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The discovery and dissemination of a new cost-saving technology
a. is an example of a positive demand shock
b. would cause the long-run AS curve to shift leftward, thereby increasing both output
and the price level
c. would increase firms' unit costs
d. would lead to an increase in output and a decrease in the price level
e. is an example of a negative supply shock
It is easy for one financial institution to reduce its leverage by acting alone, but when
many financial institutions try to do the same thing at once, asset prices fall rapidly and
bank capital declines for all such institutions.
In the short run, the impact of a $50 billion spending package on GDP will be
a. greater than $50 billion because of the multiplier effect
b. less than $50 billion because of the tax code
c. greater than $50 billion because of the tax code
d. exactly $50 billion
e. greater than $50 billion because of crowding out.
If the Fed increases the money supply, the interest rate
a. rises and spending increases
b. rises and spending decreases
c. falls and spending increases
d. falls and spending decreases
e. falls, business spending increases, and consumer spending decreases
Most corporations do not pay back their debt.
If the full-employment rate of unemployment is 5 percent, and the economy is
experiencing a 7 percent unemployment rate, what is the rate of cyclical
unemployment?
a. 7 percent
b. 12 percent
c. -2 percent
d. 5 percent
e. 2 percent
Equilibrium real GDP is
a. independent of the price level
b. determined solely in the loanable funds market
c. controlled by the Fed
d. directly related to the interest rate
e. the level of output at which total spending equals total output for a given price level
Which of the following is assumed in virtually every economic model?
a. Inefficiency exists in the economy.
b. Decision makers operate in the face of unlimited resources.
c. All decision makers face constraints.
d. Normative economic statements are derived from mathematical equations.
e. Positive statements are derived from normative statements.
As of December 2008, the most important category in the CPI is
a. medical care
b. education
c. transportation
d. food and beverages
e. housing.
When the value of a payment is adjusted in proportion to changes in the CPI,
economists refer to that as
a. nominalization
b. realization
c. indexation
d. stabilization
e. depreciation
One way to decrease leverage is increasing capital.
Which of the following may be sacrificed when pursuing growth policies?
a. Environmental regulations and air quality
b. Anti-monopoly, pro-competitive legislation
c. Safety net programs such as food stamps
d. All of the above
e. Technological progress.
Assume the economy is currently in equilibrium. Use the following information to
calculate the total value of leakages
Total injections are
a. $10.7 trillion
b. $5.1 trillion
c. $5.9 trillion
d. $5.7 trillion
e. $5.3 trillion
If the price of new automobiles rises in the U.S. market while prices remain unchanged
in foreign markets,
a. foreign firms will want to export fewer automobiles to the United States
b. foreign firms will want to export more automobiles to the United States
c. foreign firms will not change their exports to the United States since it is a different
market
d. U.S. firms will want to export more automobiles to foreign markets
e. U.S. firms will not change their exports to foreign markets unless foreign prices also
change
If autonomous consumption decreases, which of the following would occur in the short
run?
a. a decrease in GDP, a decrease in the price level, a decrease in money demand and a
decrease in the interest rate.
b. an increase in GDP, an increase in the price level, an increase in money demand and
an increase in the interest rate.
c. a decrease in GDP, an increase in the price level, an increase in money demand and
an increase in the interest rate.
d. an increase in GDP, a decrease in the price level, a decrease in money demand and an
increase in the interest rate.
e. a decrease in GDP, a decrease in the price level, an increase in money demand and an
increase in the interest rate.
The process by which an economic variable is adjusted to remove the effects of changes
predicted to occur at the time of year is known as
a. structural change
b. real change
c. macroeconomic adjustment
d. unemployment adjustment
e. seasonal adjustment.
A shock that could trigger an expansion is a
a. large increase in oil prices
b. financial crisis
c. sudden cutback in military spending
d. large decrease in oil prices
e. sudden increase in the interest rate
