Free trade makes the people of a country worse off.
Firms react to a unplanned positive inventory investment by increasing output.
Being self-sufficient in the production of everything we need is efficient.
What matters to people is the face value of money or income.
The government spending multiplier in a closed economy is the same as the
government spending multiplier in an open economy, if the marginal propensity to
import equals zero.
According to the multiplier-accelerator model, a downturn in real GDP leads to an even
sharper fall in investment.
Typical consumption taxes create an incentive to save.
The supply of money is determined by the Federal Reserve and is dependent on the
demand for money.
As the marginal propensity to consume decreases, the government spending multiplier
increases.
In a production function that is graphed with output on the y-axis and labor on the
x-axis, an increase in the labor stock is illustrated as:
A) an upward shift in the production function.
B) an upward movement along the production function.
C) a downward shift in the production function.
D) a downward movement along the production function.
The common term for a severe recession is a
A) downturn.
B) depression.
C) bottoming out.
D) economic adjustment.
The market supply curve is:
A) downward sloping and is flatter than an individual’s supply curve.
B) upward sloping and is flatter than an individual’s supply curve.
C) downward sloping and is steeper than an individual’s supply curve.
D) upward sloping and is steeper than an individual’s supply curve.
You borrow money to buy a house in 2009 at a fixed interest rate of 5.5 percent. By
2012, the inflation rate has steadily fallen to 1.5 percent from the recent high of 3.0
percent in 2009. Considering only your mortgage, is inflation good news or bad news
for you?
A) bad news, because inflation hurts everyone
B) bad news, because it makes the real value of your mortgage payments increase
C) good news, because it makes the real value of your mortgage payments decrease
D) bad news, because it makes the nominal value of your mortgage payments increase
Table 3.1
Based on the data in Table 3.1
A) April should specialize in painting kites and trade for snowboards.
B) April should specialize in painting snowboards and trade for kites.
C) Jesse should specialize in both goods.
D) April should specialize in both goods.
Table 11.3 Refer to Table 11.3. If aggregate output equals ________, there will be a $50
million unplanned decrease in inventories.
A) $2,500 million
B) $2,000 million
C) $3,500 million
D) $4,000 million
An increase in the price level in the economy leads to
A) a leftward shift in the demand for money curve.
B) a rightward shift in the demand for money curve.
C) a leftward movement along the demand for money curve.
D) a rightward movement along the demand for money curve.
The balanced budget multiplier equals:
A) 1.
B) 1/(1- MPC).
C) – MPC/(1-MPC).
D) 1/ (1-MPC+ m).
Adjustments in ________ take the economy from the short-run equilibrium to the
long-run equilibrium.
A) imports and exports
B) interest rates
C) wages and prices
D) the multiplier
If the equilibrium price of a good increases and the equilibrium quantity of the good
decreases, we can conclude that
A) demand increased.
B) demand decreased.
C) supply increased.
D) supply decreased.
Which of the following is a variable?
A) your GPA
B) your hourly wage
C) the price of gasoline
D) All of the above are correct.
When supply decreases and the supply curve shifts to the left, equilibrium price
________ and equilibrium quantity ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
Do deficits lead to inflation?
How would an increase in prices in retail stores change the real value of the money you
earn as wages?
Explain the concept of diminishing returns.
Suppose that you lend $1,000 to a friend who pays you back $1,100 the next year.
Suppose that prices that year rose by 8% and the real rate of return in the stock market
was 4%. Your friend says that he or she was being more than fair by giving you more
than the rate of inflation as a return. What do you think?
Explain why there must be a surplus in a country’s financial account if the country is
running a deficit in its current account and the capital account is zero.
To make new commercial ventures more attractive for entrepreneurs, ________ can be
used to reduce risk.
Describe the relationship demonstrated by a production function.
A surplus occurs when producers are willing to sell more than consumers are willing to
buy. This is called an ________.
By making acquisitions, resources are used that could have been used to ________.
What are some of the roles of government in a market economy?