Figure 3-15
RefertoFigure3-15.Jordan should specialize in the production of
a. novels.
b. poems.
c. both goods.
d. neither good.
If at a given exchange rate U.S. citizens wanted to buy more foreign bonds
a. the demand for dollars in the market for foreign-currency exchange would shift right.
b. the demand for dollars in the market for foreign-currency exchange would shift left.
c. the supply of dollars in the market for foreign-currency exchange shifts right.
d. the supply of dollars in the market for foreign-currency exchange shifts left.
The labor force minus the number of employed equals the number of unemployed.
a. True
b. False
Which of the following is the leastlikely to be a competitive market?
a. ice cream
b. soybeans
c. cable television
d. new houses
Prices usually reflect
a. only the value of a good to society.
b. only the cost to society of making a good.
c. both the value of a good to society and the cost to society of making the good.
d. neither the value of a good to society nor the cost to society of making the good.
If inflation is higher than what was expected,
a. creditors receive a lower real interest rate than they had anticipated.
b. creditors pay a lower real interest rate than they had anticipated.
c. debtors receive a higher real interest rate than they had anticipated.
d. debtors pay a higher real interest rate than they had anticipated.
Credit cards
a. defer payments.
b. are a store of value.
c. have led to wider use of currency.
d. are part of the money supply.
A typical society strives to get the most it can from its scarce resources. At the same
time, the society attempts to distribute the benefits of those resources to the members of
the society in a fair manner. In other words, the society faces a tradeoff between
a. guns and butter.
b. efficiency and equality.
c. inflation and unemployment.
d. work and leisure.
In the circular-flow diagram, one loop represents the flow of goods, services, and
factors of production, and the other loop represents the corresponding flow of dollars.
a. True
b. False
Economists normally
a. do not try to explain people’s tastes, but they do try to explain what happens when
tastes change.
b. believe that they must be able to explain people’s tastes in order to explain what
happens when tastes change.
c. do not believe that people’s tastes determine demand, so they ignore the subject of
tastes.
d. incorporate tastes into economic models only to the extent that tastes determine
whether pairs of goods are substitutes or complements.
The Economy in 2008
In the first half of June 2008 the effects of a housing and financial crisis and an increase
in world prices of oil and foodstuffs were affecting the economy.
RefertoTheEconomyin2008.The effects of increased prices of world commodities is
shown by shifting
a. aggregate demand to the right.
b. aggregate demand to the left.
c. aggregate supply to the right.
d. aggregate supply to the left.
Figure 2-18
RelationshipbetweenPriceandRestaurantMeals
RefertoFigure2-18.The slope of the line containing points A and B is
a. -1/2.
b. -2.
c. 1/2.
d. 2.
If Miguel expects to earn a higher income next month, he may choose to
a. save more now and spend less of his current income on goods and services.
b. save less now and spend more of his current income on goods and services.
c. decrease his current demand for goods and services.
d. move along his current demand curves for goods and services.
Milton Friedman argued that the Fed’s control over the money supply could be used to
peg
a. the level or growth rate of a nominal variable, but not the level or growth rate of a
real variable.
b. the level of a nominal or real variable, but not the growth rate of a real or nominal
variable.
c. the level or growth rate of a real variable, but not the level or growth rate of a
nominal variable.
d. both levels and growth rates of both real and nominal variables.
The multiplier for changes in government spending is calculated as
a. 1/(1+MPC).
b. (1 – MPC)/MPC.
c. 1/MPC.
d. 1/(1 – MPC).
Disposable personal income is the income that households and noncorporate businesses
have left after satisfying all their obligations to the government.
a. True
b. False
Which of the following shifts short-run aggregate supply right?
a. an increase in the minimum wage
b. an increase in immigration from abroad
c. an increase in the price of oil
d. an increase in the actual price level
The set of items that serve as media of exchange clearly includes
a. demand deposits.
b. short-term bonds.
c. credit cards.
d. All of the above are correct.
