Net foreign investment minus net foreign portfolio investment is equal to
A) capital outflows.
B) net foreign financial investment.
C) the balance of trade.
D) net foreign direct investment.
Figure 3-1
Refer to Figure 3-1. If the product represented is a normal good, an increase in income
would be represented by a movement from
A) A to B.
B) B to A.
C) D1 to D2.
D) D2 to D1.
During the Chinese experience with pegging the yuan to the dollar, the yuan was
________. As a result, there was a ________ of dollars on the market, and the Chinese
government had to purchase dollars to maintain the peg.
A) overvalued; shortage
B) undervalued; surplus
C) overvalued; surplus
D) undervalued; shortage
Most economists believe that the biases in the consumer price index cause the CPI to
overstate the true inflation rate by about
A) one-half to one percentage point.
B) one to two percentage points.
C) one quarter percentage point.
D) one and one-half percentage points.
To combat a recession with discretionary fiscal policy, Congress and the president
should
A) decrease government spending to balance the budget.
B) decrease taxes to increase consumer disposable income.
C) lower interest rates and increase investment by increasing the money supply.
D) raise taxes on interest and dividends, but not on personal income.
________ in taxes will decrease consumption spending, and ________ in transfer
payments will increase consumption spending.
A) An increase; an increase
B) A decrease; an increase
C) An increase; a decrease
D) A decrease; a decrease
All of the following are examples of explicit cost a firm might incur except
A) the out-of-pocket expense to hire employees.
B) taxes owed to the state government.
C) the rental value of the warehouse space the company owns and uses for itself.
D) the revenue a firm generates in using its resources.
Figure 17-2
Refer to Figure 17-2. At which point are inflation expectations equal to the actual
inflation rate?
A) A
B) B
C) C
D) all of the above
During the 1990s positive technological change in the production of chicken caused the
price of chicken to fall. Holding everything else constant, how would this affect the
market for pork (a substitute for chicken)?
A) The supply of pork would increase and the equilibrium price of pork would
decrease.
B) The demand for pork would decrease and the equilibrium price of pork would
decrease.
C) The demand for pork would increase because consumers could afford to buy more
chicken and pork.
D) The demand for pork would decrease and the equilibrium price of pork would
increase.
What impact does monetary policy have on the long-run Phillips curve?
A) Monetary policy can only shift the long-run Phillips curve to the left.
B) Monetary policy shifts the long-run Phillips curve to the right or left, depending on
whether monetary policy is expansionary or contractionary.
C) Monetary policy can only shift the long-run Phillips curve to the right.
D) Monetary policy has no impact on the long-run Phillips curve.
A decrease in aggregate demand will
A) cause inflation.
B) decrease unemployment.
C) move the economy to a lower point on the short-run Phillips curve.
D) cause the short-run Phillips curve to shift to the right.
In a closed economy, public saving is equal to which of the following? (Y = GDP, C =
Consumption, G = Government purchases, T = Taxes, and TR = Transfers)
A) Y – C – T
B) Y – G – T
C) T – G – TR
D) Y – C – T + TR
If inflation increases unexpectedly, then
A) borrowers pay a higher real interest rate than they expected.
B) lenders receive a lower real interest rate than they expected.
C) lenders gain and borrowers gain.
D) neither borrowers nor lenders lose.
Suppose that when the price of pickles decreases, Teddy increases his purchase of
ketchup. To Teddy,
A) pickles and ketchup are complements.
B) pickles and ketchup and substitutes.
C) pickles and ketchup are normal goods.
D) pickles are a normal good and ketchup is an inferior good.
Your grandfather tells you that he earned $7,000/year in his first job in 1961. You earn
$35,000/year in your first job in 2013. You know that average prices have risen steadily
since 1961. You earn
A) 5 times as much as your grandfather in terms of real income.
B) more than 5 times as much as your grandfather in terms of real income.
C) less than 5 times as much as your grandfather in terms of real income.
D) less than 5 times as much as your grandfather in terms of nominal income.
Using the money demand and money supply model, an open market purchase of
Treasury securities by the Federal Reserve would cause the equilibrium interest rate to
A) increase.
B) decrease.
C) not change.
D) increase if the economy is in a recession.