Exhibit 39-2
If P1 is a price support, the quantity of wheat purchased by the market would be equal
to
a. Q2.
b. Q0.
c. Q1.
d. Q2 – Q1.
e. Q1 – Q0.
As discussed in the textbook, various studies in the past have shown that there are
________________ degrees of separation between any two people in the world. Social
media would be expected to _______________ the number of degrees of separation,
making the world ________________.
a. 5 to 7; reduce; ‘smaller”
b. 8 to 10; reduce; “bigger”
c. 5 to 7; raise; “bigger”
d. 8 to 10; raise; “bigger”
When the government implements an agricultural price support (above the equilibrium
price), a surplus results and the government buys the surplus at the support price.
a. True
b. False
Some economists argue that a rise in the interest rate, brought about by a rise in
government borrowing in the loanable funds market to finance a budget deficit, brings
in foreign funds in search of the higher interest rate return. This, in turn, dampens the
rise in the interest rate. If this is true as far as it goes, there will be __________
crowding out than there would be if foreign funds did not flow into the country.
a. more
b. less
c. the same amount of
d. none of the above
The price of old (or existing) bonds and interest rates have an inverse relationship.
a. True
b. False
If variable X goes up as result of variable Y going down, then X and Y are
a. directly related.
b. inversely related.
c. independent.
d. positively related.
Suppose the economy starts off producing Natural Real GDP. Next, aggregate demand
rises, ceteris paribus. As a result, the price level rises in the short run. In the long run,
when the economy has moved back to producing Natural Real GDP, the price level will
be
a. higher than it was in short-run equilibrium.
b. lower than it was in short-run equilibrium but higher than it was originally (before
aggregate demand increased).
c. lower than it was originally (before aggregate demand increased).
d. equal to what it was originally (before aggregate demand increased).
If the natural unemployment rate is 7 percent and the current unemployment rate is 5
percent, then the economy is
a. producing a level of Real GDP that is greater than the level of natural Real GDP.
b. in a recessionary gap.
c. producing a level of Real GDP that is less than the level of natural Real GDP.
d. a and b
e. b and c
Exhibit 10-1
At Q3, there is a tendency for Real GDP to
a. rise.
b. fall.
c. remain unchanged.
d. There is not enough information to answer this question.
Exhibit 38-1
The coupon rate for bond E is
a. 37.5 percent.
b. 0.38 percent.
c. 0.45 percent.
d. 9.0 percent.
e. none of the above
The money supply falls from $1,200 billion to $1,160 billion. According to the simple
quantity theory of money, the price level will decline by __________ percent.
a. 3.33
b. 4.68
c. 5.09
d. 7.65
Exhibit 4-8
Suppose that wheat producerslobby the government for a price floor and receive
one.This price floor is set at PF.What is the size of the consumers’ surplus at PF?
a. area 5
b. area 6
c. area 1 + 2 + 4
d. area 1
The product of ____________________ and _________________ is equal to the total
amount of spending in an economy.
a. the money supply; the price level
b. velocity; the price level
c. the money supply; velocity
d. velocity; the level of output
We state that the evidence __________________ if evidence is consistent with a
theory€s predictions.
a. fails to reject the theory
b. proves the theory is correct
c. proves the theory is invalid
d. none of the above
The structural unemployment rate is 2.3 percent, the frictional unemployment rate is 2.4
percent, and the economy’s current unemployment rate is 4.1 percent. The economy is
in
a. a recessionary gap producing less than Natural Real GDP.
b. an inflationary gap producing more than Natural Real GDP.
c. long-run equilibrium.
d. an inflationary gap producing Natural Real GDP.
e. a recessionary gap producing more than Natural Real GDP.