A demand curve shows the relationship between price and
a. income.
b. quantity demanded.
c. production.
d. income and quantity demanded.
Figure 34-7
RefertoFigure34-7. Which of the following is correct?
a. Unemployment rises as the economy moves from point a to point b.
b. Either fiscal or monetary policy could be used to move the economy from point b to
point a.
c. If the economy is left alone, then as the economy moves from point b to long-run
equilibrium, the price level will fall farther.
d. All of the above are correct.
The marginal benefit Kyra gets from eating a second sandwich is
a. the total benefit Kyra gets from eating two sandwiches minus the total benefit she
gets from eating one sandwich.
b. the same as the total benefit she gets from eating two sandwiches.
c. less than the marginal cost of eating the second sandwich since she chose to eat the
second sandwich.
d. the total benefit Kyra gets from eating three sandwiches minus the total benefit she
gets from eating two sandwiches.
Other things the same, when the interest rate rises,
a. people would want to lend more, making the supply of loanable funds increase.
b. people would want to lend less, making the supply of loanable funds decrease.
c. people would want to lend more, making the quantity of loanable funds supplied
increase.
d. people would want to lend less, making the quantity of loanable funds supplied
decrease.
Ethan purchases a new house for $170,000. Ethan’s purchase of the house contributes
$170,000 to which magnitude in the identity Y= C+ I+ G?
a. C
b. I
c. G
d. None of the above are correct.
Other things the same, which of the following is correct?
a. A decrease in the price level causes the dollar to appreciate. Aggregate demand shifts
right.
b. A decrease in the price level causes the dollar to depreciate. Aggregate demand shifts
right.
c. If speculators lose confidence in the American economy, the dollar appreciates.
Aggregate demand shifts right.
d. If speculators lose confidence in the American economy, the dollar depreciates.
Aggregate demand shifts right.
If foreigners want to buy more U.S. bonds, then in the market for foreign-currency
exchange the exchange rate
a. and the quantity of dollars traded rises.
b. rises and the quantity of dollars traded falls.
c. falls and the quantity of dollars traded rises.
d. and the quantity of dollars traded falls.
When a large, well-known corporation wishes to borrow directly from the public, it can
a. sell bonds.
b. sell shares of stock.
c. go to a bank for a loan.
d. All of the above are correct.
Last year the imaginary country of Basova had a population of 10,000, 6,000 people
worked 8 hours a day, and produced a real GDP of $30,000,000. The imaginary country
of Andovia had a population of 12,000, 8,000 people worked 8 hours a day, and
produced a real GDP of $38,000,000. Which of the following is correct?
a. Basova had higher productivity and higher real GDP per person.
b. Andovia had the higher productivity and higher real GDP per person.
c. Basova had the higher productivity while Andovia had the higher real GDP per
person.
d. Andovia had the higher productivity while Basova had the higher real GDP per
person.
Which of the following are both correct?
a. Data show no correlation between saving and measures of economic well-being. A
reduction in tax rates may reduce saving because of the income effect.
b. Data show no correlation between saving and measures of economic well-being. A
reduction in tax rates may reduce saving because of the substitution effect.
c. Data show a positive correlation between saving and measures of economic
well-being. A reduction in tax rates may reduce saving because of the income effect.
d. Data show a positive correlation between saving and measures of economic
well-being. A reduction in tax rates may reduce saving because of the substitution
effect.
In the long run, an increase in the stock of human capital
a. and increases in the money supply both make the price level rise.
b. and increases in the money supply both make the price level fall.
c. makes the price level rise, while increases in the money supply make prices fall.
d. makes the price level fall, while increases in the money supply make prices rise.
Minimum-wage laws matter most for the least skilled and least experienced members of
the labor force, such as teenagers.
a. True
b. False
To say that the natural rate of unemployment changes over time is to say that
a. the short-run Phillips curve shifts over time.
b. the long-run Phillips curve shifts over time.
c. the aggregate demand curve shifts over time.
d. the Federal Reserve influences the natural rate of unemployment over time.
A decrease in the price of blueberries will decrease both the equilibrium price and
quantity in the market for blueberry muffins.
a. True
b. False
You observe a closed economy that has a government deficit and positive investment.
