the following correctly orders U.S. income measures from largest to smallest?
a. disposable personal income, gross national product, national income, net national
product, personal income
b. personal income, net national product, national income, gross national product,
disposable personal income
c. gross national product, net national product, national income, personal income,
disposable personal income
d. disposable personal income, personal income, national income, net national product,
gross national product
In the economy of Talikastan in 2015, exports were $200, GDP was $2000, government
purchases were $200, imports were $270, and investment was $500. What was
Talikastan’s consumption in 2015?
a. $830
b. $1230
c. $1370
d. $1770
If the quantity of loanable funds demanded exceeds the quantity of loanable funds
supplied,
a. there is a surplus and the interest rate is above the equilibrium level.
b. there is a surplus and the interest rate is below the equilibrium level.
c. there is a shortage and the interest rate is above the equilibrium level.
d. there is a shortage and the interest rate is below the equilibrium level.
Which of the following is correct?
a. Risk-averse people will not hold stock.
b. Diversification cannot reduce firm-specific risk.
c. The larger the percentage of stock in a portfolio, the greater the risk, but the greater
the average return.
d. Stock prices are determined by fundamental analysis rather than by supply and
demand.
Suppose the U.S. removes an import quota on steel. U.S. exports
a. increase, the real exchange rate of the U.S. dollar appreciates, and U.S. net capital
outflow increases.
b. increase, the real exchange rate of the U.S. dollar depreciates, and U.S. net capital
outflow is unchanged.
c. decrease, the real exchange rate of the U.S. dollar appreciates, and U.S. net capital
outflow is unchanged.
d. decrease, the real exchange rate of the U.S. dollar depreciates, and U.S. net capital
outflow decreases.
Your financial advisor tells you that if you earn the historical rate of return on a certain
mutual fund, then in three years your $20,000 will grow to $23,152.50. What rate of
interest does your financial advisor expect you to earn?
a. 5 percent
b. 6 percent
c. 7 percent
d. 8 percent
Figure26-5.Figure 26-5 shows the loanable funds market for a closed economy.
RefertoFigure26-5.Starting at point A, a reduction in government spending would
cause
a. the quantity of loanable funds traded to increase to $125 and the interest rate to rise
to 7% (point C).
b. the quantity of loanable funds traded to decrease to $75 and the interest rate to fall to
5% (point B).
c. the quantity of loanable funds traded to increase to $125 and the interest rate to fall to
5% (point D).
d. the quantity of loanable funds traded to decrease to $75 and the interest rate to rise to
7% (point E).
Other things the same, a decrease in the price level causes real wealth to
a. fall, interest rates to fall, and the dollar to appreciate.
b. fall, interest rates to rise, and the dollar to depreciate.
c. rise, interest rates to rise, and the dollar to appreciate.
d. rise, interest rates to fall, and the dollar to depreciate.