Figure: Demand and Supply of Gasoline
Look at the figure Demand and Supply of Gasoline. When the supply curve shifted
from the initial equilibrium, the new intersection of supply and demand has a price of
_____ and quantity of 400. This supply shift could have resulted from _____.
A) $1.50; an increase in consumers’ income
B) $1.50; an improvement in refining technology
C) $2.00; an increase in the number of buyers
D) $2.00; an increase in consumers’ income
Infrastructure includes:
A) New York City’s public transportation system.
B) corporate bonds.
C) private equity firms.
D) the water supply system, government bonds, and corporate stock.
According to Thomas Malthus’s work, which of the following is TRUE?
A) As population grew, so would output per worker.
B) The amount of capital per worker would fall.
C) Technology could be counted on to increase output per worker.
D) The amount of land per worker would eventually decline.
Figure: Aggregate Expenditures Curve II
Look at the table Aggregate Expenditures Curve II. Suppose that the consumption
function in this economy rises by $200. Equilibrium real GDP would rise by:
A) $100.
B) $200.
C) $250.
D) $500.
All other things equal, a contractionary monetary policy will cause the domestic
currency to appreciate.
A) True
B) False
If it looks as if a bank won’t meet the Federal Reserve Bank’s reserve requirement,
normally it will first turn to the:
A) other member banks and borrow money at the federal funds rate.
B) Federal Reserve and borrow money at the discount rate.
C) open market and borrow money there.
D) Congress to borrow funds.
Figure: Tom’s Production Possibilities
Look at the figure Tom’s Production Possibilities. The opportunity cost for Tom to move
from point B on the curve to point A is:
A) 10 coconuts.
B) 10 fish.
C) 5 coconuts.
D) 5 fish.
After 1980 the velocity of money began to:
A) stabilize.
B) drift upward.
C) drift downward.
D) shift erratically.
If the economy is at potential output and the Fed increases the money supply, in the
SHORT run interest rates will likely:
A) increase.
B) decrease.
C) remain constant.
D) fluctuate randomly
If a country’s capital inflow exceeds outflow, then foreigners are contributing to the
domestic country’s investment spending.
A) True
B) False
It is impossible for the U.S. government to raise revenue by printing more money
because the Federal Reserve, not the Treasury, issues most of the U.S. money supply.
A) True
B) False
In the early twentieth century, to protect against bank runs in some areas local banks
pooled resources to form clearinghouses that would guarantee the deposits of its
members.
A) True
B) False
If the exchange rate for the euro is $1.38, $1 exchanges for €0.7246.
A) True
B) False
Figure: Shifts of the AD”ASCurves
Look at the figure Shifts of the AD”AS Curves. A short run decrease in investment
spending is illustrated by:
A) panel (a).
B) panel (b).
C) panel (c).
D) panel (d).
A fixed exchange rate:
I. makes monetary policy less effective for domestic stabilization.
II. is more expensive to maintain than a fixed exchange rate.
III. reduces uncertainty in international trade.
A) I only
B) II only
C) III only
D) I, II, and III
In the last quarter of 2001, when consumer spending was ending the recession, GDP
growth was slow at first because:
A) consumer savings also decreased.
B) tax rates increased.
C) inventories, which had built up during the recession, decreased.
D) inventories of consumer goods increased.
In the factor markets:
A) households supply goods and services.
B) households supply resources.
C) firms demand goods and services.
D) firms supply goods and services.
Table: Price and Output Data
Look at the table Price and Output Data.
Between years 2 and 3, real GDP increased by:
A) 10%.
B) 20%.
C) 30%.
D) 33%.
The savings”investment spending identity says that:
A) each person in the economy must invest as much as he or she saves.
B) savings and investment spending are always equal for the economy as a whole.
C) savings must equal government investment for the economy as a whole.
D) each person in the economy must save as much as he or she invests.
Which is NOT an example of a resource?
A) land
B) labor
C) capital
D) production
Gains from trade exist for:
A) individuals only.
B) states only.
C) countries only.
D) individuals, states, and countries.
Table: Price Levels
2011 221.3
2012 227.7
2013 232.2
2014 234.8
Look at the table Price Levels. What is the rate of inflation from 2013 to 2014?
A) 1.1%
B) 2.6%
C) 2.9%
D) 2.0%
The central mission of modern macroeconomics is to prevent:
A) shortages.
B) surpluses.
C) high gas prices.
D) a deep recession like the Great Depression.
The primary taxes at the U.S. federal level are:
A) the property tax, sales taxes, and income taxes.
B) personal income taxes, corporate profit taxes, and social insurance taxes.
C) sales taxes and fees.
D) property taxes and user fees.
Marginal analysis studies how individuals decide:
A) whether to live on the margin of society.
B) whether to do a bit more of an activity versus a bit less of it.
C) whether to go to college.
D) how much down payment to make when buying stocks.
The pound sterling floats. If its exchange rate changes from $1.68 to $1.75, the pound
has:
A) depreciated.
B) been devalued.
C) appreciated.
D) been revalued.
A rubbernecking traffic jam is an example of:
A) microeconomics in action.
B) individual behavior that has a large aggregate impact.
C) the paradox of thrift.
D) an outcome smaller than the sum of its parts.
If the price level at the end of year 1 is 150 and the price level at the end of year 2 is
160, the inflation rate in year 2 is 10%.
A) True
B) False
In the short run:
A) only the supply of money determines the interest rate.
B) only the demand for money determines the interest rate.
C) the supply and demand for money determine the interest rate, and the loanable funds
market follows the lead of the money market.
D) the supply and demand for money determine the interest rate, and the money market
follows the lead of the loanable funds market.
Money flows into the United States from other countries as a result of:
A) U.S. purchases of foreign goods and services.
B) payments to foreign owners of U.S. assets.
C) domestic purchases of U.S. goods and services.
D) transfer payments from foreign sources to U.S. residents.
According to conditional convergence, the real GDP per capita of poor nations will
never catch up to that of wealthy nations because of the condition of the military in
poor nations.
A) True
B) False
_____ is most widely used to measure inflation in the United States.
A) producer price index
B) consumer price index
C) GDP deflator
D) national income account