Another term for full-employment output is:
A) potential output.
B) maximum output.
C) perfectly competitive output.
D) actual output.
If government spending is $6.2 trillion while government revenue is $6.2 trillion, the
government is said to have a
A) budget deficit.
B) budget surplus.
C) balanced budget.
D) balanced debt.
The formula for the government spending multiplier is
A) (1 + ) / (1 – ).
B) / (1 – ).
C) 1 / (1 – ).
D) – / (1 – ).
When a corporation tries to finance an investment project it can:
A) sell a corporate bond.
B) sell new shares of stock.
C) use its retained earnings.
D) All of the above are possible options for a corporation.
Under the Bretton Woods system
A) all nations fixed the value of their currencies against the dollar.
B) the United States was the only nation with a fixed exchange rate.
C) the United States was the only nation with floating exchange rates.
D) all nations allowed the value of their currencies to be determined by the free market.
Recall Application 2, “Two Approaches to Determining the Causes of Recessions,” to
answer the following questions:
According to the application, a recession is likely to be caused by a decrease in
aggregate demand if:
A) prices change but output does not change in the long run.
B) prices and output change in the long run.
C) prices and output do not change in the long run.
D) prices do not change but output changes in the long run.
Which of the following is included in both the U.S. GDP and GNP?
A) the value of all cars produced by Ford in Mexico
B) the value of all cars produced by General Motors in the U.S.
C) the value of all cars produced by Toyota in the U.S.
D) the value of cars produced by Nissan in Japan and the U.S.
According to the book, the estimate of the natural rate of unemployment in the U.S. in
recent years is between:
A) 5.0 -6.5 percent.
B) 6.0 -7.5 percent.
C) 4.0 -5.5 percent.
D) 0-10 percent.
Since 1997, the labor force participation rate for women in the United States has
A) remained virtually constant.
B) increased more than 10 percent.
C) decreased more than 20 percent.
D) equaled the participation rate for men.
Macroeconomics is best described as the study of:
A) very large issues.
B) the choices made by individual households, firms, and governments.
C) the nation’s economy as a whole.
D) the relationship between inflation and wage inequality.
A(n) ________ in U.S. prices will cause a decrease in the demand for U.S. dollars and
a(n) ________ in the (per dollar) exchange rate.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Which of the following statements is true?
A) The Fed only controls the short-term interest rates, not the long-term interest rates.
B) The Fed only controls the long-term interest rates, not the short-term interest rates.
C) The Fed controls both the short-term and the long term interest rates.
D) The Fed has no control of the long-term or the short-term interest rates.
If at a price of $1000, 8 different laptop manufacturers are willing to sell 20 laptops
each. If the 8 manufacturers are the only sellers of laptops in the market, then at a price
of $1000, there are ________ laptops supplied in the market.
A) 160
B) 8
C) 20
D) 820
An economic model is a
A) realistic version of an economic environment.
B) detailed version of an economic issue.
C) fictional representation of an entire economy.
D) simplified representation of an economic environment.
When diminishing returns has set in, adding more labor will decrease real GDP per
capita.
Suppose that the price of a television set is $10 in the United States and 1,500 yen in
Japan. If the current exchange rate is 100 yen to the dollar, then purchasing power
parity would predict that in the long run:
A) the price in the U.S. decreases.
B) the price in Japan increases.
C) the price in Japan decreases.
D) the price in the U.S. and Japan will remain unchanged.
Figure 2.1
On the production possibilities curve in Figure 2.1 the opportunity costs of increasing
agricultural production from 200 tons to 400 tons is:
A) 600 tons of manufacturing products.
B) 500 tons of manufacturing products.
C) 200 tons of manufacturing products.
D) 100 tons of manufacturing products.
Assuming all excess reserves are loaned out, if the reserve ratio is 1 percent, the money
multiplier will be equal to
A) 1.
B) 10.
C) 11.
D) 100.
As the marginal propensity to consume decreases, the value of the multiplier:
A) increases.
B) decreases.
C) stays the same.
D) can increase or decrease.