Two years ago Darryl put $3,000 into an account paying 3 percent interest. How much
does he have in the account today?
a. $3,180.00
b. $3,182.70
c. $3,183.62
d. None of the above are correct to the nearest cent.
If nominal GDP is $12,000 and the GDP deflator is 80, then real GDP is $15,000.
a. True
b. False
Which of the following is a cost of inflation?
a. shoeleather costs
b. menu costs
c. relative price variability
d. All of the above are correct.
Figure 25-1.
On the horizontal axis, K/Lrepresents capital (K) per worker (L). On the vertical axis,
Y/Lrepresents output (Y) per worker (L).
RefertoFigure25-1.Choose a point anywhere on the curve and call it point A. If the
economy is at point A in 2011, then it will definitely remain at point Ain 2012 if,
between 2011 and 2012,
a. the quantity of physical capital remains constant; the number of workers doubles; and
human capital, natural resources, and technology all double as well.
b. the quantity of physical capital doubles; human capital, natural resources, and
technology all double as well; and the number of workers remains constant.
c. the quantity of physical capital doubles; the number of workers doubles; and human
capital, natural resources, and technology all double as well.
d. the quantity of physical capital doubles; the number of workers doubles; and human
capital, natural resources, and technology remain constant.
Which among the following assets is the most liquid?
a. corporate bonds
b. fine art
c. deposits that can be withdrawn using ATMs
d. shares of stock
Most of the change from 1991 to 2000 in U.S. net capital outflow as a percent of GDP
was due to a(n)
a. decrease in U.S. investment.
b. decrease in U.S. national saving.
c. increase in U.S. investment.
d. increase in U.S. national saving.
The traditional view of the production process is that capital is subject to
a. diminishing returns, so that other things the same, real GDP in poor countries should
grow at a faster rate than in rich countries.
b. diminishing returns, so that other things the same, real GDP in poor countries should
grow at a slower rate than in rich countries.
c. increasing returns, so that other things the same, real GDP in poor countries should
grow at a faster rate than in rich countries.
d. increasing returns, so that other things the same, real GDP in poor countries should
grow at a slower rate than in rich countries.
In the language of macroeconomics, investment refers to
a. saving.
b. the purchase of new capital.
c. the purchase of stocks, bonds, or mutual funds.
d. All of the above are correct.
U.S. tax laws allow taxpayers, in computing the amount of tax they owe, to use the real
value, as opposed to the nominal value, of
a. both interest income and capital gains.
b. interest income but not capital gains.
c. capital gains but not interest income.
d. neither interest income nor capital gains.
In the calculation of the CPI, books are given greater weight than magazines if
a. consumers buy more books than magazines.
b. the price of books is higher than the price of magazines.
c. it costs more to produce books than it costs to produce magazines.
d. books are more readily available than magazines to the typical consumer.
Opponents of using policy to stabilize the economy generally believe that
a. neither fiscal nor monetary policy have much impact on aggregate demand.
b. attempts to stabilize the economy decrease the magnitude of economic fluctuations.
c. unemployment and inflation are not cause for much concern.
d. economic conditions can easily change between the start of policy action and when it
takes effect.
Table24-7.The table below applies to an economy with only two goods hamburgers and
hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.
RefertoTable24-7. If the base year is 2009, then the economy’s inflation rate is
a. 10 percent in 2010 and 6.36 percent in 2011.
b. 10 percent in 2010 and 17 percent in 2011.
c. 9.2 percent in 2010 and 6 percent in 2011.
d. 8.22 percent in 2010 and 5 percent in 2011.
In the long run,
a. the natural rate of unemployment depends primarily on the level of aggregate
demand.
b. inflation depends primarily upon the money supply growth rate.
c. there is a tradeoff between the inflation rate and the natural rate of unemployment.
d. All of the above are correct.
Which of the following will decrease U.S. net capital outflow?
a. capital flight from the United States
b. the government budget deficit increases
c. the U.S. imposes import quotas
d. None of the above is correct.
A macroeconomist is interested in
a. explaining how changes in sellers’ behavior affect prices of a particular good.
b. explaining price changes in a particular market.
c. explaining why the unemployment rate is higher.
d. All of the above are correct.
Figure 4-22
RefertoFigure4-22.At a price of $12, there is a
a. surplus of 2 units.
b. surplus of 4 units.
c. shortage of 2 units.
d. shortage of 4 units.
