Which of the following is the correct formula for calculating the unemployment rate?
a.
b.
c.
d.
An increase in quantity supplied
a. results in a movement downward and to the left along a fixed supply curve.
b. results in a movement upward and to the right along a fixed supply curve.
c. shifts the supply curve to the left.
d. shifts the supply curve to the right.
Which of the following would raise the price level in both the short and long run?
a. an increase in taxes
b. an increase in government expenditures
c. a decrease in the minimum wage
d. an increase in the capital stock
The single most important piece of information about a stock is its
a. term.
b. dividend.
c. daily volume.
d. price.
If people in a country that has had persistently high inflation expect it to remain high
and are skeptical of promises the central bank makes, then the Phillips curve is
a. farther to the left than otherwise. If the central bank tries to reduce inflation
unemployment will rise by more than if people had believed its promises.
b. farther to the left than otherwise. If the central bank tries to reduce inflation
unemployment will rise by less than if people had believed its promises.
c. farther to the right than otherwise. If the central bank tries to reduce inflation
unemployment will rise by more than if people had believed its promises
d. farther to the right than otherwise. If the central bank tries to reduce inflation
unemployment will rise by less than if people had believed its promises..
Suppose that the central bank must follow a rule that requires it to increase the money
supply when the price level falls and decrease the money supply when the price level
rises. If the economy starts from long-run equilibrium and aggregate demand shifts
right, the central bank must
a. decrease the money supply, which shifts aggregate demand further right.
b. decrease the money supply, which shifts aggregate demand left.
c. increase the money supply, which shifts aggregate demand further right.
d. increase the money supply, which shifts aggregate demand left.
Money market mutual funds are included in
a. M1 but not M2.
b. M1 and M2.
c. M2 but not M1.
d. neither M1 nor M2.
In the economy of Talikastan in 2015, consumption was two-thirds of GDP, government
purchases were $1000 more than investment, investment was one-ninth of GDP, and the
value of exports exceeded the value of imports by $500. What was Talikastan’s GDP in
2015?
a. $1688
b. $9000
c. $13,500
d. $15,000
Fluctuations in real GDP are caused only by changes in aggregate demand and not by
changes in aggregate supply.
a. True
b. False
Indiadesh is a country that produces two goods, textiles and computers. Last year,
Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000
textiles and 1100 computers. Given no further information, which of the following
events could explain this change?
a. Indiadesh decreased unemployment.
b. Indiadesh experienced an improvement in textile-making technology.
c. Indiadesh experienced an improvement in computer-making technology.
d. Indiadesh experienced a reduction in resources.
A market supply curve is determined by
a. vertically summing individual supply curves.
b. horizontally summing individual supply curves.
c. finding the average quantity supplied by sellers at each possible price.
d. finding the average price at which sellers are willing and able to sell a particular
quantity of the good.
One surprising thing about the U.S. money stock is that
a. banks hold so much currency relative to the public.
b. the public holds so much currency relative to banks.
c. there is so little currency per person.
d. there is so much currency per person.
If the nominal interest rate is 15 percent and the inflation rate is 5 percent, then what is
the real interest rate?
a. 10 percent
b. 20 percent
c. 3 percent
d. 5 percent
The existence of money leads to
a. greater specialization in production, but not to a higher standard of living.
b. a higher standard of living, but not to greater specialization.
c. greater specialization and to a higher standard of living.
d. neither greater specialization nor to a higher standard of living.
If the minimum wage increased, then at any given rate of inflation
a. both output and employment would be higher.
b. neither output nor employment would be higher.
c. output would be higher and unemployment would be lower.
d. output would be lower and unemployment would be higher.
If a country were to save more, but its domestic investment remained the same, then
which of the following would rise?
a. both net capital outflow and net exports
b. net capital outflow but not net exports
c. net exports but not net exports
d. neither net exports nor net capital outflow
Suppose an economy produces only cheese and fish. In 2010, 20 units of cheese are
sold at $5 each and 8 units of fish are sold at $50 each. In 2009, the base year, the price
of cheese was $10 per unit and the price of fish was $75 per unit. For 2010,
a. nominal GDP is $500, real GDP is $800, and the GDP deflator is 62.5.
b. nominal GDP is $500, real GDP is $800, and the GDP deflator is 160.
c. nominal GDP is $800, real GDP is $500, and the GDP deflator is 62.5.
d. nominal GDP is $800, real GDP is $500, and the GDP deflator is 160.
