If the Fed raises the discount rate at the same time it conducts an open market sale, it
follows that the money supply will
a. fall.
b. rise.
c. remain unchanged.
d. There is not enough information to answer the question.
Economists use the ceteris paribus assumption primarily in order to
a. make their analyses easier for them to conduct.
b. designate what they believe is the correct relationship between two variables.
c. explain why people sometimes consume more of a good when its price rises.
d. explain why those things that come first do not necessarily cause those things that
come later.
e. designate the difference between normative and positive economics.
Suppose Congress passes a law that states that the federal government will pay $100 to
any American citizen who can pass a (reasonably simple) current political events test. It
follows that
a. this raises the benefits of being rationally ignorant.
b. this raises the benefits of becoming informed and therefore will lower the degree of
rational ignorance in society.
c. this raises the costs of being rationally ignorant.
d. b and c
e. none of the above
When the economy is in a recessionary gap, the labor market is experiencing a surplus.
a. True
b. False
__________ rights refer to the range of laws, rules, and regulations that define rights
for the use and transfer of resources.
a. Individual
b. Constitutional
c. Property
d. Economic
e. none of the above
You turn to the Treasury bond market page of a newspaper and look under the column
headed “Bid” and see that it says, “125:8” this indicates that
a. the price that the buyer is willing to pay for this bond is $125.08.
b. the price that the buyer is willing to pay for this bond is $1,252.50.
c. the price that the seller is willing to sell this bond for is $125.80.
d. the price that the seller is willing to sell this bond for is $125.08.
If total expenditures fall at a given price level, then the
a. quantity demanded of Real GDP rises.
b. quantity demanded of Real GDP falls.
c. AD curves shifts to the right.
d. AD curve shifts to the left.
e. none of the above
Economists use the terms resource and input as synonyms.
a. True
b. False
Tax revenues can be found by
a. multiplying the tax base by the (average) tax rate.
b. dividing the tax base by the (average) tax rate.
c. summing the tax base and the (average) tax rate.
d. multiplying taxable income by the marginal tax rate.
Which of the following will lead to a leftward shift in the U.S. SRAS curve?
a. a decrease in foreign input prices
b. an appreciation of the dollar
c. a depreciation of the dollar
d. a and b
e. none of the above
The increase in the interest rate due to a higher expected inflation rate is called the
__________ effect.
a. expectations
b. Fisher
c. liquidity
d. income
e. a or b
On an aggregate level, free trade produces a net __________ and restricted trade
produces a net __________.
a. loss; loss also
b. benefit; benefit also
c. benefit; loss
d. loss; benefit
Which of the following predictions is consistent with public choice theory?
a. Voters will sometimes cast votes based on whether they like a candidate’s personality,
not on hard facts.
b. Many voters will be uninformed on political and government issues.
c. Much legislation will be special interest legislation.
d. b and c
e. a, b, and c
Those who say that economics is becoming an increasingly imperialist social science
are suggesting that economics is
a. becoming increasingly concerned with corporations rather than small businesses.
b. becoming increasingly focused on government actions rather than on business
activity.
c. spreading out into other fields of study, such as history, anthropology, and sociology.
d. becoming increasingly focused on business activity rather than on government
actions.
Exhibit 4-5
If a free market were allowed in the transplanted kidney market, then the equilibrium
price would be P2. The number of kidneys transplanted would increase by _________
compared to the number transplanted at a price ceiling of P= $0.
a. (Q3 – Q1)
b. (Q3 – Q2)
c. (Q2 – Q1)
d. Q2
Exhibit 16-4
If LRAS1 shifts to LRAS2, and this causes AD1 to shift to AD2, economists would call
this a
a. rational expectations cycle.
b. policy ineffectiveness proposition.
c. short run Phillips curve.
d. real business cycle.