In year 1 the CPI is 180, and in year 2 the CPI is 192. From year 1 to year 2, Javier’s
salary rises from $40,000 to $42,000, and Tom’s salary rises from $55,000 to $57,000.
Who is “more than keeping up with inflation”?
a. Javier
b. Tom
c. both Tom and Javier
d. neither Tom nor Javier
If Germany’s Real GDP rises, this tends to ________________ United States exports,
shifting the United States AD curve to the ___________________.
a. raise; right
b. raise; left
c. lower; right
d. lower; left
Increased government spending and tax cuts characterize
a. contractionary fiscal policy.
b. expansionary fiscal policy.
c. expansionary monetary policy.
d. deflationary policy.
e. none of the above
If velocity is rising, an increase in one spending component can occur without requiring
other spending components to decline.
a. True
b. False
In June 2012, the public debt in the United States was approximately
a. $5.8 billion.
b. $90 billion.
c. $1.6 billion.
d. $15.8 trillion.
e. $120 trillion.
Natural disasters (such as the 2011 earthquake and tsunami in Japan) are examples of an
adverse supply shock, which result in the SRAS curve shifting leftward.
a. True
b. False
The Federal Reserve began paying interest on reserves in 2008.
a. True
b. False
Exhibit 16-3
The economy is at point A. According to the Friedman natural rate theory, in the long
run after a rise in the money supply, the economy will be at point
a. A.
b. B.
c. C’.
d. C.
There is a flexible exchange rate system and only two countries in the world, the United
States and Mexico. The real interest rate in the United States rises relative to the real
interest rate in Mexico. It follows that
a. the dollar will depreciate and the peso will appreciate.
b. the peso will depreciate and the dollar will appreciate.
c. both the peso and the dollar are likely to appreciate.
d. both the peso and the dollar are likely to depreciate.
Exhibit 32-2
Two candidates are competing for an electorate consisting of 9 voters labeled A-I
shown positioned with respect to their ideological stands on issues. The median voter
theory would predict that candidates will assume the ideological position(s)
a. of voter A.
b. halfway between that of voter G and that of voter A.
c. of voter C.
d. of voter B.
e. of voter G and voter I, respectively.
There was an economic depression in the U.S in 1893 that some people blamed on the
gold standard.
a. True
b. False
Exhibit 16-6
The economy is initially in long-run equilibrium at point A. There is a correctly
anticipated increase in aggregate demand, prices and wages are flexible, the economy is
self-regulating, and people hold rational expectations. The economy will move to point
a. F.
b. C.
c. B.
d. B or C.
e. This exhibit does not show the point the economy would move to.
Which of the following directly (as opposed to indirectly) raises the price of agricultural
products?
a. marketing quota system
b. acreage allotment program
c. paying farmers not to produce
d. price supports
e. all of the above