Henry can make a bird house in 3 hours and he can make a bird feeder in 1 hour. The
opportunity cost to Henry of making a bird house is 1/3 bird feeder.
a. True
b. False
Comparative advantage is related most closely to which of the following?
a. output per hour
b. opportunity cost
c. efficiency
d. bargaining strength in international trade
A reduction in U.S net exports would shift U.S. aggregate demand
a. rightward. In an attempt to stabilize the economy, the government could increase
expenditures.
b. rightward. In an attempt to stabilize the economy, the government could decrease
expenditures.
c. leftward. In an attempt to stabilize the economy, the government could increase
expenditures.
d. leftward. In an attempt to stabilize the economy, the government could decrease
expenditures.
Suppose the government finds a major defect in one of a company’s products and
demands that the product be taken off the market. We would expect that the
a. supply of existing shares of the stock and the price will both rise.
b. supply of existing shares of the stock and the price will both fall.
c. demand for existing shares of the stock and the price will both rise.
d. demand for existing shares of the stock and the price will both fall.
As the price level falls,
a. the exchange rate falls, so net exports fall.
b. the exchange rate falls, so net exports rise.
c. the exchange rate rises, so net exports fall.
d. the exchange rate rises, so net exports rise.
If the reserve ratio is 8 percent, then the money multiplier is
a. 12.5.
b. 11.5.
c. 13.5.
d. 8.
Table 24-6
The table below pertains to Napandsnack, an economy in which the typical consumer’s
basket consists of 2 pillows and 15 hotdogs.
RefertoTable24-6. If the base year is 2011, then the economy’s inflation rate in 2011
was
a. -5.0 percent.
b. -3.3 percent.
c. 3.3 percent.
d. 16.0 percent.
Other things the same, if the long-run aggregate supply curve shifts right, prices
a. and output both increase.
b. and output both decrease.
c. increase and output decreases.
d. decrease and output increases.
HydroGrow is considering building a new greenhouse in which to grow tomatoes. The
board meets and decides that this is the right thing to do. Before they can put their plans
into action, the interest rate increases. The present value of the returns from this
investment project
a. is now lower than it was before, and so Hydro Grow is less likely to build the
building.
b. is now lower than it was before, and so HydroGrow is more likely to build the
building.
c. is now higher than it was before, and so HydroGrow is less likely to build the
building.
d. is now higher than it was before, and so HydroGrow is more likely to build the
building.
In Ireland, a pint of beer costs 3 euros. In Australia, a pint of beer costs 4 Australian
dollars. If the exchange rate is .8 euros per Australian dollar, what is the real exchange
rate?
a. 4/2.4 pints of Irish beer per pint of Australian beer
b. 3/3.2 pint of Irish beer per pint of Australian beer
c. 3.2/3 pints of Irish beer per pint of Australian beer
d. 2.4/4 pints of Irish beer per pint of Australian beer
If buyers and sellers in a certain market are price takers, then individually
a. they have no influence on market price.
b. they have some influence on market price but that influence is limited.
c. buyers will be able to find prices lower than those determined in the market.
d. sellers will find it difficult to sell all they want to sell at the market price.
According to the classical dichotomy, when the money supply doubles, which of the
following also doubles?
a. the price level
b. nominal wages
c. nominal GDP
d. All of the above are correct.
Which of the following does the Federal Reserve notdo?
a. conduct monetary policy
b. act as a lender of last resort
c. convert Federal Reserve Notes into gold
d. serve as a bank regulator
Economists use the term inflation to describe a situation in which the economy’s overall
production level is rising.
a. True
b. False
Unemployment numbers reported by the Bureau of Labor Statistics are reported based
on a
a. monthly survey of about 60,000 households.
b. monthly survey of about 6,000 households.
c. weekly survey of about 60,000 households.
d. weekly survey of about 6,000 households.
In the long run, if there is an increase in the money supply growth rate, which of the
following curves shifts right?
a. the short-run and the long run Phillips curves
b. the short-run but not the long run Phillips curve
c. the long-run but not the short-run Phillips curve
d. neither the short-run nor the long-run Phillips curves
The natural rate of unemployment is closely associated with the short-run ups and
downs of economic activity.
a. True
b. False
Suppose a basket of goods and services has been selected to calculate the CPI and 2012
has been chosen as the base year. In 2012, the basket’s cost was $80.00; in 2013, the
basket’s cost was $84; and in 2014, the basket’s cost was $87.60. The value of the CPI
was
a. 100 in 2012.
b. 105 in 2013.
c. 109.5 in 2014.
d. All of the above are correct.