The consumer price index was 200 in 2012 and 208 in 2013. The nominal interest rate
during this period was 9 percent. What was the real interest rate during this period?
a. 5.00 percent
b. 1.00 percent
c. 5.15 percent
d. 13.00 percent
If the demand for loanable funds shifts right, then
a. the real interest rate and the equilibrium quantity of loanable funds both fall.
b. the real interest rate falls and the equilibrium quantity of loanable funds rises.
c. the real interest rate and the equilibrium quantity of loanable funds both rise.
d. the real interest rate rises and the equilibrium quantify of loanable funds falls.
The short-run Phillips curve intersects the long-run Phillips curve where
a. the actual rate of inflation equals the expected rate of inflation.
b. the actual rate of unemployment equals the natural rate of unemployment.
c. Both A and B are correct.
d. None of the above is correct.
Net capital outflow
a. is always greater than net exports.
b. is always less than net exports.
c. is always equal to net exports.
d. could be any of the above.
Economists use the term inflation to describe a situation in which the economy’s overall
price level is rising.
a. True
b. False
Table 4-13
The demand schedule below pertains to sandwiches demanded per week.
RefertoTable4-13.Suppose x = 1. Then it must be true that
a. Harry and Jake have the same income, which is lower than Darby’s income.
b. if sandwiches and potato chips are complements for Harry, then those two goods are
also complements for Jake.
c. Harry’s demand curve is identical to Jake’s demand curve.
d. All of the above are correct.
Which type(s) of economies interact with other economies?
a. only closed economies
b. only open economies
c. closed economies and open economies
d. neither closed nor open economies
Table 3-8
Assume that England and Spain can switch between producing cheese and producing
bread at a constant rate.
Refer to Table3-8. Which of the following combinations of cheese and bread could
Spain produce in 24 hours?
a. 4 units of cheese and 3 units of bread.
b. 6 units of cheese and 1 units of bread.
c. 7 units of cheese and 1.5 units of bread.
d. 3 units of cheese and 3 units of bread.
To display information on two variables, an economist must use
a. a bar graph.
b. a pie chart.
c. the coordinate system.
d. a time-series graph.
If over the next six months inflation is higher in the U.S. than in foreign countries, then
according to purchasing- power parity
a. only the nominal exchange rate depreciates.
b. both the real and nominal exchange rate appreciate.
c. both the real and nominal exchange rate depreciate.
d. only the real exchange rate appreciates.
Just after World War II, the labor-force participation rate of men was
a. about 33 percent, and in 2012, it was about 50 percent.
b. about 50 percent, and in 2012, it was about 60 percent.
c. about 60 percent, and in 2012, it was about 60 percent.
d. about 90 percent, and in 2012, it was about 70 percent.
The demand curve for a good is a line that relates
a. price and quantity demanded.
b. income and quantity demanded.
c. quantity demanded and quantity supplied.
d. price and income.
Table 3-4
Assume that Andrea and Paul can switch between producing wheat and producing beef
at a constant rate.
RefertoTable3-4.Which of the following combinations of wheat and beef could Paul
notproduce in one 8-hour day?
a. 13 bushels of wheat and 60 pounds of beef
b. 20 bushels of wheat and 30 pounds of beef
c. 20 bushels of wheat and 20 pounds of beef
d. 25 bushels of wheat and 15 pounds of beef
Table 3-23
Assume that the farmer and the rancher can switch between producing pork and
producing tomatoes at a constant rate.
RefertoTable3-23. The opportunity cost of 1 pound of tomatoes for the rancher is
a. 1 pound of pork.
b. 1 hour of labor.
c. 1.5 pounds of pork.
d. 1.5 hours of labor.
The most common method employed by the Fed to increase the money supply is the
a. sale of U.S. government bonds.
b. purchase of U.S. government bonds.
c. sale of gold.
d. increase of the federal debt ceiling.
Figure30-1
RefetoFigure30-1. When the money supply curve shifts from MS1to MS2,
a. the demand for goods and services decreases.
b. the economy’s ability to produce goods and services increases.
c. the equilibrium price level decreases.
d. None of the above is correct.
Advocates of stabilization policy argue that when there is a recession, the government
should increase the money supply and increase government expenditures.
a. True
b. False