Exclusion of which of the following tends to understate the true level of unemployment
in the economy?
a. Children.
b. Retired persons.
c. Students.
d. People who do not want to work.
e. Discouraged workers.
A movement along the demand curve for automobiles is caused by a change in:
a. the price of automobiles.
b. the price of gasoline.
c. the price of steel.
d. consumers’ incomes.
Using the aggregate expenditure-output model, assume the aggregate expenditures (AE)
line is above the 45-degree line at full-employment GDP. This vertical distance is called
a(n):
a. inflationary gap.
b. recessionary gap.
c. negative GDP gap.
d. marginal propensity to consume gap.
Exhibit 1A-2 Straight line
Straight line CD in Exhibit 1A-2 shows
that:
a. increasing values for X will increase the value of Y.
b. decreasing values for X will decrease the value of Y. c. there is a direct relationship
between X and Y.
d. all of these.
Which of the following would be an external cost to the consumption of cigarettes?
a. Price of a pack of cigarettes.
b. Loss of income resulting from extra missed days of work.
c. Higher life insurance premiums due the practice of smoking.
d. The loss in utility received because the smoker must stand outside her office building
in the winter to smoke.
e. Increased risk of cancer to the nonsmoking passengers in the smoker’s carpool.
Exhibit 15-7 Lower Walloon National Bank AssetsLiabilities
Reserves $10,000 Checkable deposits $10,000 In Exhibit 15-7, if Mr. Brown pays out
all of the proceeds of the loan to Mr. John White who is going to make the renovations
of the restaurant, the Lower Walloon National bank will now have:
a. $6,000 in reserves, $4,000 in loans, and $10,000 in checkable deposits.
b. $2,000 in reserves, $4,000 in loans, and $10,000 in checkable deposits.
c. $2,000 in reserves, $8,000 in loans, and $10,000 in checkable deposits.
d. $0 in reserves, $8,000 in loans, and $10,000 in checkable deposits.
e. $10,000 in reserves, $8,000 in loans, and $2,000 in checkable deposits.
Full employment means which of the following is zero?
a. structural unemployment
b. cyclical unemployment
c. frictional unemployment
d. aggregate unemployment
On a Phillips curve diagram, a decrease in the rate of inflation, other things being equal,
is represented by a(n):
a. upward shift of the Phillips curve.
b. downward movement along Phillips curve.
c. upward movement along the Phillips curve.
d. downward shift of the Phillips curve.
Which of the following forms of money is the least liquid?
a. Dollars.
b. Checking account deposits.
c. Passbook savings.
d. Certificates of deposit.
In the simple Keynesian aggregate expenditure model, the equilibrium level of
disposable income is achieved when:
a. the employment rate is equal to the labor force participation rate.
b. saving equals investment.
c. aggregate expenditures exceed output.
d. aggregate expenditures are equal to real disposable income.
Assuming that wheat and corn can both be grown on the same type of land, a decrease
in the price of corn, other things being equal, will cause a(n):
a. downward movement along the supply curve for wheat.
b. upward movement along the supply curve for wheat.
c. rightward shift in the supply curve for wheat.
d. leftward shift in the supply curve for wheat.
Which of the following is not true about a production possibilities curve? The curve:
a. indicates the combinations of goods and services that can be produced with given
technology.
b. indicates the efficient production points.
c. indicates the non-efficient production points.
d. indicates the feasible (attainable) and non-feasible production points.
e. indicates which production point will be chosen.
The aggregate demand curve will shift rightward when there is:
a. a decrease in government spending.
b. a decrease in incomes abroad.
c. a tax increase.
d. the expectation that future consumer income will rise.
The investment demand curve shows the amount businesses spend for investment goods
at different possible:
a. price levels.
b. levels of GDP.
c. rates of interest.
d. levels of taxation.
Income tax collections:
a. rise during a recession, thus reduce the severity of the recession.
b. rise during a recession, thus increase the severity of the recession.
c. fall during inflationary episodes, thus increase the severity of the inflation.
d. fall during a recession, thus reducing the severity of the recession.
The price system eliminates scarcity.
If the economy is in recession, explain what advice you would give the President, if you
were a monetarist economist. What if you were a Keynesian?
The Federal Reserve System is run by the President of the United States.
If the supply curve decreases while the demand curve remains unchanged, the
equilibrium price would decrease.
Political instability is a deterrent to long-term private investment.