Which of the following is notan example of physical capital?
a. a new factory building
b. a delivery van
c. the knowledge of workers
d. the office chair in a lawyer’s office
According to liquidity preference theory, the money-supply curve is
a. upward sloping.
b. downward sloping.
c. vertical.
d. horizontal.
Which of the following is correct?
a. In unionized industries, wages are above the level that would prevail in competitive
markets.
b. The introduction of a union in some industry reduces the quantity of labor demanded
in that industry, causes some workers in that industry to be unemployed, and reduces
wages in the rest of the economy.
c. Critics argue that the allocation of labor resulting from unions is both inefficient and
inequitable.
d. All of the above are correct.
Proponents of zero inflation argue that a successful program to reduce inflation
a. eventually reduces inflation expectations.
b. eventually raises real interest rates.
c. permanently decreases output.
d. permanently raises unemployment.
Table 3-33
Chris and Tony’s Production Opportunities
Refer toTable 3-33Chris and Tony both produce tomatoes and pasta sauce. The table
shows their possible production per month if both work the same number of 8 hour
days. Which of the following statements is correct?
a. Tony has a comparative advantage in the production of sauce.
b. Chris has a comparative advantage in the production of tomatoes.
c. Tony has an absolute advantage in the production of tomatoes.
d. Chris has an absolute advantage in the production of tomatoes.
Indonesians, for example, have a lower standard of living than Americans because they
have a lower level of productivity.
a. True
b. False
M1 includes savings deposits.
a. True
b. False
If a country’s saving rate declined, then other things the same, in the long run the
country would have
a. lower productivity, but not lower real GDP per person.
b. lower productivity and lower real GDP per person.
c. lower real GDP per person, but not lower productivity
d. neither lower productivity nor lower real GDP per person.
Table 3-36
RefertoTable3-36.What is Barbuda’s opportunity cost of one umbrella?
a. 3/5 towels
b. 2/3 towels
c. 3/2 towels
d. 5/3 towels
Refer to Figure3-4. If the production possibilities frontier shown for Lisa is for 4
months of work, then how long does it take Lisa to produce one jacket?
a. 1/4 month
b. 1/2 month
c. 2 months
d. 4 months
If a central bank decreases the money supply in response to an adverse supply shock,
then which of the following quantities moves closer to its pre-shock value as a result?
a. both the price level and output
b. the price level but not output
c. output but not the price level
d. neither output nor the price level
Figure 3-15
RefertoFigure3-15. The opportunity cost of 1 poem for Jordan is
a. 1/2 novel.
b. 1/3 novel.
c. 3 novels.
d. 4 novels.
The Federal Reserve
a. is responsible for conducting the nation’s monetary policy, and it plays a role in
regulating banks.
b. is responsible for conducing the nation’s monetary policy, but it plays no role in
regulating banks.
c. is not responsible for conducting the nation’s monetary policy, and it plays a role in
regulating banks.
d. is not responsible for conducing the nation’s monetary policy, and it plays no role in
regulating banks.
Other things the same, a decrease in the real interest rate
a. decreases the quantity of loanable funds demanded.
b. increases the quantity of loanable funds demand
c. shifts the demand for loanable funds to the right.
d. shifts the demand for loanable funds to the left.
A steel company sells some steel to a bicycle company for $150. The bicycle company
uses the steel to produce a bicycle, which it sells for $250. Taken together, these two
transactions contribute
a. $150 to GDP.
b. $250 to GDP.
c. between $250 and $400 to GDP, depending on the profit earned by the bicycle
company when it sold the bicycle.
d. $400 to GDP.
The interest rate falls if
a. the price level falls or the money supply falls.
b. the price level falls or the money supply rises.
c. the price level rises or the money supply falls.
d. the price level rises or the money supply rises.
Table 3-9
Assume that Maya and Miguel can switch between producing mixers and producing
toasters at a constant rate.
Refer to Table3-9. Assume that Maya and Miguel each has 60 hours available. If each
person divides his/her time equally between the production of mixers and toasters, then
total production is
a. 8 mixers and 16 toasters.
b. 3.5 mixers and 6 toasters.
c. 15 mixers and 9 toasters.
d. 20 mixers and 12 toasters.
