Economic indicators, like unemployment claims and the average workweek, which
change before real GDP changes, are called:
a. leading.
b. lagging.
c. coincident.
d. structural.
Automatic stabilizers are government programs that:
a. exaggerate the ups and downs in aggregate demand without legislative action.
b. bring expenditures and revenues automatically into balance without legislative
action.
c. shift the budget toward a deficit when the economy slows but shift it toward a surplus
during an expansion.
d. increase tax collections automatically during a recession.
The vertical intercept of the consumption function that represents the portion of
consumption expenditure not associated with a level of disposable income is known as:
a. zero income intercept.
b. disposable income intercept.
c. autonomous consumption.
d. automatic consumption line.
Nonsmoking sections in restaurants are designed to remove ____ from a market ____.
a. smoke; with food service
b. third parties; for food service
c. externalities; with public goods
d. third parties; externality
e. nonsmokers; for food service
Which one of the following is leastlikely to be a user of financial information of a
grocery store?
a. The manager of the grocery store.
b. The supplier of milk to the grocery store.
c. A stockbroker looking for a possible investment.
d. A customer at the grocery store.
What interest rate does a bank pay when it borrows reserves from the Fed?
a. The discount rate.
b. The prime rate.
c. The federal funds rate.
d. The required reserve rate.
The principal objective of WTO is to:
a. reduce the level of all tariffs.
b. establish fair prices for all goods traded internationally.
c. prevent the trading of services across nations’ borders.
d. encourage countries to establish quotas.
The monetary rule is the view of the:
a. Keynesians that monetary policy is most important.
b. Monetarists that monetary policy is most important.
c. Classical economists that monetary policy is most important.
d. Monetarists that the Fed should expand the money supply at a constant rate.
Exhibit 10-7 Aggregate supply and demand curves
In Exhibit 10-7, if aggregate demand increases from AD1 to AD2,
a. output and prices will increase.
b. output and prices will decrease.
c. output alone will increase.
d. prices alone will decrease.
e. prices alone will increase.
Which of the following is excluded in the current account?
a. Goods exports.
b. Goods imports.
c. Capital inflow and outflow.
d. Net unilateral transfers.
Assume a fixed demand for money curve and the Fed increases the money supply. In
response, people will:
a. sell bonds, thus driving up the interest rate.
b. sell bonds, thus driving down the interest rate.
c. buy bonds, thus driving up the interest rate.
d. buy bonds, thus driving down the interest rate.
Marginal analysis examines the effects of additions to or subtractions from a current
situation.
GDP provides substantial information about an economy’s income distribution.
What can a nation do to increase its economic growth? Why is economic growth among
the major national economic goals of all countries?
If the marginal propensity to consume (MPC) is 0.80, the value of the spending
multiplier is 2.
Explain why the LDCs are unable to invest much in capital goods and human capital.
The Federal Reserve’s primary function is to control the money supply.
Since World War II, most of the growth in U.S. government outlays is attributable to
rapidly growing federal government transfer programs.
Demand-pull inflationary pressure increases as the economy approaches full
employment.