GDP ignores transactions that take place in the underground economy.
In the long run, the real rate of interest does not depend on monetary policy but the
nominal rate of interest does.
In the last few decades there has been little progress in lowering the barriers to
international trade.
As the price of a product rises, the demand for the product falls.
In the past few centuries, choices have led to a substantial decline in the standards of
living around the globe.
If the reserve ratio is designated by “,” the amount of deposits a bank can lend out is
equal to [D x (1 – )].
The Federal Reserve System is the central bank of the United States.
Depreciation is the term used when plants, equipment and housing deteriorate and wear
out, thus losing their original values.
A wage-price spiral can occur if an economy is producing at a level above full
employment.
If a person has a comparative advantage in some activity, she must have an absolute
advantage in that activity as well.
The slope of the consumption function is equal to the level of autonomous
consumption.
On the “demand side” of a market, consumers indicate what they are willing to buy, in
what quantity and at what price.
A sale of government bonds to the public by the Federal Reserve will increase the
money supply.
An increase in the price level in the United States relative to the price level in Mexico
will cause an appreciation of the dollar against the peso.
An increase in taxes is likely to:
A) increase the real interest rate.
B) result in an increase in aggregate supply.
C) crowd in investment spending by businesses.
D) increase the demand for money.
In the circular flow diagram, firms:
A) supply the goods and services that households demand in product markets.
B) demand the inputs that households supply in product markets.
C) demand the goods and services that households supply in product markets.
D) supply the inputs that households demand in factor markets.
The marginal propensity to import is the fraction of additional:
A) income that is spent on imports.
B) imports that is earned as income.
C) consumption that is imported.
D) imports that is consumed.
At higher interest rates the
A) money supply is higher.
B) money supply is indeterminate.
C) quantity of money demanded is higher.
D) quantity of money demanded is lower.
Import bans, import quotas, voluntary export restraints, and tariffs on goods all:
A) increase imports and raise prices for consumers.
B) reduce imports and reduce prices for consumers.
C) reduce imports and raise prices for consumers.
D) increase imports and reduce prices for consumers.
Over the last 20 years, which Asian country has experienced a depression?
A) China
B) Malaysia
C) Japan
D) Thailand
Figure 18.1
Refer to Figure 18.1. Canada has a comparative advantage in the production of
A) bicycles.
B) hang gliders.
C) both bicycles and hang gliders.
D) neither bicycles nor hang gliders.
In the short run, which of the following determines the level of real GDP?
A) stock prices
B) aggregate demand
C) prices
D) wages
Figure 8.1
Refer to Figure 8.1. What will happen to the long run equilibrium if the economy
changes saving rates from s1 to s2?
A) K will increase and the long run equilibrium will move from point D to Point E.
B) K will decrease and the long run equilibrium will move from point D to Point E.
C) K will increase and the long run equilibrium will move from point A to Point E.
D) K will decrease and the long run equilibrium will move from point D to Point A.
Figure 4.6
David’s Supply Schedule Celeste’s Supply Schedule Refer to Figure 4.6, which
shows David’s and Celeste’s individual supply curves for flower arrangements per
week. Assuming David and Celeste are the only producers in the market, if the market
quantity supplied is 50, the price must be
A) $0.
B) $10.
C) between $10 and $20.
D) $30.
If we observe that the price is rising in the sugar market, it could be due to:
A) an excess supply of sugar.
B) an excess demand for sugar.
C) an increase in the supply of sugar.
D) a decrease in the demand for sugar.
Suppose that a tire factory produces $825,000 of output and causes $70,000 worth of
pollution as a result of production. The tire factory’s official contribution to GDP would
be ________ and its overall contribution to society would be ________.
A) $825,000; $895,000
B) $895,000; $825,000
C) $825,000; $755,000
D) $755,000; $825,000
Suppose Bob holds cash because he expects to need it in the future and it may be costly
for him to convert his assets into money later, then the reason Bob holds on to money is
the:
A) transactions demand for money.
B) liquidity demand for money.
C) speculative demand for money.
D) All of the above are correct.
What is an import?
In An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith listed
three reasons for productivity to increase with specialization. What are these three
reasons?
Suppose someone told you that the chain-weighted price index for GDP in a country
was 135. Why does this fact not convey much information to you?
Comment on the following statement: “Firms will compare the net return on an
investment with the opportunity cost of that investment, and they will invest as long as
the net return is less than the opportunity cost.”
Suppose the government cracks down on illegal immigration. How will this affect the
demand and supply of labor.