A stock with a price-earnings ratio of 11.2 means that the stock is selling for a closing
share price that is 11.2 times its latest available net earnings per share.
a. True
b. False
If labor is immobile between two countries, changes in relative demand for goods and
services may pose major economic problems
a. whether exchange rates are flexible or fixed.
b. but the problems will not be as significant as they would be if labor were mobile.
c. when exchange rates are flexible, but not when they are fixed.
d. when exchange rates are fixed, but not when they are flexible.
When the equilibrium dollar price of a foreign currency decreases due to changes in
demand for or supply of the foreign currency, the domestic currency
a. has appreciated.
b. has depreciated.
c. is overvalued.
d. is undervalued.
e. is revalued.
An IOU that promises to pay a certain amount at maturity, and also to pay periodic
fixed amounts until that date, is called a(n)
a. stock.
b. equity.
c. bond.
d. futures contract.
The government can _______________ change an inefficient market outcome (in the
case where there is a negative externality) into an efficient outcome by imposing a tax
on the activity that generates the negative externality.
a. in almost all situations
b. possibly
c. not
d. in all situations
e. a or d
Which of the following statements represents a correct and sequentially accurate
economic explanation?
a. If government purchases rise, total expenditures on goods and services rises, and the
AD curve shifts leftward.
b. If government purchases rise, total expenditures on goods and services rises, and the
AD curve shifts rightward.
c. If consumption rises, total expenditures on goods and services rises, and the AD
curve shifts rightward.
d. If consumption rises, total expenditures on goods and services rises, and the quantity
demanded of Real GDP rises.
e. b and c
A fall in the price level changes the purchasing power of money. This is relevant to the
__________ effect.
a. international trade
b. real balance
c. aggregate demand
d. interest rate
e. aggregate supply
Scarcity means
a. wants are greater than the limited resources available to satisfy these wants.
b. wants are less than the limited resources available to satisfy these wants.
c. resources are infinite.
d. wants are limited.
e. both c and d
Exhibit 4-6
At a wage of $7, there will be a __________ of unskilled workers equal to __________
thousand workers.
a. shortage; 10
b. surplus; 20
c. surplus; 10
d. shortage; 20
e. surplus; 15
Exhibit 39-1
At the support price of PT, how many units of the good must the government buy and
store?
a. Q1
b. Q3
c. Q1 – Q3
d. Q2 – Q3
Exhibit 4-8
If the wheat market is in competitive equilibrium, the consumers€ surplus will equal
a. area 1 + 2 + 3
b. area 1 + 2 + 4
c. area 3 + 5
d. area 1 + 2 + 3 + 4 + 5
e. area 6
If the value of a bank’s assets is rising, a high leverage ratio increases the percentage
rise in its capital.
a. True
b. False
What is the proper sequence of the phases of a business cycle?
a. peak, contraction, trough, expansion, recovery
b. peak, contraction, recovery, trough, expansion
c. peak, contraction, trough, recovery, expansion
d. contraction, peak, trough, recovery, expansion
e. recovery, trough, peak, expansion, contraction
Say’s law states that demand creates its own supply.
a. True
b. False
All economists agree that the European Union is an example of a true a optimal
currency area.
a. True
b. False
A permanent marginal tax decrease is likely to
a. shift the short-run aggregate supply curve to the left and the long-run aggregate
supply curve to the right.
b. shift both the short-run and the long-run aggregate supply curves to the left.
c. shift the short-run aggregate supply curve to the right, and the long-run aggregate
supply curve to the left.
d. shift both the short run and the long run aggregate supply curves to the right.
When the Federal Open Market Committee (FOMC) votes on policy, it does so in the
following order: the chair votes first, the vice chair votes second, and the remaining
FOMC members vote based on their seniority at the Fed.
a. True
b. False
Exhibit 4-3
If price P3 is a price ceiling, then
a. the price ceiling does not have an effect on the market for good X.
b. the price at which exchange takes place is P3.
c. the price at which exchange takes place is P2.
d. there is a shortage in the market for good X.
e. both a and c