Which of the following is a reason why increases in the price level result in a decline in
aggregate expenditure?
A) Price level increases raise real wealth, which causes consumption spending and
aggregate expenditure to decline.
B) Price level increases cause firms and consumers to hold more money, which raises
the interest rate. Higher interest rates lower consumption and planned investment
expenditures, which lowers aggregate expenditure.
C) Price level increases in the United States relative to other countries raise net exports,
which lowers aggregate expenditure.
D) As the price level rises, government spending falls, which lowers aggregate
expenditure.
Scenario 14-1 Consider the
information above for a simple economy. Assume there are no traveler’s checks.
M2 in this simple economy equals
A) $3,000.
B) $8,000.
C) $14,000.
D) $21,000.
If real GDP per capita in the United States is $8,000 in 2013, and if real GDP per capita
is $12,000 in 2023, what is the average annual percent changein the growth rate of GDP
per capita between 2013 and 2023?
A) 3.33%
B) 5%
C) 33%
D) 50%
The Federal Reserve cannot target both the money supply and the interest rate because
it does not control
A) bank reserves.
B) money demand.
C) the discount rate.
D) open market operations.
In the long run, most economists agree that a permanent increase in government
spending leads to ________ crowding out of private spending.
A) no
B) partial
C) complete
D) more than complete
If the quantity of tacos demanded is represented by the equation QD = 20 – 0.5P then
the corresponding price of tacos is represented by the equation
A) P = 0.5QD + 10.
B) P = 40 – 2QD.
C) P = 10 – 2QD.
D) P = QD + 40.
Article Summary. As a part of its 2013 marketing campaign, the Greater Fort
Lauderdale Convention & Visitors Bureau (CVB) set its sights on increasing travel
to the region by with promotions to the lesbian, gay, bisexual and transgender
community (LGBT). From August through November, the CVB has events
scheduled across the United States and globally in an effort to attract a larger
share of this travel segment. According to the CVB, Fort Lauderdale is the state’s
largest and most popular diverse gay capital, and their marketing efforts helped
attract 1.2 million LGBT tourists who spent $1.4 billion in 2012.
Source: Arlene Satchell, “Lauderdale CVB ramps up LGBT summer marketing,”
Sun Sentinel, June 29, 2013.
By marketing to the LGBT community, Fort Lauderdale and the CVB are trying to set
the city apart from competing travel destinations. This is an example of
A) defending a brand name.
B) blocking entry into the market.
C) legally enforcing a trademark.
D) product differentiation.
Crowding out, following an increase in government spending, results from (the
exchange rate is the foreign exchange price of the domestic currency)
A) higher interest rates and a lower exchange rate.
B) higher interest rates and a higher exchange rate.
C) lower interest rates and a lower exchange rate.
D) lower interest rates and a higher exchange rate.
If the marginal benefit of reducing emissions of some air pollutant is greater than the
marginal cost
A) further reductions will make society better off.
B) the marginal benefit will rise and the marginal cost will fall as further reductions are
made.
C) economic efficiency will be achieved when emissions are reduced to zero.
D) private businesses, rather the consumers, should be made to pay for the cost of
further reductions.
Which of the following transactions would be included in Germany’s current account?
A) A German citizen purchases 100 shares of Texas Instruments stock.
B) An American citizen purchases 100 shares of BMW stock.
C) A German citizen purchases a new Volkswagen made in Germany.
D) An American citizen purchases a new Volkswagen made in Germany.