Late in the 2000″2009 decade, real estate prices in the U.S. fell by a greater percentage
than they had fallen since the
a. 1890s.
b. 1930s.
c. 1950s.
d. 1970s.
Adam Smith
a. and David Ricardo both opposed free trade.
b. opposed free trade, but David Ricardo supported it.
c. supported free trade, but David Ricardo opposed it.
d. and David Ricardo both supported free trade.
Suppose that you are a broker and people tell you the following about themselves. What
sort of bond would you recommend to each? Defend your choices.
a. “I am in a high federal income tax bracket and I don’t want to take very much risk.”
b. “I want a high return and I am willing to take a lot of risk to get it.”
c. “I want a decent return and I have enough deductions that I don’t value tax breaks
highly.”
On a graph that depicts the market for loanable funds, the nominal interest rate is
measured along the vertical axis.
a. True
b. False
Proponents of rational expectations argued that the sacrifice ratio
a. could be high because it was rational for people not to immediately change their
expectations.
b. could be high because people might adjust their expectations quickly if they found
anti-inflation policy credible.
c. could be low because it was rational for people not to immediately change their
expectations.
d. could be low because people might adjust their expectations quickly if they found
anti-inflation policy credible.
People can write checks against
a. demand deposits and money market mutual funds
b. demand deposits but not money market mutual funds
c. money market mutual funds but not demand deposits
d. neither demand deposits nor money market mutual funds
RefertoFigure4-27. Panel (c) shows which of the following?
a. an increase in demand and an increase in quantity supplied
b. an increase in demand and an increase in supply
c. an increase in quantity demanded and an increase in quantity supplied
d. an increase in quantity demanded and an increase in supply
Measured in 2010 dollars, real GDP per person in the United States in 2010 was about
a. $37,000.
b. $47,000.
c. $57,000.
d. $67,000.
According to the circular flow diagram, if Denny is the owner of a landscaping business
and he just received $50 for mowing Mrs. Pendleton’s lawn,
a. the $50 represents a cost of production for Denny’s firm.
b. the $50 represents wages, rent, and profit to Denny’s firm.
c. Denny acts as a firm who interacted in the markets for factors of production with
Mrs. Pendleton.
d. Denny acts as a firm who interacted in the markets for goods and services with Mrs.
Pendleton.
Suppose there is an increase in the price of steel. We would expect the supply curve for
steel beams to
a. shift rightward.
b. shift leftward.
c. become flatter.
d. remain unchanged.
Other things the same, a decrease in the price level makes the dollars people hold worth
a. more, so they can buy more.
b. more, so they can buy less.
c. less, so they can buy more.
d. less, so they can buy less.
Other things the same, a country that decides to reduce inflation will
a. have a higher unemployment rate in the short run and the long run.
b. have a higher unemployment rate only in the long run.
c. have a higher unemployment rate only in the short run.
d. not have a higher unemployment rate in either the short run or the long run.
Figure 3-23
The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
Refer to Figure3-23. In the nation of Cropitia, the opportunity cost of a pound of
cheese is 1.5 pounds of ham. Bonovia and Cropitia both can gain from trading with one
another if one pound of cheese trades for
a. 1.0 pound of ham.
b. 1.4 pounds of ham.
c. 2.1 pounds of ham.
d. All of the above are correct.
The effects of unionization on wages in the sectors of the economy that are unionized
causes the supply of labor in other sectors of the economy to
a. decrease, raising wages in industries that are not unionized.
b. decrease, reducing wages in industries that are not unionized.
c. increase, raising wages in industries that are not unionized.
d. increase, reducing wages in industries that are not unionized.
Ford Motor Company announces that next month it will offer $3,000 rebates on new
Mustangs. As a result of this information, today’s demand curve for Mustangs
a. shifts to the right.
b. shifts to the left.
c. shifts either to the right or to the left, but we cannot determine the direction of the
shift from the given information.
d. will not shift; rather, the demand curve for Mustangs will shift to the right next
month.
In the Friedman-Phelps analysis, when inflation is less than expected, the
unemployment rate is less than the natural rate.
a. True
b. False
If the dollar buys less cotton in Egypt than in the United States, then traders could make
a profit by
a. buying cotton in the United States and selling it in Egypt, which would tend to raise
the price of cotton in the United States.
b. buying cotton in the United States and selling it in Egypt, which would tend to raise
the price of cotton in Egypt.
c. buying cotton in Egypt and selling it in the United States, which would tend to raise
the price of cotton in Egypt.
d. buying cotton in Egypt and selling it in the United States, which would tend to raise
the price of cotton in the United States.
Scenario34-1.Take the following information as given for a small, imaginary economy:
When income is $10,000, consumption spending is $6,500.
When income is $11,000, consumption spending is $7,250.
