Table 28-4
2010 Labor Data for Adults (ages 16 and older) in Meditor
RefetoTable28-4. What is the adult female labor force in Meditor?
a. 40 million
b. 65 million
c. 70 million
d. 100 million
A firm might offer efficiency wages to reduce worker turnover and thereby reduce
production costs.
a. True
b. False
A closed economy
a. does not engage in international trade of goods and services.
b. does not engage in international borrowing or lending.
c. both A and B
d. engages in international borrowing and lending.
If an economy’s GDP rises, then it must be the case that the economy’s
a. income rises and saving falls.
b. income and saving both rise.
c. income rises and expenditure falls.
d. income and expenditure both rise.
When an American doctor opens a practice in Bermuda, his production there is part of
U.S. GNP.
a. True
b. False
If the public decides to hold more currency and fewer deposits in banks, bank reserves
a. decrease and the money supply eventually decreases.
b. decrease but the money supply does not change.
c. increase and the money supply eventually increases.
d. increase but the money supply does not change.
If wages for accountants rose, then accountants’ leisure time would have a lower
opportunity cost.
a. True
b. False
An increase in the price of oil shifts the
a. short-run Phillips curve right and the unemployment rate rises.
b. short-run Phillips curve right and the unemployment rate falls.
c. short-run Phillips curve left and the unemployment rate rises.
d. short-run Phillips curve left and the unemployment rate falls.
If the CPI was 108.00 in 1942 and is 336.96 today, then $10 in 1942 purchased the
same amount of goods and services as
a. $2.57 purchases today.
b. $28.89 purchases today.
c. $31.20 purchases today.
d. $38.89 purchases today.
Most spells of unemployment are long, and most unemployment observed at any given
time is long-term.
a. True
b. False
Economists use the term “money” to refer to
a. all wealth.
b. all assets, including real assets and financial assets.
c. all financial assets, but not real assets.
d. those types of wealth that are regularly accepted by sellers in exchange for goods and
services.
When a society cannot produce all the goods and services people wish to have, it is said
that the economy is experiencing
a. scarcity.
b. surpluses.
c. inefficiencies.
d. inequalities.
The invention of the telegraph led to the loss of jobs for those who had delivered mail
by horse but created jobs for telegraph operators and delivery persons. This is an
example of
a. structural unemployment created by efficiency wages.
b. structural unemployment created by sectoral shifts.
c. frictional unemployment created by efficiency wages.
d. frictional unemployment created by sectoral shifts.
Monetary policy
a. must be described in terms of interest-rate targets.
b. must be described in terms of money-supply targets.
c. can be described either in terms of the money supply or in terms of the interest rate.
d. cannot be accurately described in terms of the interest rate or in terms of the money
supply.
Which of the following is nota cause of the decline in the U.S. men’s laborforce
participation rate over the past several decades?
a. young men now stay in school longer than their fathers and grandfathers did
b. older men now retire earlier and live longer
c. with more women employed, there are fewer jobs now available to men
d. more fathers now stay at home to raise their children
A recession is always associated with
a. the end of a war.
b. slowly growing real GDP.
c. rising inflation.
d. declining real GDP.
The real interest rate is the interest rate corrected for inflation.
a. True
b. False
Table 28-3
2009 Labor Data for Baltivia
RefetoTable28-3.How many people were in Baltivia’s labor force in 2009?
a. 11,000
b. 12,600
c. 13,380
d. 20,000
The U.S. president who referred to inflation as “public enemy number one” was
a. Richard Nixon.
b. Gerald Ford.
c. Jimmy Carter.
d. Ronald Reagan.
Table29-6.
RefetoTable29-6. Assume there is a reserve requirement and the Bank of Pleasantville
is exactly in compliance with that requirement. Assume the same is true for all other
banks. Lastly, assume people hold only deposits and no currency. What is the money
multiplier?
a. 6
b. 16.7
c. 15.6
d. 6.4
Some people believe that monetary policy should be made by rule rather than by
discretion. One of their beliefs is that
a. setting a policy rule will limit the abuse of power of policymakers.
b. policymakers can better influence the political business cycle in their favor when
following a policy rule.
c. a policy rule provides policymakers with the greatest flexibility to manage inflation.
d. if the Fed was required to follow a low-inflation policy, the economy would face a
less favorable short-run trade-off between inflation and unemployment.
Inflation reduction has the lowest cost when the efforts are
a. credible so that the sacrifice ratio is low.
b. credible so that the sacrifice ratio is high.
c. unexpected so that the sacrifice ratio is high.
d. unexpected so that the sacrifice ratio is low.
If the reserve ratio is 5 percent, banks do not hold excess reserves, and people do not
hold currency, then when the Fed purchases $20 million worth of government bonds,
bank reserves
a. increase by $20 million and the money supply eventually increases by $400 million.
b. decrease by $20 million and the money supply eventually decreases by $400 million.
c. increase by $20 million and the money supply eventually increases by $100 million.
d. decrease by $20 million and the money supply eventually decreases by $100 million.
When a country experiences capital flight, the interest rate
a. falls because the demand for loanable funds shifts left.
b. falls because the supply for loanable funds shifts right.
c. rises because the demand for loanable funds shifts right.
d. rises because the supply for loanable funds shifts left.
A country’s trade balance
a. must be zero.
b. must be greater than zero.
c. is greater than zero only if exports are greater than imports.
d. is greater than zero only if imports are greater than exports.
The production possibilities frontier is a graph that shows the various combinations of
output that an economy can possibly produce given the available factors of production
and
a. society’s preferences.
b. the available production technology.
c. a fair distribution of the output.
d. the available demand for the output.
Table 3-21
Assume that Jamaica and Norway can switch between producing coolers and producing
radios at a constant rate. The following table shows the number of coolers or number of
radios each country can produce in one day.
Refer to Table3-21. Jamaica and Norway would notbe able to gain from trade if
Norway’s opportunity cost of one radio changed to
a. 0 coolers.
b. 1 cooler.
c. 2 coolers.
d. Jamaica and Norway can always gain from trade regardless of their opportunity
costs.
People are likely to want to hold more money if the interest rate
a. increases, making the opportunity cost of holding money rise.
b. increases, making the opportunity cost of holding money fall.
c. decreases, making the opportunity cost of holding money rise.
d. decreases, making the opportunity cost of holding money fall.
An economic model can accurately explain how the economy is organized because it is
designed to include, to the extent possible, all features of the real world.
a. True
b. False
At a given real exchange rate, which of the following, by itself, would increase the
supply of dollars in the market for foreign-currency exchange?
a. foreign citizens want to buy more U.S. bonds
b. U.S. citizens want to buy more foreign bonds
c. foreign citizens want to buy more U.S. goods
d. U.S. citizens want to buy more foreign goods
A bagel shop sells fresh baked bagels from 5 a.m. until 7 p.m. every day. The shop does
not sell day-old bagels, so all unsold bagels are thrown away at 7 p.m. each day. The
cost of making and selling a dozen bagels is $1.00; there are no costs associated with
throwing bagels away. If the manager has 8 dozen bagels left at 6:30 p.m. on a
particular day, which of the following alternatives is most attractive?
a. Lower the price of the remaining bagels, even if the price falls below $1.00 per
dozen.
b. Lower the price of the remaining bagels, but under no circumstances should the price
fall below $1.00 per dozen.
c. Throw the bagels away and produce 8 fewer dozen bagels tomorrow.
d. Starting tomorrow, lower the price on all bagels so they will all be sold earlier in the
day.