Which of the following is not a reason why low-income countries might experience low
economic growth?
A) The country has endured extended periods of war.
B) The country fails to enforce a rule of law.
C) The country has a good education system.
D) The country has a low rate of saving and investment.
If inflation is completely anticipated,
A) no one loses in the economy.
B) borrowers lose in the economy.
C) lenders lose in the economy.
D) firms lose because they incur menu costs.
If a corporate bond with face value of $1,000 has an interest rate of eight percent paid
once a year for a term of 30 years, what is the size of the coupon payment?
A) $1,000
B) $300
C) $80
D) $8
________ is the ease with which a financial security can be exchanged for money.
A) Risk
B) The face value
C) Liquidity
D) The rate of return
From 1983-2013, net exports for the United States
A) grew and then declined.
B) were negative.
C) were positive.
D) increased as exports rose above imports.
Purchases of which of the following goods would be dramatically reduced during a
recession?
A) tomatoes
B) ink pens
C) gasoline
D) refrigerators
Some economists argue that the apparent slowdown in economic growth in the United
States during the mid-1970s may not really have reduced the standard of living because
A) spending on new government regulations such as the Clean Air Act increased output
dramatically without increasing the standard of living of Americans.
B) significant improvements in the quality of services occurred, although the quantity
of these services did not increase much during this time.
C) changes in well-being are accurately reflected in statistics measuring economic
growth.
D) higher production costs from higher oil prices raised production and transportation
costs and reduced output.
As a result of slow economic growth following the recession of 2007-2009, many
companies including Cisco Systems, Lockheed Martin, and Cracker Barrel Old Country
Store cut production and employment as a result of the sluggish growth in the total
amount of spending in the economy. The total amount of spending in the economy is
known as
A) deficit spending.
B) planned investment spending.
C) aggregate expenditure.
D) equilibrium spending.
Between 2007 and 2011 the value of the U.S. dollar fell by more than 60 percent
against the Japanese yen. This fall in the price of the dollar against the yen was
________ for Japanese companies that exported to the United States and ________ for
U.S. companies that exported to Japan.
A) good; good
B) bad; good
C) good; bad
D) bad; bad
The total value of U.S. Treasury bonds outstanding equals
A) the federal government deficit.
B) the federal government surplus.
C) the federal government debt.
D) the cyclically adjusted budget deficit.
Table 7-6
Production and
Consumption Production
Without Trade With Trade
Estonia and Morocco can produce both swords and belts. Table 7-6 shows the
production and consumption quantities without trade, and the production numbers with
trade.
Refer to Table 7-6. With trade, what is the total gain in belt production?
A) 30
B) 80
C) 120
D) 210
Which of the following explains why mortgages weren’t considered securities prior to
1970?
A) The Federal Reserve Act of 1913 prohibited mortgages from being considered
securities. An amendment to the Act was approved in 1970 that allowed mortgages to
be considered securities.
B) Until 1970, the average annual increase in housing prices did not allow the buying
and selling of mortgages to be profitable. There has been a significant annual increase
in housing prices and mortgage values since 1970.
C) Congress passed a law in 1970 stipulating that mortgages could be classified as
securities.
D) Prior to 1970, mortgages were rarely resold in the secondary market.
If pilots and flight attendants agree to wage and benefit reductions in the wake of the
financial difficulties in the airline industry, what impact would this have on the supply
and demand in the market for airline service, assuming no other changes take place in
this market?
How has economist Robert Fogel explained that economic growth is connected to life
expectancy? Based on this connection, in what country would you expect to have a
longer life expectancy, the United States or India? Explain.
The textbook referred to the following quotation from a Federal Reserve publication:
“Trade is a win-win situation for all countries that participate.” But many firms and
workers oppose free trade policies and protests against globalization have become a
regular occurrence at meetings of the World Trade Organization. If trade is a “win-win”
situation, why is there strong opposition to free trade and globalization?
What does the word “marginal” mean in economics? What is a marginal benefit? What
is a marginal cost? What is marginal analysis?
Table 9-13
Refer to Table 9-13. Consider a simple economy that produces only three products:
tacos, earplugs, and toothbrushes. Use the information in the table to calculate the
inflation rate for 2013, as measured by the consumer price index.