Suppose Turkey increases its saving rate. In the long run
a. the growth rates of productivity and real GDP per person increase.
b. productivity and real GDP per person increase.
c. the growth rate of productivity increases, and real GDP per person increases.
d. productivity increases, and the growth rate of real GDP per person increases.
Table 2-2
The following table contains some production possibilities for an economy for a given
year:
Refer to Table2-2. If the production possibilities frontier is bowed outward, then “?”
could be
a. 6000.
b. 5500.
c. 5000.
d. 4500.
Unemployment compensation is
a. part of GDP because it represents income.
b. part of GDP because the recipients must have worked in the past to qualify.
c. not part of GDP because it is a transfer payment.
d. not part of GDP because the payments reduce business profits.
When production costs rise,
a. the short-run aggregate supply curve shifts to the right.
b. the short-run aggregate supply curve shifts to the left.
c. the aggregate demand curve shifts to the right.
d. the aggregate demand curve shifts to the left.
Table 4-7
RefertoTable4-7.If these are the only four sellers in the market for ice cream, then
when the price decreases from $10 to $8, the market quantity supplied decreases by
a. 2.5 gallons.
b. 4 gallons.
c. 10 gallons.
d. 50 gallons.
Goods that cost 1/5 of one dollar in the U.S. cost one kroner in Denmark, the real
exchange rate would be computed as how many Danish goods per U.S. goods?
a. five
b. the amount of kroner that can be bought with twenty U.S. cents
c. the amount of kroner that can be bought with 5 dollars
d. None of the above is correct.
Dilbert’s Incorporated produced 6,000,000 units of software in 2010. At the start of
2011 the pointyhaired boss raised employment from 10,000 total annual hours to 14,000
annual hours and production was 7,000,000 units. These number indicate that
productivity
a. fell by about 16.7%.
b. stayed the same.
c. rose by about 16.7%.
d. rose by about 40%.
In 2001, Congress and President Bush instituted tax cuts. According to the short-run
Phillips curve, in the short run this change should have
a. reduced inflation and unemployment.
b. raised inflation and unemployment.
c. reduce inflation and raised unemployment.
d. raised inflation and reduced unemployment.
If one producer has the absolute advantage in the production of all goods, then that
same producer will have the comparative advantage in the production of all goods as
well.
a. True
b. False
In the GDP accounts production equals
a. income.
b. income + saving.
c. income – government expenditures.
d. income – imports.
Different values are not a reason for disagreement among economists.
a. True
b. False
In the circular-flow diagram, the two types of markets in which households and firms
interact are the markets for goods and services and the markets for factors of
production.
a. True
b. False
Figure 3-20
RefertoFigure3-20.Canada’s opportunity cost of one unit of Good Y is
a. 1/2 unit of Good X and Mexico’s opportunity cost of one unit of Good Y is 1/2 unit of
Good X.
b. 1/2 unit of Good X and Mexico’s opportunity cost of one unit of Good Y is 2 units of
Good X.
c. 2 units of Good X and Mexico’s opportunity cost of one unit of Good Y is 1/2 unit of
Good X.
d. 2 units of Good X and Mexico’s opportunity cost of one unit of Good Y is 2 units of
Good X.
Lucy quit her job because she was unhappy at work. Genevieve was fired because she
frequently surfed the Internet rather than working on her assigned tasks. Who is eligible
for unemployment insurance benefits?
a. both Lucy and Genevieve
b. Lucy but not Genevieve
c. Genevieve but not Lucy
d. neither Lucy nor Genevieve
Figure 4-26
RefertoFigure4-26.Which of the following movements would illustrate the effect in the
market for wedding cakes resulting from a decrease in the number of pastry chefs?
a. Point A to Point B
b. Point C to Point B
c. Point C to Point D
d. Point A to Point D
Which of the following statements is correct?
a. Few economic models incorporate assumptions.
b. Different economic models employ different sets of assumptions.
c. Good economic models attempt to mimic reality as closely as possible.
d. Economic models, to be accepted, must be tested by conducting experiments.
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.Juanita’s opportunity cost of testing one cellular phone is
programming
a. 0.133 cellular phones and Shantala’s opportunity cost of testing one cellular phone is
programming 2.5 cellular phones.
b. 0.133 cellular phones and Shantala’s opportunity cost of testing one cellular phone is
programming 0.4 cellular phones.
c. 7.5 cellular phones and Shantala’s opportunity cost of testing one cellular phone is
programming 2.5 cellular phones.
d. 7.5 cellular phones and Shantala’s opportunity cost of testing one cellular phone is
programming 0.4 cellular phones.
