An adverse supply shock causes inflation to
a. rise and the short-run Phillips curve to shift right.
b. rise and the short-run Phillips curve to shift left.
c. fall and the short-run Phillips curve to shift right.
d. fall and the short-run Phillips curve to shift left.
The self-interest of the participants in an economy is guided into promoting general
economic self-interest by
a. the invisible hand.
b. market power.
c. government intervention.
d. oikonomos.
Within the U.S. population, blacks of prime working age (ages 25-54) have similar rates
of unemployment than whites of prime working age (ages 25-54), regardless of gender.
a. True
b. False
Figure 35-6
Use the graph below to answer the following questions.
RefertoFigure35-6. If the economy starts at C and the money supply growth rate
increases, in the long run the economy
a. stays at C.
b. moves to B.
c. moves to F.
d. None of the above is consistent wit an increase in the money supply growth rate.
The production possibilities frontier provides an illustration of the principle that
a. trade can make everyone better off.
b. governments can sometimes improve market outcomes.
c. people face trade-offs.
d. people respond to incentives.
Darla puts her money into a bank account that earns interest. One year later she sees
that the account has 6 percent more dollars and that her money will buy 7.5 percent
more goods.
a. The nominal interest rate was 13.5 percent and the inflation rate was 7.5 percent.
b. The nominal interest rate was 13.5 percent and the inflation rate was 1.5 percent.
c. The nominal interest rate was 6 percent and the inflation rate was -1.5 percent.
d. The nominal interest rate was 6 percent and the inflation rate was 7.5 percent.
Most economists believe the principle of monetary neutrality is
a. relevant to both the short and long run.
b. irrelevant to both the short and long run.
c. mostly relevant to the short run.
d. mostly relevant to the long run.
Table 3-20
Assume that Brad and Theresa can switch between producing wheat and producing beef
at a constant rate.
RefertoTable3-20.What is Theresa’s opportunity cost of producing one pound of beef?
a. 5/6 bushel of wheat
b. 6/5 bushel of wheat
c. 3/5 bushel of wheat
d. 5/3 bushels of wheat
Which list ranks assets from most to least liquid?
a. currency, demand deposits, money market mutual funds
b. currency, money market mutual funds, demand deposits
c. money market mutual funds, demand deposits, currency
d. demand deposits, money market mutual funds, currency
The failure of communism in a large number of countries is at least partly explained by
a. the fact that those countries relied absolutely on the invisible hand.
b. the fact that those countries did little or nothing to restrict trade with other countries.
c. the lack of information, on the part of central planners in those countries, about tastes
and preferences in their economies.
d. the lack of information, on the part of central planners in those countries, about how
much authority the government had in affecting economic outcomes.
Which of these countries’ growth rates of real GDP per person have exceeded the
United States’ growth rate of real GDP per person over the last century?
a. Canada and China
b. China and India
c. Germany and India
d. Germany and Pakistan
When Ghana sells chocolate to the United States, U.S. net exports
a. increase, and U.S. net capital outflow increases.
b. increase, and U.S. net capital outflow decreases.
c. decrease, and U.S. net capital outflow increases.
d. decrease, and U.S. net capital outflow decreases.
Other things the same, an economy’s factors of production are likely to be used more
effectively if there is an economywide respect for property rights.
a. True
b. False
Over the long run the Volcker disinflation
a. shifted the short-run and long-run Phillips curves left.
b. shifted the short-run, but not the long-run Phillips curve left.
c. shifted the long-run, but not the short-run Phillips curve left.
d. None of the above is correct.
If consumers often purchase muffins to eat while they drink their latts at local coffee
shops, what would happen to the equilibrium price and quantity of latts if the price of
muffins falls?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
People who are unemployed because they are in search of a job that suits their skills are
included within
a. structural unemployment.
b. frictional unemployment.
c. cyclical unemployment.
d. marginal unemployment.
Table 4-6
RefertoTable4-6.If these are the only four sellers in the market, then when the price
increases from $6 to $8, the market quantity supplied
a. increases by 0.5 units.
b. increases by 2 units.
c. decreases by 4 units.
d. increases by 42 units.
