Suppose that a consumer’s original budget line was AB in Figure 5-4, but it has now
changed to line AC. Which of the following must have occurred?
Figure 5-6 shows the demand curve for chicken. Between points L and M, the price
elasticity of demand is
Which of the following statements is true about the behavior of the CPI?
a. It has risen steadily since 1960.
b. It has fallen steadily since 1960.
c. It fell during the 1960s and has risen ever since.
d. It rose sharply in the 1970s and then declined in the 1980s.
e. It has risen and fallen with roughly equal frequency since 1960.
Which of the following is a definition of economic fluctuations?
a. Movements in prices around their long-run trend
b. Shifts in the long-run trend of output
c. Movements of the real wage over the long run
d. Shifts in the long-run trend of prices
e. Movements in output around its long-run trend
Consider two perfectly competitive labor markets for jobs that require different skills
but are otherwise equivalent. One job currently pays a higher wage than the other job.
This wage differential
If U.S. net exports are $100 billion and the U.S. purchased $250 billion in foreign
assets, then what amount of U.S. assets did foreigners purchase?
a. $150 billion
b. -$100 billion
c. $250 billion
d. -$150 billion
e. $50 billion
The Fed can decrease the money supply by
a. decreasing the reserve requirement
b. making open market purchases of bonds
c. selling government bonds
d. destroying printed currency
e. creating wealth
When the Fed conducts open market operations, what type of bonds does the Fed
purchase?
a. Newly issued bonds from the treasury
b. Bonds newly issued by companies
c. Previously issued bonds from the treasury
d. Bonds previously issued by companies
e. Newly issued bonds from other countries
The noise inflicted on bystanders by users of chain saws, lawn mowers, and
motorcycles is an example of
A labor market is divided into two segments. All workers have the same qualifications
and find jobs in either segment equally attractive. Initially, both segments are in
competitive equilibrium. Then the development of worker prejudice that reduces the
hiring of minorities in one segment can lead to a
Which production possibilities frontier(s) in Figure 2-4 depict(s) a situation in which
all resources are perfect substitutes in production?
Figure 2-4
Which of the following is not an automatic stabilizer?
a. Forward-looking behavior
b. Interest rates
c. Imports
d. Transfer payments
e. Consumption spending
The number of sellers in a market is considered to be large when
If one person’s consumption of a good means that no one else can consume it,
Suppose that population grows by 2 percent annually. For the standard of living to rise,
which of the following must occur?
a. Nominal GDP must grow by more than 2 percent.
b. Real GDP must grow by more than 2 percent.
c. Real GDP per capita must grow by more than 2 percent.
d. Consumption spending must grow by more than 2 percent.
e. Private investment spending must grow by more than 2 percent.
If workers become more productive, which of the following would happen in the labor
market?
a. Labor supply would increase.
b. Labor supply would decrease.
c. Labor demand would increase and labor supply would decrease.
d. Labor demand would decrease and so would labor supply.
e. Labor demand would increase.
Rapid economic growth has increased the economic well-being of U.S. citizens because
a. people are now earning higher incomes while goods and services are cheaper
b. the dollar is worth now more than in the past
c. the output of goods and services has risen faster than the population
d. the population is now living and working longer
e. the population has increased while production has decreased
If the equilibrium interest rate is 4% but the current interest rate is 6%,
a. bond prices will rise.
b. money demand will decrease.
c. money demand will increase.
d. bond prices will fall.
e. the money supply will decrease.