Federal Reserve governors are given long terms to insulate them from politics.
a. True
b. False
Which of the following is notan example of a durable good?
a. a refrigerator.
b. an automobile.
c. a business suit.
d. a furnace.
In principle, we can
a. ignore positive statements when choosing among various public policy alternatives.
b. ignore normative statements when choosing among various public policy
alternatives.
c. confirm or refute positive statements by examining evidence.
d. confirm or refute normative statements by examining evidence.
In the open-economy macroeconomic model, if the supply of loanable funds increases,
net capital outflow
a. and the real exchange rate increase.
b. and the real exchange rate decrease.
c. increases and the real exchange rate decreases.
d. decreases and the real exchange rate increases.
Which of the following statements is correct? In 2010,
a. real income per person in the U.S. was about 6 times that in China.
b. real income per person in China was more than 2 times that in India.
c. the typical resident of India had less real income than the typical resident of England
in 1870.
d. All of the above are correct.
Figure 3-13
Refer to Figure3-13. Suppose Peru decides to increase its production of emeralds by 2.
What is the opportunity cost of this decision?
a. 30 rubies
b. 40 rubies
c. 60 rubies
d. 120 rubies
Figure 4-9
RefertoFigure4-9. The graphs show the demand for cigarettes. In Panel (a), the arrows
are consistent with which of the following events?
a. The price of marijuana, a complement to cigarettes, increased.
b. Mandatory health warnings were placed on cigarette packages.
c. Several foreign countries banned U.S. cigarettes in their countries.
d. A tax was placed on cigarettes.
Milton Friedman and Edmund Phelps argued in the late 1960s that in the long run the
Phillips curve is
a. downward-sloping, which implies that monetary and fiscal policies can influence the
level of unemployment in the long run.
b. downward-sloping, which implies that monetary and fiscal policies cannot influence
the rate of inflation in the long run.
c. vertical, which implies that monetary and fiscal policies cannot influence the level of
unemployment in the long run.
d. vertical, which implies that monetary and fiscal policies cannot influence the rate of
inflation in the long run.
Which of the following is an example of physical capital?
a. the computer a secretary uses
b. rivers on which goods are transported
c. the skills and knowledge of a doctor
d. All of the above are correct.
The money multiplier equals
a. 1/R,where Rrepresents the quantity of reserves in the economy.
b. 1/R,where Rrepresents the reserve ratio for all banks in the economy.
c. 1/(1+R), where Rrepresents the quantity of reserves in the economy.
d. 1/(1+R), where Rrepresents the reserve ratio for all banks in the economy.
A decrease in demand will cause a decrease in price, which will cause a decrease in
supply.
a. True
b. False
Macroeconomic statistics include GDP, the inflation rate, the unemployment rate, retail
sales, and the trade deficit.
a. True
b. False
The multiplier effect states that there are additional shifts in aggregate demand from
fiscal policy, because it
a. reduces investment and thereby increases consumer spending.
b. increases the money supply and thereby reduces interest rates.
c. increases income and thereby increases consumer spending.
d. decreases income and thereby increases consumer spending.
Figure 32-1
RefertoFigure32-1. If the real interest rate is 2 percent, there will be a
a. surplus of $20 billion.
b. surplus of $40 billion.
c. shortage of $20 billion.
d. shortage of $40 billion.
In the 1940s and 1950s, about one-third of U.S. workers belonged to unions, but today,
only about one-fifth of U.S. workers belong to unions.
a. True
b. False
If the United States decides to trade with Yemen, we know that
a. Yemen will benefit, but trade with a less developed country could not benefit the
United States.
b. it will not benefit Yemen because workers in the United States are more productive.
c. Yemen and the United States can both benefit.
d. it will not benefit either country because their cultural differences are too vast.
A reduction in the marginal tax-rate includes an income effect that tends to increase
savings.
a. True
b. False
Figure 3-17
RefertoFigure3-17.Maxine has an absolute advantage in the production of
a. both goods and a comparative advantage in the production of pies.
b. both goods and a comparative advantage in the production of tarts.
c. neither good and a comparative advantage in the production of pies.
d. neither good and a comparative advantage in the production of tarts.
The term used to describe a situation in which markets do not allocate resources
efficiently is
a. economic meltdown.
b. market failure.
c. equilibrium.
d. the effect of the invisible hand.
If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then the base
year must be
a. 2012.
b. 2013.
c. 2014.
d. The base year cannot be determined from the given information.
If there is excess demand for money, then people will
a. deposit more money into interest-bearing accounts, and the interest rate will fall.
b. deposit more money into interest-bearing accounts, and the interest rate will rise.
c. withdraw money from interest-bearing accounts, and the interest rate will fall.
d. withdraw money from interest-bearing accounts, and the interest rate will rise.
If a central bank decreases the money supply, then
a. prices, output, and unemployment rise.
b. prices and output rise and unemployment falls.
c. prices rise and output and unemployment fall.
d. prices and output fall and unemployment rises.
Laws that restrict the smoking of cigarettes in public places are examples of
government intervention that is intended to reduce
a. efficiency.
b. equality.
c. externalities.
d. productivity.
The quantity equation is M xV = P xY.
a. True
b. False
Diversification reduces
a. only market risk.
b. only firm-specific risk.
c. neither market or firm-specific risk.
d. both market and firm-specific risk.
Figure 2-13
Refer to Figure2-13. Which points are not currently attainable but could become
achievable for this economy if there is an improvement in technology?
a. I, L
b. G, H
c. J, K
d. F, G
Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing
toasters at a constant rate.
RefertoTable3-25.Miguel has an absolute advantage in the production of
a. both goods and a comparative advantage in the production of mixers.
b. both goods and a comparative advantage in the production of toasters.
c. neither good and a comparative advantage in the production of mixers.
d. neither good and a comparative advantage in the production of toasters.
There is a
a. short-run tradeoff between inflation and unemployment.
b. short-run tradeoff between the actual unemployment rate and the natural rate of
unemployment.
c. long-run tradeoff between inflation and unemployment.
d. long-run tradeoff between the actual unemployment rate and the natural rate of
unemployment.
Figure 2-2
Refer to Figure2-2. If households are sellers in the markets represented by Box D of
this circular-flow diagram, then
a. Box D must represent the markets for factors of production.
b. Box C must represent the markets for goods and services.
c. firms are buyers in the markets represented by Box D.
d. All of the above are correct.
Last year residents of Country A purchased $600 billion of foreign assets. Foreigners
purchased $425 billion dollars of assets and $375 billion of goods and services from
country A. What was the value of Country A’s imports?
Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so
that high cigarette prices
a. encourage marijuana use, and the evidence supports this argument.
b. encourage marijuana use, but the evidence does not support this argument.
c. discourage marijuana use, and the evidence supports this argument.
d. discourage marijuana use, but the evidence does not support this argument.