Which of the following would be the best measure of the cost of living?
A) real GDP
B) real GDP per person
C) GDP deflator
D) consumer price index
Which of the following is an example of foreign portfolio investment?
A) the purchase of a U.S. stock by a U.S. citizen
B) the purchase of a U.S. Treasury bond by a German citizen
C) the purchase of a U.S. mutual fund by a U.S. citizen
D) the purchase of a Japanese factory by a Korean citizen
If the price of pork rinds falls, the substitution effect due to the price change will cause
A) an increase in the demand for pork rinds.
B) an increase in the demand for corn chips, a substitute for pork rinds.
C) an increase in the quantity of pork rinds demanded.
D) a decrease in the quantity of pork rinds demanded.
Suppose the government cuts taxes. We would expect interest rates to ________ and the
dollar to ________ in foreign exchange markets.
A) rise; appreciate
B) rise; depreciate
C) fall; depreciate
D) fall; appreciate
Figure 16-11
Refer to Figure 16-11. In the graph above, the shift from AD1 to AD2 represents the
total change in aggregate demand. If government purchases increased by $50 billion,
then the distance from point A to point B ________ $50 billion.
A) would be equal to
B) would be greater than
C) would be less than
D) may be greater than or less than
China runs a current account surplus with the United States. Which of the following
must be true about China’s balance of payments with the United States?
A) It must run a financial account deficit.
B) Its balance of trade must be in deficit.
C) Its net exports must be negative.
D) Its balance of payments must run a deficit.
The health care system in ________ is referred to as a single-payer health care system,
and is a system in which the government provides national health insurance to all
residents.
A) Canada
B) Japan
C) the United Kingdom
D) the United States
What is the present value of $888 in a one year if the current rate of interest is five
percent?
A) $4,440
B) $845.71
C) $177.60
D) none of these
Rising prices erode the value of money as a ________ and as a ________.
A) unit of barter; unit of account
B) store of value; unit of liquidity
C) medium of exchange; store of value
D) store of value; unit of barter
Table 2-5
Table 2-5 shows the number of labor hours required to produce a cell phone and a board
foot of lumber in Estonia and Finland.
Refer to Table 2-5. Finland has a comparative advantage in the production of
A) both products.
B) lumber.
C) cell phones.
D) neither product.
A sharp increase in the divorce rate increases the number of lawyers hired to determine
divorce settlements. This will
A) increase GDP and increase well being in the economy.
B) increase GDP and decrease well being in the economy.
C) decrease GDP and increase well being in the economy.
D) decrease GDP and decrease well being in the economy.
Expansionary fiscal policy
A) can be effective in the short run.
B) causes complete crowding out in the short run.
C) is never effective because of crowding out.
D) can be effective in the long run.