As income taxes rise, disposable income __________, causing __________ the AD
curve.
a. increases; movement down along
b. increases; a rightward shift of
c. decreases; movement up along
d. decreases; a leftward shift of
As interest rates rise, the____________ curve shifts _____________ resulting in a(n)
_________________ in the price level and a(n) ________________ in Real GDP.
a. AD; leftward; decrease; decrease
b. AD; rightward; increase; increase
c. SRAS; rightward; decrease; increase
d. SRAS; leftward; increase; decrease
Which of the following illustrates the data lag?
a. The economy turns down on January 8, 2006, but policymakers do not figure this out
until April 19, 2006.
b. Policymakers wait and see what is really going on with the economy.
c. Policymakers implement policy X on September 12, 2006, but the effects are not felt
until six months later.
d. The data lag is illustrated equally well by a, b, and c.
Exhibit 2-4
This economy is productive
a. efficient, if it operates at point B or C.
b. efficient, if it operates at point A or D.
c. inefficient, if it operates at point A or D.
d. inefficient regardless of the particular point.
e. both a and b
If the Fed increases its open market purchases of government securities, it exerts a
downward pressure on the interest rate. Such a phenomenon is usually referred to as the
___________________ effect.
a. income
b. substitution
c. open market
d. liquidity
e. expectations
For every gift that A gives to B from the first to the tenth gift, A receives a net benefit of
$10.The additional cost to A of giving an additional gift is constant at $5.It follows that
A’s marginal benefit curve for giving gifts to B is ___________________(assuming that
we place “marginal benefits” on the vertical axis and “number of gifts” on the
horizontal axis).
a. downward-sloping over units 1 -10.
b. upward-sloping over units 1-10.
c. horizontal over units 1-10.
d. vertical over units 1-10.
e. There is not enough information provided to answer the question.
The Samuelson-Solow version of the Phillips curve states that
a. there is an inverse relationship between the wage inflation rate
and unemployment.
b. there is a direct relationship between the wage inflation rate
and unemployment.
c. there is an inverse relationship between price inflation and
unemployment.
d. there is a direct relationship between price inflation and unemployment.
e. a and b
Keynes believed that saving is more responsive to changes in income than to changes in
interest rates.
a. True
b. False
_______________ is the practice of hiring people in other countries to do a job that was
once done domestically.
a. Offshoring
b. Onshoring
c. Insourcing
d. Megasourcing
Some of the crowding out of private expenditures may come in the form of
a. an increase in consumption.
b. an increase in net exports.
c. a decrease in taxes.
d. a decrease in net exports.
Business optimism about future sales tends to __________ investment expenditures,
shifting the AD curve to the __________.
a. increase; left
b. increase; right
c. decrease; left
d. decrease; right
Say’s law states that
a. demand creates its own supply.
b. the more supply there is, the lower prices are.
c. supply creates supply.
d. supply creates its own demand.
e. none of the above
Exhibit 6-2
How many persons are not in the labor force in year 4?
a. 80 million
b. 100 million
c. 150 million
d. 350 million
e. 200 million
Points that lie outside (or beyond) the PPF are
a. attainable.
b. unattainable.
c. efficient.
d. inefficient.
Which of the following statements is false?
a. The Wilshire 5000 is a stock index that consists of the stocks of about 6,500 firms.
b. Instead of buying a mutual fund that consists of various stocks picked by a fund
manager you can buy a mutual fund that consists of the stocks that make up a particular
stock index.
c. The term Sypders stands for €Standard& Poors Direct Receipts.€
d. When an investor buys Spyders they are said to €buy the market.€
Special interest group Z receives a 1/200th slice of the economic pie.Its net benefit from
both an economic growth policy and a transfer policy is $30,000.How much does the
size of the economic pie (Real GDP) need to grow before group Z is indifferent
between the two policies?
a. $150
b. $600,000
c. $600,000,000
d. $6,000,000
e. none of the above
If you thought the share price of a stock was going to rise, would you be more likely to
buy a call option or a put option?
a. a call option
b. a put option
c. a call option and a put option
d. There is not enough information given to answer this question.
The market in which the currencies of different countries are exchanged is called the
a. money market.
b. capital market.
c. foreign exchange market.
d. loanable funds market.
If an economy’s institutional production possibilities frontier (institutional PPF) shifts
rightward, the economy’s
a. natural unemployment rate rises.
b. natural unemployment rate falls.
c. Natural Real GDP declines.
d. physical PPF shifts leftward.
e. physical PPF shifts rightward.
If wage rates rise at the same time that labor productivity increases, what is the effect
on short-run aggregate supply (SRAS)?
a. SRAS rises.
b. SRAS falls.
c. SRAS remains constant.
d. SRAS may rise, fall, or remain constant.