In year 1 the CPI is 181, and in year 2 the CPI is 195. If Dennis’s salary was $95,000 in
year 1, what is the minimum salary he must earn in year 2 to “keep up with inflation”?
a. $112,500
b. $102,348
c. $105,750
d. $88,180
Special interest group X receives a 1/150th slice of the economic pie.Its net benefits
from an economic growth policy are $7,000, which are the same as its net benefits from
a transfer policy.What is the change in the size of the economic pie (Real GDP) that is
required to bring about this result?
a. $1,050,000
b. $46.67
c. $150,000
d. $2,500,000
e. none of the above
Supply-restricting policies are intended to __________ prices and __________ farmers’
revenues.
a. lower; increase
b. lower; reduce
c. raise; increase
d. raise; reduce
Based on the given change, what word (rises or falls) should go in blank (7) and blank
(8), respectively, to summarize the resulting impact on short run equilibrium?
a. rises; rises
b. falls; falls
c. rises; falls
d. falls; rises
In the TE-TP framework, total production
a. always equals total expenditures.
b. equals Real GDP.
c. is always greater than total expenditures.
d. is always less than total expenditures.
Price ceilings and price floors
a. shift demand and supply curves and therefore have no effect upon the rationing
function of prices.
b. interfere with the rationing function of prices.
c. make the rationing function of free markets more efficient.
d. cause surpluses and shortages, respectively.
Suppose that nondurable goods spending is $200 billion, durable goods spending is
$400 billion, new residential housing spending is $500 billion, and spending on services
is $700 billion.What does consumption equal?
a. $600 billion
b. $1,100 billion
c. $1,800 billion
d. $1,300 billion
e. There is not enough information to answer this question.
Is it possible for the economy to be at full employment and still have some people who
are unemployed?
a. No, full employment means that no one is unemployed.
b. Yes, since full employment exists if the economy is operating at the natural
unemployment rate and there is always some natural unemployment.
c. Yes, since full employment exists if the economy is operating at the frictional
unemployment rate and there is always some frictional unemployment.
d. Yes, since full employment equals the sum of the cyclical unemployment rate and the
natural unemployment rate, and there is always some cyclical unemployment.
e. none of the above
Equilibrium and disequilibrium
a. are real world states.
b. are mental constructs used by economists.
c. foreshadow what is about to happen in a market.
d. a and b
e. a, b and c
__________ is the number of units that individuals are __________ to buy at a
particular price during some time period.
a. Demand; willing and able
b. Supply; willing and able
c. Quantity demanded; willing and able
d. Demand; able
e. Quantity demanded; willing
Which of the following is not a function of the Fed?
a. to provide check-clearing services
b. to hold depository institutions’ reserves
c. to serve as the government’s banker
d. to serve as the borrower of last resort
e. none of the above