Table 28-4
2010 Labor Data for Adults (ages 16 and older) in Meditor
RefetoTable28-4. What is the adult male labor-force participation rate in Meditor?
a. 37%
b. 63%
c. 66.7%
d. 96.3%
Banks are able to create money only when
a. interest rates are above 2%.
b. the Fed sells U.S. government bonds.
c. the reserve ratio is 100%.
d. only a fraction of deposits are held in reserve.
Which of the following is correct?
a. The amount of unemployment that a country typically experiences is a determinant of
that country’s standard of living, and some degree of unemployment is inevitable in a
complex economy.
b. The amount of unemployment that a country typically experiences is a determinant of
that country’s standard of living, and a complex economy can achieve zero
unemployment.
c. The amount of unemployment that a country typically experiences is not a
determinant of that country’s standard of living, and a complex economy can achieve
zero unemployment.
d. The amount of unemployment that a country typically experiences is not a
determinant of that country’s standard of living, and some degree of unemployment is
inevitable in a complex economy.
In the open-economy macroeconomic model, the demand for dollars shifts right if at
any given exchange rate
a. foreign residents want to buy more U.S. goods and services.
b. U.S. residents want to buy fewer foreign goods and services.
c. Both A and B are correct.
d. None of the above is correct.
Wages tend to be sticky
a. because of contracts, social norms, and notions of fairness.
b. because of contracts, but not social norms or notions of fairness.
c. because of social norms and notions of fairness, but not contracts.
d. None of the above are correct.
If for some reason Americans desired to decrease their purchases of foreign assets, then
other things the same
a. both the real exchange rate and the quantity of dollars exchanged in the market for
foreign-currency exchange would fall.
b. both the real exchange rate and the quantity of dollars exchanged in the market for
foreign-currency would rise.
c. the real exchange rate would rise and the quantity of dollars exchanged in the market
for foreign-currency would fall.
d. the real exchange rate would fall and the quantity of dollars exchanged in the market
for foreign-currency would rise.
An important difference between the GDP deflator and the consumer price index is that
a. the GDP deflator reflects the prices of goods and services bought by producers,
whereas the consumer price index reflects the prices of goods and services bought by
consumers.
b. the GDP deflator reflects the prices of all final goods and services produced
domestically, whereas the consumer price index reflects the prices of goods and
services bought by consumers.
c. the GDP deflator reflects the prices of all final goods and services produced by a
nation’s citizens, whereas the consumer price index reflects the prices of all final goods
and services bought by consumers.
d. the GDP deflator reflects the prices of all final goods and services bought by
producers and consumers, whereas the consumer price index reflects the prices of all
final goods and services bought by consumers.
In an open economy, gross domestic product equals $1,650 billion, government
expenditure equals $250 billion, and savings equals $550 billion. What is consumption
expenditure?
a. $250 billion
b. $300 billion
c. $550 billion
d. $850 billion
Contractionary monetary policy
a. leads to disinflation and makes the short-run Phillips curve shift right.
b. leads to disinflation and makes the short-run Phillips curve shift left.
c. does not lead to disinflation but makes the short-run Phillips curve shift right.
d. does not lead to disinflation but makes the short-run Phillips curve shift left.
By itself, when a Japanese bank purchases a bond issued by a U.S. corporation, U.S. net
capital outflow rises.
a. True
b. False
If Canada’s national saving exceeds its domestic investment, then Canada has
a. positive net capital outflows and negative net exports.
b. positive net capital outflows and positive net exports.
c. negative net capital outflows and negative net exports.
d. negative net capital outflows and positive net exports.
In which case would people desire to borrow the most?
a. the nominal interest rate is 8% and the inflation rate is 7%
b. the nominal interest rate is 7% and the inflation rate is 5%
c. the nominal interest rate is 6% and the inflation rate is 3%
d. the nominal interest rate is 5% and the inflation rate is 1%
U.S. international trade has
a. decreased because of a decrease in the trade of goods with a high value per pound.
b. decreased because of an increase in the trade of goods with a high value per pound.
c. increased because of a decrease in trade of goods with a high value per pound.
d. increased because of an increase in trade of goods with a high value per pound.
You know an economist has crossed the line from policy adviser to scientist when he or
she
a. claims that the problem at hand is widely misunderstood by non-economists.
b. makes positive statements.
c. talks about values.
d. makes a claim about how the world should be.