Corporations receive no proceeds from the resale of their stock.
a. True
b. False
Table 23-7
The table below contains data for the country of Togogo. The base year is 1974.
RefertoTable23-7.From 1976 to 1977,
a. inflation was 33.3% and output grew at a rate of 20%.
b. inflation was 33.3% and output grew at a rate of 60%.
c. inflation was 50% and output grew at a rate of 20%.
d. inflation was 50% and output grew at a rate of 60%.
Which of the following is the correct formula for calculating the labor force
participation rate?
a.
b.
c.
d.
Sometimes during wars, government expenditures are larger than normal. To reduce the
effects this spending creates on interest rates,
a. the Federal Reserve could increase the money supply by buying bonds.
b. the Federal Reserve could increase the money supply by selling bonds.
c. the Federal Reserve could decrease the money supply by buying bonds.
d. the Federal Reserve could decrease the money supply by selling bonds.
If the reserve ratio is 12.5 percent, then $2,000 of additional reserves can create up to
a. $8,000 of new money.
b. $16,000 of new money.
c. $32,000 of new money.
d. None of the above is correct.
If the price level last year was 180 and this year it is 176, then
a. there was inflation of 2.3 percent.
b. there was inflation of 4.0 percent.
c. there was deflation of 2.2 percent.
d. there was deflation of 4.0 percent.
According to some estimates, over the last two decades China has had an annual
average growth rate of about 12 percent.
a. True
b. False
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. Assume that Jamaica and Norway each has 4 days available for
production. Originally, each country divided its time equally between the production of
coolers and radios. Now, each country spends all its time producing the good in which it
has a comparative advantage. As a result, the total output of radios increased by
a. 3.
b. 6.
c. 9.
d. 12.
Figure 3-22
Referto Figure3-22.Which of the following statements is correct regarding absolute
advantage?
a. Alice has an absolute advantage in the production of both lemonade and pizzas.
b. Betty has an absolute advantage in the production of both lemonade and pizzas.
c. Alice has an absolute advantage in the production of pizzas while Betty has an
absolute advantage in the production of lemonade.
d. Alice has an absolute advantage in the production of lemonade while Betty has an
absolute advantage in the production of pizzas.
An increase in the price of a good would
a. increase the supply of the good.
b. increase the amount purchased by buyers.
c. give producers an incentive to produce more.
d. decrease both the quantity demanded of the good and the quantity supplied of the
good.
Shoeleather costs arise when higher inflation rates induce people to
a. spend more time looking for bargains.
b. spend less time looking for bargains.
c. hold more money.
d. hold less money.
A firm may pay efficiency wages in an attempt to
a. reduce incentives to shirk.
b. reduce turnover.
c. attract a well-qualified pool of applicants.
d. All of the above are correct.
According to the efficient markets hypothesis, worse-than-expected news about a
corporation will
a. have no effect on its stock price.
b. raise the price of the stock.
c. lower the price of the stock.
d. change the price of the stock in a random direction.
Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle
made there. His purchase is included in
a. both Mexican GDP and U.S. GDP.
b. Mexican GDP, but it is not included in U.S. GDP.
c. U.S. GDP, but it is not included in Mexican GDP.
d. neither Mexican GDP nor U.S. GDP.
Which of the following is notcorrect?
a. Frictional unemployment is inevitable in a dynamic economy.
b. Although the unemployment created by sectoral shifts is unfortunate, in the long run
such changes lead to higher productivity and higher living standards.
c. At least 10 percent of U.S. manufacturing jobs are destroyed every year.
d. More than 13 percent of U.S. workers leave their jobs in a typical month.
Unemployment would cause an economy to
a. produce inside its production possibilities frontier.
b. produce on its production possibilities frontier.
c. produce outside its production possibilities frontier.
d. experience an inward shift of its production possibilities frontier.
If Switzerland chooses to engage in trade, it
a. will only benefit if it trades with countries that produce goods Switzerland cannot
produce.
b. cannot benefit if it trades with less developed countries.
c. should first attempt to produce the good itself.
d. can benefit by trading with any other country.
The natural rate of unemployment is constant over time.
a. True
b. False
RefertoFigure2-10,Panel(a).The opportunity cost of one sofa is highest when the
economy produces
a. 0 sofas.
b. 12 sofas.
c. 20 sofas.
d. 24 sofas.
