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For the two year period ending in 2008-2009, what has been the number of bank
failures?
a. About 500
b. About 2,000
c. Fewer than 150
d. More than 5,000
e. Fewer than 1,000
According to the law of increasing opportunity cost,
a. opportunity cost rises as technology improves
b. the production possibilities frontier is a straight line
c. opportunity cost rises as society produces more of a good or service
d. the production possibilities frontier is convex with respect to the origin (that is bowed
toward the origin)
e. monetary costs rise as opportunity cost rises
The market clearing assumption is
a. a central assumption of the short-run macro model
b. the idea that prices in every market will adjust until quantity supplied and quantity
demanded are equal
c. the idea that excess supply always leads to an increase in demand
d. the idea that markets only work when they are in equilibrium
e. believed by most economists today to be an unreasonable assumption
When calculating the effect of a tax cut on equilibrium GDP, the tax multiplier is
always
a. 2.0 smaller than the spending multiplier
b. 1.0 smaller than the spending multiplier and negative in sign
c. positive
d. positive and larger than the spending multiplier
e. negative and larger than the spending multiplier
Consider the production possibilities frontier for food and clothing in Figure 2-10. A
movement from point J to point K could be caused by
Figure 2-10
a. the development of new and better
technology
b. increasing unemployment
c. the movement of society into a recession
d. the law of increasing opportunity costs
e. eliminating productive inefficiency
A decrease in the price level
a. decreases investment spending, thereby shifting the AD curve.
b. increases investment spending, thereby shifting the AD curve.
c. does not shift the AD curve.
d. increases autonomous consumption spending, thereby shifting the AD curve.
e. changes the slope of the AD curve.
An increase in human capital
a. is of secondary importance to economic growth compared to physical capital.
b. causes the production function to shift downward and become flatter.
c. causes the production function to shift upward.
d. causes the production function to shift downward.
e. can be separated from labor.
A critical assumption in the classical model is that markets are always clear.
If a lender charged a 4 percent nominal interest rate and the expected inflation rate is 1
percent, what is the difference between the real rate the lender received and the real rate
the lender expected when actual inflation ended up being 1 percent?
a. 2 percent
b. 4 percent
c. -4 percent
d. 1 percent
e. 0 percent
An economic system in which resources are privately owned and allocated by the
market is called
a. market capitalism
b. market socialism
c. centrally-planned capitalism
d. centrally-planned socialism
e. a tradition-based economy
An increase in demand coupled with a decrease in supply results in a(n)
a. increase in equilibrium price and an ambiguous effect on equilibrium quantity
b. increase in equilibrium quantity and a decrease in equilibrium price
c. decrease in equilibrium quantity and an ambiguous effect on equilibrium price
d. surplus
e. decrease in the equilibrium price and quantity
The Congressional Budget Office and the Office of Management and Budget each
produce deficit forecasts for a fiscal year. They use models that are mostly similar but
have notable differences. As such, the disagreements are likely usually over
a. normative issues
b. positive issues
c. the mathematical calculations in an economic model
d. whether microeconomics or macroeconomics is more important
e. whether economic theory is useful in explaining the behavior of actors in the
economy
The study of how firms interact in a market is a
a. waste of time
b. normative subject
c. microeconomic topic
d. topic in political science
e. macroeconomic topic
Which of the following is included in the M2 money stock?
a. bonds
b. stocks
c. gold
d. savings-type accounts
e. credit card balances
Private investment during a year includes
a. the value of inventories plus the values of stocks and bonds
b. spending on plant and equipment, new housing construction, and changes in
inventories
c. stocks and bonds purchased by firms
d. spending on plant and equipment plus government spending plus household spending
on stocks and bonds
e. spending on plant and equipment
How retail gasoline stations behave in a local market is an example of a
macroeconomic issue.
When demand increases,
a. consumers are willing and able to purchase more of the good at every price
b. consumers are willing and able to purchase less of the good at every price
c. there is a movement to the right along the demand curve
d. this is referred to as a change in quantity demanded
e. the price will tend to fall
