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Suppose that the quantity supplied of cars exceeds the quantity of cars demanded. We
would expect that:
A) the price of cars will increase.
B) the price of cars will decrease.
C) the supply will increase to meet the demand.
D) the demand will decrease to meet the supply.
Which of the following would be included in GDP?
A) the purchase of a used car
B) the broker's fee one pays when purchasing stocks
C) the sale of Firestone tires to Ford Motor company
D) none of the above
Figure 9.1 shows three aggregate demand curves. A movement from curve AD1 to curve
AD0 could be caused by a(n)
A) decrease in the money supply.
B) decrease in taxes.
C) increase in the price level.
D) increase in government spending.
The marginal propensity to consume (MPC) is the
A) ratio of consumption to savings.
B) fraction of additional income that is spent.
C) ratio of consumption to income.
D) fraction of additional consumption that is not based on the level of income.
Economists have long noticed that when the level of the stock market is ________,
other things being equal, investment spending tends to be ________.
A) low; high
B) low; low
C) high; low
D) none of the above
Suppose Venezuela experiences economic expansion in 2013, yet its unemployment
rate is 15 percent. All else equal, if this unemployment rate is above the natural rate of
unemployment, what will tend to happen over time?
A) Wages and prices will fall.
B) Wages and prices will rise.
C) Wages will rise and prices will fall.
D) Wages will fall and prices will rise.
You want to make a 5% real return on a loan that you are planning to make, and the
expected inflation rate during the period of the loan is 6%. You should charge a nominal
interest rate of:
A) 1%.
B) 11%.
C) -1%.
D) -11%.
In the late 1990s, the United States had:
A) a budget deficit and a national debt.
B) a budget deficit, but no national debt.
C) a budget surplus and a national debt.
D) a budget surplus, but no national debt.
Recall the Application about the policies used by the European Union to support
the agricultural sectors of is member countries to answer the following question(s).
According to this Application, the policies used by the European Union to support the
agricultural sectors of its member countries created excess supply. Excess supply can be
generated if a government establishes a
A) price ceiling below the market equilibrium price.
B) price ceiling above the market equilibrium price.
C) price floor below the market equilibrium price.
D) price floor above the market equilibrium price.
The value of money or income in terms of the quantity of goods the money can buy is
called its
A) real value.
B) marginal value.
C) nominal value.
D) implicit value.
The Federal Reserve System consists of ________ Federal Reserve Banks.
A) 8
B) 10
C) 12
D) 14
Figure 1A.1
Refer to Figure 1A.1. The slope of the line between the points where income equals 50
and income equals 200 is
A) 0.2.
B) 5.
C) 10.
D) 50.
The factors of production include:
A) natural resources.
B) labor.
C) entrepreneurship.
D) all of the above.
Recall the Application about adapting growth accounting to new developments in the
economy to answer the following question(s).
Recall the Application. Intangible capital includes all of the following EXCEPT
A) finished products.
B) research and development.
C) customer support.
D) marketing.
Consumption expenditures can be broken down into three categories:
A) durable goods, nondurable goods and services.
B) land, labor and capital.
C) food, shelter and appliances.
D) luxury goods, normal goods and inferior goods.
Recall Application 4, "The Argentine Financial Crisis," to answer the question below:
The main reason Argentina had pegged its currency to the U.S. dollar prior to the 2002
crisis was:
A) to avoid chronic hyperinflation.
B) to balance its current account.
C) to prevent capital flight.
D) none of the above.
Countries with more independent central banks tend to have
A) higher inflation rates.
B) lower inflation rates.
C) lower rates of unemployment.
D) higher rates of GDP growth.
