National income equals gross national product minus
A) imports.
B) depreciation.
C) inventories.
D) changes in inventories.
A bond’s coupon payment divided by the bond’s current price is equal to the bond’s
A) dividend yield.
B) current yield.
C) price-earnings ratio.
D) maturity value.
Figure 4-5
Figure 4-5 shows the market for apartments in Bay City. Recently, the government
imposed a rent ceiling at R0.
Refer to Figure 4-5. What area represents the deadweight loss after the imposition of
the ceiling?
A) G + H
B) J + H
C) C + E + J + H
D) C + E
Proponents of the ________ model argue that the short-run supply curve is vertical.
A) the monetarist model
B) the new classical model
C) the real business cycle model
D) the new Keynesian model
An increase in frictional unemployment will
A) shift the long-run Phillips curve to the right.
B) increase the natural rate of unemployment.
C) shift the short-run Phillips curve to the right.
D) All of the above are correct.
E) None of the above is correct.
When the Bretton Woods system was set up, the United States agreed initially to buy
and sell gold at a price of ________ per ounce.
A) $24
B) $35
C) $42
D) $48
You agree to lend $1,000 for one year at a nominal interest rate of 10%. You anticipate
that inflation will be 4% over that year. If inflation is instead 3% over that year, which
of the following is true?
A) The real interest rate you earn on your money is lower than you expected.
B) The purchasing power of the money that will be repaid to you will be lower than you
expected.
C) The person who borrowed the $1,000 will be worse off as a result of the
unanticipated decrease in inflation.
D) The real interest rate you earn on your money will be negative.
If you transfer all of your currency to your checking account, then initially, M1 will
________ and M2 will ________.
A) increase; not change
B) not change; increase
C) not change; not change
D) decrease; increase
According to ________, entrepreneurship does not contribute anything of value to
production.
A) Robert Lucas and Thomas Sargent
B) Milton Friedman
C) John Maynard Keynes
D) Karl Marx
A proprietorship or partnership can raise funds for expansion in all of the following
ways except
A) borrowing from someone or an institution willing to lend the funds.
B) reinvesting profit back into the business.
C) taking on a partner or more partners.
D) issuing stock through financial markets.
Prices of commercial airline tickets (assume that this is a normal good) have fallen in
recent months. Over this same period, the price of jet fuel has risen and consumer
incomes have fallen. Which of the following best explains the falling prices of airline
tickets?
A) The supply curve for airline tickets has shifted to the left while the demand curve for
airline tickets has shifted to the left.
B) The demand curve for airline tickets has shifted to the left more than the supply
curve has shifted to the left.
C) The demand curve and the supply curve for airline tickets have both shifted to the
right.
D) The supply curve for airline tickets has shifted to the left more than the demand
curve has shifted to the left.
Scenario 14-2
Imagine that Kristy deposits $10,000 of currency into her checking account deposit at
Bank A and that the required reserve ratio is 20%.
Refer to Scenario 14-2. As a result of Kristy’s deposit, Bank A’s excess reserves
increase by
A) $2,000.
B) $8,000.
C) $10,000.
D) $50,000.
If the U.S. government places tariffs on imports from countries that have been accused
of deliberately undervaluing their currencies, the price of these imports will ________
and the demand for the undervalued currency will ________.
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
Suppose that the federal budget is balanced when GDP is at potential GDP. If
equilibrium GDP falls below potential,
A) this will result in a current budget deficit.
B) the cyclically adjusted budget will be balanced.
C) government transfer payments will be rising and tax receipts will be falling.
D) All of the above are correct.
Following the recession of 2007-2009, the employment-population ratio
A) remained virtually unchanged for the next 36 months.
B) was even lower four years after the end of the recession.
C) began to slowly increase back to its pre-recession level.
D) began to quickly increase back to its pre-recession level.
Figure 17-1
Refer to Figure 17-1. What should the Federal Reserve do if it wants to move from
point A to point C in the short-run Phillips curve depicted in the figure above?
A) buy treasury bills
B) sell treasury bills
C) raise the discount rate
D) decrease the money supply
E) raise taxes