One year a country has negative net exports. The next year it still has negative net
exports and imports have risen more than exports.
a. its trade surplus fell.
b. its trade surplus rose.
c. its trade deficit fell.
d. its trade deficit rose
An increase in quantity demanded
a. results in a movement downward and to the right along a demand curve.
b. results in a movement upward and to the left along a demand curve.
c. shifts the demand curve to the left.
d. shifts the demand curve to the right.
Which of the following both increase the money supply?
a. an increase in the discount rate and an increase in the interest rate on reserves
b. an increase in the discount rate and a decrease in the interest rate on reserves
c. a decrease in the discount rate and an increase in the interest rate on reserves
d. a decrease in the discount rate and a decrease in the interest rate on reserves
In national income accounting, we use which of the following pairs of terms
interchangeably?
a. “investment” and “private saving”
b. “investment” and “purchases of stocks and bonds”
c. ‘saving” and “national saving”
d. “public saving” and “government tax revenue minus government spending”
When a minimum-wage law forces the wage to remain above the level that balances
supply and demand, the result is a surplus of labor.
a. True
b. False
The bond market
a. is a financial market, whereas the stock market is a financial intermediary.
b. is a financial intermediary, whereas the stock market is a financial market.
c. is a financial market, as is the stock market.
d. is a financial intermediary, as is the stock market.
Which of the following is notcorrect?
a. The consumer price index gives economists a way of turning dollar figures into
meaningful measures of purchasing power.
b. The consumer price index is used to monitor changes in the cost of living over time.
c. The consumer price index is used by economists to measure the inflation rate.
d. The consumer price index is used to measure the quantity of goods and services that
the economy is producing.
Velocity is
a. Y/(MxP) and increases if dollars are exchanged less frequently.
b. Y/(MxP) and increases if dollars are exchanged more frequently.
c. (PxY)/Mand increases if dollars are exchanged less frequently.
d. (PxY)/Mand increases if dollars are exchanged more frequently.
A pair of jeans cost $25 in the U.S. and 1600 dinar in Algeria. If the nominal exchange
rate is 75 dinar per U.S. dollar, then the real exchange rate is
a. more than one, so a profit could be made by buying jeans in Algeria and selling them
in the U.S.
b. more than one, so a profit could be made by buying jeans in the U.S. and selling
them in Algeria.
c. less than one, so a profit could be made by buying jeans in Algeria and selling them
in the U.S.
d. less than one, so a profit could be made by buying jeans in the U.S. and selling them
in Algeria.
Table29-7.
RefetoTable29-7. If the Bank of Springfield has lent out all the money it can given its
level of deposits, then what is the reserve requirement?
a. 8.1 percent
b. 11.0 percent
c. 12.4 percent
d. 89.0 percent
Educational attainment tends to be
a. low in countries with high population growth.
b. low in countries with low population growth.
c. high in countries with high population growth.
d. None of the above are true.
In 2012, the imaginary nation of Kanmiw had a population of 8,044 and real GDP of
36,198,000. In 2013 it had a population of 7,800 and real GDP of 35,880,000. What
was the growth rate of real GDP per person in Kanmiw between 2012 and 2013?
a. -2.2 percent
b. -0.7 percent
c. 2.2 percent
d. 4.5 percent
Table 28-4
2010 Labor Data for Adults (ages 16 and older) in Meditor
RefetoTable28-4. What is the adult labor force in Meditor?
a. 90 million
b. 150 million
c. 160 million
d. 230 million
A U.S. firm buys bonds issued by a technology center in India. This purchase is an
example of U.S.
a. foreign portfolio investment. By itself it is an increase in U.S. holdings of foreign
bonds and increases U.S. net capital outflow.
b. foreign portfolio investment. By itself it is an increase in U.S. holdings of foreign
bonds and decreases U.S. net capital outflow.
c. foreign direct investment. By itself it is an increase in U.S. holdings of foreign bonds
and increases U.S. net capital outflow.
d. foreign direct investment. By itself it is an increase in U.S. holdings of foreign bonds
and decreases U.S. net capital outflow.
Which of the following is always correct in an open economy?
a. S= I
b. S= NX+ NCO
c. S= NCO
d. S= I+ NCO
For a given level of money and real GDP, an increase in velocity would lead to an
increase in the price level.
a. True
b. False