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All cash within the geographical boundaries of the United States is counted as part of
the U.S. money supply.
Managed floats are only effective in the long run.
A monetary system is what allows us to
a. earn a wage
b. compare the costs of different goods and services
c. invest in productive assets
d. be productive
e. consume today, rather than tomorrow
Suppose that in 2009 the total value of exports was $250 million, while imports were
$225 million. The contribution of net exports to GDP was
a. $250 million
b. $25 million
c. $475 million
d. $225 million
e. -$25 million
If net taxes decrease by $100 billion and the result is an increase in GDP of $300
billion, what is the marginal propensity to consume?
a. 0.75
b. 3.0
c. 0.66
d. 0.50
e. 0.33
The natural rate is natural in the sense that macroeconomic policy
a. sees it all the time
b. can ignore it
c. can't do much about it
d. is a natural reaction to unemployment
e. has always recognized that some workers will be voluntarily unemployed
Diminishing returns to labor occur for two primary reasons: 1) as we keep adding new
workers, it becomes increasingly difficult to obtain productivity gains through
additional specialization; and 2) each additional worker we add has less land and capital
to work with.
If both labor demand and labor supply fall, what will happen to the real wage,
employment, and output?
a. The real wage will increase, real output will increase, but the effect on employment
depends upon the magnitudes of the shifts.
b. The real wage will increase, but the effects of employment and real output depend
upon the magnitudes of the shifts.
c. The real wage, employment, and real output will all decrease.
d. Employment and real output will decrease, but the effect on the real wage depends
upon the magnitudes of the shifts.
e. The real wage, employment, and real output will all increase.
Periodic fluctuations in real GDP are called
a. business cycles
b. recessions
c. peaks
d. expansions
e. troughs
When economists speak of the demand for money, they refer to the amount of money
people would like to hold
a. given that it can only be printed slowly
b. in the best of all possible worlds
c. in their bank accounts rather than their wallets
d. at each interest rate
e. rather than spend.
The lower the price of a foreign currency, the more expensive that foreign country's
goods and services are to individuals in the domestic economy.
Refer to Figure 9-2. An increase in output from A to B could be caused by an increase
in
a. labor demand only
b. labor supply only
c. labor demand or in labor supply
d. technology only
e. the capital stock
The aggregate production function shows
a. the total output the economy can produce with different quantities of labor and
technology, holding land and capital constant
b. the total output the economy can produce with different quantities of land and labor,
holding capital and technology constant
c. the total output the economy can produce with different quantities of labor, holding
land, capital and technology constant
d. the total output the economy can produce with different quantities of labor and
capital, holding land and technology constant
e. the total output the economy can produce with different quantities of technology,
holding land, labor and capital constant
If there is a leftward shift of the money demand curve, which of the following should
the Fed do if it wants to keep output stable?
a. Lower its interest rate target
b. Sell bonds in the open market
c. Wait, since output usually does not change when the money demand curve shifts
d. Raise its interest rate target
e. Buy bonds in the open market.
One reason why economists often appear to disagree when asked about the impact of
some bad economic news is that
a. they do not understand the economy very well
b. economics is a very difficult science, and so there are many incorrect economic
projections being made
c. economists rarely disagree; people just think they are disagreeing because they do not
understand the language of economics
d. economists often appear to be disagreeing when one is talking about long-run impact
while the other is referring to short-run impacts
e. economists are by nature competitive individuals and they often disagree
Which of the following is the opportunity cost of money?
a. The use of money as a means of payment
b. The trouble of having to get money out of the bank
c. The interest forgone by holding money
d. The ability to purchase things at a moment's notice
e. Commissions paid to brokers
What is the difference between an intermediate good and a final good?
a. Final goods are adjusted for depreciation, intermediate goods are not.
b. Final goods are adjusted for changes in the value of the dollar, intermediate goods are
not.
c. In GDP calculations, final goods are counted as consumption spending, intermediate
goods are counted as private investment spending.
d. There is no meaningful difference between them.
e. Final goods are finished and ready for sale; intermediate goods require further
processing.
If the cost per unit of output for a particular product is $50 and the product sells for $55,
what is the percentage markup over cost per unit?
a. 200 percent
b. 10 percent
c. 100 percent
d. 20 percent
e. 50 percent.
Household saving is the defined as consumption minus disposable income.
