Each week, the Bureau of Labor Statistics computes and reports the consumer price
index.
a. True
b. False
From 1980-1987, U.S. net capital outflow as a percent of GDP became a
a. larger positive number.
b. smaller positive number.
c. larger negative number.
d. smaller negative number.
If interest rates rose more in Japan than in the U.S., then other things the same
a. U.S. citizens would buy more Japanese bonds and Japanese citizens would buy more
U.S. bonds.
b. U.S. citizens would buy more Japanese bonds and Japanese citizens would buy fewer
U.S. bonds.
c. U.S. citizens would buy fewer Japanese bonds and Japanese citizens would buy more
U.S. bonds.
d. U.S. citizens would buy fewer Japanese bonds and Japanese citizens would buy
fewer U.S. bonds.
In less than two years in the early 1920s, the cost of a German newspaper rose from
0.30 marks to 70,000,000 marks. This is a spectacular example of
a. market power caused by a change in the country’s standard of living.
b. market power caused by a single firm controlling the newspaper production.
c. inflation caused by increased productivity in the economy.
d. inflation caused by an increase in the quantity of money in the economy.
Table 28-6
RefetoTable28-6. What is the U-6 measure of labor underutilization?
a. 8.4%
b. 9.0%
c. 9.2%
d. 35.2%
Social Security payments are
a. included in GDP because they represent current income.
b. included in GDP because they represent potential consumption.
c. excluded from GDP because they are not private pensions.
d. excluded from GDP because they do not reflect the economy’s production.
An increase in the government budget deficit shifts the demand for loanable funds to
the right.
a. True
b. False
What will happen in the gasoline market now if buyers expect higher gasoline prices in
the near future?
a. The demand for gasoline will increase.
b. The demand for gasoline will decrease.
c. The demand for gasoline will be unaffected.
d. The supply of gasoline will increase.
If the dollar appreciates, perhaps because of speculation or government policy, then
U.S. net exports
a. increase which shifts aggregate demand right.
b. increase which shifts aggregate demand left.
c. decrease which shifts aggregate demand right.
d. decrease which shifts aggregate demand left.
In a particular country in 1998, the average worker needed to work 25 hours to produce
40 units of output. In that same country in 2008, the average worker needed to work 40
hours to produce 68 units of output. In that country, the productivity of the average
worker
a. decreased by 1.7 percent between 1998 and 2008.
b. remained unchanged between 1998 and 2008.
c. increased by 4.75 percent between 1998 and 2008.
d. increased by 6.25 percent between 1998 and 2008.
A century ago, the four industries with the largest employment in the United States
were cotton goods, woolen goods, men’s clothing, and lumber.
a. True
b. False
Other things the same,if the price level rises, people
a. increase foreign bond purchases, so the supply of dollars in the market for
foreign-currency exchange increases.
b. increase foreign bond purchases, so the supply of dollars in the market for
foreign-currency exchange decreases.
c. decrease foreign bond purchases, so the supply of dollars in the market for
foreign-currency exchange increases.
d. decrease foreign bond purchases, so the supply of dollars in the market for
foreign-currency exchange decreases.
Which of the following likely occurs when households and firms become more
pessimistic?
a. increased spending, increased aggregate demand, rising real GDP, and a rising
unemployment rate
b. decreased spending, increased aggregate demand, rising real GDP, and a falling
unemployment rate
c. decreased spending, decreased aggregate demand, falling real GDP, and a rising
unemployment rate
d. decreased spending, decreased aggregate demand, falling real GDP, and a falling
unemployment rate
If the government raises government expenditures, then in the short run prices
a. rise and unemployment falls.
b. fall and unemployment rises.
c. and unemployment rise.
d. and unemployment fall.
In the open economy macroeconomic model, the price that balances supply and demand
in the market for foreign- currency exchange model is the
a. nominal exchange rate.
b. nominal interest rate.
c. real exchange rate.
d. real interest rate.
Suppose the CPI was 56 in 1967, and suppose one must spend $349 today to obtain the
same basket of goods and services that could be bought for $100 in 1967. Then today’s
CPI is
a. 223.7.
b. 195.0.
c. 623.2.
d. 195.4.
