The 4-year term of the president of the Fed is coterminous with the 4-year term of the
president of the U.S.
The CPI’s approach is to
a. track the cost of the CPI market basket, which is the collection of goods and services
that the typical consumer buys.
b. track the cost of the CPI market basket, which is the collection of every good and
service that is for sale in the U.S.
c. track the cost of housing, and food and beverage expenditures.
d. track the cost of the CPI market basket, which is the collection of every good that is
for sale in the U.S.
e. track the cost of the CPI market basket, which is the collection of goods that the
typical consumer buys.
Which of the following best defines an expansion?
a. Real GDP is below its potential level.
b. Real GDP is increasing.
c. Unemployment is unusually high.
d. Real GDP is decreasing.
e. Real GDP exceeds its potential level.
Recessions are identified by
a. severe and long-lasting phases of decreased output
b. high employment
c. constant output
d. decreasing output
e. low unemployment
If Country A exports a good to Country B, the prices of the good in Country A will
______ and the prices of the good in Country B will ________.
a. increase; increase
b. decrease; decrease
c. increase; decrease
d. decrease; increase
e. stay the same; increase
By December 2008, the federal funds rate was approaching the zero lower bound.
When households and businesses interact in product markets money
Countercyclical fiscal policy refers to
a. any fiscal policy that cycles between budget surpluses and budget deficits
b. the use of taxes and government spending to keep the economy close to potential
GDP in the short run
c. any fiscal policy that is employed during a business cycle
d. the use of open market purchases of bonds to keep the economy close to potential
GDP in the short run
e. the use of changes in tax rates to keep the economy at potential output in the long run
One problem with using discount rate changes to influence deposit creation or
destruction is that
a. small changes in the rate do not have much impact
b. the discount rate changes are covert
c. banks like to borrow from the Fed, and they will borrow even more after the changes
d. the Fed must change the discount rate each time they meet
e. banks do not have enough control over their demand deposits
Which of the following would be example(s) of the resource cost of inflation?
a. Shopping several web sites to check prices
b. Changing price tags
c. Re-printing menus
d. The wear and tear on your car from additional trips to the bank
e. All of the above
From the 1960s through the 1990s military expenditures increased as a percentage of
GDP and they were a major influence in the continued growth of government outlays.
In an Israeli factory, each worker can produce 2/5 of a shirt in an hour or 1/4 of a pair of
pants in an hour. If there are 500 workers in the factory, then the maximum number of
pairs of pants that can be made in an hour is
a. 120
b. 250
c. 75
d. 350
e. 300
Factor payments are
a. amounts paid to resource owners for the use of their resource
b. amounts paid for goods
c. another term for revenues
d. the amount households put into savings
e. payments made to workers who are employed only part time
Why is the effect of saving so controversial to economists?
a. Increased saving always has an unambiguously positive effect on the economy
b. Increased saving always has an unambiguously negative effect on the economy
c. Increased saving may hurt the economy in the short run but help it in the long run
d. Decreased saving my hurt the economy in the short run but help it in the long run
e. Because different schools of economic thought use different definitions
Figure 6-6 shows the total utility that Jerry would receive from consuming different
numbers of apples per week. What is Jerry’s marginal utility from consuming the
second apple after he already consumed the first one?