When a production function is graphed with Real GDP on the vertical axis and labor on
the horizontal axis, a rise in capital________________________, and a rise in the
technology coefficient __________________.
a. shifts the production function upward; also shifts the production function upward
b. shifts the production function downward; shifts the production function upward
c. moves us up along a given production function; shifts the production function
upward
d. shifts the production function upward; moves us up along a given production
function
A decrease in the money supply may __________ total expenditures and thus
__________ aggregate demand.
a. raise; raise
b. raise; lower
c. lower; raise
d. lower; lower
Minerals, animals, water and forests are all considered to be part of the resource
category known as
a. capital
b. entrepreneurship
c. labor
d. land
e. none of the above
The larger the simple deposit multiplier,
a. the higher the required reserve ratio.
b. the higher the discount rate.
c. the larger the change in the money supply for a given change in deposits.
d. the less likely the Fed will be to use its monetary policy tools.
A price floor set above the equilibrium price will
a. clear the market for the good.
b. result in a shortage of the good.
c. result in a surplus of the good.
d. force some firms in this industry to go out of business.
According to the simple quantity theory of money in the AD-AS framework, when the
money supply decreases, the __________ curve shifts to the __________.
a. AD; left
b. AD; right
c. AS; left
d. AS; right
Exhibit 7-1
What is the value ofnational income?
a. $4,351
b. $4,252
c. $4,403
d. $2,996
e. $4,542
Exhibit 3-8
Equilibrium price and quantity are ____________________, respectively.
a. $3 and 25 units
b. $3 and 15 units
c. $5 and 15 units
d. $5 and 25 units
e. $1 and 25 units
Corporate profits is the largest category of national income.
a. True
b. False
According to the Keynesian transmission mechanism (and assuming there is no
liquidity trap and investment is not interest insensitive), if the money supply increases,
the interest rate __________, investment spending __________ and the AD curve shifts
to the __________.
a. falls; falls; left
b. rises; rises; right
c. falls; rises; left
d. falls; rises; right
e. rises; falls; right
The model predicting victory in a two-person race for the candidate closer to occupying
the center of the voter distribution is built on the assumption that
a. people always vote for the Democratic candidate if they are Democrats and for the
Republican candidate if they are Republicans.
b. people vote for the candidate who comes closer to matching their own views.
c. most people don’t vote unless the election is predicted to be close.
d. none of the above
In the market for a given product, when a price floor is set above the equilibrium price
the result will be
a. more exchanges made in the market.
b. an increase in the supply of the product.
c. a decrease in the demand for the product.
d. a deadweight loss.
According to Alan Greenspan, the Taylor rule is ________________ when trying to
figure out the causes of sharp increases in housing prices.His opinion is based, in part,
on his assertion that the Taylor rule addresses ____________ inflation, not
____________ inflation.
a. inappropriate; product-price; asset-price
b. inappropriate; asset-price; product-price
c. appropriate; product-price; asset-price
d. appropriate; asset-price; product-price
Keynes asserted that investment is more responsive to business expectations,
technological changes and innovation, than to changes in interest rates.
a. True
b. False
In all cases, positive economics deals with
a. what is.
b. what should be.
c. relatively small units in the economy.
d. aggregates or the entire economy.
In the United States, paper currency is printed at the
a. Bureau of Engraving and Printing.
b. Federal Reserve District banks.
c. U.S. Mint.
d. U.S. Treasury.
In a foreign exchange market diagram with pesos per dollar on the vertical axis, the
quantity of __________ would be on the horizontal axis, and the U.S. demand for
Mexican goods would help to determine the __________ curve.
a. dollars; demand
b. dollars; supply
c. pesos; demand
d. pesos; supply
Under certain circumstances, a congressional district may be a special interest group.
a. True
b. False