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If the economy is operating at a point beyond its institutional production possibilities
frontier (institutional PPF), then the economy is
a. producing Natural Real GDP and operating at the natural unemployment rate.
b. producing less than Natural Real GDP and operating below the natural
unemployment rate.
c. producing more than Natural Real GDP and operating above the natural
unemployment rate.
d. producing more than Natural Real GDP and operating below the natural
unemployment rate.
e. none of the above
A change in Real GDP in the short run can be brought about by a change in
a. the exchange rate.
b. labor productivity.
c. expectations of future sales.
d. wealth.
e. all of the above
Exhibit 38-1
The yield on bond C is approximately
a. 11.0 percent.
b. 4.8 percent.
c. 3.6 percent.
d. 100 percent.
Suppose that the annual dividend per share of stock is $5.40 and the closing price of the
stock is $72.50, the yield of the stock would be
a. 13.43%
b. 7.45%
c. 23.62%
d. 8.38%
An economy can produce either of these two combinations of goods X and Y: 1,000X
and 0Y or 400Y and 0X. Furthermore, the opportunity cost between the two goods is
always constant. Which of the following combinations of the two goods, X and Y, is it
possible for the economy to produce?
a. 700 units of X and 280 units of Y
b. 600 units of X and 250 units of Y
c. 400 units of X and 150 units of Y
d. 100 units of X and 600 units of Y
e. 300 units of X and 280 units of Y
A rise in foreign real national income tends to raise U.S. __________, shifting the U.S.
AD curve to the __________.
a. exports; left
b. exports; right
c. imports; left
d. imports; right
Keynes believed that saving is
a. more responsive to changes in income than to changes in interest rates.
b. less responsive to changes in income than to changes in interest rates.
c. equally responsive to changes in income and to changes in interest rates.
d. dependent only on changes in interest rates.
Society as a whole is made worse off by rent seeking behavior by producers.
a. True
b. False
Complete crowding out implies that as government increases purchases by $1,
a. private spending decreases by $1.
b. Real GDP remains unchanged.
c. there is an equal offsetting decrease in one or more of the components of private
expenditures.
d. all of the above
e. none of the above
Neoclassical growth theory placed emphasis on two resources:
a. capital and entrepreneurship.
b. natural resources and capital.
c. capital and labor.
d. labor and entrepreneurship.
e. labor and natural resources.
In the production function, the variable K represents human capital.
a. True
b. False
A Federal Reserve Bank is located in which of the following cities?
a. St. Louis, Missouri
b. Richmond, Virginia
c. Atlanta, Georgia
d. San Francisco, California
e. all of the above
Discouraged workers are not counted as unemployed because they are working.
a. True
b. False
If the coupon payment on a bond is $350 and the coupon rate is 7%, then what is the
face value of the bond?
a. $5,000
b. $374.50
c. $24.50
d. $528.57
e. There is not enough information provided to answer this question.
