Which of the following is an example of foreign direct investment in China?
A) U.S. auto entrepreneur Elon Musk buys stock in Tata Motors of Mumbai, India.
B) Chinese Shenzen Airlines company buys a small U.S. midwest airline company, Air
Chicago.
C) The U.S. company Wal-Mart buys a warehouse in Shanghai.
D) The bank of China purchases U.S. Treasury bonds.
E) A U.S. foreign exchange speculator buys $200,000 worth of the Chinese currency
the yuan.
Which of the following best describes an assumption economists make about human
behavior?
A) They assume that individuals act rationally all the time in all circumstances.
B) They assume that rational behavior is useful in explaining choices people make even
though people may not behave rationally all the time.
C) They assume that people take into account the question of fairness in all decisions
they make.
D) They assume that individuals act randomly.
Table 12-12
Refer to Table 12-12. Using the table above, answer the following questions. The
numbers in the table are in billions of dollars.
a. What is the equilibrium level of real GDP?
b. What is the MPC?
c. If potential GDP is $7,000 billion, is the economy at full employment? If not, what is
the condition of the economy?
d. If the economy is not at full employment, by how much should government spending
increase so that the economy can move to the full employment level of GDP?
Figure 2-4
Figure 2-4 shows various points on three different production possibilities frontiers for
a nation.
Refer to Figure 2-4. Consider the following events:
a. an increase in the unemployment rate
b. a decrease in a nation’s money supply
c. a war that kills a significant portion of a nation’s population
Which of the events listed above could cause a movement from Z to X ?
A) a, b and c
B) a and b only
C) a and c only
D) a only
E) c only
The marginal propensity to save is defined as
A) saving divided by disposable income.
B) disposable income divided by saving.
C) the change in saving divided by the change in disposable income.
D) the change in disposable income divided by the change in saving.
If you spend more of your income on consumption goods, which of the following will
occur?
A) The production of investment goods will fall.
B) Economic growth will be stimulated.
C) Investments in education will rise.
D) For every dollar you spend on consumption, real GDP will fall by a dollar.
You are made better off in which of the following situations?
A) you borrow 10,000 pesos, you earn income in dollars, the dollar depreciates against
the peso, you must pay back the loan in pesos
B) you borrow $10,000, you earn income in pesos, the dollar depreciates against the
peso, you must pay back the loan in dollars
C) you borrow $10,000, you earn income in pesos, the dollar appreciates against the
peso, you must pay back the loan in dollars
D) you borrow 10,000 pesos, you earn income in pesos, the dollar depreciates against
the peso, you must pay back the loan in pesos
A tax rebate, like the one issued in 2008, is likely to ________ consumption spending
________ than would a permanent tax cut.
A) increase; more
B) increase; less
C) decrease; more
D) decrease; less
Suppose a bank has $100,000 in checking account deposits with no excess reserves and
the required reserve ratio is 5 percent. If the Federal Reserve lowers the required
reserve ratio to 3 percent, then the bank will now have excess reserves of
A) $0.
B) $2,000.
C) $3,000.
D) $5,000.
Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What
happens in the market for sushi if the Surgeon General announces that a majority of the
raw fish that is imported to make sushi contains high levels of toxic mercury?
A) D decreases, S no change, P and Q decrease
B) S decreases, D no change, P increases, Q decreases
C) D and S decrease, P and Q decrease
D) D no change, S increases, P decreases, Q decreases
Briefly describe monetarism and the monetary growth rule.
How do economists generally rate the Fed’s performance in the 1980s, 1990s, and the
early 2000s? Has the public been supportive of their policies? Is there anything on the
horizon for the Fed that might cause the public concern?
Table 9-23
Refer to Table 9-23. The table above lists the actual minimum wage and CPI in 1974
and in 2012. Using the above table, calculate the real minimum wage for 1974 and
2012. Calculate the rate of growth of the real minimum wage from 1974 to 2012. Are
workers better off in terms of the purchasing power of a dollar in 1974 or 2012?
Explain why.
What is a market economy?