An “increase in demand” means that
a. the demand curve has shifted to the left.
b. price has declined and consumers want to purchase more of the good.
c. the demand curve has shifted to the right.
d. the price of the good can be expected to decline, assuming supply stays constant.
Exhibit 7-2
Assuming that 1990 is the base year, Real GDP in 2012 is
a. $49.
b. $51.
c. $86.
d. $92.
e. not possible to calculate without the CPI.
If people begin to favor science fiction novels to a greater degree than previously, the
demand curve for science fiction novels
a. shifts rightward.
b. shifts leftward.
c. stays constant.
d. can shift either rightward or leftward.
Exhibit 4-3
Which of the following is true?
a. If price P3 is set as a price ceiling it will have an effect on the market for good X.
b. If price P3 is set as a price floor it will have an effect on the market for good X.
c. Price P3 is the equilibrium price for good X.
d. Price P3 is the highest price that can legally be charged in the market for good X.
In the real business cycle theory, business cycle contractions begin as a result of
changes in
a. aggregate GDP.
b. aggregate spending.
c. aggregate demand.
d. aggregate consumption.
e. long-run aggregate supply.
The expenditure approach to measuring GDP sums
a. consumption, investment, government purchases, and net exports.
b. sales, revenues, income, and wages.
c. profits, compensation of employees, consumption, and investment.
d. net exports, consumption, wages, and salaries.
e. consumption, interest, net exports, and federal government purchases
M2 includes M1 plus all of the following except
a. savings deposits.
b. retail money market mutual funds.
c. short-term U.S. government securities.
d. small-denomination time deposits.
The two ways of measuring Gross Domestic Product are the __________ approach and
the __________ approach.
a. expenditure; income
b. expenditure; national product
c. national product; income
d. net national product; personal income
The part of consumption that is dependent on disposable income is called autonomous
consumption.
a. True
b. False
If autonomous consumption rises, the TE curve shifts __________, the marginal
propensity to consume __________, and the TP curve __________.
a. upward; rises; shifts downward
b. upward; remains unchanged; remains unchanged
c. downward; rises; remains unchanged
d. upward; remains unchanged; shifts downward
e. none of the above
When you buy a corporate bond, you are
a. borrowing funds from the corporation.
b. lending funds to the corporation.
c. selling an ownership right in the corporation.
d. acquiring an ownership right in the corporation.
e. b and d
The economy is in equilibrium, TP = TE. Then, net exports fall. As a result, the
__________ curve shifts __________, inventory levels unexpectedly __________, and
business firms __________ the quantity of good and services they produce.
a. TE; upward; rise; increase
b. TP; rightward; rise; decrease
c. TE; downward; rise; decrease
d. TE; downward; rise; increase
e. none of the above
When the federal government incurs a budget deficit, it will
a. mint more coins and spend them.
b. create money out of thin air.
c. impose a special tax on all income earners.
d. borrow money from the Federal Reserve System by issuing securities.
e. borrow money from the public by issuing government securities.
The base year is the year
a. in which prices are unstable.
b. in which prices are lowest.
c. in which prices are highest.
d. that serves as a reference point or benchmark.
e. in which nominal output is largest.