Prices in both the U.S. and China rise, but prices in China increase by a larger
percentage. According to purchasing- power parity, the U.S. dollar
a. gains value both in terms of the domestic goods and services it can buy and in terms
of the Chinese currency it can buy.
b. gains value in terms of the domestic goods and services it can buy, but loses value in
terms of the Chinese currency it can buy.
c. loses value in terms of the domestic goods and services it can buy, but gains value in
terms of the Chinese currency it can buy.
d. loses value both in terms of the domestic goods and services it can buy and in terms
of the Chinese currency it can buy.
A person can benefit from specialization and trade by obtaining a good at a price that is
a. lower than his or her opportunity cost of that good.
b. the same as his or her opportunity cost of that good.
c. higher than his or her opportunity cost of that good.
d. different than his or her opportunity cost of that good.
RefertoFigure2-9,Panel(a).The opportunity cost of moving from point J to point L is
a. 2 donuts.
b. 2 donuts and 2 cups of coffee.
c. 2 cups of coffee.
d. 6 cups of coffee.
Communist countries worked on the premise that government officials were in the best
position to allocate the economy’s scarce resources.
a. True
b. False
Figure 35-2
Use the pair of diagrams below to answer the following questions.
RefertoFigure35-2. If the economy starts at C and 1, then in the short run, an increase
in taxes moves the economy to
a. B and 2.
b. D and 3.
c. E and 2.
d. None of the above is correct.
Other things the same, a decrease in the price level causes the interest rate to
a. increase, the dollar to appreciate, and net exports to increase.
b. increase, the dollar to depreciate, and net exports to decrease.
c. decrease, the dollar to depreciate, and net exports to increase.
d. decrease, the dollar to appreciate, and net exports to decrease.
The classical model is the appropriate model for analysis of the economy in the
a. long run, because evidence indicates that money is not neutral in the long run.
b. long run, because real and nominal variables are essentially determined separately in
the long run.
c. short run, because money is neutral in the short run.
d. short run, because real and nominal variables are not highly intertwined in the short
run.
The primary argument against active monetary and fiscal policy is that
a. attempts to stabilize the economy do not constitute a proper role for government in a
democratic society.
b. these policies affect the economy with a long lag.
c. these policies affect the economy too quickly and with too much impact.
d. history demonstrates that interest rates respond unpredictably to active policies,
leading to unpredictable effects on income.
If a government of a country with a zero trade balance increases its budget deficit, then
the real exchange rate
a. appreciates and there is a trade surplus.
b. appreciates and there is a trade deficit.
c. depreciates and there is a trade surplus.
d. depreciates and there is a trade deficit.
What would happen to the equilibrium price and quantity of latts if coffee shops began
using a machine that reduced the amount of labor necessary to produce them?
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.
Table 28-2
Labor Data for Aridia
RefetoTable28-2.The unemployment rate of Aridia in 2010 was
a. 10%.
b. 12.5%.
c. 14.3%.
d. 80%.
Which of the following is correct?
a. Lenders sell bonds and borrowers buy them.
b. Long-term bonds usually pay a lower interest rate than do short-term bonds because
long-term bonds are riskier.
c. The term junkbondrefers to bonds that have been resold many times.
d. None of the above is correct.
If the cost of transportation increases by 20 percent, then, other things the same, the CPI
is likely to increase by about
a. 0.3 percent.
b. 1.7 percent.
c. 3.4 percent.
d. 10 percent.
Buddy is the owner of a firm that bottles beer in St. Louis, Missouri. There are many
other such firms in the area. Buddy decides that if he pays his workers a wage higher
than the going market wage, his profits will increase. Which of the following is a likely
explanation for his decision?
a. The higher the wage, the less often his workers will choose to leave his firm.
b. The higher the wage, the lower will be the costs of obtaining needed supplies.
c. The higher the wage, the more he can charge for his beer
d. The higher the wage, the more he will have to monitor his workers for shirking.
Benefits from trade would not include
a. the ability of people and nations to specialize.
b. a greater variety of goods and services becoming available.
c. less competition.
d. lower prices.