A production possibilities frontier will be bowed outward if some of the economy’s
resources are better suited to producing one good than another.
a. True
b. False
Which of the following would both make a country’s real exchange rate rise?
a. its budget deficit increases and bonds issued in the country become riskier
b. bonds issued in that country become riskier and it imposes an import quota
c. it imposes an import quota and the budget deficit increases
d. None of the above are correct.
An ordered pair is
a. the process of checking calculations twice before placing them on a graph.
b. two numbers that can be represented by a single point on a graph.
c. two numbers that are represented by two points on a graph.
d. two points on a graph that are of equal distance from the origin.
Table 26-2
RefertoTable26-2.Which company had the highest earnings per share?
a. Boeing Co.
b. Eli Lilly and Co.
c. Kraft
d. Kellogg Co.
The primary advantage of mutual funds is that they
a. always provide the highest return.
b. always allow people to “beat the market.”
c. allow people to diversify and reduce risk.
d. allow people to diversify, which increases risk and return.
Table 3-24
Assume that England and Spain can switch between producing cheese and producing
bread at a constant rate.
RefertoTable3-24. The opportunity cost of 1 unit of bread for England is
a. 1/4 unit of cheese.
b. 1/4 hour of labor.
c. 4 units of cheese.
d. 4 hours of labor.
Figure 3-15
Refer to Figure3-15. If Perry and Jordan each spends all of his/her time producing the
good in which s/he has a comparative advantage and trade takes place at a price of 1
novel for 7 poems, then
a. Perry and Jordan will both gain from this trade.
b. Perry will gain from this trade, but Jordan will not.
c. Jordan will gain from this trade, but Perry will not.
d. neither Perry nor Jordan will gain from this trade.
In an economy in which decisions are guided by prices and individual self-interest,
there is
a. the potential to achieve efficiency in production.
b. a strong need for government intervention in the market.
c. less efficiency than would be observed in a centrally-planned economy.
d. more need for a strong legal system to control individual greed than would be needed
in a centrally-planned economy.
Figure 4-15
RefertoFigure4-15.Which of the following would cause the supply curve to shift from
Supply A to Supply C in the market for sail boats?
a. an increase in the price of sailboats
b. a decrease in the number of firms selling sailboats
c. a decrease in the price of fiberglass and sail cloth
d. a decrease in the price of America’s Cup sailing tshirts
Figure 2-14
Consider the production possibilities curve for a country that can produce sweaters,
apples (in bushels), or a combination of the two.
RefertoFigure2-14.The opportunity cost of moving from point U to point R is
a. 60 bushels of apples.
b. 80 bushels of apples.
c. 80 sweaters.
d. 160 sweaters.
Which of the following does the U.S. currently have?
a. means-tested government benefits and tax laws that tax capital income only once
b. means-tested government benefits and tax laws that tax some capital income twice
c. tax laws that tax capital income only once, but not means-tested government benefits
d. tax laws that tax some capital income twice, but not means-tested government
benefits
A British grocery chain uses previously obtained U.S. dollars to purchase oranges from
the United States. This transaction
a. increases British net capital outflow, and increases U.S. net exports.
b. increases British net capital outflow, and decreases U.S. net exports.
c. decreases British net capital outflow, and increases U.S. net exports.
d. decreases British net capital outflow, and decreases U.S. net exports.
If net exports are positive, then
a. exports are greater than imports.
b. net capital outflow is negative.
c. Both of the above are correct.
d. Neither of the above is correct.
In a closed economy, national saving is
a. usually greater than investment.
b. equal to investment.
c. usually less than investment because of the leakage of taxes.
d. always less than investment.
If traveler’s checks were $1000 higher and saving deposits were $500 higher, M1 would
be
a. $500 higher and M2 would be $1,500 higher.
b. $1,000 higher and M2 would be $1,500 higher.
c. M2 and M1 would be $1,500 higher.
d. $1,000 high and M2 would be $500 higher..
In recent years, the Federal Reserve has conducted policy by setting a target for
a. bank reserves.
b. the monetary growth rate.
c. the exchange rate.
d. the federal funds rate.