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Every time the Fed buys or sells on the open market, the __________ changes.
a. budget deficit
b. income tax rate
c. money supply
d. a and b
e. a, b, and c
A characteristic of a 45-degree line is that
a. any point on the line is equidistant from the two axes.
b. it bisects a right angle.
c. its slope is 1.
d. a and c
e. a, b, and c
Exhibit 9-1
The economy is currently producing Q1. At this level of Real GDP, the economy is in
a. an inflationary gap.
b. a recessionary gap.
c. long-run equilibrium.
d. none of the above
Exhibit 11-2
At the highest point above the horizontal axis, tax revenues
a. are maximized.
b. are lower than at A and higher than at B.
c. are lower than at B and higher than at A.
d. drop to zero.
Capital consumption allowance refers to
a. capital goods being used up in production through natural wear, obsolescence, and
accidental destruction.
b. people sending money between countries.
c. the purchase of used factories.
d. the purchase of goods that allow households to consume more services.
Under a fixed exchange rate system, if the dollar price of Mexican pesos is above its
equilibrium level, the peso is referred to as overvalued and the dollar is necessarily
undervalued.
a. True
b. False
Which of the following statements would Keynes have been most likely to agree with?
a. Saving is more responsive to changes in interest rates than to changes in income.
b. Say's law holds in both a barter and money economy.
c. The internal structure of the economy is not always competitive enough to allow
prices to fall.
d. Investment is exclusively dependent upon the interest rate.
e. none of the above
Exhibit 10-8
The marginal propensity to consume (MPC) is
a. 0.90.
b. 0.10.
c. 0.80.
d. 0.95.
e. 0.75.
The smaller the required reserve ratio, the larger the simple deposit multiplier.
a. True
b. False
Exhibit 15-2
If the interest rate is i2 and the relevant money supply curve is S1, then there is a
a. shortage of money between points B and A.
b. surplus of money between points B and A.
c. surplus of money between points C and D.
d. shortage of money between points C and D.
Exhibit 4-1
Suppose the good shown is being sold at the $6 price ceiling. At a quantity of 75 units,
what is the maximum per-unit price buyers would be willing to pay for a good "tied" to
the good shown in the exhibit?
a. $10
b. $8
c. $6
d. $4
e. none of the above
Which of the following is a correct listing of money's functions?
a. source of credit, value of transaction costs, unit of barter
b. medium of barter, medium of exchange, medium of transactions
c. unit of barter, unit of account, a unit of income
d. store of value, store of exchange, measure of account
e. store of value, medium of exchange, unit of account
