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Assume that brand X is an inferior good and name brand Y is a normal good. An
increase in consumer income, other things being equal, will cause a(n):
a. upward movement along the demand curve for name brand Y.
b. downward movement along the demand curve for brand X.
c. rightward shift in the demand curve for brand X.
d. leftward shift in the demand curve for brand X.
Which of the following is a five-member body that has the authority from Congress to
set standards for conducting audits?
a. FASB
b. SEC
c. PCAOB
d. AICPA
When there is a shortage of a product in a market the:
a. price will fall.
b. price must be below the equilibrium price.
c. price must be above the equilibrium price.
d. producers will reduce output and sales will fall.
A favorable balance of trade occurs when:
a. goods exports are greater than goods imports.
b. goods imports are greater than goods exports.
c. international trade is an increasing share of total output.
d. the balance on capital account equals the balance on current account.
e. unilateral transfers are positive.
The real interest rate can be expressed as the:
a. nominal interest rate minus the real interest rate.
b. inflation rate minus the nominal interest rate.
c. nominal interest rate minus the inflation rate.
d. nominal interest rate plus the inflation rate.
Exhibit 9-7 Keynesian aggregate-expenditures model
In Exhibit 9-7, the level of
autonomous consumption is:
a. $50.
b. $100.
c. $150.
d. $200.
e. $0.
Exhibit 8-14 Disposable income and consumption data Disposable income
(Y)Consumption
(C)
MPC
MPS
Saving
$5,000 $4,750
$6,000 $5,500
$7,000
In Exhibit 8-14, when disposable income is $7,000, then saving will equal:
a. $2,500.00.
b. $1,750.00.
c. $1,562.50.
d. $1,250.00.
e. $750.00.
In accordance with the law of supply, both individual and market supply curves are
drawn:
a. horizontal.
b. vertical.
c. downward-sloping.
d. upward-sloping.
Exhibit 9-8 Keynesian aggregate-expenditures model
In Exhibit 9-8, an
increase in aggregate expenditures of 100 causes real GDP to rise by:
a. $100.
b. $200.
c. $300.
d. $400.
e. $500.
Which of the following economic systems answers the basic economic questions by
copying the previous generation?
a. Traditional economy.
b. Command economy.
c. Market economy.
d. Capitalism.
If MPC = 0.80, how much should government spending change to increase real GDP by
$500?
a. -100.
b. +80.
c. -80.
d. +500.
e. +100.
If a bank receives a new checkable deposit of $10,000, and the required reserve ratio is
20 percent, then the bank can lend out:
a. $2,000.
b. $10,000.
c. $40,000.
d. $8,000.
e. $0.
A movement along the consumption function is caused by a change in:
a. the price level.
b. autonomous consumption.
c. real disposable income.
d. the stock of durable goods.
Suppose you received a 5 percent increase in your nominal wage. Over the year,
inflation ran about 2 percent. Which of the following is true?
a. Your real wage increased.
b. Your nominal wage decreased.
c. Both your nominal and real wages decreased.
d. Although your nominal wage rose, your real wage decreased.
In Exhibit 4-2, a decrease in quantity demanded would cause a movement from which
equilibrium point to another, other things being equal?
a. E1 to E2.
b. E1 to E3.
c. E4 to E1.
d. E3 to E4.
If the marginal propensity to consume (MPC) is 0.75, the value of the spending
multiplier is:
a. 0.
b. 1.
c. 4.
d. 5.
