Unemployment rates are usually higher in Europe than in the United States because:
A) the minimum wage is higher in the United States than in Europe.
B) U.S. economic policy is much more effective than European economic policy.
C) there are more unskilled, uneducated workers in Europe than in the United States.
D) unemployment benefits are more generous in Europe than in the United States.
How people choose among the alternatives available to them is:
A) not part of the study of economics.
B) impossible to describe.
C) the study of microeconomics.
D) not important in the study of microeconomics.
Look at the table Production Possibilities for Machinery and Petroleum. The
opportunity cost in Mexico of producing 10 units of machinery is _____ units of
petroleum.
A) 30
B) 90
C) 180
D) 270
A negative demand shock, holding everything else constant:
A) shifts AD to the left and results in lower aggregate price levels and lower real GDP
in the short run.
B) shifts AS to the left and results in lower aggregate price levels and lower real GDP in
the short run.
C) moves the economy downward along the AD curve.
D) moves the economy upward along the AD curve.
M2 is made up of:
A) M1 plus near-moneys.
B) M1 plus stocks and bonds.
C) only near-moneys.
D) any assets that are not very liquid.
Purchases of _____ are included in GDP.
A) used goods
B) newly issued stocks
C) new foreign-produced investment goods
D) new capital goods
Assume that marginal propensity to consume is 0.8 and potential output is $800 billion.
If the actual real GDP is $700 billion, _____ government spending by _____ would
bring the economy to potential output.
A) increasing; $25 billion
B) increasing; $100 billion
C) increasing; $20 billion
D) decreasing; $100 billion
Look at the table Production Possibilities. The opportunity cost of 1 computer for _____
is _____ box(es) of roses.
A) the United States; 2
B) Colombia; 2
C) Colombia; 0.5
D) the United States; 1
All other things being equal, if the economy of Europe expands rapidly and this
increases tourism dramatically in the United States:
A) the euro will appreciate.
B) the U.S. dollar will appreciate.
C) the demand for the dollar will fall.
D) the supply of the euro will fall.
In the United States during the time between the Civil War and the Great Depression:
A) banks were completely unregulated.
B) bank runs rarely occurred.
C) there was no insurance on bank deposits.
D) there were very few national banks.
When the United States and Mexico trade:
A) the United States will be worse off because wages in Mexico are so low.
B) Mexico will be worse off because the United States is a stronger economic power.
C) both Mexico and the United States will be better off.
D) both Mexico and the United States will be worse off.
The ratio of debt to GDP is a way to assess the ability of a government to pay its debts
because it is an indicator of the taxes that the government can collect to pay the debt.
A) True
B) False
A country’s balance of payments on financial account is the:
A) difference between the dollar value of a country’s exports and its imports of goods
and services.
B) difference between the dollar value of a country’s exports and its imports of goods
only.
C) difference between the country’s sale of assets to foreigners and its purchases of
assets from foreigners.
D) same value as the country’s merchandise trade balance.
The aggregate price level is the:
A) average price of shares on the stock market.
B) average price of commodities.
C) overall level of prices.
D) same as the average price of gasoline.
Microeconomics deals with:
A) the working of the entire economy or large sectors of it.
B) economic growth.
C) individual decision makers in the economy.
D) gross domestic product.
Suppose a bank gets a new deposit of $100 cash and it has a 20% required reserve ratio.
If the bank lends the maximum amount of money allowed, then the checkable deposits
(including the original deposit) increase by:
A) $20.
B) $100.
C) $500.
D) $1,000.
Scenario: Technological Progress and Productivity Growth in Techland
In Techland, from 1980 to 2010, holding technology and human capital fixed,
increasing physical capital per worker from $25,000 to $100,000 would have led to a
doubling of real GDP per worker, from $40,000 to $80,000. However, not only did
physical capital per worker increase from $25,000 to $100,000, but technological
progress shifted the productivity curve upward so that real GDP per worker actually
increased from $40,000 to $320,000.
Look at the scenario Technological Progress and Productivity Growth in Techland.
What was the growth rate of real GDP per capita in Techland?
A) 2.0%
B) 4.5%
C) 7%
D) 17.5%
The two parts of the U.S. Federal Reserve are the Board of Governors and 50 regional
banks.
A) True
B) False
Government spending is like investment in each of the following cases EXCEPT when:
A) it goes to help pay for education.
B) it helps provide infrastructure for the economy.
C) it is used for public health measures.
D) it is used for a personal income tax rebate.
The panic of 1893 began when:
A) the Treaty of Paris was signed, ending the American Revolution.
B) the Titanic sank.
C) real estate developers built too many office buildings.
D) the Philadelphia and Reading Railroad failed.
While the United States generally follows a policy of free trade, this is true particularly
for agriculture and textiles, in which all restrictions on international trade have been
removed.
A) True
B) False
If the Federal Reserve uses expansionary monetary policy there is a _____ short-run
effect on _____, but_____.
A) negative short-run; real GDP; prices remain unchanged in the long run.
B) positive short-run; real GDP; GDP remains equal to potential GDP in the long run.
C) t positive long-run; real GDP; GDP remains unchanged at its potential level in the
short run.
D) positive short-run; the price level; the aggregate price level remains unchanged in
the long run.
In the 1970s most European countries were unhappy with floating exchange rates
because they made each country’s domestic monetary policy ineffective.
A) True
B) False
Stagflation is the combination of inflation and rising aggregate output.
A) True
B) False
The budget balance equals:
A) taxes minus government spending.
B) transfers minus government spending.
C) taxes plus government spending.
D) savings plus taxes.
If an economy has to sacrifice increasing amounts of good X for each additional unit of
good Y produced, then its production possibility frontier is:
A) bowed out.
B) bowed in.
C) a straight line.
D) a vertical line.
In a single year, Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips.
In the same growing season, Venezuela can raise 50 tons of beef or produce 750 boxes
of tulips. When the two countries begin trading beef for tulips, we expect the consumer
surplus from beef consumption to:
A) fall in Argentina.
B) rise in Argentina.
C) stay the same in Argentina.
D) either rise or fall in Argentina.
Table: Per Capita GDP
Look at the table Per Capita GDP. Per capita nominal GDP in 2011 was:
A) $600.
B) $400.
C) $300.
D) $30.
During the Great Depression, the United States underwent a movement _____ along the
short-run aggregate supply curve; during the 1979 oil crisis, the United States
underwent a _____ shift in the short-run aggregate supply curve.
A) down; leftward
B) up; leftward
C) up; rightward
D) down; rightward
Depository banks borrow from depositors primarily on a _____ basis and lend to others
on a _____ basis.
A) short-term; long-term
B) long-term; long-term
C) short-term; short-term
D) long-term; short-term
When you or your parents pay the tuition at college, money is being used mainly as a:
A) unit of account.
B) store of value.
C) medium of exchange.
D) unit of account, a store of value, and a medium of exchange.
Look at the scenario Monetary Base and Money Supply. How much are excess
reserves?
A) $50 billion
B) $100 billion
C) $150 billion
D) $250 billion
An increase in consumer spending on durable goods was the main factor that ended the
recession in 2001.
A) True
B) False