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In the classical view, all markets clear, except the labor market.
Suppose that equilibrium in the dollar-pound market occurs where 300 million pounds
are demanded at a price of $1.75 per pound. If the current exchange rate is $1.60 per
pound, we know that
a. the dollar-pound market is in equilibrium
b. there is an excess demand for pounds, so the dollar price of the pound will rise
c. there is an excess demand for pounds, and the pound is overvalued
d. there is an excess supply of pounds, and the dollar price of the pound will rise
e. there is an excess supply of pounds, and the dollar price of the pound will fall
If the required reserve ratio (RRR) is 10 percent and the Fed sells a $5,000 bond to an
individual who pays for it with a check, the money supply will
a. not change
b. decrease by $4,500
c. increase by $4,500
d. decrease by $5,000
e. increase by $5,000
Which of the following changes would cause a movement along the U.S. demand curve
for a foreign currency?
a. An increase in U.S. real GDP
b. A fall in U.S. real GDP
c. A rise in the U.S. interest rate
d. A change in the exchange rate
e. An expectation that the exchange rate is going to fall.
Economic models come in the form of
a. three-dimensional objects
b. all of the following
c. words
d. diagrams
e. mathematical equations
Which of the following would lead to a decrease in autonomous consumption
spending?
a. a decrease in disposable income
b. an increase in disposable income
c. an increase in the interest rate
d. more optimistic expectations about future income
e. an increase in wealth
A demand shock that increases real GDP above its full-employment level will, in the
long run,
a. lead to a higher wage rate and an upward shift of the aggregate supply curve
b. lead to a lower wage rate and a downward shift of the aggregate supply curve
c. lead to a higher wage rate and a rightward shift of the aggregate demand curve
d. lead to a lower wage rate and a leftward shift of the aggregate demand curve
e. cause no further shifts in the aggregate supply or aggregate demand curve
A bank's most important service is
a. making money
b. providing checking account services
c. organizing money flowing into accounts
d. providing investment advice
e. increasing the amount of cash the public holds
In Figure 3-5, a movement from point G to point H would represent
a. a change in demand
b. the impact of a decrease in the price of a substitute good
c. higher prices for the inputs used to produce this product
d. a change in demand plus a change in quantity demanded
e. a change in quantity demanded
Specialization and exchange result in
a. lower production levels than would otherwise be possible
b. higher living standards than would otherwise be possible
c. more down-time as workers switch activities more frequently
d. the assignment of workers to activities according to their preferences
e. self-sufficiency
