If banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign
currencies of other countries, but foreigners do not desire to increase their holdings of
U.S. dollars, then U.S. net exports would
a. rise and aggregate demand would shift left.
b. rise and aggregate demand would shift right.
c. fall and aggregate demand would shift left.
d. fall and aggregate demand would shift right.
Which of the following is not correct?
a. Gross domestic product is both total income in an economy and total expenditures on
the economy’s output of goods and services.
b. In a closed economy net exports are zero.
c. National saving is the sum of private saving and public saving.
d. Purchases of capital goods are excluded from GDP.
In a competitive market, each seller has limited control over the price of his product
because
a. other sellers are offering similar products.
b. buyers exert more control over the price than do sellers.
c. these markets are highly regulated by the government.
d. sellers usually agree to set a common price that will allow each seller to earn a
comfortable profit.
A price floor will be binding only if it is set
a. equal to the equilibrium price.
b. above the equilibrium price.
c. below the equilibrium price.
d. either above or below the equilibrium price.
Because the CPI is based on a fixed basket of goods, the introduction of new goods and
services in the economy causes the CPI to overestimate the cost of living. This is so
because
a. new goods and services are always of higher quality than existing goods and services.
b. new goods and services cost less than existing goods and services.
c. new goods and services cost more than existing goods and services.
d. when a new good is introduced, it gives consumers greater choice, thus reducing the
amount they must spend to maintain their standard of living.
The greater the price elasticity of demand, the
a. more likely the product is a necessity.
b. smaller the responsiveness of quantity demanded to a change in price.
c. greater the percentage change in price over the percentage change in quantity
demanded.
d. greater the responsiveness of quantity demanded to a change in price.
The long-run aggregate supply curve would shift right if immigration from abroad
a. increased or Congress made a substantial increase in the minimum wage.
b. decreased or Congress abolished the minimum wage.
c. increased or Congress abolished the minimum wage.
d. decreased or Congress made a substantial increase in the minimum wage.
The aggregate demand curve shifts right if either
a. speculators gain confidence in U.S. assets or foreign countries enter into recession.
b. speculators gain confidence in U.S. assets or recessions in foreign countries end.
c. speculators lose confidence in U.S. assets or foreign countries enter into recession.
d. speculators lose confidence in U.S. assets or recessions in foreign countries end.
Suppose the price elasticity of supply for candles is 0.3 in the short run and 1.2 in the
long run. If an increase in the demand for candles causes the price of candles to increase
by 36%, then the quantity supplied of candles will increase by about
a. 0.8% in the short run and 3.3% in the long run.
b. 1.2% in the short run and 0.3% in the long run.
c. 10.8% in the short run and 2% in the long run.
d. 120% in the short run and 30% in the long run.
People are likely to want to hold more money if the interest rate
a. increases, making the opportunity cost of holding money rise.
b. increases, making the opportunity cost of holding money fall.
c. decreases, making the opportunity cost of holding money rise.
d. decreases, making the opportunity cost of holding money fall.
Diversification reduces
a. only market risk.
b. only firm-specific risk.
c. neither market or firm-specific risk.
d. both market and firm-specific risk.
Figure 15-1
Refer to Figure 15-1. If the government imposes a minimum wage of $8, then
unemployment will increase by
a. 0 workers.
b. 2000 workers.
c. 4000 workers.
d. 7000 workers.
Table 10-5
A hypothetical country of Lahland produces only movies and popcorn. Quantities and
prices of these goods for the last several years are shown below. The base year is 2009.
Prices and Quantities
Refer to Table 10-5 In which year was this country’s real GDP highest?
a. 2008
b. 2009
c. 2010
d. 2011
The future value of $500 saved for two years at an interest rate of 5% is
a. $550.25.
b. $550.00.
c. $551.25.
d. None of the above are correct.
A German citizen buys an automobile produced in the United States by a Japanese
company. As a result,
a. U.S. net exports increase, U.S. GDP is unaffected, Japanese GNP increases, German
net exports decrease, and German GNP and GDP are unaffected.
b. U.S. net exports and GDP increase, Japanese GNP increases, German net exports
decrease, German GNP is unaffected, and German GDP decreases.
c. U.S. net exports and GDP increase, Japanese GNP increases, German net exports
decrease, and German GNP and GDP are unaffected.
d. U.S. net exports and GDP are unaffected, Japanese GNP increases, and German net
exports, GNP, and GDP decrease.
