Which of the following would be most likely to cause a rightward shift of the demand
for shares of Planet X, Inc.’s stock?
If the interest rate at which you can lend funds is percent per year, then the present
value of Y dollars to be received next year is
Given the balance sheet below, what is the simple leverage ratio?
a. 1.25
b. 0.25
c. 5.00
d. 4.00
e. 1.00
If this balance sheet depicts the only bank in the economy, how large is M1?
a. $5 million
b. $10 million
c. $15 million
d. $60 million
e. $65 million
Which of the following are equivalent terms?
a. The absence of structural unemployment and the absence of cyclical unemployment
b. Normal employment and the absence of structural unemployment
c. Full employment and the absence of cyclical unemployment
d. Normal employment and the absence of frictional unemployment
e. Null employment and the absence of frictional unemployment.
Consider a market with a price floor. If the price floor is lowered, which of the
following would happen?
Assuming the economy was in equilibrium, use the following information to determine
the amount of funds supplied to the loanable funds market.
a. $2.2 trillion
b. $2.5 trillion
c. $2.7 trillion
d. $3.0 trillion
e. $5.2 trillion
The system of resource allocation in the United States is a
Suppose that the United States has an absolute advantage over Mexico in producing
both agricultural and manufactured goods. In the U. S., the opportunity cost of 1 unit of
agricultural output is 2 units of manufactured goods. In Mexico, the opportunity cost of
1 unit of agricultural output is 1.5 units of manufactured goods. Total production in the
U. S. and Mexico will be maximized if
According to Say’s Law, in the aggregate
a. demand creates its own supply
b. the production of output will generate exactly enough income to purchase what has
been produced
c. the economy is incapable of producing output fast enough to ensure full employment
d. full employment cannot be sustained without government action
e. consumer saving prevents the economy from reaching full employment
If the Federal Reserve unexpectedly raised its interest rate target, which of the
following would most likely occur?
a. The interest rate would increase and bond prices would rise.
b. The interest rate would decrease and bond prices would rise.
c. The interest rate would increase and bond prices would fall.
d. The interest rate would decrease and bond prices would fall.
e. The interest rate would increase but bond prices would not change.
The amount of wealth that an individual wishes to hold as money is determined by
a. the price level
b. the price level and real income
c. real income
d. real income and the interest rate
e. the price level, real income, and the interest rate
One of the concepts that is illustrated by a downward sloping production possibilities
frontier is that
Which of the following is a definition of value added? Revenue received by a firm for
its output
a. minus the cost of all the final goods bought
b. plus the cost of all the intermediate goods bought
c. minus the cost of all the intermediate goods bought
d. minus the cost of all interest payments
e. plus the cost of all the final goods bought
In examining consumer behavior, one of the constraints faced by consumers is
Suppose Mike agrees to borrow $100 from Renee for one year at a one-time interest
payment of 5%. They both expected the inflation rate to be 2% during the one-year
period. However, during that year the inflation rate was actually 1%. Which of the
following has occurred?
a. The unexpectedly low inflation rate has redistributed $1 from Mike to Renee
b. The unexpectedly low inflation rate has redistributed $5 from Mike to Renee
c. The unexpectedly high inflation rate has redistributed $1 from Mike to Renee
d. There have not been any redistribution costs to either party
e. The unexpectedly low inflation rate has redistributed $1 from Renee to Mike
The additional revenue a firm obtains from employing one more unit of capital is called
the
The Great Depression provided significant evidence that
a. the economy always worked well on its own
b. the economy always reached full employment on its own
c. the economy may not always do well on its own
d. the notion of laissez faire was correct
e. the supporters of the classical model were correct
GDP is a flow variable because it measures the process of production and is
independent of time.