If the French government increases its expenditures and reduces taxes, then France’s
interest rate
a. and its exchange rate rise.
b. rises and its exchange rate falls.
c. falls and its exchange rate rises.
d. and its exchange rate fall.
Table 3-27
Assume that Huang and Min can switch between producing parasols and producing
porcelain plates at a constant rate.
Refer to Table3-27. At which of the following prices would both Huang and Min gain
from trade with each other?
a. 15 parasols for 10 plates
b. 15 parasols for 6 plates
c. 15 parasols for 3 plates
d. Huang and Min could not both gain from trade with each other at any price.
If interest rates rise in the U.S., then other things the same
a. foreigners would buy more U.S. bonds which increases the quantity of loanable funds
demanded in the U.S.
b. foreigners would buy more U.S. bonds which reduces the quantity of loanable funds
demanded in the U.S.
c. foreigners would buy fewer U.S. bonds which increases the quantity of loanable
funds demanded in the U.S.
d. foreigners would buy fewer U.S. bonds which reduces the quantity of loanable funds
demanded in the U.S.
The scientific method is applicable to studying
a. natural sciences, but not social sciences.
b. social sciences, but not natural sciences.
c. both natural sciences and social sciences.
d. None of the above is correct.
In answering which of the following questions would you find it necessary to calculate
a presentvalue?
a. Should Jane put $1,000 today into a 5-year certificate of deposit that pays 4 percent
annual interest?
b. Should ABC Corporation buy a factory today for $2 million, knowing that the factory
will yield the corporation $3 million after 5 years?
c. If Jill puts $5,000 today into a bank account that pays 3 percent interest, then how
much will she have in the account after 2 years?
d. You would find it necessary to calculate a present value in order to answer all of
these questions.
Table 3-12
Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim
can switch between setting up and testing computers at a constant rate. The following
table applies.
RefertoTable3-12. The number of minutes needed by Barb to test a computer is
a. 36
b. 48.
c. 60.
d. 64.
The price of a Honda Accord
a. and the price of a Honda Accord divided by the price of a Honda Civic are both real
variables.
b. and the price of a Honda Accord divided by the price of Honda Civic are both
nominal variables.
c. is a real variable, and the price of a Honda Accord divided by a Honda Civic is a
nominal variable.
d. is a nominal variable and the price of a Honda Accord divided by the price of a
Honda Civic is a real variable.
Which of the following would cause prices and real GDP to rise in the short run?
a. an increase in the expected price level
b. an increase in the money supply
c. a decrease in the capital stock
d. an increase in taxes.
With respect to the consumer price index, which of the following does notserve as an
example of how the substitution bias arises? Between 2010 and 2011, the price of a
pound of peanuts
a. rises from $0.80 to $1.00 while the price of a loaf of bread rises from $2.00 to $2.50.
b. rises from $1.00 to $1.30 while the price of a loaf of bread rises from $2.00 to $2.30.
c. remains constant, while the price of a loaf of bread rises from $2.00 to $2.30.
d. falls from $1.00 to $0.80 while the price of a loaf of bread falls from $2.00 to $1.80.
Other things the same, if workers and firms expected prices to rise by 2 percent but
instead they rise by 3 percent, then
a. employment and production rise.
b. employment rises and production falls.
c. employment falls and production rises.
d. employment and production fall.
Figure 3-11
The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
Refer to Figure3-11. If the production possibilities frontier shown is for 240 hours of
production, then how long does it take Bonovia to make one pound of cheese?
a. 3/5 hour
b. 3/4 hour
c. 4/3 hours
d. 5/3 hours
Figure 2-4
RefertoFigure2-4. This economy has the ability to produce at which point(s)?
a. Q, R, T, U
b. R, T, U
c. R, U
d. T
Over-the-Rhine Cheese Corporation had a P/E ratio of 20, retained earnings of $0.80
per share and a dividend of $1.70. What was its dividend yield?
a. 1.25%.
b. 5.0%.
c. 3.4%.
d. 10.6%.
Japan is
a. an advanced economy, and over the past century its rate of economic growth has been
higher than that of the United States.
b. an advanced economy, and over the past century its rate of economic growth has
been lower than that of the United States.
c. a middle-income country, and over the past century its rate of economic growth has
been higher than that of the United States.
d. a middle-income country, and over the past century its rate of economic growth has
been lower than that of the United States.