The velocity of money is
a. the rate at which the Fed puts money into the economy.
b. the same thing as the long-term growth rate of the money supply.
c. the money supply divided by nominal GDP.
d. the average number of times per year a dollar is spent.
A double coincidence of wants
a. is required when there is no item in an economy that is widely accepted in exchange
for goods and services.
b. is required in an economy that relies on barter.
c. is a hindrance to the allocation of resources when it is required for trade.
d. All of the above are correct.
Figure 9-11
Refer to Figure 9-11. Consumer surplus in this market before trade is
a. A.
b. B + C.
c. A + B + D.
d. C.
Table 4-2
Refer to Table 4-2. If these are the only four buyers in the market, then when the price
decreases from $6 to $4, the market quantity demanded
a. increases by 0.75 units.
b. increases by 3 units.
c. increases by 8 units.
d. decreases by 27 units.
Suppose you win a small lottery and you are given the following choice: You can (1)
receive an immediate payment of $10,000 or (2) three annual payments, each in the
amount of $3,600, with the first payment coming one year from now, the second two
years from now, and the third three years from now. You would choose to take the three
annual payments if the interest rate is
a. 2 percent, but not if the interest rate is 3 percent.
b. 3 percent, but not if the interest rate is 4 percent.
c. 4 percent, but not if the interest rate is 5 percent.
d. 5 percent, but not if the interest rate is 6 percent.
Which of the following would not be included in aggregate demand?
a. additions of newly produced goods to inventory
b. purchases of U.S. services by foreigners
c. the purchase of newly produced capital goods
d. government transfer payments such as Social Security payments
If all workers and all jobs were the same such that all workers were equally well suited
for all jobs, then there would be no
a. cyclical unemployment.
b. frictional unemployment.
c. natural rate of unemployment.
d. structural unemployment.
Figure 9-15
Refer to Figure 9-15. A result of the tariff is that, relative to the free-trade situation, the
quantity of saddles imported decreases by
a. Q2 – Q1.
b. Q3 – Q2.
c. Q4 – Q3.
d. Q4 – Q3 + Q2 – Q1.
Higher inflation results in
a. more frequent price changes and increased variability of relative prices.
b. more frequent price changes and decreased variability of relative prices.
c. less frequent price changes and increased variability of relative prices.
d. less frequent price changes and decreased variability of relative prices.
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of
oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels
of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of
the following statements is true?
a. Both countries could gain from trade with each other.
b. Neither country could gain from trade with each other because Cornland has an
absolute advantage in both goods.
c. Neither country could gain from trade with each other because neither one has a
comparative advantage.
d. Oatland could gain from trade between the two countries, but Cornland definitively
would lose.
Studies of the effects of the minimum wage typically find that a 10 percent increase in
the minimum wage depresses teenage employment by about
a. 1 to 3 percent.
b. 5 to 7 percent.
c. 10 percent.
d. None of the above is correct because studies show no decrease in teenage
employment.
An appreciation of the U.S. real exchange rate induces U.S. consumers to buy
a. fewer domestic goods and fewer foreign goods.
b. more domestic goods and fewer foreign goods.
c. fewer domestic goods and more foreign goods.
d. more domestic goods and more foreign goods.
The quantity of aggregate goods and service demanded rises when the
a. price level rises, because the interest rate rises.
b. price level rises, because the interest rate falls.
c. price level falls, because the interest rate rises.
d. price level falls, because the interest rate falls.
An example of a perfectly competitive market would be the
a. cable TV market.
b. soybean market.
c. breakfast cereal market.
d. shampoo market.
Figure 2-4
Refer to Figure 2-4. It is possible for this economy to produce
a. 40 notepads and 20 lamps.
b. 50 notepads and 30 lamps.
c. 70 notepads and 40 lamps.
d. All of the above.
According to 2009 data on the U.S. population, which of the following groups of
teenagers (ages 16-19) had the highest labor-force participation rate?
a. white males
b. white females
c. black males
d. black females