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The sum of the unemployment rate and the employment rate always equals 100 percent.
a. True
b. False
Exhibit 1-1
If the student whose study habits are illustrated here is currently studying for the
2nd hour she should
a. cut back on the number of hours she is studying because the marginal benefit of
studying for the 2nd hour is less than the marginal cost of doing so.
b. cut back on the number of hours she is studying because the marginal benefit of
studying for the 2nd hour is greater than the marginal cost of doing so.
c. increase the number of hours she is studying because the marginal benefit of
studying for the 2nd hour is less than the marginal cost of doing so.
d. increase the number of hours she is studying because the marginal benefit of
studying for the 2ndhour is greater than the marginal cost of doing so.
Which of the following statements is false?
a. Purchasing power and the price level are inversely related.
b. The real balance effect refers to the change in the purchasing power of
dollar-denominated assets as a result of a change in the price level.
c. The aggregate demand curve slopes downward because of the real balance, interest
rate, and international trade effects.
d. A change in the quantity demanded of Real GDP is directly brought about by a
change in interest rates.
In the real world, we should expect the multiplier process to work itself out
a. almost instantaneously.
b. within a few days.
c. within about one month.
d. over many months, perhaps even years.
Unusually good weather that improves crop production and a major oil discovery are
both examples of a beneficial supply shock.
a. True
b. False
When a country imposes and maintains price controls, inflation
a. can never occur.
b. will result in a general surplus of goods and services.
c. is felt through long lines of people wanting to buy goods.
d. has been legislated away.
Which of the following statements is false?
a. Aggregate demand is a specific dollar amount, such as $400 billion.
b. At a given price level, anything that changes total expenditures changes aggregate
demand.
c. Total expenditures rises if consumption rises, ceteris paribus.
d. Total expenditures rises if investment spending rises, ceteris paribus.
A price floor (set above the equilibrium price) on rice will
a. force otherwise profitable farmers out of business.
b. result in a shortage of rice.
c. result in a surplus of rice.
d. clear the market for rice.
e. both a and b
Advocates of a gold standard believe that long-term price stability would be more likely
under a gold standard than under current Fed monetary policy.
a. True
b. False
According to new classical economists, if a decrease in aggregate demand is correctly
anticipated, the short-run aggregate supply curve will shift __________ at the same
time the AD curve shifts _________ so that there will be no change in Real GDP.
a. rightward; rightward
b. leftward; rightward
c. leftward; rightward
d. rightward; leftward
e. none of the above
Farmers as a group generally prefer bad weather to good weather because bad weather
shifts the demand curve for their product rightward and raises the price of their product.
a. True
b. False
High demand for a product does not necessarily mean a high quantity demanded for
that product if the price is high enough.
a. True
b. False
The answer is, "This is principally used to exhibit changes in data over time." The
question is,
a. What is a pie chart?
b. What is a 45-degree line?
c. What is a tangent line?
d. What is a line graph?
e. b and d
The branch of economics that studies the decisions of individuals and firms is called
a. macroeconomics.
b. microeconomics.
c. microeconomics and macroeconomics.
d. positive economics.
e. normative economics.
When income rises for the buyers of good X, the ____________ curve for good X will
shift ________________.
a. demand; rightward
b. demand; leftward
c. supply; rightward
d. supply; leftward
e. This question cannot be answered unless we know whether good X is a normal good,
a neutral good, or an inferior good.
In the monetarist transmission mechanism, changes in the money market directly affect
aggregate demand.
a. True
b. False
In the median voter model, we assume that
a. voters will vote for the friendlier of two candidates.
b. voters will vote for the candidate who comes closer to matching their views.
c. the candidate who occupies the far right has a better chance of winning the election
than the candidate who occupies the far left.
d. there are three candidates running for the same office.
e. b and c