Most recessions and depressions
a. are accurately forecasted.
b. usually occur with ample advance warning.
c. cause falling unemployment.
d. occur with little advance warning.
Credit card limits are included in
a. M1 but not M2.
b. M2 but not M1.
c. M1 and M2.
d. neither M1 nor M2.
For an imaginary economy, the value of the consumer price index was 138.75 in 2016,
and the inflation rate was 10 percent between 2015 and 2016. The consumer price index
in 2015 was
a. 126.1.
b. 128.8.
c. 148.8.
d. 152.6.
In the early 1980’s the Fed tightened monetary policy. Over the next few years
a. inflation remained high and unemployment rose.
b. inflation fell but unemployment rose temporarily.
c. inflation and unemployment fell.
d. inflation and unemployment rose.
One of the widely acknowledged problems with using the consumer price index as a
measure of the cost of living is that the CPI
a. fails to measure all changes in the quality of goods.
b. displays a housing bias.
c. accounts for changes in prices of some goods, but prices of certain goods are
assumed to remain constant.
d. All of the above are correct.
On the basis of the information presented in the table below, which presents the correct
ordering of real GDP per person from highest to lowest?
a. Atlantis, Merpois, Bensalem
b. Bensalem, Atlantis, Merpois
c. Atlantis, Bensalem, Merpois
d. Bensalem, Merpois, Atlantis
If the Fed decreases reserve requirements, the money supply will increase.
a. True
b. False
The fact that we observe a trade-off between risk and return is puzzling to economists,
because that observation conflicts with the notion that most people are risk averse.
a. True
b. False
Discouraged workers are included in
a. the number of unemployed.
b. frictional unemployment.
c. the labor force.
d. None of the above is correct.
Long-term bonds are
a. riskier than short-term bonds, and so interest rates on long-term bonds are usually
lower than interest rates on short-term bonds.
b. riskier than short-term bonds, and so interest rates on long-term bonds are usually
higher than interest rates on short-term bonds.
c. less risky than short-term bonds, and so interest rates on long-term bonds are usually
lower than interest rates on short-term bonds.
d. less risky than short-term bonds, and so interest rates on long-term bonds are usually
higher than interest rates on short-term bonds.
Figure 4-22
RefertoFigure4-22.At a price of $8, there is a
a. surplus of 4 units.
b. surplus of 8 units.
c. shortage of 4 units.
d. shortage of 8 units.
If Iowa’s opportunity cost of corn is lower than Oklahoma’s opportunity cost of corn,
then
a. Iowa has a comparative advantage in the production of corn.
b. Iowa has an absolute advantage in the production of corn.
c. Iowa should import corn from Oklahoma.
d. Oklahoma should produce just enough corn to satisfy its own residents’ demands.
In 2012, the U.S. natural rate of unemployment was estimated to be about 5.5 percent,
which at the time was below the actual rate of unemployment of about 8.1 percent.
a. True
b. False
The value of money falls as the price level
a. rises, because the number of dollars needed to buy a representative basket of goods
rises.
b. rises, because the number of dollars needed to buy a representative basket of goods
falls.
c. falls, because the number of dollars needed to buy a representative basket of goods
rises.
d. falls, because the number of dollars needed to buy a representative basket of goods
falls.
Susan put $375 into an account and one year later had $405. What interest rate was paid
on Susan’s deposit?
a. 5 percent
b. 7 percent
c. 8 percent
d. 10 percent
In 2011, the average American earned about $48,000 while the average Nigerian earned
about $1,200. Which of the following statements is likely?
a. The average American purchases more televisions than the average Nigerian.
b. The average American has better nutrition and healthcare than the average Nigerian.
c. The average American has a longer life expectancy than the average Nigerian.
d. All of the above are correct.
If the exchange rate rises from .65 British pounds per dollar to .70 pounds per dollar,
then compared to British goods, U.S. goods become
a. relatively more expensive for both British and U.S. residents.
b. relatively more expensive for British residents and relatively less expensive for U.S.
residents.
c. relatively less expensive for British residents and relatively more expensive for U.S.
residents.
d. relatively less expensive for both British and U.S. residents.