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Exhibit 3-13 -----------------------------Quantity
Demanded-------------------------------------
Assume that Jose, Kaitlyn, Leah, and Maria are the only buyers in this market. Each
individual consumer€s demand curve is ________________ sloping and the market
demand curve is _________________ sloping.
a. upward; also upward
b. downward; also downward
c. upward; downward
d. downward; upward
Suppose the Fed lowers its federal funds rate target.The Fed probably seeks to
a. lower the actual federal funds rate.
b. raise the actual federal funds rate.
c. leave unchanged the actual federal funds rate
d. b or c
e. a or c
Complete crowding out occurs when an increase in government spending is completely
offset by an equal increase in tax revenues.
a. True
b. False
One of the Fed's functions is to be the government's banker. This function means that
the
a. Fed holds bank reserves
b. Fed extends loans to the government whenever it spends more than it collects in tax
revenues.
c. government's checking account is at the Fed.
d. all of the above
Suppose that on Monday, a Big Mac cost $3.00 in the United States and 320 Japanese
yen in Japan. On Monday, the exchange rate was $1 = 90 yen. According to the
purchasing power parity theory, the yen was __________ by approximately
__________ percent.
a. overvalued; 22
b. undervalued; 40
c. overvalued; 29
d. undervalued; 19
e. overvalued; 19
The money supply increased and the AD curve did not shift to the right. This is
consistent with the
a. Keynesian transmission mechanism when there is either a liquidity trap or
interest-insensitive investment.
b. monetarist transmission mechanism when there is interest-insensitive investment.
c. Keynesian transmission mechanism when there is a liquidity trap.
d. monetarist transmission mechanism when there is a liquidity trap.
e. c and d
Suppose that the price of butter is $3 per pound and the price of margarine is $2 per
pound.If the price of butter rises to $3.90 and the price of margarine rises to $2.20, then
the absolute price of butter has _______________ and the relative price of butter has
_______________.
a. risen; fallen
b. fallen; risen
c. risen; risen
d. fallen; fallen
Exhibit 4-3
If price P2 is a price ceiling, then
a. there is a shortage in the market for good X.
b. the highest price that can legally be charged in this market is P3.
c. the price at which exchange legally takes place in the market for good X is P2.
d. the quantity exchanged is less than the quantity demanded.
e. all of the above
Exhibit 3-4
A price of $6 in the market will result in a
a. shortage of 10 units.
b. surplus of 10 units.
c. surplus of 5 units.
d. shortage of 5 units.
Tariffs and quotas are often imposed when a government is more responsive to
__________ interests, and the benefits of those trade restrictions are often __________.
a. consumer; concentrated
b. consumer; widely dispersed
c. producer; concentrated
d. producer; widely dispersed
Exhibit 3-6
If an increase in income causes the demand for good X to shift from D1 to D2,then good
X is
a. a normal good.
b. an inferior good.
c. a substitute good.
d. a complementary good.
e. a neutral good.
Exhibit 11-1
The economy is currently at point 1. Suppose the federal government increases
purchases and there is complete crowding out. As a result, the aggregate demand (AD)
curve in the exhibit
a. will maintain its present position at AD1.
b. will shift rightward, ideally so that it goes through point 2.
c. will shift rightward, ideally so that it goes beyond point 2.
d. will shift leftward.
e. €does not shift, but the SRAS curve will shift rightward so that it goes through
point 3.
Which of the following is an example of an adverse supply shock?
a. a nationwide drought lasting for many months
b. an outbreak of war among several of the Middle Eastern oil-producing countries
c. an influenza virus that affects 50 percent of the labor force over a two month period
d. a, b, and c
e. a and c
How are changes in opportunity cost predicted to affect behavior?
a. The lower the opportunity cost of doing X, the less likely X will be done.
b. The higher the opportunity cost of doing X, the less likely X will be done.
c. The lower the opportunity cost of doing X, the more likely X will be done.
d. a and c
e. b and c
A PPF is more likely to be a downward-sloping curve that is bowed outward than a
downward-sloping straight line because most resources are
a. better suited for the production of some goods than others.
b. used efficiently.
c. relatively cheap at low levels of output.
d. used to produce consumption goods.
If the Bureau of Labor Statistics considers Jessica to be a discouraged worker, then she
is not counted as unemployed for purposes of computing the official unemployment
rate.
a. True
b. False
A government agricultural policy in which a mandated minimum price is set is the
a. marketing quota system.
b. acreage allotment program.
c. price support program.
d. target price system.
e. paying farmers not to produce system.
