When the U.S. government runs a deficit, it usually does the following:
a. It buys government bonds from the public
b. It asks the Treasury Department to print money to pay for the deficit
c. It sells new government bonds to the public
d. It borrows money directly from the Federal Reserve
e. It asks the Federal Reserve to print money to pay for the deficit
The more dangerous of two jobs currently pays $3 more per hour. The jobs are
equivalent in all other respects. If labor is migrating from the higher-risk job to the
lower-risk job, then
Under the total revenue and total cost approach to profit maximization,
Opponents of the Taylor rule argue that it implies more advanced knowledge about the
economy than is potentially feasible.
The focus of the short-run macro model is on the role of
a. spending in explaining economic fluctuations
b. labor in explaining economic fluctuations
c. financial markets in explaining economic fluctuations
d. output in explaining economic fluctuations
e. resources in explaining economic fluctuations.
In the classical model, beginning from an equilibrium in which the government is
running a budget surplus,
a. this will lower the wage rate
b. the demand for loanable funds will be horizontal
c. an increase in government spending will crowd out more than an equal amount of
private spending
d. an increase in government spending will crowd out an equal amount of private
spending
e. an increase in government spending will crowd out less than an equal amount of
private spending
As its capital stock increases, a nation will
a. move rightward along a fixed production function
b. move leftward along a fixed production function
c. find its production function shifting upward
d. find its production function shifting downward
e. experience no change in the marginal product of labor
Consider a market with a price ceiling. If the price ceiling is raised which of the
following would happen?
If the demand for bonds increases, the
a. price and quantity of bonds in existence both increase
b. price of bonds increases, but the quantity of bonds in existence decreases
c. price of bonds increases, but the quantity of bonds in existence remains unchanged
d. interest rate and quantity of bonds in existence both increase
e. interest rate increases, but the quantity of bonds in existence remains unchanged
Economies of scale act as a barrier to entry because
An important difference between a perfectly competitive market and a monopolistically
competitive market is that, in the latter,
Which of the following would shift the demand curve for new college textbooks to the
right?
If you believe that the inflation rate is likely to be high over the next ten years, you
would want to
a. have a pension with raises indexed to the CPI if you were going to be retiring
b. obtain a variable rate mortgage
c. not obtain any fixed rate consumer loans
d. pay off all of your existing fixed rate loans
e. be a shareholder of a bank because their profits are going to increase dramatically
There are approximately ______ banks in the U.S.
a. 8,000.
b. 2,000.
c. 100,000.
d. 25,000.
e. 4,000.
Inflation reduces the average real income in the economy and redistributes purchasing
power.
If the Fed believes the natural rate of unemployment is 5.5 percent and the natural rate
is really 5 percent, what is likely to happen in the short run?
a. The Fed will allow unemployment to be unnecessarily high and output to be
unnecessarily low.
b. The Fed will allow unemployment to be unnecessarily high, but output will remain at
potential.
c. The Fed will allow unemployment to be unnecessarily low and output to be
unnecessarily high.
d. The Fed will allow output to be unnecessarily low, but unemployment will remain at
the natural rate.
e. The Fed will allow unemployment to be unnecessarily low and output to be
unnecessarily low.
When the demand for alternative investments decreases, the market for a particular
bond adjusts by
If the marginal propensity to consume is 0.75, net taxes are fixed at $2,000 and real
income rises by $12,000, by how much will real consumption spending increase?
a. $9,000
b. $8,000
c. $7,500
d. $7,000
e. $10,000
Which of the following is a primary function served by financial markets?
If a commercial bank has liabilities valued at $150 million, a net worth of $50 million
and assets (not including loans) of $180 million, what is the value of the bank’s loans?
a. $180 million
b. $200 million
c. $20 million
d. $280 million
e. $80 million