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Here is a consumption function: C = C0 + MPC(Yd). If MPC is 0.95, then we know that
a. as Yd rises by $1, Co rises by $0.95.
b. as Yd rises by $1, C rises by $0.95.
c. Yd rises by $0.95.
d. as C0 rises by $0.05, Yd rises by $1.
Which of the following is not a result of a higher federal budget deficit?
a. a higher real interest rate
b. an appreciation of the currency
c. a rise in exports
d. a fall in the price of foreign inputs
The higher the U.S. dollar price per Mexican peso, the __________ Mexican goods are
for Americans and the __________ Mexican goods Americans will buy; thus
__________ pesos will be demanded.
a. more expensive; fewer, more
b. less expensive; more, fewer
c. more expensive; fewer, fewer
d. less expensive; fewer, more
e. none of the above
A bank has $390 million in assets and $330 million in liabilities.The bank€s net worth
is _____________ million and its leverage ratio is __________________.
a. $360; 1.08 to 1
b. $60; 0.15 to 1
c. $40; 3.75 to 1
d. $60; 6.5 to 1
Economists sometimes refer to the resource category land as natural resources.
a. True
b. False
Globalization is closely aligned with which of the following?
a. increased free enterprise
b. more government control of markets
c. less freedom of movement for people
d. less freedom of movement for goods
With globalization, the world is moving from hundreds of national economies toward
one large world economy.
a. True
b. False
Many economists argue that the labor market may take a long time for wages to adjust
to new equilibrium level.
a. True
b. False
If the economy is producing Natural Real GDP, then the
a. current unemployment rate is greater than the natural unemployment rate.
b. current unemployment rate is less than the natural unemployment rate.
c. economy is at full employment.
d. economy is operating at the natural unemployment rate.
e. c and d
Exhibit 16-1
Milton Friedman would most likely have called the vertical line on which points A and
C are located the
a. long-run aggregate supply curve.
b. Friedman curve.
c. long-run Phillips curve.
d. short-run aggregate supply curve.
e. short-run Phillips curve.
A public choice theorist would be most likely to say that government failure is a
consequence of the
a. actions of selfish and corrupt politicians.
b. rational behavior of the participants of the political process.
c. irrational behavior of voters.
d. irrational behavior of special interest groups.
The major policy-making group within the Fed is the __________ Committee.
a. Federal Reserve Tax
b. Federal Reserve Banking
c. Federal Open Market
d. Federal Reserve Decision-Making
e. Regional Bank
The physical and mental talents people bring to production processes comprise the
resource called
a. entrepreneurship.
b. natural resources.
c. capital.
d. labor.
For all practical purposes, a discouraged worker is an unemployed person because a
discouraged worker is not working.
a. True
b. False
Exhibit 1-3
Based on the data provided in this table,if these data were plotted in a two-variable
diagram the result would be a ______________ sloping
a. downward; (nonlinear) curve.
b. downward; (straight) line.
c. upward; (nonlinear) curve.
d. upward; (straight) line.
e. none of the above
Some economists believe that permanently lower marginal income tax rates
__________ the incentive to work and thus shift the __________.
a. increase; LRAS curve to the right
b. increase; AD curve to the right
c. increase; SRAS curve to the left
d. decrease; LRAS curve to the right
e. decrease; AD curve to the left
Given that the demand for unskilled labor curve is downward-sloping, an unintended
effect of raising the minimum wage is that some people who worked at the lower wage
will lose their jobs at the higher wage.
a. True
b. False
