The Phillips Curve shows the trade-off between:
a. unemployment and output.
b. inflation and output.
c. unemployment and inflation.
d. imports and exports.
e. unemployment and imports.
The conduct of monetary policy is the responsibility of:
a. commercial banks.
b. the U.S. Treasury.
c. the Federal Reserve System.
d. the Congress and the president.
Deflation:
a. was prevalent during the oil shocks of the 1970s.
b. will cause consumers’ purchasing power to shrink.
c. has been persistent in the U.S. economy since the Great Depression.
d. none of these.
The market shown in Exhibit 4-2 is initially in equilibrium at point E1. Union
negotiations for workers producing good X result in a wage increase. Other things
being equal, which of the following is the new equilibrium after this wage increase is in
effect?
a. E1.
b. E2.
c. E3.
d. E4.
If the Fed wanted to use all three of its major monetary control tools to decrease the
money supply, it would:
a. buy bonds, reduce the discount rate, and reduce reserve requirements.
b. sell bonds, reduce the discount rate, and reduce reserve requirements.
c. sell bonds, increase the discount rate, and increase reserve requirements.
d. buy bonds, increase the discount rate, and increase reserve requirements.
Exhibit 4-4 Supply and demand curves for good X
A
decrease in buyers’ income, assuming good X is a normal good, combined with a
decrease in the wage rate paid to workers producing good X would be represented by
which of the following changes in equilibrium shown in Graph C of Exhibit 4-4?
a. E1 to E2.
b. E1 to E3.
c. E3 to E2.
d. E1 to E4.
Exhibit 2-2 Production possibilities curve
The production possibilities in Exhibit
2-2 indicates that the opportunity cost of corn is:
a. increasing.
b. decreasing.
c. zero.
d. constant.
e. indeterminate.
SeveralitemsfromthefinancialstatementsofStandardTiresarelistedbelow.Usethefollowing
answerchoicestoidentifythetypeofaccountforeachitemlisted.Placeyouranswersinthespac
eprovided.
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Owners’ equity Long-term debt
If the economy is experiencing less than full-employment, the Keynesian school
recommends that the government:
a. do nothing to stimulate the economy.
b. undertake fiscal policy to stimulate aggregate demand.
c. undertake fiscal policy to stimulate aggregate supply.
d. balance the budget to stimulate aggregate demand.
Which of the following is a normative economic statement?
a. The unemployment rate for the United States is currently 5.4 percent.
b. The inflation rate in the United States is too high.
c. An increase in the price of a good will reduce the amount purchased.
d. Higher profits in an industry will attract more entrepreneurs into the industry.
Which of the following statements is true about Say’s law?
a. It states that supply creates its own demand.
b. It states that demand creates its own supply.
c. It states that total output will always exceed total spending.
d. It states that consumption spending is the most volatile component of aggregate
expenditures.
e. It is a major proposition of the Keynesian model.
Exhibit 10-7 Aggregate supply and demand curves
In Exhibit 10-7, choosing to operate the economy at GDP = $1200 billion and P = 110
would be opting for an economy of:
a. moderate unemployment with inflation.
b. full employment without inflation.
c. full employment with inflation.
d. high unemployment and high inflation.
e. moderate cyclical unemployment without inflation.
If a country has a comparative advantage in the production of all goods, it should:
a. specialize in the production of goods with the lowest opportunity cost.
b. specialize in the production of goods with the highest opportunity cost.
c. specialize in the production of goods with the absolute advantage.
d. specialize in the production of goods without the absolute advantage.
e. not specialize at all and produce all the goods itself.