If Germany’s Real GDP falls, this tends to ______________ United States exports,
shifting the United States AD curve to the ________________.
a. raise; right
b. raise; left
c. lower; right
d. lower; left
The interest rate that the Fed charges when it lends reserves to banks is called the
federal funds rate.
a. True
b. False
What is the difference between an inflation-indexed Treasury bond, and a Treasury
bond that is not indexed?
a. An inflation-indexed Treasury bond guarantees a certain real rate of return, while a
nonindexed Treasury bond does not.
b. A nonindexed Treasury bond guarantees a certain real rate of return, while a
nonindexed Treasury bond does not.
c. An inflation-indexed Treasury bond can only be purchased directly from the Federal
Reserve, while a nonindexed Treasury can be purchased through a broker.
d. An inflation-indexed Treasury bond always guarantees the purchaser a 5 percent rate
of return, while a nonindexed Treasury bond does not.
Exhibit 3-1
Equilibrium price and quantity are ____________________, respectively.
a. $2 and 250 units
b. $4 and 250 units
c. $2 and 150 units
d. $6 and 250 units
e. none of the above
A quota on imported avocadoes ______________ the price of avocadoes,
_____________ consumers’ surplus for avocado buyers, _______________ producers’
surplus of avocado growersand __________________ tariff revenue. Because the loss
to _____________ is more than the gain to ___________________, there is a net loss
to society.
a. raises; increases; decreases; generates; producers; consumers and government
b. lowers; increases; decreases; does not generate; producers; consumers
c. raises; increases; decreases; does not generate;consumers; producers and importers
d. raises; decreases; increases; generates; consumers; producers and government
Exhibit 32-3
The exhibit shows the breakdown of benefits and costs for a five-person community
considering whether to purchase a $5,000 statue of Adam Smith to put in the center of
the public square. If simple majority voting determines the outcome, the statue
_______________ be purchased, and the total costs are ______________ the total
benefits of the statue.
a. will; greater than
b. will; less than
c. will not; greater than
d. will not; less than
When economists say that banks must hold a percentage of their total deposits in
reserve form, what does this mean?
a. It means that banks must hold a fraction of their customers’ deposits either as bank
deposits at the Federal Reserve, or as vault cash, or both.
b. It means that banks reserve the right to turn away customers a certain percentage of
the time.
c. It means that the fraction of vault cash a bank has cannot be greater than the fraction
of bank deposits (it has) at the Federal Reserve.
d. Essentially, it means that total reserves are greater than required reserves.
e. none of the above
Which of the following is a normative macroeconomics statement?
a. The central bank should increase the nation’s money supply.
b. The increase in the nation’s money supply helped push the nation’s unemployment
rate down in the short run.
c. Ford Motor Company’s new advertising campaign ended up hurting General Motors’
sales.
d. The local government ought to spend more on recreational facilities.
If real interest rates in Japan fall relative to real interest rates in the United States, the
yen will likely __________ in terms of the dollar and the dollar will likely __________
in terms of the yen.
a. appreciate; depreciate
b. depreciate; appreciate
c. remain unaffected; remain unaffected
d. remain unaffected; appreciate
e. remain unaffected; depreciate
A house is $100,000, a computer is $2,000, and a car is $20,000. In this context, money
is principally functioning as a
a. unit of account.
b. store of value.
c. medium of exchange.
d. none of the above
Consider two straight-line PPFs. They have the same vertical intercept, but curve I is
flatter than curve II. The opportunity cost of producing the good on the vertical axis
a. is greater along curve I.
b. is greater along curve II.
c. is the same along both curves.
d. cannot be compared for the two curves without more information.