Which of the following is correct concerning recessions?
a. They come at fairly regular and predictable intervals.
b. They are associated with comparatively large increases in investment spending.
c. They are any period when real GDP growth is less than average.
d. They tend to be associated with rising unemployment rates.
The federal funds rate is the
a. percentage of face value that the Federal Reserve is willing to pay for Treasury
Securities.
b. percentage of deposits that banks must hold as reserves.
c. interest rate at which the Federal Reserve makes short-term loans to banks.
d. interest rate at which banks lend reserves to each other overnight.
If the price level rises above what was expected and nominal wages are fixed, then
a. production becomes less profitable so firms will hire fewer workers.
b. production becomes less profitable so firms will hire more workers.
c. production becomes more profitable so firms will hire fewer workers.
d. production becomes more profitable so firms will hire more workers.
Who of the following is notincluded in the Bureau of Labor Statistics’ “employed”
category?
a. those who worked in their own business
b. those who worked as unpaid workers in a family member’s business
c. those waiting to be recalled to a job from which they had been laid off
d. those who were temporarily absent from work because of vacation.
People who report being unemployed but who, in fact, are working for “under the table”
pay to avoid taxes on their earnings are really employed and therefore cause the
reported unemployment rate to be higher than it would otherwise be.
a. True
b. False
Last year a country had exports of $100 billion, imports of $70 billion, and purchased
$60 billion worth of foreign assets. What was the value of domestic assets purchased by
foreigners?
a. $70 billion
b. $40 billion
c. $30 billion
d. $10 billion
Figure 2-12
RefertoFigure2-12.The shift of the production possibilities frontier from A to B can
best be described as
a. a downturn in the economy.
b. economic growth.
c. an enhancement of equality.
d. an improvement in the allocation of resources.
The fact that different countries experience different standards of living is largely
explained by differences in those countries’
a. populations.
b. productivity levels.
c. locations.
d. None of the above is correct. Economists are puzzled by differences in standards of
living around the world.
Figure 2-19
In the following graph the x-axis shows the number of times a commuter rail train stops
at a station per hour and the y-axis shows the number of commuter rail passengers per
hour.
Commuter Rail Passengers by Frequency of Service
RefertoFigure2-19.Which of the following conclusions should notbe drawn from
observing this graph?
a. There is a positive correlation between the frequency of service and the number of
passengers.
b. When there are 5 stops per hour, there are approximately 200 passengers.
c. More stops per hour is associated with more passengers per hour.
d. No other factors besides the frequency of service affect the number of passengers.
US citizens have better nutrition, better healthcare, and a longer life expectancy than
citizens of Ghana. Which of the following conclusions can be drawn from this
statement?
a. Average income in the US is higher than the average income in Ghana.
b. The US has a higher standard of living than Ghana.
c. Productivity in the US is higher than productivity in Ghana.
d. All of the above are correct.
Which of the following is both a store of value and regularly used as a medium of
exchange?
a. cash and stocks
b. cash but not stocks
c. stocks but not cash
d. neither cash nor stocks
Table 3-11
Assume that Max and Min can switch between producing mittens and producing hats at
a constant rate.
Refer to Table3-11. Assume that Max and Min each has 36 labor hours available. If
each person divides his/her time equally between the production of mittens and hats,
then total production is
a. 18 mittens and 6 hats.
b. 18 mittens and 7.5 hats.
c. 16 mittens and 12 hats.
d. 36 mittens and 15 hats.
Which of the following could reduce economic efficiency?
a. laws that encourage lawsuits
b. policies that redistribute income
c. policies that impose significant restrictions on international trade
d. All of the above are correct
An increase in money demand would create a surplus of money at the original value of
money.
a. True
b. False
If a reform of the tax laws encourages greater saving, the result would be
a. higher interest rates and greater investment.
b. higher interest rates and less investment.
c. lower interest rates and greater investment.
d. lower interest rate and less investment.
According to the article “Why Gold?”, silver may be used as money. One problem with
using silver as money is that
a. silver is too abundant.
b. silver tarnishes over time.
c. it is not a precious metal.
d. it has a high melting point.
Means-tested government benefits base benefits on
a. a household’s wealth and are an incentive to save.
b. a household’s wealth and are a disincentive to save.
c. the current interest rate and are an incentive to save.
d. the current interest rate and are a disincentive to save.
