Figure 4-12
RefertoFigure4-12.If these are the only two sellers in the market, then the market
quantity supplied at a price of $6 is
a. 2 units.
b. 10 units.
c. 12 units.
d. 22 units.
Short-term bonds are generally
a. less risky than long-term bonds and so they feature higher interest rates.
b. less risky than long-term bonds and so they feature lower interest rates.
c. more risky than long-term bonds and so they feature higher interest rates.
d. more risky than long-term bonds and so they feature lower interest rates.
In the open-economy macroeconomic model, a higher U.S. real exchange rate makes
a. U.S. goods more expensive relative to foreign goods and reduces the quantity of
dollars supplied.
b. U.S. goods more expensive relative to foreign goods and reduces the quantity of
dollars demanded.
c. foreign goods more expensive relative to U.S. goods and reduces the quantity of
dollars supplied.
d. foreign goods more expensive relative to U.S. goods and reduces the quantity of
dollars demanded.
When a country removes trade barriers and imports appliances and exports engineering
services,
a. its growth slows.
b. its productivity decreases.
c. it is essentially transforming engineering services into appliances.
d. its economic well-being decreases while that of the country that sells appliances
increases.
In the long run, the natural rate of unemployment depends primarily on the growth rate
of the money supply.
a. True
b. False
Figure 3-19
RefertoFigure3-19.Chile has an absolute advantage in the production of
a. coffee and Colombia has an absolute advantage in the production of soybeans.
b. soybeans and Colombia has an absolute advantage in the production of coffee.
c. both goods and Colombia has an absolute advantage in the production of neither
good.
d. neither good and Colombia has an absolute advantage in the production of both
goods.
Which of the following is correct?
a. The word economy comes from the Greek word for “rational thinker.”
b. Economists study the management of scarce resources.
c. Because economists believe that people pursue their best interests, they are not
interested in how people interact.
d. All of the above are correct.
“Society would be better off if the welfare system were abolished” is a normative
statement, not a positive statement.
a. True
b. False
In the circular-flow diagram, which of the following items does not flow from
households to firms?
a. revenue
b. land, labor, and capital
c. factors of production
d. profit
Figure 28-3
RefetoFigure28-3.At the equilibrium wage, how many workers are employed?
a. 0
b. 1,000
c. 5,000
d. 9,000
Suppose a country has only a sales tax. Now suppose it replaces the sales tax with an
income tax that includes a tax on interest income. This would make equilibrium
a. interest rates and the equilibrium quantity of loanable funds rise.
b. interest rates rise and the equilibrium quantity of loanable funds fall.
c. interest rates fall and the equilibrium quantity of loanable funds rise.
d. interest rates and the equilibrium quantity of loanable funds fall.
You are staying in London over the summer and you have a number of dollars with you.
If the dollar appreciates relative to the British pound, then other things the same,
a. the dollar would buy more pounds. The appreciation would discourage you from
buying as many British goods and services.
b. the dollar would buy more pounds. The appreciation would encourage you to buy
more British goods and services.
c. the dollar would buy fewer pounds. The appreciation would discourage you from
buying as many British goods and services.
d. the dollar would buy fewer pounds. The appreciation would encourage you to buy
more British goods and services.
Suppose that some country had an adult population of about 46 million, a labor-force
participation rate of 75 percent, and an unemployment rate of 8 percent. How many
people were employed?
a. 2.76 million
b. 31.74 million
c. 34.5 million
d. 42.32 million
A budget surplus
a. occurs when the government has debt equal to zero.
b. causes government debt to increase.
c. exists when government spending is greater than tax revenues.
d. reduces the government’s debt.
Table 23-9
A country produces only ice cream and pie. Quantities and prices of these goods for the
last several years are shown below. The base year is 2008.
Prices and Quantities
RefertoTable23-9.In 2009, this country’s
a. real GDP was $250, and the GDP deflator was 125.
b. real GDP was $250, and the GDP deflator was 120.
c. real GDP was $240, and the GDP deflator was 125.
d. real GDP was $240, and the GDP deflator was 120.
If the MPC= 0.75, then the government purchases multiplier is about
a. 1.33.
b. 7.
c. 4.
d. 3.
Aggregate demand shifts to the left if the money supply increases.
a. True
b. False
Table29-5.
RefetoTable29-5. If the bank is holding $4,000 in excess reserves, then the reserve
requirement with which it must comply is
a. 17 percent.
b. 12 percent.
c. 13 percent.
d. 14 percent.
The conventions of national income accounting imply that saving and investment are
equal for the economy as a whole and for individual households and firms.
a. True
b. False
Both monetary policy and fiscal policy affect aggregate demand.
a. True
b. False
Which of the following examples of household spending is categorized as investment
rather than consumption?
a. expenditures on durable goods such as automobiles and refrigerators
b. expenditures on intangibles items such as medical care
c. expenditures on new housing
d. All of the above are correct.
An American retailer sells dollars to obtain euros. It then uses the euros to buy
ready-to-assemble furniture from Sweden. These transactions
a. increase U.S. net capital outflow because foreigners obtain U.S. assets.
b. decrease U.S. net capital outflow because foreigners obtain U.S. assets.
c. increase U.S. net capital outflow because the U.S. buys capital goods.
d. decrease U.S. net capital outflow because the U.S. buys capital goods.
Using income tax revenue to fund the welfare system illustrates the conflict between
efficiency and equality.
a. True
b. False
The inflation rate you are likely to hear on the nightly news is calculated from
a. the GDP deflator.
b. the CPI.
c. the Dow Jones Industrial Average.
d. the unemployment rate.
The short-run Phillips curve shows the combinations of
a. unemployment and inflation that arise in the short run as aggregate demand shifts the
economy along the short-run aggregate supply curve.
b. unemployment and inflation that arise in the short run as short-run aggregate supply
shifts the economy along the aggregate demand curve.
c. real GDP and the price level that arise in the short run as short-run aggregate supply
shifts the economy along the aggregate demand curve.
d. None of the above is correct.
Which of the following results in higher inflation and higher unemployment in the short
run?
a. a more expansionary monetary policy
b. a more contractionary monetary policy
c. a decrease in the minimum wage
d. an adverse supply shock such as an increase in the price of oil
The circular-flow diagram is a
a. visual model of the economy.
b. visual model of the relationships among money, prices, and businesses.
c. model that shows the effects of government on the economy.
d. mathematical model of how the economy works.
Daniel has $300 in a bank account. Some years ago he put $213.20 into this account,
and it has earned 5 percent interest every year since then. How many years ago did
Daniel open his account?
a. 4 years
b. 5 years
c. 6 years
d. 7 years
If a central bank had to give up its discretion and follow a rule that required it to keep
inflation low,
a. the short-run Phillips curve would shift up.
b. the short-run Phillips curve would shift down.
c. the long-run Phillips curve would shift right.
d. the long-run Phillips curve would shift left.
The law of demand states that, other things equal, an increase in
a. price causes quantity demanded to increase.
b. price causes quantity demanded to decrease.
c. quantity demanded causes price to increase.
d. quantity demanded causes price to decrease.
Who said, “The whole of science is nothing more than the refinement of everyday
thinking”?
a. Isaac Newton
b. Albert Einstein
c. Adam Smith
d. Benjamin Franklin
The money multiplier equals 1/(1 – R), where Rrepresents the reserve ratio.
a. True
b. False
Which of the following transactions is notincluded in GDP?
a. oranges sold to households by a grocer.
b. orange juice sold by a restaurant to its diners.
c. oranges sold by a farmer to a grocery store.
d. All of the above are included in GDP.