When the government decides to increase income taxes, this is an example of
contractionary fiscal policy.
a. True
b. False
If the economy is in a recessionary gap,
a. Real GDP is greater than Natural Real GDP.
b. Real GDP is equal to Natural Real GDP.
c. Real GDP is less than Natural Real GDP.
d. the (actual) unemployment rate is less than the natural unemployment rate.
e. a and d
Exhibit 16-2
Suppose the economy starts out at point A and the public correctly anticipates that the
AD curve will shift from AD1 to AD2. If wages are temporarily fixed, SRAS1 will
__________ and the economy will end up at point __________.
a. shift; D
b. shift; B
c. not shift; D
d. not shift; E
Exhibit 2-10
Person A has the comparative advantage in the production of _____________ and
person B has the comparative advantage in the production of __________________.
a. X; Y
b. Y; X
c. neither good X nor good Y; neither good X nor good Y
d. both good X and good Y; neither good X nor good Y
e. neither good X nor good Y; both good X and good Y
As interest rates drop, households tend to borrow more and businesses tend to borrow
less.
a. True
b. False
Who has the comparative advantage in the production of good B?
a. Alex
b. Adam
c. Both Alex and Adam
d. Neither Alex nor Adam
Which of the following government agricultural policies is not aimed at restricting
supply?
a. price supports
b. acreage allotments
c. market quotas
d. paying farmers not to produce
Exhibit 2-7
For which of the following is the statement “In order to get more civilian goods, we
have to forfeit some military goods” true?
a. a movement from A to C
b. a movement from B to D
c. a movement from C to D
d. a movement from F to D
e. none of the above
Exhibit 17-2
Assume that the starting point is always point 1.Which of the production function
graphs shown, (a) or (b), represents an increase in the quantity of labor, and which
represents an increase in the technology coefficient, respectively?
a. (a); (b)
b. (b); (a)
c. (a); (a)
d. (b); (b)
Jose has one evening in which to prepare for two exams and can employ one of two
possible strategies:
The opportunity cost of receiving a 90 on the statistics exam is ___________ points on
the economics exam.
a. 79
b. 17
c. 11
d. 90
Suppose that prices in Japan increase by 8 percent while prices in the United States
remain stable. We would expect that the result would be that in the foreign exchange
market ___________________________,€ceteris paribus€.
a. the dollar will appreciate and the yen will depreciate
b. the dollar will depreciate and the yen will appreciate
c. both the dollar and the yen will appreciate
d. both the dollar and the yen will depreciate
A bond is
a. a claim on the assets of a corporation such that the purchaser has an ownership right
in the corporation.
b. anything of value to which the firm has a legal claim.
c. a means of assuring that the business firm will pay its debts or fulfill other legal
obligations.
d. a promise to pay for the use of someone else’s money.
Which of the following statements is true?
a. The economy can operate outside (or beyond) its institutional PPF and its physical
PPF, but only for a short while.
b. The economy can operate outside its physical PPF, if only for a short while, but can
never operate outside its institutional PPF.
c. The economy can operate outside its institutional PPF, if only for a short while, but
can never operate outside its physical PPF.
d. The economy can never operate outside its institutional PPF or its physical PPF, even
for a short while.
e. none of the above
In the acreage allotment program, a farmer’s acreage allotment is sometimes based on a
farmer’s
a. history of production.
b. income.
c. location.
d. b and c
e. none of the above