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More than 3 percent of U.S. workers leave their jobs in a typical month.
a. True
b. False
An example of a perfectly competitive market would be the market for
a. tennis racquets.
b. pizza.
c. garbage collection.
d. wheat.
Opponents of active stabilization policy
a. advocate a monetary policy designed to offset changes in the unemployment rate.
b. argue that fiscal policy is unable to change aggregate demand or aggregate supply.
c. believe that the political process creates lags in the implementation of fiscal policy.
d. None of the above is correct.
A policymaker in favor of stabilizing the economy would be likely to believe
a. recessions are a waste of resources.
b. economies must suffer through the booms and busts of the business cycle.
c. the long policy lags make implementing policy changes in response to recession too
risky.
d. policy increases the magnitude of economic fluctuations.
Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house
that could be rented for $21,000 a year. How much do these housing services contribute
to GDP?
a. $21,000
b. $28,000
c. $7,000
d. $14,000
An economy has a current inflation rate of 7%. If the central bank wants to reduce
inflation to 4% and the sacrifice ratio is 2, then how much annual output must be
sacrificed in the transition?
a. 10%
b. 8%
c. 6%
d. None of the above is correct.
At the end of 2012, the government had a debt of about $11.3 trillion. If during 2013
real GDP rose 2% and inflation was 2.2%, what is the largest deficit the government
could have run without raising the debt-to-GDP ratio?
a. about $226.0 billion
b. about $248.6 billion
c. about $474.6 billion
d. about $561.8 billion
Suppose banks desire to hold no excess reserves and that the Fed has set a reserve
requirement of 6 percent. If you deposit $8,000 into First Raven Bank,
a. First Raven's required reserves increase by $480.
b. First Raven will be able to lend out $7,520.
c. First Raven's assets and liabilities both will increase by $8,000.
d. All of the above are correct.
In which of the following countries has economic growth been sufficiently high that
income would double every ten years?
a. India
b. Mexico
c. South Korea
d. Zimbabwe
An increase in the budget deficit causes domestic interest rates
a. and investment to rise.
b. to rise and investment to fall.
c. to fall and investment to rise.
d. and investment to fall.
Suppose a gardener produces both tomatoes and squash in his garden. If the opportunity
cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1
bushel of tomatoes is
a. 2/5 bushel of squash.
b. 5/2 bushels of squash.
c. 2 bushels of squash.
d. 5 bushels of squash.
Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing
toasters at a constant rate.
RefertoTable3-25. The opportunity cost of 1 toaster for Miguel is
a. 1/2 mixer.
b. 2 hours of labor.
c. 2 mixers.
d. 20 hours of labor.
Table 23-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932.
RefertoTable23-4.If prices had remained constant between 1929 and 1930, Nominal
GDP would have decreased
a. 8.62%.
b. 9.43%.
c. 11.97%.
d. 13.6%.
If the cost of housing increases by 10 percent, then, other things the same, the CPI is
likely to increase by about
a. 1.7 percent.
b. 3.3 percent.
c. 4.1 percent.
d. 10 percent.
Which of the following is both a store of value and a common medium of exchange?
a. corporate bonds
b. mutual funds
c. checking account balances
d. All of the above are correct.
Retirees are included in the Bureau of Labor Statistics' "not in the labor force" category.
a. True
b. False
Sometimes, changes in monetary policy and/or fiscal policy are intended to offset
changes to aggregate demand over which policymakers have little or no control.
a. True
b. False
What happens to each of the following if the supply of loanable funds shifts right?
a. the interest rate
b. net capital outflow
c. the exchange rate
Other things the same, corporate bonds generally feature higher interest rates than U.S.
government bonds.
a. True
b. False
Suppose that an American company opens and operates a restaurant in Ireland. This is
an example of
a. foreign direct investment. American saving is used to finance Irish investment.
b. foreign direct investment. American saving is used to finance American investment.
c. foreign portfolio investment. American saving is used to finance Irish investment.
d. foreign portfolio investment. American saving is used to finance American
investment.
Social Security transfers wealth from younger generations to older generations.
a. True
b. False
Demand for workers in some industry declines. These workers are reluctant to have a
cut in their nominal wage. However,
a. inflation will raise their real wage and so increase the number of available workers.
b. inflation will raise their real wage and so decrease the number of available workers
c. inflation will reduce their real wage and so increase the number of available workers.
d. inflation will reduce their real wage and so decrease the number of available workers.
Figure 4-18
RefertoFigure4-18. At what price would there be an excess supply of 200 units of the
good?
a. $15
b. $20
c. $30
d. $35
Suppose that a worker in Radioland can produce either 4 radios or 1 television per year
and a worker in Teeveeland can produce either 2 radios or 5 televisions per year. Each
nation has 100 workers, and each country specializes according to the principle of
comparative advantage. If Radioland trades 100 televisions to Teeveeland in exchange
for 100 radios each year, then each country's maximum consumption of new radios and
televisions per year will be
a. higher than it would be in the absence of trade because of the gains from trade.
b. the same as it would be in the absence of trade.
c. less than it would be in the absence of trade because neither country is specializing in
the product in which it has a comparative advantage.
d. less than it would be in the absence of trade because Teeveeland has an absolute
advantage in both goods and so it cannot benefit by trading with Radioland.
If real GDP and the GDP deflator both rise, then it must be that nominal GDP rose.
a. True
b. False
The Bureau of Labor Statistics' U1 measure of joblessness is smaller than its U6
measure of joblessness.
a. True
b. False
Which of the following would cause a movement along the supply curve for cupcakes?
a. an improvement in technology for commercial mixers
b. a decrease in the price of cupcakes
c. an increase in the price of cake flour
d. All of the above are correct.
Suppose policymakers take actions that cause a contraction of aggregate demand.
Which of the following is a short- run consequence of this contraction?
a. The inflation rate decreases.
b. The level of output decreases.
c. The unemployment rate increases.
d. All of the above are correct.
Which of the following is not an example of scarcity?
a. Only some people can afford to buy a BMW automobile.
b. Every individual in society cannot attain the highest standard of living to which he or
she might aspire.
c. Miranda has an unlimited supply of oranges in her orchard.
d. Each member of a household cannot get everything he or she wants.
Table 24-5
The table below pertains to Wrexington, an economy in which the typical consumer's
basket consists of 20 pounds of meat and 10 toys.
RefertoTable24-5.If the base year is 2006, then the inflation rate in 2005 was
a. -44.5%.
b. -30.8%.
c. 7.7%.
d. 12.5%.
Currently, bank runs are a major problem for the U.S. banking system and the Fed.
a. True
b. False
If the number of people unemployed rose but the number of people employed and the
adult population stayed the same, then the labor force participation rate would rise.
a. True
b. False
Table 3-40
RefertoTable3-40.Germany should specialize in the production of
a. boats and import cars.
b. cars and import boats.
c. both goods and import neither good.
d. neither good and import both goods.
When we move along a given supply curve,
a. only price is held constant.
b. technology and price are held constant.
c. all nonprice determinants of supply are held constant.
d. all determinants of quantity supplied are held constant.
