The Real GDP of country X doubled in 20 years. It follows that the annual growth rate
in country X during this time period was
a. 4.0 percent.
b. 5.0 percent.
c. 2.8 percent.
d. 3.5 percent.
Suppose government spending rises by $120 billion. It follows that if private
expenditures
a. rise by $120 billion, complete crowding out exists.
b. fall by $100 billion, incomplete crowding out exists.
c. remain unchanged, complete crowding out exists.
d. rise by more than $120 billion, complete crowding out exists.
e. b and c
Consumption and disposable income are
a. indirectly related.
b. directly related.
c. not related.
d. sometimes directly and sometimes indirectly related, depending upon whether
consumption is planned or unplanned.
Some economists believe the economy is self-regulating. What does this mean?
a. It means the economy can remove itself from recessionary and inflationary gaps and
produce at Natural Real GDP.
b. It means the economy is always in long-run equilibrium producing Natural Real
GDP.
c. It means that inflationary gaps naturally change into recessionary gaps.
d. It means that recessionary gaps naturally change into inflationary gaps.
e. c and d
Public choice theorists assert that persons who change jobs from, say, a government
position to a business position, sometimes alter their work behavior and attitudes
because
a. they want to fit in and be liked by their fellow workers.
b. they are acting rationally by weighing the costs and benefits of certain behavior in
different work settings.
c. they feel that if they change jobs, they should also change their behavior.
d. their new boss tells them it is in their best interest.
If a theory gives a scientist results that she does not want, then she should not believe in
that theory.
a. True
b. False
Which of the following statements is true?
a. Another name for capital consumption allowance is depreciation.
b. When there are two consecutive quarterly declines in Real GDP the economy is said
to be in recession (based on the standard definition).
c. In the expansion phase of a business cycle, Real GDP rises beyond the recovery.
d. a and b
e. a, b, and c
A farmer has 1,000 acres on which he has previously grown corn. His yield per acre is
100 bushels of corn. If the corn payment rate is $0.43 a bushel, his production
flexibility contract payment equals
a. $39,600.
b. $43,000.
c. $36,550.
d. $12,345.
e. none of the above
The price elasticity of demand for many agricultural products is (absolute value) less
than 1, meaning that these products are inelastic in demand.
a. True
b. False
In 1946 the average tariff rate in the United States was around ___________ percent,
while the average tariff in 2012 was about ____________ percent.
a. 14.0; 2.4
b. 18.7; 12.8
c. 40.0; 1.8
d. 30.2; 21.0
When economists speak of scarcity, they are referring to the
a. condition in which society is not employing all its resources in an efficient way.
b. condition in which people’s wants outstrip the limited resources available to satisfy
those wants.
c. economic condition that exists in only very poor countries of the world.
d. condition in which society produces too many frivolous goods and not enough
socially desirable goods.
Increased productivity in the agricultural sector during much of the twentieth century
shifted the
a. demand curve for farm products rightward.
b. supply curve of farm products leftward.
c. demand curve for farm products leftward.
d. supply curve of farm products rightward.
The economy is in a recessionary gap, wages are inflexible downward, and investment
spending is insensitive to changes in the interest rate. In this situation, a Keynesian is
likely to advocate the use of__________ policy.
a. expansionary monetary
b. contractionary monetary
c. expansionary fiscal
d. contractionary fiscal
A consumption function is a statement that shows the relationship between interest rates
and consumption.
a. True
b. False
Monetarists believe that changes in the supply of money
a. do not affect aggregate demand.
b. affect aggregate demand through the loanable funds market only.
c. affect only the investment component of aggregate demand.
d. affect aggregate demand directly.
The economy is in long-run equilibrium when there is a correctly anticipated increase in
aggregate demand. In new Keynesian theory, the price level will rise __________ in the
short run than it is predicted to rise in new classical theory.
a. by more
b. by less
c. by the same amount
d. faster
e. slower
If new legislation allowed patients to sue their health-maintenance organization (HMO),
we would expect the supply curve for HMO-provided health care to shift to the right
and the price of such coverage to fall.
a. True
b. False
The __________ the opportunity cost of doing something, the __________ likely a
person will do that something.
a. lower; less
b. lower; more
c. higher; more
d. higher; less
e. b and d