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Refer to Figure 18.4. With a tariff or quota, what is the equilibrium price of gloves in
Duckland?
A) $8
B) $9
C) $10
D) $11
Inside lags associated with fiscal policy are due to all of the following, except:
A) the political infighting involved in approving changes in government spending or
taxes.
B) the poor and conflicting data available to policymakers.
C) the delays in assessing the real state of the economy.
D) the delayed response of the firms to a tax cut.
A closed economy refers to an economy with
A) no immigration.
B) no international trade.
C) tariffs and import quotas.
D) government control of all factors of production.
The theory that considers real interest rates and taxes as the important determinants of
investment spending is the:
A) neoclassical theory of investment.
B) Keynesian theory of investment.
C) classical theory of investment.
D) Q-theory of investment.
Table 5.2 Refer to Table 5.2.
Suppose this economy produces only the three goods A, B, and C. If we use year 2 as
the base year, nominal GDP in year 1 is:
A) $6.20.
B) $7.80.
C) $8.50.
D) $9.70.
As interest rate falls, people hold ________ money instead of bonds because the
opportunity cost of holding money ________.
A) more; falls
B) less; falls
C) less; rises
D) more; rises
Tradeoff is
A) allowing the government and other organizations to choose for us.
B) sacrificing one thing for another.
C) deciding who consumes the products produced in an economy.
D) holding other variables fixed.
In the U.S., the Federal Reserve gets directives regarding the conduct of monetary
policy from:
A) the U.S. president.
B) Congress.
C) U.S.
Treasury.
D) no one, because the Fed makes its own decisions.
Consider an aggregate demand / aggregate supply diagram. The intersection of the
relatively flat, upward-sloping aggregate supply curve and the aggregate demand curve
determines the
A) short-run levels of prices and output.
B) short-run and long-run levels of prices and output.
C) long-run levels of prices and output.
D) short-run level of prices and the long-run level of output.
A person who leaves the labor force because they could not find a job is called:
A) a discouraged worker.
B) a disgruntled worker.
C) a dissatisfied worker.
D) a disbarred worker.
A change in the quantity demanded of a product is the result of a change in
A) the price of the product.
B) the price of related goods.
C) consumer income.
D) the cost of producing the product.
Which of the following is a bank liability?
A) reserve deposits held at the Fed
B) loans made to customers
C) required reserves
D) demand deposit balances
Suppose that the banks hold no excess reserves and the reserve requirement is 10
percent. If Bob writes a check to you for $100 and you choose to cash the check and
hold on to $100 in currency, then:
A) the money supply can decrease by as much as $1000.
B) the money supply can increase by as much as $1000.
C) the money supply will not change.
D) the money supply will decrease by exactly $100.
Table 3.1
Table 3.1 illustrates Willy and Blythe's hourly production for apples and carrots. From
the table, we can conclude that:if Willy and Blythe choose to specialize and trade, then:
A) Willy will specialize in apples and trade apples for carrots.
B) Willy will specialize in carrots and trade carrots for apples.
C) Blythe will specialize in carrots and trade carrots for apples.
D) None of the above; specialization and trade are not beneficial for Willy and Blythe.
Bananas and apples are substitutes. When the price of bananas falls, the equilibrium
quantity of apples will ________ and the equilibrium price of apples will ________.
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
Recall the Application about the Fed's expanded involvement in the economy following
the financial crisis in 2008 to answer the following question(s).Recall the Application.
During 2008, the value of the Fed's total assets
A) fell by over $2 trillion.
B) remained virtually unchanged.
C) became negative.
D) more than doubled.
If we calculate GNP per capita of all countries using a similar set of prices, the Norway
would rank 4th. A very large source of Norway's wealth is:
A) oil.
B) timber.
C) diamonds
D) gold.