According to liquidity preference theory, a decrease in the price level shifts the
a. money demand curve rightward, so the interest rate increases.
b. money demand curve rightward, so the interest rate decreases.
c. money demand curve leftward, so the interest rate decreases.
d. money demand curve leftward, so the interest rate increases.
You go to the movieplex where movies ordinarily cost $9. You are intending to see a
movie for which you have a $3 off coupon good for only that movie at that time.
However, when you get there you see a friend who asks if you would rather see a new
release. Both movies start and end at the same time. If you decide to see the new release
with your friend, what is your opportunity cost?
a. the amount you value the first movie + $3
b. the amount you value the first movie + $9
c. $3
d. $9
People are willing to pay more for a diamond than for a bottle of water because
a. the marginal cost of producing an extra diamond far exceeds the marginal cost of
producing an extra bottle of water.
b. the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra
bottle of water.
c. producers of diamonds have a much greater ability to manipulate diamond prices
than producers of water have to manipulate water prices.
d. water prices are held artificially low by governments, since water is necessary for
life.
Figure 2-23
RefertoFigure2-23. It is possible for this economy to produce 75 doghouses.
a. True
b. False
“Other things equal, when the price of a good rises, the quantity demanded of the good
falls, and when the price falls, the quantity demanded rises.” This relationship between
price and quantity demanded
a. applies to most goods in the economy.
b. is represented by a downward-sloping demand curve.
c. is referred to as the law of demand.
d. All of the above are correct.
According to purchasing-power parity, which of the following necessarily equals the
ratio of the foreign price level divided by the domestic price level?
a. the real exchange rate, but not the nominal exchange rate
b. the nominal exchange rate, but not the real exchange rate
c. the real exchange rate and the nominal exchange rate
d. neither the real exchange rate nor the nominal exchange rate
In 2012, U.S. GDP was almost
a. $16 trillion.
b. $12 trillion.
c. $15 trillion.
d. $14 trillion.
Unemployment would decrease and prices would increase if
a. aggregate demand shifted right.
b. aggregate demand shifted left.
c. aggregate supply shifted right.
d. aggregate supply shifted left.
The introduction of a union into a firm benefits all of that firm’s workers.
a. True
b. False
Table 2-4
ProductionPossibilitiesforPicnicland
Refer to Table2-4. What is the opportunity cost to Picnicland of increasing the
production of burgers from 450 to 750?
a. 150 hotdogs
b. 225 hotdogs
c. 300 hotdogs
d. 450 hotdogs
The broken window fallacy states that when a window breaks and someone spends
money to repair it, they have created new economic activity that would not have
otherwise taken place.
a. True
b. False
Corey deposits $1,000 in a savings account that pays an annual interest rate of 5
percent. Over the course of a year, the inflation rate is 1.7 percent. At the end of the
year, Corey has
a. $17 more in his account, and his purchasing power has increased by $10.
b. $30 more in his account, and his purchasing power has increased by $50.
c. $40 more in his account, and his purchasing power has increased by $33.
d. $50 more in his account, and his purchasing power has increased by $33.
Productivity
a. is nearly the same across countries, and so provides no help explaining differences in
the standard of living across countries.
b. explains very little of the differences in the standard of living across countries.
c. explains some, but not most of the differences in the standard of living across
countries.
d. explains most of the differences in the standard of living across countries.
When aggregate demand shifts rightward along the short-run aggregate-supply curve,
inflation
a. increases and unemployment increases.
b. increases and unemployment decreases.
c. decreases and unemployment increases.
d. decreases and unemployment decreases.
Changes in nominal variables are determined mostly by the quantity of money and the
monetary system according to
a. both the classical dichotomy and the quantity theory of money.
b. the classical dichotomy, but not the quantity theory of money.
c. the quantity theory of money, but not the classical dichotomy.
d. neither the classical dichotomy nor the quantity theory of money.
If a firm wants to borrow it can
a. supply bonds by selling them.
b. supply bonds by buying them.
c. demand bonds by selling them.
d. demand bonds by buying them.
In 2009 and 2010, the federal government’s budget deficit was about
a. 5 percent of GDP, and this was the highest debt-GDP ratio in U.S history.
b. 10 percent of GDP, and this was the highest debt-GDP ratio in U.S history.
c. 5 percent of GDP, and this was the highest debt-GDP ratio since World War II.
d. 10 percent of GDP, and this was the highest debt-GDP ratio since World War II.
From 1991-2000, U.S. net capital outflow as a percent of GDP became a
a. larger positive number.
b. smaller positive number.
c. larger negative number.
d. smaller negative number.