To determine the equilibrium price level and equilibrium level of real GDP, the
aggregate demand and aggregate supply must
A) be considered separately.
B) intersect.
C) be disregarded.
D) be considered as a multiplier.
The demand for money that arises so that individuals or firms can make purchases on
quick notice is called the
A) real demand for money.
B) transaction demand for money.
C) liquidity demand for money.
D) speculative demand for money.
If a nation with a low level of GDP per capita converges to a richer nation, the poor
nation
A) experiences low growth rates.
B) enters into a free trade agreement with the richer nation.
C) experiences a rate of high growth such that its GDP per capita increases to that of the
richer nation.
D) experiences a rate of low growth such that its GDP per capita increases to that of the
richer nation.
During the early 1980s, one effect of the Federal Reserve’s fight against inflation was
A) historically low interest rates.
B) falling unemployment rates.
C) the largest peace-time economic expansion.
D) high unemployment rates.
Refer to Figure 15.2. The unemployment rate is above the natural rate at point
A) a.
B) .
C) c.
D) d.
Based on the quantity theory of money, hyperinflations are most likely caused by a
rapid
A) increase in the growth of the money supply.
B) decrease in the price level.
C) increase in real GDP.
D) decrease in the money supply.
An increase in the number of migrant workers into the country will shift the labor
________ curve to the ________.
A) supply; right
B) supply; left
C) demand; right
D) demand; left
If the price of hotdogs are expected to increase in the future, then:
A) the current demand for hotdogs will increase.
B) the current demand for hotdogs will decrease.
C) the current quantity demanded for hotdogs will decrease.
D) the current quantity demanded for hotdogs will increase.
Federal government debt as a percentage of GDP:
A) did not change significantly between 1982 and 1992.
B) fell significantly between 1982 and 1992.
C) rose rapidly between 1970 and 1982.
D) rose rapidly between 1982 and 1992.
Between 1959 and 2011, the velocity of M2 was highest:
A) in the 1990s.
B) in the 1970s.
C) in the 1980s.
D) in the 2000s.
Optimistic investors tend to ________ their investment spending.
A) reduce
B) increase
C) defer
D) not change
If the MPC is 0.9, then the tax multiplier is:
A) -9.
B) 9.
C) 10.
D) -10.
A decrease in the price level will:
A) increase consumption and increase output demanded.
B) decrease consumption and decrease output demanded.
C) increase consumption and decrease output demanded.
D) decrease consumption and increase output demand.
If the inflation rate unexpectedly increases, it is likely that workers will not fully
anticipate some of this sudden increase. This will cause
A) anticipated inflation to exceed actual inflation.
B) actual inflation to exceed anticipated inflation.
C) anticipated inflation to equal actual inflation.
D) nominal inflation to exceed real inflation.
When constructing a production function between labor and output, which is drawn on
the Y-axis?
A) output
B) labor
C) capital
D) technology
Innovations that come about through inventive activity designed specifically to reduce
costs is known as:
A) virtuous circle.
B) induced innovation.
C) creative destruction.
D) endogenous growth.
If the labor-force participation rate is 85% and the total population 16 years of age or
older is one million people, the labor force is:
A) 280,000 people.
B) 80,000 people.
C) 850,000 people.
D) 180,000 people.
Suppose an economy has a balanced federal budget, and a favorable supply shock hits
the economy. Tax revenues will ________ and expenditures on transfer payments will
________, resulting in a budget ________.
A) fall; increase; deficit
B) increase; increase; surplus
C) fall; fall; deficit
D) increase; fall; surplus
Table 3.3 Consider two individuals, Bob and Jerry, who
produce guitars and banjos. Bob and Jerry’s weekly productivity are shown in Table 3.3.
Which of the following is true?
A) Bob has an absolute advantage in producing both goods, and a comparative
advantage in producing guitars.
B) Bob has an absolute advantage in producing both goods, and a comparative
advantage in producing banjos.
C) Bob has an absolute and a comparative advantage in producing both goods.
D) Bob has an absolute advantage in producing both goods, but no one has a
comparative advantage in producing either good.