Figure 18.2
Refer to Figure 18.2. In autarky, the maximum amount of spears that Macadamia can
produce is
A) 40.
B) 100.
C) 120.
D) 160.
If incomes increase and hotdogs are inferior goods, then:
A) the demand for hotdogs increases.
B) the demand for hotdogs decreases.
C) the quantity demanded for hotdogs decreases.
D) the quantity demanded for hotdogs increases.
According to the expectations Phillips curve, unemployment varies with
A) unanticipated inflation.
B) anticipated inflation.
C) actual inflation.
D) real inflation.
When the consumption function is expressed as C = 200 + .75(1-t)y where t =0.2, then
the adjusted MPC is:
A) 0.6.
B) 0.75.
C) 0.15.
D) 0.8.
Suppose the government’s initial debt is $350 billion and that during the next two years
the government runs deficits of $90 and $40 billion. If during the third year the
government has a $70 billion surplus, the government’s total debt at the end of the three
years will be
A) $60 billion.
B) $200 billion.
C) $410 billion.
D) $550 billion.
When the price of a product decreases, the demand for a substitute product:
A) decreases.
B) increases.
C) changes to balance the price change.
D) none of the above
An open-market purchase of government bonds by the Fed results in ________ in bank
reserves and ________ in the supply of money.
A) an increase; a decrease
B) a decrease; a decrease
C) an increase; an increase
D) a decrease; an increase
Figure 14.4 Refer to Figure 14.4. If the Fed wants to reduce the economy’s market
interest rate from 6 percent to 4 percent, it needs to ________.
A) sell government bonds
B) buy government bonds
C) increase
D) keep constant
According to real business cycle theorists, in modern times, economic fluctuations can
largely be attributed to
A) immigration policies that increased the supply of labor.
B) advancements in technology.
C) the entry of more college graduates in the labor market.
D) large scale unemployment.
The difference between the Phillips curve and the expectations Phillips curve is that the
A) expectations Phillips curve takes into account expectations of inflation.
B) Phillips curve takes into account expectations of inflation.
C) Phillips curve is flatter.
D) Phillips curve is steeper.
Figure 18.3
Refer to Figure 18.3. With free trade, the equilibrium price is:
A) $0.
B) $12.
C) $10.
D) $8.
Given the data in Table 6.1, if the workers who are “not employed and not looking for
work” were counted as not employed and in the labor force, the unemployment rate of
Metropolis would be approximately
A) 4 percent.
B) 7 percent.
C) 9 percent.
D) 10 percent.
The fact that it takes time for government to take action, even after a problem has been
diagnosed, is one reason for the occurrence of
A) inside lags.
B) outside lags.
C) crowding out.
D) the multiplier effect.
Daily Output of Russia and Panama
Table 18.1
Refer to Table 18.1. The opportunity cost of a glove in Russia is
A) 1/8 of a hat.
B) 1/3 of a hat.
C) 3 hats.
D) 8 hats.
If the velocity of money is 4 and nominal GDP is $24 trillion, then the money supply is
A) $28 trillion.
B) $20 trillion.
C) $6 trillion.
D) $0.167 trillion.
Which of the following will shift the natural rate of unemployment?
A) changes in labor productivity
B) changes in the state of the economy
C) changes in the age structure of the labor force
D) all of the above
In the long run, an increase in the money supply
A) decreases real interest rates, increases investment, and decreases output.
B) decreases real interest rates, but has no effect on investment or output.
C) increases output, but has no effect on real interest rates or output.
D) has no effect on real interest rates, investment or output.
Which of the following is considered capital?
A) a factory a company builds to produce other output
B) a tractor produced by John Deere
C) a computer purchased for a secretary
D) all of the above