An increase in government spending by $100 would, if the MPC = 0.90, result in an
increase in real GDP by:
a. $1,000.
b. $9,000.
c. $900.
d. $190.
e. inadequate information is given.
If India has an absolute advantage in rug production when compared to England, then:
a. India should export rugs to England.
b. England should export rugs to India.
c. international trade should not occur.
d. England uses fewer resources to produce rugs than India.
e. India uses fewer resources to produce rugs than England.
Assuming that hamburgers and hot dogs are substitutes, an increase in the price of
hamburgers, other things being equal, results in a:
a. rightward shift in the demand curve for hot dogs.
b. leftward shift in the demand curve for hamburgers.
c. rightward shift in the demand curve for hamburgers.
d. leftward shift in the demand curve for hot dogs.
Exhibit 10-1 Aggregate supply curve
In Exhibit 10-1, as production increases, firms
resort to offering higher-wage rates to attract the dwindling supply of unemployed
resources in:
a. the segment labeled ab.
b. the segment labeled bc.
c. the segment labeled cd.
d. both segment bc and segment cd.
e. the entire curve.
The GDP gap is the difference between:
a. frictional unemployment and actual real GDP.
b. unemployment rate and real GDP deflator.
c. actual real GDP and full-employment real GDP .
d. full-employment real GDP and real GDP deflator.
An increase in the wages paid to fishermen will have what effect on the fish market
equilibrium?
a. Price will decrease, and quantity will decrease.
b. Price will increase, and quantity will increase.
c. Price will decrease, and quantity will increase.
d. Price will increase, and quantity will decrease.
e. Price and quantity will stay the same.
A tariff has the effect of granting ____ a larger share of the domestic market.
a. domestic consumers
b. foreign consumers
c. domestic producers
d. foreign producers
e. no producers or consumers
The rational expectations hypothesis indicates that people:
a. pay little attention to policy when forming their expectations about the future.
b. expect the next period to be pretty much like the recent past, regardless of policy
changes.
c. will always be able to forecast the future accurately.
d. change their expectations about the future if policy changes.
Adam Smith wrote that the:
a. economic problems of eighteenth-century England were caused by free markets.
b. government should control the economy.
c. pursuit of private self interest promotes the public interest in a market economy.
d. public or collective interest is not promoted by people pursuing their self interest.
Which of the following is in charge of the buying and selling of government securities
by the Fed?
a. The president.
b. The Federal Open Market Committee.
c. The Congress.
d. None of these.
Which of the following would count as an investment expenditure in the GDP
expenditures approach?
a. General Motors hires 10 electrical engineers.
b. Boeing purchases a new metal stretching machine used to produce airplane wings.
c. Ms. Quantum buys 100 shares of Microsoft stock.
d. A large corporation spends $10,000 per month on long-distance phone charges.