The sacrifice ratio is the percentage point increase in the unemployment rate created in
the process of reducing inflation by one percentage point.
a. True
b. False
Figure 2-18
RelationshipbetweenPriceandRestaurantMeals
RefertoFigure2-18.The slope of the line containing points Y and Z is
a. -0.5.
b. -1.
c. -2.
d. -4.
At the end of 2007, the government had a debt of about $5,000 billion. During 2007,
real GDP grew by about 0.8 percent and inflation was about 2.7 percent. About what is
the largest deficit the government could have run without raising the debt-to-GDP ratio?
a. 135 billion
b. 143 billion
c. 169 billion
d. 175 billion
An assumption an economist might make while studying international trade is
a. there are only two countries.
b. countries only produce two goods.
c. technology does not change.
d. All of the above are possible assumptions.
Figure 4-19
RefertoFigure4-19. In this market, equilibrium price and quantity, respectively, are
a. $10 and 30 units.
b. $10 and 50 units.
c. $10 and 70 units.
d. $4 and 50 units.
According to the traditional view of the production function, which of the following
values of the additions to output per worker would be consistent with moving from 5 to
6, and then from 6 to 7, and then from 7 to 8 units of capital per worker in that order?
a. 40, 40, 40
b. 40, 35, 38
c. 40, 34, 32
d. 40, 43, 48
Suppose the central bank increases the growth rate of the money supply. In the long run,
which of the following is unaffected by this change in policy?
a. the unemployment rate and the inflation rate
b. the unemployment rate but not the inflation rate
c. the inflation rate but not the unemployment rate
d. neither the inflation rate nor the unemployment rate
When a minimum-wage law forces the wage to remain above the equilibrium level, the
result is
a. both a shortage of labor and a shortage of jobs.
b. a shortage of labor and a surplus of jobs.
c. a surplus of labor and a shortage of jobs.
d. both surplus of labor and a surplus of jobs.
Which of the following pairs of countries experienced approximately the same rate of
growth of real income per person over about the last 120 years?
a. Germany and Japan
b. Indonesia and Bangladesh
c. the United States and Argentina
d. Mexico and Pakistan
In the long run, import quotas increase net exports.
a. True
b. False
Which of the following is notan argumentmade by those who oppose reforming the tax
laws to encourage saving?
a. A public budget surplus can raise national saving.
b. The substitution effect of a higher return to saving may be about equal to the income
effect of a higher return to saving.
c. Low-income households save a larger fraction of their income than high-income
households.
d. Tax cuts might cause a budget deficit.
Suppose a basket of goods and services has been selected to calculate the CPI and 2012
has been selected as the base year. In 2012, the basket’s cost was $77; in 2013, the
basket’s cost was $82; and in 2014, the basket’s cost was $90. The value of the CPI in
2014 was
a. 109.8 and the inflation rate was 9.8%.
b. 109.8 and the inflation rate was 16.9%.
c. 116.9 and the inflation rate was 9.8%.
d. 116.9 and the inflation rate was 16.9%.
Stock represents
a. a claim to a share of the profits of a firm.
b. ownership in a firm.
c. equity finance.
d. All of the above are correct
Table 3-28
Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim
can switch between setting up and testing computers at a constant rate. The following
table applies.
RefertoTable3-28.Barb’s opportunity cost of testing one computer is setting up
a. 4/5 computer and Jim’s opportunity cost of testing one computer is setting up 3/4
computer.
b. 4/5 computer and Jim’s opportunity cost of testing one computer is setting up 4/3
computers.
c. 5/4 computers and Jim’s opportunity cost of testing one computer is setting up 3/4
computer.
d. 5/4 computers and Jim’s opportunity cost of testing one computer is setting up 4/3
computers.
Individual demand curves are summed vertically to obtain the market demand curve.
a. True
b. False
Figure 25-1.
On the horizontal axis, K/Lrepresents capital (K) per worker (L). On the vertical axis,
Y/Lrepresents output (Y) per worker (L).
RefertoFigure25-1.The curve becomes flatter as the amount of capital per worker
increases because of
a. increasing returns to capital.
b. increasing returns to labor.
c. diminishing returns to capital.
d. diminishing returns to labor.