If France had positive net exports last year, then it
a. sold more abroad than it purchased abroad and had a trade surplus.
b. sold more abroad than it purchased abroad and had a trade deficit.
c. bought more abroad than it sold abroad and had a trade surplus.
d. bought more abroad than it sold abroad and had a trade deficit.
Suppose the U.S. and Japan can both produce airplanes and televisions and the U.S. has
a comparative advantage in the production of airplanes while Japan has a comparative
advantage in the production of televisions. Also suppose the U.S. has an absolute
advantage in the production of both airplanes and televisions. The U.S. should
a. not trade airplanes or televisions with Japan.
b. import airplanes from Japan and export televisions to Japan.
c. export airplanes to Japan and import televisions from Japan.
d. export both airplanes and televisions to Japan.
If muffins and bagels are substitutes, a higher price for bagels would result in a(n)
a. increase in the demand for bagels.
b. decrease in the demand for bagels.
c. increase in the demand for muffins.
d. decrease in the demand for muffins.
Other things the same, an increase in the foreign price level
a. reduces the real exchange rate. This reduction could be offset by a decrease in the
domestic price level.
b. reduces the real exchange rate. This reduction could be offset by an increase in the
domestic price level.
c. increases the real exchange rate. This increase could be offset by a decrease in the
domestic price level.
d. increases the real exchange rate. This increase could be offset by an increase in the
domestic price level.
While pollution regulations yield the benefit of a cleaner environment and the improved
health that comes with it, the regulations come at the cost of reducing the incomes of
the regulated firms’ owners, workers, and customers. This statement illustrates the
principle that
a. trade can make everyone better off.
b. rational people think at the margin.
c. people face tradeoffs.
d. people respond to incentives.
When a country experiences capital flight, its net capital outflow,
a. which is part of the demand for loanable funds, increases.
b. which is part of the supply of loanable funds, increases.
c. which is part of the demand for loanable funds, decreases.
d. which is part of the supply of loanable funds, decreases.
The purchase of a capital asset adds to the demand for loanable funds only if that asset
is a domestic one.
a. True
b. False
Which of the following is an example of an efficiency wage?
a. a high wage paid to compensate for dangerous work such as coal mining
b. an above-equilibrium wage offered by a firm to attract a more talented pool of job
applicants
c. a wage below the minimum wage but supplemented by customer tips
d. a high wage paid to a college graduate for a high-skill job such as electrical
engineering
Figure 4-8
RefertoFigure4-8.Suppose the figure shows the market demand for Big Box e-readers.
Suppose the price of the leading competitor’s ereaders, a substitute good, decreases.
Which of the following changes would occur?
a. a movement along D2 from point A to point B
b. a movement along D2 from point B to point A
c. a shift from D1 to D2
d. a shift from D2 to D1
Suppose that monetary neutrality and the Fisher effect both hold. An increase in the
money supply growth rate increases
a. the inflation rate and growth of real GDP.
b. the inflation rate but not the growth rate of real GDP.
c. the growth rate of real GDP, but not the inflation rate.
d. neither the inflation rate nor the growth rate of real GDP.
Scenario 28-1
Suppose that the Bureau of Labor Statistics reports that the entire adult population of
Mankiwland can be categorized as follows: 25 million people employed, 3 million
people unemployed, 1 million discouraged workers, and 1 million people who are either
students, homemakers, retirees, or other people not seeking employment.
RefetoScenario28-1.What is the labor-force participation rate?
a. 83.3%
b. 86.7%
c. 93.3%
d. 96.7%
During a bank run, depositors decide to hold more currency relative to deposits and
banks decide to hold more excess reserves relative to deposits.
a. Both the decision to hold relatively more currency and the decision to hold relatively
more excess reserves would make the money supply increase.
b. Both the decision to hold relatively more currency and the decision to hold relatively
more excess reserves would make the money supply decrease.
c. The decision to hold relatively more currency would make the money supply
increase. The decision to hold relatively more excess reserves would make the money
supply decrease.
d. The decision to hold relatively more currency would make the money supply
increase. The decision to hold relatively more excess reserves would make the money
supply decrease.
Suppose that the prices of dairy products have risen relatively less than prices in general
over the last several years. To which problem in the construction of the CPI is this
situation most relevant?
a. substitution bias
b. introduction of new goods
c. unmeasured quality change
d. income bias
Most job search in the U.S. economy takes place without intervention by the
government.
a. True
b. False