RefertoScenario34-1.The marginal propensity to consume for this economy is
a. 0.650.
b. 0.750.
c. 0.650 or 0.664, depending on whether income is $10,000 or $11,000.
d. 0.800.
Figure 4-17
RefertoFigure4-17.At a price of
a. $2, there is a shortage of 6 units.
b. $5, there is a surplus of 25 units.
c. $5, there is a shortage of $25.
d. $7, there is a shortage of 4 units.
Figure 2-4
RefertoFigure2-4. Inefficient production is represented by which point(s)?
a. Q, S
b. Q, S, T
c. R, U
d. T
Which of the following would likely be studied by a microeconomist rather than a
macroeconomist?
a. the effect of foreign direct investment on economic growth
b. the effect of a sales tax on the cigarette industry
c. the effect of an investment tax credit on the economy’s capital stock
d. the effect of a war on government spending
When a production possibilities frontier is bowed outward, the opportunity cost of one
good in terms of the other is constant.
a. True
b. False
An increase in which of the following would shift the supply curve for gasoline to the
right?
a. demand for gasoline
b. price of gasoline
c. number of producers of gasoline
d. price of oil, an input into the production of gasoline
The natural rate of unemployment
a. is constant over time.
b. varies over time, but can”t be changed by the government.
c. is the unemployment rate that the economy tends to move to in the long run.
d. depends on the rate at which the Fed increases the money supply.
If the cost of food & beverages increases by 10 percent, then, other things the same, the
CPI is likely to increase by about
a. 1.5 percent.
b. 7.5 percent.
c. 10 percent.
d. 20 percent.
Figure 2-14
Consider the production possibilities curve for a country that can produce sweaters,
apples (in bushels), or a combination of the two.
Refer to Figure2-14. Which combination of points show production possibilities only
achievable with improvements in technology or increases in resources?
a. Q, R, U, and V
b. S and X
c. T and W
d. None of the above is correct.
Table 3-29
Juanita and Shantala run a business that programs and tests cellular phones. Assume
that Juanita and Shantala can switch between programming and testing cellular phones
at a constant rate. The following table applies.
RefertoTable3-29.Shantala has an absolute advantage in
a. programming cellular phones and a comparative advantage in programming cellular
phones.
b. programming cellular phones and a comparative advantage in testing cellular phones.
c. testing cellular phones and a comparative advantage in programming cellular phones.
d. testing cellular phones and a comparative advantage in testing cellular phones.
Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks.
Which of the following is not possible?
a. Jim has an absolute advantage in the production of baseball bats and in the
production of hockey sticks.
b. Jim has an absolute advantage in the production of baseball bats and a comparative
advantage in the production of hockey sticks.
c. Jim has an absolute advantage in the production of hockey sticks and a comparative
advantage in the production of baseball bats.
d. Jim has a comparative advantage in the production of baseball bats and in the
production of hockey sticks.
Figure27-1. The figure shows a utility function.
RefertoFigure27-1. What is measured along the vertical axis?
a. risk aversion
b. marginal utility
c. utility
d. the number of units of a good that can be purchased
Adam and Doug both build birdhouses. Adam works 30 hours a week and produces 15
bird houses. Doug works 20 hours a week and produces 12 bird houses. Which of the
following is correct?
a. Adam’s production and productivity are higher than Doug’s.
b. Adam’s production is higher than Doug’s, but Doug’s productivity is higher than
Adam’s.
c. Doug’s production is higher than Adam’s, but Adam’s productivity is higher than
Doug’s.
d. Doug’s production and productivity are higher than Adam’s.
When Jamie, a U.S. citizen, purchases a wool jacket made in Ireland, the purchase is
a. both a U.S. and Irish import.
b. a U.S. import and an Irish export.
c. a U.S. export and an Irish import.
d. neither an export nor an import for either country.
Figure 35-6
Use the graph below to answer the following questions.
RefertoFigure35-6. If the economy starts at C and the money supply growth rate
increases, then in the short run the economy moves to
a. B.
b. D.
c. F.
d. None of the above is consistent with an increase in the money supply growth rate.
GDP excludes most items that are produced and sold illegally and most items that are
produced and consumed at home because
a. the quality of these items is not high enough to contribute value to GDP.
b. measuring them is so difficult.
c. the government wants to discourage the production and consumption of these items.
d. these items are not reported on income tax forms.
Which of the following is an example of U.S. foreign direct investment?
a. A Greek company opens a cheese factory in the U.S.
b. A German mutual fund buys stock issued by a U.S. corporation.
c. A U.S. beverage company opens a bottling plant in Russia.
d. A U.S. bank buys bonds issued by an Argentinean company.
The labor force equals the sum of the employed and the unemployed.
a. True
b. False