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Refer to Figure 15-1. Assume the economy is in equilibrium at $7 trillion. If the
changes in all three graphs were caused by the same event, what was that event?
a. An increase in nominal income
b. An increase in the price level
c. An increase in the interest rate
d. An increase in taxes
e. An increase in real income.
Governments have learned that a(n)
a. increased budget deficit tends to reduce interest rates and increase investment, thus
increasing the growth of the capital stock
b. reduced budget deficit tends to reduce interest rates and increase investment, thus
increasing the growth of the capital stock
c. reduced budget deficit tends to increase interest rates and increase investment, thus
increasing the growth of the capital stock
d. reduced budget deficit tends to increase interest rates and increase investment, thus
reducing the growth of the capital stock
e. increased budget deficit tends to increase interest rates and increase investment, thus
reducing the growth of the capital stock
A statement of opinion about which policy is best for America is
a. an abstraction
b. a positive statement
c. a normative statement
d. a philosophical conundrum
e. empirically verifiable
The federal funds rate is the rate at which
a. banks loan money to the Fed
b. the Fed loans money to banks
c. one regional Federal Reserve bank loans money to another regional Federal Reserve
bank
d. one bank loans money to another
e. regional Federal Reserve banks loan money to a local bank
Federal subsidies to higher education benefit
a. only the student
b. only universities
c. both universities and students
d. neither universities nor students
The most likely reason that oil prices spiked during 2007-2008 was because
a. suppliers drastically cut back on production
b. speculators heavily invested in the futures market
c. there was an increase in demand due to an increase in usage
d. there was an increase in demand as buyers began to hoard oil for future use
e. suppliers increased their production to match the increase in demand
Suppose an economy has 90,000 employed persons and 10,000 unemployed persons,
the unemployment rate is
a. 11.1%
b. 10.0%
c. 5.6%
d. 12.5%
e. 9.1%
Which of the following impacts of a Gulf hurricane would not show up as a direct loss
to GDP?
a. The reduction in crude oil production
b. The reduction in oil refining
c. The loss of oil production facilities
d. The loss of restaurant business in coastal communities
e. The reduction in agricultural production
Inflation has never been a major problem in the U.S.
The law of demand says that
a. the customer is always right
b. quantity supplied equals quantity demanded
c. price and quantity supplied are inversely related
d. price and quantity demanded are inversely related
e. income and quantity demanded are directly related
To judge the size of government debts and deficits, we should use real values.
Which of the following statements best describes the U.S. labor force since World War
II?
a. Total employment grew, but the labor force participation rate fell.
b. Total employment grew, and so did the labor force participation rate.
c. Total employment grew, but the labor force participation rate remained unchanged.
d. Total employment remained constant, but the labor force participation rate fell.
e. Total employment remained constant, but the labor force participation rate rose.
Which of the following types of unemployment can the classical model not explain?
a. Structural unemployment
b. Cyclical unemployment
c. Seasonal unemployment
d. Frictional unemployment
e. Temporary unemployment