Part of the explanation for why the aggregate-demand curve slopes downward is that a
decrease in the price level
a. decreases the real value of money.
b. increases the real value of the dollar in foreign exchange markets.
c. decreases the interest rate.
d. All of the above are correct.
Which of the following is notincluded in either M1 or M2?
a. U.S. Treasury bills
b. small time deposits
c. demand deposits
d. money market mutual funds
Figure 2-18
RelationshipbetweenPriceandRestaurantMeals
RefertoFigure2-18.A movement from point A to point B is called
a. a shift in demand.
b. a movement along the demand curve.
c. a shift in supply.
d. a movement along the supply curve.
Which of the following shifts the short-run aggregate supply curve to the right?
a. an increase in the money supply
b. an increase in the price level
c. a decrease in the expected price level
d. All of the above are correct.
Which of the following is an example of physical capital?
a. the strength of workers
b. on the job training
c. financial assets like cash and bonds
d. the equipment in a factory
In the 1980s, the U.S. government budget deficit rose. At the same time the U.S. trade
deficit grew larger, the real exchange rate of the dollar appreciated, and U.S. net capital
outflow decreased. Which of these events is contrary to what the open-economy
macroeconomic model predicts concerning the effects of an increase in the budget
deficit?
a. the U.S. trade deficit grew
b. the real exchange rate of the dollar appreciated
c. U.S. net capital outflow fell
d. None of the above is contrary to the predictions of the model.
You watch a lot of HGTV during your summer vacation, and you notice that most
housing buyers list granite countertops in their “must have” lists when buying a new or
existing house. You expect the demand for
a. granite countertops to shift to the left.
b. granite countertops to shift to the right.
c. substitute products such as marble countertops to shift to the right.
d. substitute products such as marble countertops to be unaffected by buyers’
preferences for granite.
If the Fed conducts open-market sales, which of the following quantities increase(s)?
a. interest rates, prices, and investment spending
b. interest rates and prices, but not investment spending
c. interest rates and investment, but not prices
d. interest rates, but not investment or prices
Figure 3-3
Refer to Figure3-3. If Arturo and Dina each divides his/her time equally between the
production of tacos and burritos, then total production is
a. 200 tacos and 150 burritos.
b. 400 tacos and 250 burritos.
c. 400 tacos and 300 burritos.
d. 800 tacos and 500 burritos.
A person’s subjective measure of wellbeing or satisfaction is called aversio.
a. True
b. False
Changes in inventory are included in the investment component of GDP.
a. True
b. False
If the natural rate of unemployment is 6%, but the Fed thinks it is 5% and attempts to
use monetary policy to move unemployment from 6% to 5%, then in the short run
which of the following variables will the Fed’s policy raise?
a. the price level and real GDP
b. the price level but not real GDP
c. real GDP but not the price level
d. neither real GDP nor the price level
The Federal Reserve can alter the size of the money supply by changing reserves or
changing reserve requirements.
a. True
b. False
Suppose tax laws were reformed to encourage saving by increasing the rate of return on
savings. Which of the following would be true?
a. Both the income effect and the substitution effect would tend to increase the amount
of money a household saved.
b. The income effect would tend to increase household savings while the substitution
effect would tend to decrease household savings.
c. The income effect would tend to decrease household savings while the substitution
effect would tend to increase household savings.
d. Both the income effect and the substitution effect would tend to decrease the amount
of money a household saved.
Other things the same, an increase in the U.S. real exchange rate makes U.S. goods
more expensive relative to foreign goods.
a. True
b. False
An outcome is said to be efficient if an economy is getting all it can from the scarce
resources it has available.
a. True
b. False
Changes in the GDP deflator reflect
a. only changes in prices.
b. only changes in the amounts being produced.
c. both changes in prices and changes in the amounts being produced.
d. neither changes in prices nor changes in the amounts being produced.