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Exhibit 16-2 Money market demand and supply curves
Beginning from an equilibrium at E1 in
Exhibit 16-2, an increase in the money supply from $400 billion to $600 billion causes
people to:
a. sell bonds and drive the price of bonds down.
b. buy bonds and drive the price of bonds up.
c. buy bonds and drive the price of bonds down.
d. sell bonds and drive the price of bonds up.
Exhibit 4-9 Data on supply and demand Price Quantity
DemandedQuantity
Supplied
$2.00 100 300
1.50 150 250
1.00 200 200
0.50 250 150In Exhibit 4-9 the equilibrium price and quantity in the market are:
a. $5.50, 200.
b. $1.50, 300.
c. $2.00, 100.
d. $1.00, 200.
A graph illustrating the relationship between the quantity of money demanded and the
interest rate would have a slope that is:
a. positive.
b. negative.
c. horizontal.
d. vertical.
If no fiscal policy changes are implemented to fight inflation, suppose the aggregate
demand curve will exceed the current aggregate demand curve by $900 billion at any
level of prices. Assuming the marginal propensity to consume is 0.90, this increase in
aggregate demand could be prevented by:
a. increasing government spending by $500 billion.
b. increasing government spending by $140 billion.
c. decreasing taxes by $40 billion.
d. increasing taxes by $100 billion.
A textbook is an example of:
a. capital.
b. a natural resource.
c. labor.
d. all of these.
Aggregate demand's downward-sloping character reflects three principal influences as
shown in which of the following?
a. People's desire to maintain real wealth holdings, the interest rate, and international
trade.
b. People's desire to increase the price level, the interest rate, and the economic growth
effect.
c. The interest rate, the economic growth effect, and international trade.
d. Cost-pull inflation, demand-pull inflation, and the need to maintain real wealth
holdings.
e. Recession phases of the business cycle, upturns, and downturns.
Imposing a restrictive quota on imported plasma TVs will:
a. increase the price of the plasma TVs and decrease the quantity consumed.
b. increase both the price of the plasma TVs and the quantity consumed.
c. leave the price of the plasma TVs unchanged but decrease the quantity consumed.
d. leave the price and the quantity consumed of plasma TVs unchanged, because
domestic producers will expand production to make up for the reduction in imports
Karl Marx was a(n):
a. 19th century German philosopher.
b. 18th century Russian economist.
c. 14th century Polish banker.
d. 19th century Russian journalist.
An increase in the quantity demanded of a good is most often due to:
a. current prices.
b. higher prices.
c. higher income.
d. lower prices.
e. technological change.
Assume Q represents the quantity supplied at a given price and Qd represents the
quantity demanded at the same given price. Which of the following market conditions
produce a downward movement of the price?
a. Q = 1,000, Qd = 750.
b. Q = 750, Qd = 750.
c. Q = 750, Qd = 1,000.
d. Q = 1,000, Qd = 1,000.
Exhibit 12-4 Marginal tax rate lines
In Exhibit 12-4, line A represents a(n):
a. regressive tax.
b. progressive tax.
c. proportional tax.
d. ability-to-pay tax.
To finance a federal budget deficit, the U.S. Treasury borrows by selling:
a. Treasury bills.
b. Treasury notes.
c. Treasury bonds.
d. All of these.
A majority of the commercial banks in the United States are members of the Fed.
During the 1960s, the inflation rate and the unemployment rate were inversely related.
Describe the relationship between investment and the level of disposable income.
Suppose A and B are substitute goods. Other things being equal, the demand curve for A
will shift to the right when the price of B goes down.
Net exports equal imports minus exports.
Discuss the impact of demand and supply changes on market equilibrium price and
quantity. Express this graphically.
