When a mall Santa Claus loses his job at the end of the Christmas season, this is an
example of
a. frictional unemployment
b. structural unemployment
c. frictional unemployment
d. seasonal unemployment
e. economic unemployment
The total debt includes amounts one government agency owes to another.
The marginal product of labor
An increase in oil prices is considered a supply shock because it would lead to a shift of
the aggregate supply curve.
The discovery and dissemination of a new cost-saving technology
a. is an example of a positive demand shock
b. would cause the long-run AS curve to shift leftward, thereby increasing both output
and the price level
c. would increase firms’ unit costs
d. would lead to an increase in output and a decrease in the price level
e. is an example of a negative supply shock
The law of diminishing marginal returns says that as additional units of a variable input
are added to
Suppose workers agreed to an indexed contract that increased their nominal wage by 4
percent plus 25 percent of any increase in the Consumer Price Index (CPI). If the CPI
increased by 8 percent, what would be the change in the real wage?
a. 4 percent
b. -2 percent
c. 0 percent
d. -4 percent
e. 2 percent
When the Federal Reserve increases the money supply, it has the immediate effect of
creating wealth.
Refer to Figure 15-6. If the price level is currently at 140, what would we expect to
occur in the short run?
a. The price level will remain at 140 and businesses will cut production to $5.5 trillion.
b. The price level will remain at 140 and the extra $2 trillion in real GDP will be saved
for future use.
c. The aggregate supply curve will shift upward until it intersects the aggregate demand
curve at a price level of 140 and real GDP of $5.5 trillion.
d. The aggregate demand curve will shift right until it intersects the aggregate supply
curve at a price level of 140 and real GDP of $7.5 trillion.
e. Inventories will accumulate and businesses will cut production until equilibrium is
reached at a price level of 120 and real GDP of $6.5 trillion.
What is the range of the required reserve ratio?
a. Between 0 and 2
b. Between 0 and 1
c. Between 0 and 100
d. Between 0 and infinity
e. Between 0 and 10
How many districts does the Federal Reserve System have?
a. 50
b. 1
c. 12
d. 51
e. 4
In the classical model, if government tries to increase employment and output by
increasing its own purchases,
a. it will achieve its goal and economic conditions will improve
b. it will not attain its objective unless it also decreases taxes
c. its actions will cause the interest rate to rise, which will choke off investment
spending
d. firms will be motivated to increase their output, thereby creating even more jobs
e. saving will also increase, as more people are employed
If Bob has an absolute advantage over Pete in both typing and woodworking, then Bob
also has a comparative advantage over Pete in both activities.
If a firm changed its fringe benefit program so that no employee suffered a loss in
benefits and some employees enjoyed an increase in benefits, then
If consumption of a good creates positive externalities, then
A bank failure occurs when a bank
a. cannot call in its loans
b. spends all of its reserves
c. is unable to meet its depositors’ requests to withdraw funds
d. cannot make any more loans
e. makes bad loans
The money market is in equilibrium when there is no excess supply of or excess
demand for bonds.
A pizza shop owner who needs to buy a new pizza oven is trying to decide between two
different used ones. Whichever oven he buys, it will generate $6,000 net revenue per
year. But the older pizza oven has a useful life of only 3 years and the newer oven has a
useful life of 5 years. If the interest rate is 7% per year, what is the difference in value
between the two ovens? (Assume that each year’s revenue is received at the end of the
year.)