If a U.S. citizen buys a dress made in Nepal by a Nepalese firm, then
a. U.S. consumption increases, U.S. net exports decrease, and U.S. GDP decreases.
b. U.S. consumption increases, U.S. net exports decrease, and U.S. GDP is unaffected.
c. U.S. consumption decreases, U.S. net exports increase, and U.S. GDP increases.
d. U.S. consumption decreases, U.S. net exports increase, and U.S. GDP is unaffected.
If a good or service has only one seller, then the seller is called a monopoly.
a. True
b. False
Country A has a higher money supply growth rate and a long-run Phillips curve that is
farther to the left than country B’s. In the long run as compared to country B, country A
will have
a. lower unemployment and higher inflation
b. higher unemployment and higher inflation
c. lower unemployment and lower inflation
d. None of the above is necessarily correct.
If you put $300 into an account paying 2 percent interest, what will be the value of this
account in 4 years?
a. $320.69
b. $324.00
c. $324.73
d. $327.81
The source of the supply of loanable funds is
a. saving, and the source of the demand for loanable funds is investment.
b. consumption, and the source of the demand for loanable funds is investment.
c. investment, and the source of the demand for loanable funds is saving.
d. the interest rate, and the source of the demand for loanable funds is saving.
Which of the following bonds has the highest interest rate?
a. a high credit risk and a short term.
b. a low credit risk and a short term.
c. a long term and a high credit risk.
d. a long term and a low credit risk.
The law of supply states that, other things equal, when the price of a good falls, the
quantity supplied falls as well.
a. True
b. False
For economists, conducting experiments is often difficult and sometimes impossible.
a. True
b. False
If the interest rate is rpercent, then the rule of 70 says that your savings will double
about every
a. 70/(1 – r) years.
b. 70/(1 + r) years.
c. 70/years.
d. 70(1 + r)/ryears.
In competitive markets,
a. firms produce identical products.
b. buyers can influence the market price more easily than sellers.
c. markets are more likely to be in equilibrium.
d. sellers are price setters.
A central bank can reduce inflation by reducing money supply growth, but it necessarily
does so at the cost of permanently raising the unemployment rate.
a. True
b. False
The “natural” rate of unemployment is the unemployment rate toward which the
economy gravitates in the
a. short run, and the natural rate is constant over time.
b. long run, and the natural rate is constant over time.
c. short run, and the natural rate changes over time.
d. long run, and the natural rate changes over time.
Jason plans to buy shrimp in Florida and sell them in Manhattan, Kansas where the
price is higher. Jason plans to engage in arbitrage.
a. True
b. False
Which of the following adjust to bring aggregate supply and demand into balance?
a. the price level and real output
b. the real rate of interest and the money supply
c. government expenditures and taxes
d. the saving rate and net exports
Discountingrefers directly to
a. finding the present value of a future sum of money.
b. finding the future value of a present sum of money.
c. calculations that ignore the phenomenon of compounding for the sake of ease and
simplicity.
d. decreases in interest rates over time, while compoundingrefers to increases in interest
rates over time.
If the U.S. were to impose import quotas
a. the demand for loanable funds and the demand for dollars in the market for
foreign-currency exchange would both increase.
b. nether the demand for loanable funds nor the demand for dollars in the market for
foreign-currency exchange would increase.
c. the demand for loanable funds would increase, but the demand for dollars in the
market for foreign-currency exchange would not.
d. the demand for dollars in the market for foreign-currency exchange would increase,
but the demand for loanable funds would not.
nominal federal funds rate, yis real GDP, y* is an estimate of the natural rate of output,
π is the inflation rate, and π* is the inflation target. Other things the same, if the
economy starts at y* and π* and then y rises and exceeds y* by 1% and π rises 2%
points above π*, the rule would require the Fed to raise the federal funds rate by
a. 1.5 percentage points
b. 2.5 percentage points
c. 3.5 percentage points
d. 5.5 percentage points
Which of the following is not included in the investment component of GDP?
a. The purchase of 100 shares of stock.
b. The purchase of a $1000 bond.
c. A firm’s purchase of a used van to use for deliveries.
d. None of the above are included in the investment component of GDP.
The term inflation is used to describe a situation in which
a. the overall level of prices in the economy is increasing.
b. incomes in the economy are increasing.
c. stock-market prices are rising.
d. the economy is growing rapidly.
