Inflation that is ________ than what is expected benefits ________ and hurts
________.
A) less; lenders; borrowers
B) less; borrowers; lenders
C) greater; lenders; borrowers
D) greater; lenders; no one
Figure 19-3
Refer to Figure 19-3. At what level should the Thai government peg its currency to the
dollar to make Thai exports cheaper to the United States?
A) greater than $.03/baht
B) less than $.03/baht
C) equal to $.03/baht
D) $1/baht
If a straight line passes through the point x = 12 and y = 4 and also through the point x =
4 and y = 8, the slope of this line is
A) negative 8 divided by 4.
B) seven tenths.
C) negative one half.
D) one -and one half.
Figure 2-13
Refer to Figure 2-13. Which two arrows in the diagram depict the following
transaction: Carter earns a $400 commission for selling men’s designer shoes at Brooks
Brothers.
A) J and M
B) K and G
C) K and M
D) J and G
Why is the multiplier for contractionary fiscal policy smaller in an open economy?
A) Contractionary fiscal policy reduces the deficit, which raises the interest rate, which
raises the foreign exchange value of the dollar, which increases net exports.
B) Contractionary fiscal policy increases the deficit, which raises the interest rate,
which reduces the foreign exchange value of the dollar, which increases net exports.
C) Contractionary fiscal policy reduces the deficit, which reduces the interest rate,
which reduces the foreign exchange value of the dollar, which increases net exports.
D) Contractionary fiscal policy reduces the deficit, which reduces the interest rate,
which reduces the foreign exchange value of the dollar, which decreases net exports.
Models that focus on factors such as technology shocks rather than “monetary”
explanations of fluctuations in real GDP are called
A) nonmonetary business cycle models.
B) real business cycle models.
C) rational expectations models.
D) short-run macroeconomic models.
Published in 1776, ________ was written by Adam Smith.
A) “The General Theory of Employment, Interest, and Money”
B) “The Communist Manifesto”
C) “The Declaration of Economics”
D) “An Inquiry into the Nature and Causes of the Wealth of Nations”
When a foreign investor buys a bond issued in the United States,
A) the balance on the capital account increases.
B) the balance on the current account increases.
C) the balance on the financial account increases.
D) the balance of trade increases.
At a product’s equilibrium price
A) anyone who needs the product will be able to buy the product, regardless of ability
to pay.
B) the federal government will provide the product to anyone who cannot afford it.
C) not all sellers who are willing to accept the price will find buyers for their products.
D) any buyer who is willing and able to pay the price will find a seller for the product.
Figure 5-1
Figure 5-1 represents the market for vaccinations. Vaccinations are considered a benefit
to society, and the figure shows both the marginal private benefit and the marginal
social benefit from vaccinations.
Refer to Figure 5-1. At the market equilibrium, the deadweight loss is equal to
A) $0.
B) $500,000.
C) $1,000,000.
D) $2,000,000.
During the expansion phase of the business cycle,
A) production increases.
B) employment decreases.
C) income decreases.
D) unemployment increases.
Cutting taxes
A) will lower disposable income and lower spending.
B) will raise disposable income and lower spending.
C) will lower disposable income and raise spending.
D) will raise disposable income and raise spending.
If the amount you owe on your house is greater than the price of the house, you have
A) no value to your house.
B) a mortgage rate that is too high.
C) negative equity in your house.
D) a reverse mortgage on your house.
If nominal GDP exceeds real GDP for a specific year, then the GDP deflator must be
A) equal to 100.
B) greater than 100.
C) less than 100.
D) less than 0.
In a small European country, it is estimated that changing the level of capital from $8
million to $10 million will increase real GDP from $2 million to $3 million. What level
of GDP would you expect the economy to be able to reach if spending on capital
continued to rise to $12 million, assuming no technological change and no change in
the hours of work?
A) GDP would increase further, but by less than $1 million.
B) GDP would increase further by exactly $1 million.
C) GDP would increase further by more than $1 million
D) GDP would increase further by exactly $4 million.
Figure 15-7
Refer to Figure 15-7. Suppose the Fed lowers its target for the federal funds rate. Using
the static AD–AS model in the figure above, this situation would be depicted as a
movement from
A) A to B.
B) B to A.
C) C to B.
D) E to A.
E) C to D.
In cities with rent control, people have an incentive to list their apartments on sites such
as Airbnb at rents ________ the controlled rates, because rent control causes a
________ of apartments.
A) above; surplus
B) above; shortage
C) below; surplus
D) below; shortage
Which of the following is a correct statement?
A) Inflation is measured as the percent change in the CPI.
B) The CPI is a widely used measure of the inflation rate.
C) Real GDP is our best measure of economic growth.
D) The PPI measures inflation as experienced by producers.
Because consumers who have insurance provided by their employers usually only pay a
deductible for a visit to the doctor’s office, they ________ of health care services than
they would if they paid a price that better represented the true cost of providing the
service.
A) demand a larger quantity
B) demand a smaller quantity
C) supply a larger quantity
D) supply a smaller quantity
When people became ________ concerned with the underlying value of their houses
and became ________ with the expectations of the prices of their houses increasing, a
housing bubble occurred.
A) less; less
B) less; more
C) more; less
D) more; more