An increase in the supply of dollars:
A) increases the dollar price of yen.
B) decreases the dollar price of yen.
C) increases the yen price of dollars.
D) does not change the exchange rate between dollars and yen.
Figure 18.1 Refer to Figure 18.2. After trade and specialization begin, the maximum
amount of tomatoes that Pizzaland can consume is:
A) 120.
B) 90.
C) 80.
D) 60.
Which of the following tend to reduce economic uncertainty?
A) unemployment insurance
B) health insurance
C) social security
D) all of the above are correct.
If the production function is Y = 3K, then an increase in capital (K) by 1 unit would:
A) increase Y by 3 units.
B) decrease Y by 3 units.
C) increase Y by 0 units.
D) increase L by 3 units.
The key lesson to remember about budget deficits is that during a recession we should
focus on:
A) what the fiscal policy does to the economy and not on what it does to the deficit.
B) what the monetary policy does to the economy and not on what it does to the deficit.
C) what the fiscal policy does to the deficit and not on what it does to the economy.
D) what the fiscal policy does to the deficit and not on what it does to the national debt.
The law of one price indicates that the:
A) interest rate on domestic and foreign bonds must be the same.
B) exchange rate will always equal 1.
C) exchange rate will always exceed 1.
D) prices will adjust so that the price of similar goods in different countries is the same.
Assume that last year’s inflation rate is the same as the expectation of inflation for the
next year. According to the expectations Phillips curve, if the inflation rate remains
constant relative to the expected rate, the unemployment rate
A) decreases.
B) increases.
C) may increase or decrease.
D) does not change.
Recall the Application about the price of Big Macs in China and around the world to
answer the following question(s).
The following table is taken from the Application. For several years, The Economist has
measured the prices of Big Macs throughout the world and compared the price
differences to exchange rates.
According to the table, when converted to U.S. dollars, Big Macs cost approximately
________ percent more in the United States than they do in China.
A) 42
B) 58
C) 72
D) 126
The velocity of money is 3. If nominal GDP is $1,500 billion then the money supply is:
A) $300 billion.
B) $400 billion.
C) $4,800 billion.
D) $500 billion.
The short run in macroeconomics is the period in which
A) prices change significantly.
B) no contracts or agreements exist to fix prices.
C) demand determines output.
D) the demand curve is vertical.
A firm’s value added can be measured as the value of its
A) profits.
B) purchases of inputs from other firms.
C) total sales.
D) total sales, less purchases from other firms.
What happens to the labor supply curves in the U.S. and Canada when Canadian
workers migrate to the United States?
A) The labor supply curve shifts to the right in the U.S. and to the left in Canada.
B) The labor supply curve shifts to the right both in the U.S. and in Canada.
C) The labor supply curve shifts to the left both in the U.S. and in Canada.
D) The labor supply curve shifts to the left in the U.S. and to the right in Canada.
If the value of net exports is negative, then:
A) exports exceed imports.
B) imports exceed exports.
C) exports equal imports.
D) imports are zero.
Contractionary fiscal policy shifts:
A) the aggregate demand curve to the left.
B) the short run aggregate supply curve to the right.
C) the short run aggregate supply curve to the left.
D) the aggregate demand curve to the right.