Figure 4-7
RefertoFigure4-7. The movement from Db to Da in the market for potato chips could
be caused by a(n)
a. decrease in the price of potato chips.
b. decrease in income, assuming that potato chips are a normal good.
c. announcement by the FDA that potato chips lower cholesterol.
d. increase in the price of a pretzels.
The primary economic function of the financial system is to
a. keep interest rates low.
b. provide expert advice to savers and investors.
c. match one person’s consumption expenditures with another person’s capital
expenditures.
d. match one person’s saving with another person’s investment.
Joan uses some of her income to buy mutual fund shares. A macroeconomist refers to
Joan’s purchase as investment.
a. True
b. False
In the U.S. a candy bar costs $1. If the nominal exchange rate were 6 Chinese yuan per
dollar and the real exchange rate were 1.2, then, what would be the price of a candy bar
in China?
a. 7.2 yuan
b. 6 yuan
c. 5 yuan
d. 3.6 yuan
When the price level changes, which of the following variables will change and thereby
cause a change in the aggregate quantity of goods and services demanded?
a. the real value of wealth
b. the interest rate
c. the value of currency in the market for foreign exchange
d. All of the above are correct.
The law of supply states that, other things equal, when the price of a good rises, the
quantity supplied of the good falls.
a. True
b. False
If a central bank reduced inflation by 2 percentage points and that made output fall by 3
percentage points for 2 years and the unemployment rate rise from 3 percent to 5
percent for 2 years, the sacrifice ratio is
a. 1.
b. 2.
c. 3.
d. None of the above is correct.
A worker received $5 for a daily wage in 1930. What is the value of that wage today if
the CPI was 17 in 1930 and is 230 today?
a. 37 cents
b. b. $4.63
c. $67.65
d. $37.86
What is the present value of a payment of $2,000 to be received two years from today if
the interest rate is 5%?
a. $2205
b. $2200
c. $1818.18
d. $1814.06
Which of the following is not an example of the opportunity cost of going to school?
a. The money a student could have earned by working if he had not gone to college.
b. The nap a student could have enjoyed if he had not attended class.
c. The party a student could have enjoyed if he had not stayed in to study for his exam.
d. The money a student spends on rent for his apartment while attending school.
A firm in China sells toys to a U.S. department store chain. Other things the same, these
sales
a. increase U.S. net exports and decrease Chinese net exports.
b. decrease U.S. net exports and increase Chinese net exports.
c. increase U.S. and Chinese net exports.
d. decrease U.S. and Chinese net exports.
Which of the following is not a reason people choose to depend on others for goods and
services?
a. to improve their lives
b. to allow them to enjoy a greater variety of goods and services
c. to consume more of each good without working any more hours
d. to allow people to produce outside their production possibilities frontiers
The long-run aggregate supply curve shifts right if
a. the price level rises.
b. the price level falls.
c. the capital stock increases.
d. the capital stock decreases.
When households decide to hold more money,
a. interest rates fall and investment decreases.
b. interest rates fall and investment increases.
c. interest rates rise and investment increases.
d. interest rates rise and investment decreases.
Suppose foreigners find U.S. goods and services more desirable for some reason other
than a change in the exchange rate. Which policies could be used to offset the resulting
change in output?
a. an increase in the money supply and an increase in government purchases.
b. an increase in the money supply and a decrease in government purchases.
c. a decrease in the money supply and an increase in government purchases.
d. a decrease in the money supply and a decrease in government purchases.
The price index was 220 in one year and 238.2 in the next year. What was the inflation
rate?
a. 8.3 percent
b. 108.3 percent
c. 4.8 percent
d. 38.2 percent
You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you
kept in your piggy bank illustrates money’s function as a ______. The laptop’s price is
posted as $500. The $500 price illustrates money’s function as a. You use the $500 to
purchase the laptop. This transaction illustrates money’s function as a______.
a. store of value, medium of exchange, unit of account
b. store of value, unit of account, medium of exchange
c. medium of exchange, unit of account, store of value
d. medium of exchange, store of value, unit of account