Queen City Sausage stock is selling at $40 per share, it has retained earnings of $1.00
per share, and dividends of $1.00 per share. What is the price-earnings ratio and what is
the dividend yield?
a. 20, 2.5 percent.
b. 20, 5 percent.
c. 40, 2.5 percent.
d. 40, 5 percent.
The supply of money is determined by
a. the price level.
b. the Treasury and Congressional Budget Office.
c. the Federal Reserve System.
d. the demand for money.
During recessions
a. sales and profits fall.
b. sales and profits rise.
c. sales rise, profits fall.
d. profits fall, sales rise.
Which of the following is notcorrect?
a. Government debt can continue to rise forever.
b. If the government uses funds to pay for investment programs, on net the debt need
not burden future generations.
c. Social Security does not transfer wealth from younger generations to older
generations.
d. The average U.S. citizens’ share of the government debt represents less than 2 percent
of her lifetime income.
Figure 4-10
RefertoFigure4-10.The movement from Point A to Point B represents a(n)
a. increase in the price.
b. decrease in the quantity supplied.
c. shift in the supply curve.
d. Both a and b are correct.
Last year a country had exports of $50 billion, imports of $60 billion, and domestic
investment of $40 billion. What was its saving last year?
a. $30 billion
b. $20 billion
c. $10 billion
d. -$10 billion
Table24-11.Megan’s salary for three consecutive years, along with other values, are
presented in the table below.
RefertoTable24-11. Megan’s 2011 salary in 2013 dollars is
a. $67,600.
b. $67,489.
c. $67,588.
d. $70,850.
If Shawn can produce donuts at a lower opportunity cost than Sue, then
a. Shawn has a comparative advantage in the production of donuts.
b. Sue has a comparative advantage in the production of donuts.
c. Shawn should not produce donuts.
d. Shawn is capable of producing more donuts than Sue in a given amount of time.
In which of the following cases can we be certain that a natural resource has become
scarcer?
a. both the demand for the resource and the supply of the resource have increased.
b. both the demand for the resource and the supply of the resource have decreased.
c. the demand for the resource has increased and the supply has decreased.
d. the demand for the resource has decreased and the supply has increased.
Which of the following is correct according to the long-run Phillips curve?
a. No government policy, including changes in the money supply growth rate, can
change the natural rate of unemployment.
b. Changes in the money supply growth rate are the only means by which government
policy can change the natural rate of unemployment.
c. Monetary policy cannot change the natural rate of unemployment, but other
government policies can.
d. Monetary policy and other government policies can shift the long-run Phillips curve.
Most spells of unemployment are
a. long, and most unemployment observed at any given time is long term.
b. long, but most unemployment observed at any given time is short term.
c. short, but most unemployment observed at any given time is long term.
d. short, and most unemployment observed at any given time is short term.
If there is a temporary adverse supply shock, then the short-run Phillips curve shifts to
the
a. right. It remains to the right regardless of monetary policy.
b. right. It remains to the right if the central bank pursues expansionary monetary
policy.
c. left. It remains to the left regardless of monetary policy.
d. left. It remains to the left if the central bank pursues expansionary monetary policy.
A 2009 article in TheEconomistnoted that
a. recent research has allowed economists to estimate the values of fiscal multipliers
with a great deal of precision.
b. research on multipliers indicates that multipliers for permanent tax cuts tend to be
smaller than multipliers for temporary tax cuts.
c. most of the evidence on multipliers for government spending is based on changes in
military expenditures.
d. All of the above are correct.
In the 1990s, Fed Chairperson Alan Greenspan questioned whether the stock market
a. boom at that time reflected “irrational exuberance.”
b. decline at that time reflected “irrational funk.”
c. boom at that time reflected “rational exuberance.”
d. decline at that time reflected “rational funk.”
Suppose the consumer price index was 184 in 2009 and 198.17 in 2010. The nominal
interest rate during this period was 5.8 percent. What was the real interest rate during
this period?
a. 0.4 percent
b. 1.2 percent
c. “1.9 percent
d. “2.6 percent
The nominal interest rate is 3.5 percent and the inflation rate is 1.5 percent. What is the
real interest rate?
a. 5.25 percent
b. 5 percent
c. 2.3 percent
d. 2 percent