Expansionary monetary policy enacted during a recession will cause the inflation rate to
increase.
Crowding out refers to a decrease in government purchases as a result of an increase in
private expenditures.
Most of the countries of Africa are considered newly industrializing countries.
Rent control is an example of a price floor.
An economy without money would have no exchanges of goods and services.
An increase in government spending increases the supply of money in our economy.
Monetary policy is conducted by the U.S. Treasury Department.
Contractionary monetary policy and expansionary fiscal policy both reduce net exports
in an open economy.
In 2012, South America had a lower average GDP per capita than any other continent.
The decisions General Motors makes in determining production levels for its Chevy
Volt is an example of a microeconomics topic.
Suppose that to move more people off the wait list for organ donations, surgeons and
hospitals are developing a market for organ swapping. This is an example of a
macroeconomics topic.
It is not possible to have a comparative advantage in producing a good or service
without having an absolute advantage.
Since 1999, the U.S. ________ account has recorded relatively minor transactions, such
as migrants’ transfers, and sales and purchases of nonproduced, nonfinancial assets.
A) current
B) capital
C) financial
D) balance of trade account
Figure 7-3
Since 1953 the United States has imposed a quota to limit the imports of peanuts.
Figure 7-3 illustrates the impact of the quota.
Refer to Figure 7-3. What is the value of domestic producer surplus without a quota?
A) $5 million
B) $15.75 million
C) $38.5 million
D) $53.5 million
A general formula for the multiplier is
A) .
B) .
C) .
D) .
Which of the following best describes supply-side economics?
A) Labor productivity affects aggregate supply.
B) Education affects labor productivity which affects aggregate supply.
C) Education affects the incentive to work, save, and invest and, therefore, aggregate
supply.
D) Tax rates, particularly marginal tax rates, affect the incentive to work, save, and
invest and, therefore, aggregate supply.
In an open economy, the government purchases multiplier will be
A) larger as the marginal propensity to import increases.
B) smaller as the marginal propensity to import increases.
C) larger as the marginal propensity to tax increases.
D) smaller as the marginal propensity to consume increases.
If the number of unemployed workers is 200 million, the number of employed workers
is 300 million, and the working-age population is 800 million, what is the labor force
participation rate?
A) 12.5%
B) 37.5%
C) 40%
D) 62.5%
If aggregate expenditure is greater than GDP, how will the economy reach
macroeconomic equilibrium?
A) Inventories will decline, and GDP and employment will decline.
B) Inventories will rise, and GDP and employment will decline.
C) Inventories will decline, and GDP and employment will rise.
D) Inventories will rise, and GDP and employment will rise.
An increase in the value of the U.S. dollar relative to the Japanese yen would be
________ for Japanese owners of U.S. houses who wish to sell those houses, and
________ for Japanese manufacturers operating factories in the United States that
export their products back to Japan.
A) good news; good news
B) good news; bad news
C) bad news; good news
D) bad news; bad news
Suppose the labor force stays constant, and the working-age population stays constant,
but a greater number of persons who were unemployed become employed. The labor
force participation rate will
A) increase.
B) decrease.
C) remain constant.
D) not change in a way that can be predicted.
The difference between the lowest price a firm would have been willing to accept and
the price it actually receives from the sale of a product is called
A) producer surplus.
B) profit.
C) marginal revenue.
D) price differential.
In the circular flow model, households
A) sell goods and services in the input market.
B) and firms spend earnings from resource sales on goods and services in the factor
market.
C) hire resources sold by firms in the factor market.
D) spend earnings from resource sales on goods and services in the product market.
If technological change increases the profitability of new investment for firms, then the
________ curve for loanable funds will shift to the ________ and the equilibrium real
interest rate will ________.
A) supply; right; fall
B) supply; left; rise
C) demand; right; rise
D) demand; left; fall
If the marginal propensity to save is 0.25, then a $10,000 decrease in disposable income
will
A) increase consumption by $7,500.
B) increase consumption by $2,500.
C) decrease consumption by $7,500.
D) decrease consumption by $2,500.
During a time when the inflation rate is increasing each year for a number of years, are
adaptive expectations or rational expectations likely to give the more accurate
forecasts? Briefly explain.
Explain why the budget deficit and the trade deficit are sometimes referred to as the
“twin deficits.”
You have been hired as an economic advisor for a developing country. You have been
asked to focus on education as a means for the country’s development. Explain to the
prime minister how improving education and training can contribute to his country’s
economic growth, and why it is important for the government to take a pro-active role
in promoting education.
Why do we not count the value of intermediate goods and services in gross domestic
product? Does the value of intermediate goods and services show up in gross domestic
product? If so, how?
What is the relationship among the AD, SRAS and LRAS curves when the economy is in
macroeconomic equilibrium?
Table 8-32
Refer to Table 8-32. The table above represents hypothetical data from the National
Income Accounts for 2013. Use the data to calculate personal income and disposable
income.