How much is a bond that pays $50 in coupon payments for 3 years and $1,000 at the
end of the third year worth if the interest rate is 10%?
A) $876
B) $952
C) $1,045
D) $1,150
Which of the following would increase the balance on the current account?
A) an increase in foreign direct investment
B) an increase in the amount of aid money the government sends abroad
C) an increase in imports
D) an increase in the balance of trade
Table 26-8
The price elasticity of supply is usually a positive number because
A) quantity supplied increases in response to income increases.
B) quantity supplied increases in response to price increases.
C) the quantity demanded usually rises when price falls and therefore suppliers would
want to capitalize on this increase in demand.
D) price rises when supply increases.
Which of the following is a normative economic statement?
A) Rising corn prices have increased the price of corn-based ethanol.
B) With rising home prices and falling mortgage interest rates, the amount of home
foreclosures has decreased.
C) The federal government is considering increasing regulations on the use of fossil
fuels to promote the use of wind power.
D) Farmers should not be allowed to grow and sell genetically-modified crops.
If a country has a fixed exchange rate,
A) the equilibrium exchange rate in that market does not respond to changes in supply
and demand for currency.
B) central banks have more control over real GDP in the economy.
C) central banks must buy and sell their holdings of currencies to maintain a given
exchange rate.
D) the exchange rate is allowed to fluctuate in response to changes in the supply and
demand for currency.
The demand for labor is different from the demand for final goods and services because
A) the demand for labor is derived from the demand for the good or service the labor is
used to produce.
B) it is a demand for people, not inanimate objects.
C) the demand for labor is more inelastic than the demand for the goods and services
produced with this labor.
D) the law of demand does not apply to the demand for labor.
Since 1950, expansions in the United States have become ________, while recessions
have become ________.
A) longer; longer
B) shorter; shorter
C) shorter; longer
D) longer; shorter
Marco goes to the pet store to buy a dozen Koi fish for his new Koi pond. He is willing
to pay $200 for the dozen fish, but buys them for a total of $140. Marco’s consumer
surplus from the purchase is
A) $5.
B) $60.
C) $140.
D) $200.
If, in a competitive market, marginal benefit is greater than marginal cost
A) the net benefit to consumers from participating in the market is greater than the net
benefit to producers.
B) the government must force producers to lower price in order to achieve economic
efficiency.
C) the quantity sold is greater than the equilibrium quantity.
D) the quantity sold is less than the equilibrium quantity.
If money demand is extremely sensitive to changes in the interest rate, the money
demand curve becomes almost horizontal. If the Fed expands the money supply under
these circumstances, then the interest rate will
A) fall substantially and investment and consumer spending will fall substantially.
B) rise substantially and investment and consumer spending will rise substantially.
C) fall substantially and investment and consumer spending will change very little.
D) change very little and investment and consumer spending will change very little.
Which of the following is likely to occur as the result of the law of diminishing
marginal utility?
A) Petra’s utility from her second apple was less than her satisfaction from her first
orange.
B) Hudson enjoyed his second slice of pizza more than his first.
C) Sabine’s utility from her first granola bar is greater than Rachel’s utility from her
second granola bar.
D) Wesley enjoyed his second bottle of iced tea less than his first bottle, other things
constant.
Figure 21-6
The loanable funds market is in equilibrium, as shown in the figure above. An increase
in the supply of loanable funds could result in which of the following combinations of
the real interest rate and quantity of loanable funds at a new equilibrium?
A) The real interest rate is 5 percent, and the quantity of loanable funds is $150 million.
B) The real interest rate is 5 percent, and the quantity of loanable funds is $90 million.
C) The real interest rate is 3 percent, and the quantity of loanable funds is $150 million.
D) The real interest rate is 3 percent, and the quantity of loanable funds is $90 million.
An increase in U.S. federal government budget deficits that raises U.S. interest rates
relative to the rest of the world should
A) raise the trade balance.
B) increase net exports.
C) cause the dollar to depreciate.
D) lead to a current account deficit.
E) decrease foreign portfolio investment.
The actual real wage is lower than the expected real wage if
A) actual inflation is less than expected inflation.
B) expected inflation is less than actual inflation.
C) actual unemployment is less than expected unemployment.
D) actual unemployment is less than actual inflation.
The increase in government spending on unemployment insurance payments to workers
who lose their jobs during a recession and the decrease in government spending on
unemployment insurance payments to workers during an expansion is an example of
A) automatic stabilizers.
B) discretionary fiscal policy.
C) discretionary monetary policy.
D) automatic monetary policy.
Which of the following is not a result of government price controls?
A) Some people win and some people lose.
B) Price controls benefit poor consumers but harm producers and wealthy consumers.
C) Price controls decrease economic efficiency.
D) A deadweight loss will occur.
Table 4-3
The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that
specializes in producing western wear. If the price of cowboy hats increases from $38 to
$46
A) consumers will buy no cowboy hats.
B) the marginal cost of producing the third cowboy hat will increase to $46.
C) producer surplus will rise from $22 to $46.
D) there will be a surplus of cowboy hats.