The coordinates of point A are 400 units of X and 40 units of Y. The coordinates of
point B are 480 units of X and 60 units of Y. With X on the horizontal axis and Y on the
vertical axis, the slope of the line between points A and B is
a. + 0.25
b. + 4.00
c. + 0.33
d. – 4.00
e. – 0.25
Exhibit 10-1
At all points on the 45-degree line,
a. TP = Real GDP.
b. TP > Real GDP.
c. TP < Real GDP.
d. all of the above are possible.
When the dollar appreciates, U.S. net exports fall and aggregate demand decreases.
a. True
b. False
The difference between the highest amount a buyer would be willing to pay for a good
and the amount she actually pays for it is
a. producers’ surplus.
b. consumers’ surplus.
c. marginal revenue.
d. marginal utility.
A bond purchaser bought a bond from which she receives $800 a year from the issuer. If
the face value of the bond is __________ then the coupon rate is __________.
a. $10,000; 10 percent
b. $8,000; 8 percent
c. $10,000; 8 percent
d. $8,000; 12 percent
e. none of the above
Exhibit 4-2
represents the orange juice market. The horizontal line at $2 shows a price ceiling
imposed by the government. Which of the following statements is true at this price?
a. At the price ceiling the surplus equals 400 units.
b. At the price ceiling the shortage equals 400 units.
c. At the price ceiling the surplus equals 300 units.
d. At the price ceiling the shortage equals 200 units.
e. none of the above
Under the target price program,
a. the government ends up buying the surplus product that results.
b. taxpayers pay the difference between the price consumers pay and the target price.
c. deficiency payments are made to both rich and poor farmers.
d. the surplus that results is sometimes dumped or otherwise wasted.
e. b and c
When we say that the financial crisis can be viewed as a balance sheet problem, this is
descriptive of
a. banks’ assets being greater than their liabilities.
b. banks possessing assets that are declining in value, resulting in banks approaching
insolvency.
c. banks having low leverage ratios.
d. banks engaging in regulatory capital arbitrage.
e. none of the above
Suppose the supply of Malaysian rubber decreases.If U.S. producers purchase this
rubber as an input, in the United States, this would cause a
a. rightward shift of the AD curve.
b. leftward shift of the AD curve.
c. rightward shift of the SRAS curve.
d. leftward shift of the SRAS curve.
The true cost of borrowing is the nominal interest rate.
a. True
b. False
Classical economics refers to an era in the history of economic thought that stretched
from about
a. 1750 to the early 1900s.
b. 1935 to the 1970s.
c. 1800 to the mid 1900s.
d. 1600 to the mid 1800s.
Suppose the Fed sells a $50,000 U.S. Treasury security to Martha, a member of the
public. If Martha writes a check to the Fed in order to buy this security, the money in
her checking account will be transferred to
a. the Fed, and now the Fed will have $50,000 more in reserves than it had before.
b. her bank, and now her bank will have $50,000 more in reserves than it had before.
c. the Fed, and now it is as if the money doesn’t exist.
d. the Treasury, and now the Treasury will have $50,000 more in reserves than it had
before.
One reason the AD curve is downward sloping is the __________ effect.
a. wage rate
b. productivity
c. interest rate
d. structural
e. none of the above
The Taylor Rule specifies that the federal funds rate target should be equal to
a. 0.5 ( inflation rate) + 1.5 (GDP gap) + 1
b. 1.5 (inflation rate) + 0.5 (GDP gap) + 1.
c. interest rate – expected inflation rate.
d. equilibrium federal funds rate + inflation rate +1
A PPF is bowed outward as a result of
a. constant opportunity costs.
b. increasing opportunity costs.
c. decreasing opportunity costs.
d. scarcity.
e. choice.
Who has the comparative advantage in the production of good A?
a. Alex
b. Adam
c. Both Alex and Adam
d. Neither Alex nor Adam
If wage rates fall at the same time that labor productivity increases, what is the effect on
short-run aggregate supply (SRAS)?
a. SRAS falls.
b. SRAS remains constant.
c. SRAS rises.
d. SRAS may rise, fall, or remain constant.
Compare a property rights system in which people are allowed to keep one-third of the
monetary rewards of their labor with a system in which they keep two-thirds. We should
expect more entrepreneurship under the __________ system and faster real economic
growth under the __________ system.
a. former; former
b. former; latter
c. latter; former
d. latter; latter
If, under a fixed exchange rate system, the dollar price of a Mexican peso is above its
equilibrium level, then the
a. dollar is undervalued.
b. peso is undervalued.
c. dollar has appreciated.
d. peso has depreciated.