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Between 1940 and 2000, income per person in China
a. doubled.
b. tripled.
c. quadrupled.
d. decreased by 5 percent.
Here is a consumption function: C = C0 + MPC(Yd). If MPC is 0.80, then we know that
a. as Yd rises by $1, Co rises by $0.80.
b. as Yd rises by $1, C rises by $0.80.
c. Yd rises by $0.80.
d. as C0 rises by $0.80, Yd rises by $1.
When the money supply increases at the same time that velocity is decreasing, total
spending will
a. always rise.
b. always decline.
c. fall if the decrease in velocity is relatively less than the increase in the money supply.
d. fall if the decrease in velocity is relatively greater than the increase in the money
supply.
The president of the ________________________ holds a permanent seat on the
FOMC.
a. United States
b. Federal Reserve District Bank of New York
c. Federal Reserve District Bank of San Francisco
d. U.S. Senate banking committee
e. none of the above
Which of the following assumptions is held by both the classical view and the new
classical view?
a. rational expectations
b. flexible wages and prices
c. flexible wages and sticky prices
d. adaptive expectations
e. a and b
Bank A has $25,500 in required reserves. The required reserve ratio is 10 percent. Bank
A has checkable deposits of
a. $2,550.
b. $255,000.
c. $2,550,000.
d. $25,500.
Explain how a change in the money supply can affect the following in the short run:
a. The supply of loanable funds
b. Real GDP
c. The price level
d. The expected inflation rate
To say that government sometimes functions as a "transfer mechanism," means that
government sometimes
a. ends up transferring goods to individuals in return for taxes paid.
b. ends up transferring negative externalities into positive externalities.
c. ends up taking from group X to give to group Y.
d. transfers taxes into subsidies.
e. none of the above
Monetarists believe
a. Real GDP is not determined by M in the long run.
b. velocity is constant.
c. the SRAS curve is vertical.
d. a and c
e. a, b and c
A rise in MPC makes the total expenditures (TE) curve __________ and __________
the multiplier.
a. steeper; raises
b. steeper; lowers
c. flatter; raises
d. flatter; lowers
Which of the following statements is false?
a. Asymmetric information can exist both before and after a transaction.
b. Moral hazard occurs when one party to a transaction changes his or her behavior in a
way that is hidden from and costly to the other party.
c. Adverse selection has the potential to eliminate some markets.
d. none of the above
Changes in which of the following will not cause the SRAS curve to shift?
a. the wage rate
b. prices of nonlabor inputs
c. the price level
d. productivity
e. All of the above will cause the SRAS curve to shift.
The instructors at College A are regularly late for their office hours.Based on a theory
presented in the textbook, we would predict that the gap between the
______________student tuition and ___________equilibrium tuition is ___________
at College A.
a. lower; higher; small
b. higher; lower; small
c. lower; higher; large
d. higher; lower; large
