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Congress created the Federal Deposit Insurance Corporation to
a. sell insurance to individuals who have bank accounts
b. inject reserves into the economy more quickly
c. develop a better working relationship between bank managers and government
officials
d. charge higher interest rates to banks
e. reimburse those who lose their bank deposits
In the following index, which year is most likely to be the base period: 2003 = 123.3;
2004 = 145.3; 2005 = 111.4; 2006 = 100; 2007 = 93?
a. 2003
b. 2004
c. 2005
d. 2006
e. 2007
A midwestern farmer grows wheat and sells it to a miller for $500. After processing, the
miller sells the flour to a baker for $800, who then sells it to a grocery store for $1,000.
The grocery store sells it to customers for $1,200. In these transactions, how much has
been added to GDP?
a. $500
b. $800
c. $1,000
d. $1,200
e. $3,500
In Figure 15-17 above, which of the following most likely represents the long-run
aggregate supply curve?
a. A
b. B
c. C
d. D
e. None of the above.
Which of the following would shift the demand curve for new college textbooks to the
right?
a. an increase in the price of new college textbooks
b. a decrease in the price of new college textbooks
c. an increase in the price of used college textbooks
d. a decrease in the population of college students
e. a decrease in the wealth of college students
If you observed the wage rate decreasing while employment increased, which of the
following would be a possible explanation?
a. A decrease in labor demand
b. A decrease in labor demand coupled with a decrease in labor supply
c. An increase in labor supply
d. A decrease in labor supply
e. It is not possible for the wage rate to decrease while employment is increasing
The difference in unemployment rates between Europe and the U.S. has been narrowing
partly because
a. tax rates in European countries are generally lower.
b. economic conditions in Europe and the U.S have been converging.
c. European and American labor unions have been coordinating their activities.
d. of a change in labor market policies.
e. Europe has been making it easier for workers to gain unemployment benefits
If the demand for bonds increases, the
a. price and quantity of bonds in existence both increase
b. price of bonds increases, but the quantity of bonds in existence decreases
c. price of bonds increases, but the quantity of bonds in existence remains unchanged
d. interest rate and quantity of bonds in existence both increase
e. interest rate increases, but the quantity of bonds in existence remains unchanged
If Chris pays $500 for a bond that will return $750 in one year, what is the interest rate?
a. 50 percent
b. 10 percent
c. 25 percent
d. 250 percent
e. 33 percent
In the long run,
a. higher consumption spending means a larger capital stock and a higher standard of
living
b. higher investment spending means higher interest rates
c. higher investment spending means a larger capital stock and a higher standard of
living
d. higher interest rates means higher consumption spending
e. higher government spending means a larger capital stock and a higher standard of
living
If output rises, then income
a. drops by an equal amount
b. remains stable
c. rises twice as fast as output
d. rises slowly
e. rises by an equal amount
When was the first U.S. paper currency, the greenback, created?
a. During the Revolutionary War
b. During World War I
c. During World War II
d. During the Civil War
e. During the war of 1812.
Suppose workers agreed to a contract that guaranteed a real wage increase of 3 percent
per year. If the inflation rate was 7 percent over the following year, what is the required
increase in the nominal wage to meet the contract requirements?
a. 10 percent
b. 3 percent
c. 4 percent
d. 7 percent
e. 1 percent
Which of the following would be a redistributive cost of inflation?
a. Additional trips to the bank
b. Reprinting menus and price tags
c. Comparison shopping
d. The real amount paid back for a loan compared to the expected real payments
e. The actual nominal rate on a loan compared to the expected nominal rate
Which of the following would be included in the income approach to calculating U.S.
GDP?
a. Wage and salary payments to U.S. workers
b. Purchases of automobiles by households
c. Government purchases of guns and tanks and bombs
d. Purchases of new trucks by Federal Express
e. Purchases of new tractors by farmers
Which of the following would be included in the expenditures approach to calculating
U.S. GDP?
a. Wage and salary payments to U.S. workers
b. Interest paid on borrowed funds
c. Government payments of social security benefits
d. Purchases of new trucks by Federal Express
e. Wage payments to U.S. citizens working outside the U.S.
The required reserve ratio is
a. the minimum fraction of vault cash balances that banks must hold as reserves.
b. the minimum fraction of all assets that banks must hold as reserves.
c. the minimum fraction of all liabilities that banks must hold as reserves.
d. the minimum fraction of checking account balances that banks must hold as reserves.
e. the minimum fraction of loans that banks must make sure are repaid.
