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Which of the following exchange rates between the dollar and the peso would a
Mexican buyer of American goods most prefer?
a. $0.10 = 1 peso
b. $0.08 = 1 peso
c. $0.06 = 1 peso
d. $0.04 = 1 peso
Exhibit 7-3
Net exports is equal to
a. $200.
b. -$200.
c. $600.
d. -$1,400.
e. $1,400
Which of the following is an example of a service?
a. medical care
b. dental care
c. a psychology lecture
d. a television set
e. a, b and c
Exhibit 14-1
A continued increase in the price of oil, combined with Fed attempts to respond to these
oil shocks by increasing aggregate demand, is likely to take the economy along which
of the following paths?
a. A-E-B-H-C
b. A-E-G-I-C
c. A-D-B-E-A
d. A-D-B-H-C
e. A-E-B-I-C
Which of the following is descriptive of the law of diminishing marginal utility?
a. The third hamburger consumed provides less utility than the second hamburger
consumed.
b. The third hamburger is priced higher than the first hamburger.
c. As price falls, quantity demanded rises, ceteris paribus.
d. The price of a good rises as the costs of producing that good rise.
e. none of the above
The economy is initially in long-run equilibrium. The AD curve shifts to the right and
the price level rises. Assuming that the economy is self-regulating, the SRAS curve will
shift to the left and the price level will rise even further. If the price level now remains
constant, what have we witnessed?
a. one-shot demand-induced inflation
b. continued demand-induced inflation
c. one-shot supply-induced inflation
d. one-shot inflation that was partly demand-induced and partly supply-induced
e. continued supply-side inflation
Rising demand for an agricultural good __________ the payments government is
committed to pay farmers under a __________ program.
a. raises; production flexibility contract
b. raises; deficiency payment
c. lowers; production flexibility contract
d. lowers; deficiency payment
The income effect is the
a. increase in the interest rate caused by an increase in Real GDP.
b. increase in the interest rate due to a higher expected inflation rate.
c. decrease in the interest rate due to an increase in the supply of loanable funds.
d. change in national income brought about by a change in interest rates.
e. rate of change in national income brought about by a change in the supply of money.
Which of the following statements is false?
a. The Fed has the legal authority to create money out of thin air.
b. There is a direct relationship between the money supply and the required reserve
ratio.
c. The Fed can cause money to disappear into thin air.
d. The federal funds market is a market in which banks can borrow money from other
banks.
The consumption function is a function showing the relationship between consumption
and
a. disposable income.
b. exports.
c. interest rates.
d. investment.
If the maximum price a person is willing and able to pay for a good is $50, and
consumers€ surplus is $20, then it follows that the price the buyer paid for the good is
a. $20
b. $70
c. $50
d. $30
e. There is not enough information to answer the question.
Personal income is
a. equal to GDP.
b. that portion of national income that can be used for consumption and saving.
c. the sum of all payments to suppliers of the factors of production.
d. the amount of income that individuals actually receive.
e. another term for disposable income.
Business taxes fall. This raises __________, which raises __________ and the
__________ curve shifts rightward.
a. consumption; aggregate demand (AD); AD
b. investment; government purchases; AD
c. investment; aggregate demand (AD); AD
d. net exports; aggregate demand (AD); AD
e. none of the above
To try to eliminate a recessionary gap the Fedtypically__________ the money supply,
and to try to eliminate an inflationary gap the Fed typically __________ the money
supply.
a. increases; decreases
b. increases; increases
c. decreases; increases
d. decreases; decreases
The simple quantity theory of money predicts that an increase in M of 5 percent will
lead to
a. an increase in P of 5 percent.
b. an increase in P of less than 5 percent.
c. an increase in P of more than 5 percent.
d. a decrease in P of 5 percent.
e. a decrease in P of more than 5 percent.
The lower the price of medical care in general, the higher the
____________________________ medical care and the ______________________
specific items that make up medical care (such as x-rays).The result will be a
_______________ price for the specific items that make up medical care.
a. quantity demanded of; higher the demand for; higher
b. demand for; higher the demand for; higher
c. quantity demanded of; lower the demand for; lower
d. demand for; higher the quantity demanded of; higher
Exhibit 34-5
The opportunity cost of one unit of good A is __________ for country 1 and
__________ for country 2.
a. 20B; 15B
b. 10B; 15B
c. 2B; 1B
d. 1/2B; 2B
e. 1/10B; 1B
"Logrolling" is
a. the exchange of votes to gain support for legislation.
b. pressure that special interest groups place on politicians.
c. when politicians refuse to go into detail and speak only in generalities.
d. the process by which government agencies make sure they spend their allotted annual
budget.