Which of the following is correct?
a. Private and public saving are both positive.
b. Private saving is positive; public saving is negative.
c. Private saving is negative; public saving is positive.
d. Both private saving and public saving are negative.
An increase in the budget surplus
a. raises net exports and domestic investment.
b. raises net exports and reduces domestic investment.
c. reduces net exports and raises domestic investment.
d. reduces net exports and domestic investment.
In the simple circular flow diagram, the flow of money from the firms to the markets
for factors of production is called
a. spending.
b. revenue.
c. income.
d. wages, rent, and profit.
Domestic saving must equal domestic investment in
a. both closed and open economies.
b. closed, but not open economies.
c. open, but not closed economies.
d. neither closed nor open economies.
A larger budget surplus
a. raises the interest rate and investment.
b. reduces the interest rate and investment.
c. raises the interest rate and reduces investment.
d. reduces the interest rate and raises investment.
Figure 3-11
The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
Refer to Figure3-11. If the production possibilities frontier shown is for 240 hours of
production, then which of the following combinations of ham and cheese could
Bonovia notproduce in 240 hours?
a. 250 pounds of ham and 120 pounds of cheese
b. 200 pounds of ham and 160 pounds of cheese
c. 160 pounds of ham and 200 pounds of cheese
d. 100 pounds of ham and 240 pounds of cheese
Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.
a. True
b. False
In addition to
a. performing financial intermediation, banks are important in that they help create a
medium of exchange.
b. serving as financial markets, mutual funds are important in that they help create a
store of value.
c. serving as stores of value, stocks and bonds also serve as media of exchange.
d. All of the above are correct.
Ron decides which stocks to purchase by throwing darts at the stock pages of
TheWallStreetJournal. Ron probably believes that
a. stock prices follow a random walk.
b. the stock market is informationally efficient.
c. it is better to own stock in 20 companies than it is to own stock in 2 companies.
d. All of the above are correct.
Optimism
Imagine that the economy is in long-run equilibrium. Then, perhaps because of
improved international relations and increased confidence in policy makers, people
become more optimistic about the future and stay this way for some time.
RefertoOptimism.In the long run, the change in price expectations created by
optimism shifts
a. long-run aggregate supply right.
b. long-run aggregate supply left.
c. short-run aggregate supply right.
d. short-run aggregate supply left.
Table 3-26
Assume that Japan and Korea can switch between producing cars and producing
airplanes at a constant rate.
RefertoTable3-26.Japan has an absolute advantage in the production of
a. cars and a comparative advantage in the production of cars.
b. cars and a comparative advantage in the production of airplanes.
c. neither good and a comparative advantage in the production of cars.
d. neither good and a comparative advantage in the production of airplanes.
Tonya put $250 into an account three years ago. The first year he earned 6 percent
interest, the second year 7 percent, and the third year 8 percent. About how about much
does Tonya have in her account now?
a. $302.50
b. $306.23
c. $308.67
d. $309.39
If the government of a country with a zero trade balances increases its budget deficit,
then interest rates
a. rise and the trade balance moves to a surplus.
b. rise and the trade balance moves to a deficit.
c. fall and the trade balance moves to a surplus.
d. fall and the trade balance moves to a deficit.
A bond promises to pay $500 in one year and $10,500 in two years. What is the correct
way to find the present value of this bond?
a. $500(1 + r) + $10,500/(1 + r)2
b. $500/(1 + r) + $10,500/(1 + r)2
c. $11,000/(1 + r)2
d. $500(1 + r) + $10,500(1 + r)2
If labor in Mexico is less productive than labor in the United States in all areas of
production,
a. then neither nation can benefit from trade.
b. then Mexico can benefit from trade but the United States cannot.
c. then the United States will have a comparative advantage relative to Mexico in the
production of all goods.
d. then both Mexico and the United States still can benefit from trade.
The principle of comparative advantage does not provide answers to certain questions.
One of those questions is
a. Do specialization and trade benefit more than one party to a trade?
b. Is it absolute advantage or comparative advantage that really matters?
c. How are the gains from trade shared among the parties to a trade?
d. Is it possible for specialization and trade to increase total output of traded goods?