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If the economy is on the production possibilities frontier (PPF), the economy is
a. productive inefficient.
b. operating with no unemployed resources.
c. productive efficient.
d. b and c
e. none of the above
According to J-curve theory, imports initially increase after a country€s currency
depreciates, but in the long run imports decrease.
a. True
b. False
If the absolute price of a computer is $500 and the relative price of a dining room table
is 3 computers, it follows that the absolute price of a dining room table is
a. $167.
b. $750.
c. $3,000.
d. $30,000.
e. none of the above
As the price level falls,
a. the purchasing power of cash holdings rises.
b. the purchasing power of cash holdings falls.
c. the purchasing power of cash holdings remains constant.
d. cash holdings turn into dollar-denominated assets.
e. none of the above
A bear market is one in which prices are expected to rise.
a. True
b. False
If people buy more than has been produced,
a. the economy is in equilibrium.
b. total expenditures are greater than total production.
c. there will be an increase in inventory.
d. there will be a decrease in total output.
Exhibit 16-1
Suppose the economy is currently at point A on the short-run Phillips curve, SRPC1.
What could get the economy to move to point B?
a. an increase in aggregate demand combined with an unchanged expected inflation rate
b. an increase in aggregate demand combined with a rise in the expected inflation rate
c. a rise in the expected inflation rate
d. a decrease in aggregate demand combined with an unchanged expected inflation rate
e. none of the above
As the dollar price of a foreign currency (for example, dollars per yen) increases,
__________ dollars will be demanded by foreigners, U.S. goods will be __________
expensive for foreigners, __________ U.S. goods will be purchased by foreigners, and
__________ foreign currency will be supplied to the foreign exchange market.
a. more; less; more; more
b. more; less; more; less
c. fewer; more; fewer; less
d. fewer; more; fewer; more
Exhibit 39-2
If P1 is a price support, the cost of the price support program to the government is
a. P1 x Q2.
b. P1 x (Q2 - Q0).
c. P1 x (Q0 - Q1).
d. P1 x (Q2 - Q1).
e. none of the above
The potential buyer of a house has less information about the house than the seller of
the house. This is a case of
a. externality information.
b. free ridership.
c. asymmetric information.
d. biased information.
e. a public good not being a private good.
Which of the following statements is false?
a. Monetarists believe that the velocity of money is highly stable.
b. Monetarists believe that the velocity of money is predictable.
c. Monetarists believe that the economy will settle into long-run equilibrium at less than
full employment output.
d. Monetarists believe that output can be at less than full employment output in the
short run.
Property rights are a tangible factor in producing economic growth.
a. True
b. False
At a price above the equilibrium price, there is
a. a shortage.
b. a surplus.
c. excess demand.
d. super-equilibrium.
e. none of the above
Evidence indicates that tariffs and quotas are
a. beneficial for producers in a protected industry, but not beneficial for the workers in
the industry.
b. beneficial for producers in a protected industry, but not beneficial for consumers.
c. beneficial for workers in a protected industry, but not beneficial for consumers.
d. not beneficial for the workers in a protected industry or for consumers.
e. b and c
The U.S. dollar has depreciated relative to the Japanese yen if it takes
a. fewer yen to buy a dollar.
b. more yen to buy a dollar.
c. more dollars to buy a yen.
d. fewer dollars to buy a yen.
e. a and c
If the economy is self-regulating and current Real GDP is less than Natural Real GDP,
the economy is operating __________ the natural unemployment rate and wages will
__________.
a. below; soon rise
b. above; soon rise
c. below; soon fall
d. above; remain unchanged
e. none of the above
