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Those who supply ________ are holders of pounds seeking to exchange them for
________.
A) dollars; pounds
B) both pounds and dollars; dollars
C) pounds; pounds
D) pounds; dollars
The reason why an increase in government expenditure has a more than proportional
impact on aggregate demand is known as:
A) the wealth effect.
B) the multiplier effect.
C) the divider effect.
D) the interest rate effect.
Suppose there are three economies with 3 different consumption functions:
Country A: C = 100 + 0.8Y
Country B: C = 200 + 0.75 Y
Country C: C = 75 + 0.9Y In which of these countries is autonomous consumption the
largest?
A) Country B
B) Country A
C) Country C
D) All countries have the same autonomous consumption levels.
Assuming that the economy is in the long run equilibrium at full employment, an
increase in the money supply will cause a:
A) proportional increase in the price level and an increase in real GDP.
B) proportional increase in the price level and a reduction in real GDP.
C) proportional reduction in the price level and an increase in real GDP.
D) proportional increase in the price level and no change in real GDP.
The view that the labor market quickly adjusts to reach equilibrium is consistent with
the assumption of ________ aggregate supply curve.
A) a horizontal
B) a downward-sloping
C) an upward-sloping
D) a vertical
If what a government spends exceeds what it collects in taxes in a year, then the
government is experiencing a:
A) government net revenue.
B) government net expenditure.
C) government budget deficit.
D) government budget surplus.
Bob is unemployed if he:
A) is temporarily laid off.
B) is not looking for a job.
C) looked for a job for two months and then quit looking.
D) A and C are correct.
Recall Application 2, "Would a Policy Rule Have Prevented the Housing Boom?" to
answer the following questions:
According to the application, which of the following did John Taylor identify as the
cause of the housing boom from 2001-2004?
A) the Fed's "easy money" policy
B) the Fed's "tight money" policy
C) the Treasury's bailout of banks
D) Congress' tax cuts
President Obama's stimulus package in 2009 included
A) tax increases and decreases in government spending.
B) new tax cuts and increases in government spending.
C) increases in government spending but no change in taxes.
D) new tax cuts but no change in government spending.
Which of the following increased labor productivity in the U.S. in the 1980s and 1990s?
A) information revolution
B) lower prices of oil
C) the recessions at the beginning of the 1980s and the 1990s
D) illegal immigration
The fraction of deposits that banks are required by law to hold and not lend out are
called its
A) reserves.
B) excess reserves.
C) required reserves.
D) net worth.
Figure 15.4
Refer to Figure 15.4. Suppose that the economy is originally in equilibrium at point a.
In the long run, as the supply of money increases, the economy moves to point
A) a.
B) .
C) c.
D) d.
The production function is Y = 3KL. If there are 10 units of capital and 50 units of
labor, aggregate output is:
A) 1500.
B) 500.
C) 3500.
D) 35010.
If real salaries decrease but nominal salaries do not, this means that
A) the purchasing power of money has increased.
B) prices have not changed.
C) prices have risen.
D) prices have fallen.
An example of a Federal Reserve action that increases the money supply is:
A) a decrease in the discount rate.
B) the Fed selling bonds in the open market.
C) an increase in the required reserve ratio.
D) a law placing a ceiling on the maximum interest rate that banks can pay to
depositors.
Which of the following is an example of a consumption expenditure?
A) the construction of a new public library
B) the purchase of a ticket to a New Orleans Saints game
C) the purchase of a new fire truck
D) the salary paid to the mayor of Denver
Fixed exchange rates:
A) make international transactions more expensive.
B) allow countries to run large balance of payments imbalances without the need to
change their holdings of foreign reserves.
C) can only be altered with the previous authorization of the IMF.
D) make international transactions easier and less costly.
Which of the following is a question that needs to be answered with normative
economic reasoning?
A) If the college offers free parking for students, will more students drive to campus?
B) If the college provided more financial aid assistance, would more students benefit?
C) If the college increases tuition, would class size decline?
D) Should the college reduce tuition to stimulate enrollment?
