Which of the following is the best example of an intermediate good?
a. a new fighter jet purchased by the federal government
b. tires purchased by an automobile manufacturer for installation on new cars
c. a new saw purchased by a carpenter
d. screwdrivers purchased by a homeowner for home repairs
e. aprons purchased by restaurant chefs
The institution charged with creating and regulating the U.S. money supply is the
a. U.S. Treasury
b. Federal Reserve System
c. Department of Commerce
d. Department of Weights and Measures
e. U.S. Mint
Which of the following would shift the AS curve downward?
a. A decrease in the price level
b. A decrease in world oil prices.
c. An increase in world oil prices.
d. A natural disaster that raises unit costs for all firms.
e. A loss of technological capability.
Disposable income is best defined as
a. income adjusted for inflation
b. nominal income
c. the income remaining after bills have been paid
d. income after taxes have been paid and transfers received
e. income paid in dollars that are worthless
Which of the following annual real GDP growth rates would be needed to prevent the
U.S. unemployment rate from rising?
a. 3.3 percent
b. 2.5 percent
c. 10.0 percent
d. 5.0 percent
e. 1.0 percent
Which of the following policies would be most likely to encourage households to save
more?
a. Significant reductions in the social safety net
b. Increasing social security benefits to all recipients, regardless of their contribution
into the system
c. Elimination of the tax deduction on individual retirement account (IRA)
contributions
d. Replacement of sales and excise taxes with an income tax
e. Elimination of government insurance of bank deposits
In the market for euros, Americans want to buy euros
a. only to buy goods from European firms
b. primarily to buy services from European firms
c. only to buy European assets
d. only to buy European goods and assets
e. to buy European goods, services, and assets
Which of the following would be classified as private investment?
a. An individual’s purchase of a used car
b. A family’s purchase of groceries
c. An individual’s purchase of a General Electric bond
d. A family’s purchase of a newly built home
e. A family’s purchase of a new car
Suppose that the following headlines appeared in a newspaper. Which would most
clearly represent a macroeconomic issue?
a. “Central Bank Raises Interest Rates”
b. “Auto Dealership to Cut Prices”
c. “Fanny’s Freeze Dried Prunes to Lay Off 50 Workers”
d. “United Workers Union to Strike April 15”
e. “Brazilian Coffee Bean Crop Falls by 10 Percent”
In order for the classical model to explain expansions and recessions, which of the
following would have to be true?
a. Labor supply could not change.
b. The labor market equilibrium would have to change suddenly and significantly.
c. Labor demand could not change.
d. The labor market equilibrium would have to change slowly.
e. The labor market equilibrium could not move.
What can be said about the comparison between the unemployment benefits offered in
Europe and in the United States?
a. Unemployment benefits tend to be lower in Europe and are offered for shorter
periods than in the United States
b. Unemployment benefits tend to be higher in Europe and are offered for shorter
periods than in the United States
c. Unemployment benefits tend to be lower in Europe and are offered for longer periods
than in the United States
d. Unemployment benefits tend to be higher in Europe and are offered for longer
periods than in the United States
e. Unemployment benefits in Europe and the United States tend to be of similar
magnitude and are offered for similar periods.
When we study macroeconomics,
a. we model tens of thousands of individual supply and demand curves
b. we determine thousands of prices and quantities
c. we employ aggregation to reduce the number of markets we need to understand
d. we add up all the demand and supply curves that are obtained in microeconomics
e. we add up the prices of all goods and services produced in the economy
If a good is a normal good then
a. other things equal, no consumer will buy it
b. a rise in income or wealth will increase the amount of the good that consumers will
purchase
c. a decline in income will increase the amount of it that consumers will purchase
d. abnormal goods are never substituted for it
e. normal consumers will always demand it
Which of the following is a characteristic of entrepreneurship?
a. the ability to navigate bodies of water
b. it is produced using physical capital
c. it is used up quickly in the production process
d. it is a pre-existing resource like land
e. it is associated with risk taking and innovation
The law of increasing opportunity cost says that
a. wages increase as employment increases
b. interest rates rise as inflation increases
c. the cost of increasing employment opportunities increases with specialization
d. the more of something we produce, the less expensive it becomes
e. the more of something we produce, the greater is the opportunity cost of producing
an additional unit
In the market for British pounds, if the current exchange rate is above the equilibrium
rate,
a. there is an excess supply of pounds and those who hold pounds will be able to sell
them and make a profit
b. there is an excess supply of pounds and the exchange rate will fall
c. there is an excess demand for pounds and suppliers will not be able to supply enough
pounds to meet the demand
d. there is an excess demand for pounds and the exchange rate will rise
e. the quantity of pounds supplied is barely sufficient to meet the quantity demanded