The Council of Economic Advisers
a. was created in 1946.
b. advises the president of the United States on economic policy matters.
c. writes the annual EconomicReportofthePresident.
d. All of the above are correct.
Normative statements are
a. not usually made by economists.
b. claims about how the world should be.
c. claims about how variables in the economy normally behave.
d. pessimistic interpretations of the economy.
Assume a central bank follows a rule that requires it to take steps to keep the price level
constant. If the price level fell because of a decrease in aggregate demand and an
increase in aggregate supply that kept output unchanged, then
a. the central bank would have to decrease the money supply which would decrease
output.
b. the central bank would have to decrease the money supply which would increase
output.
c. the central bank would have to increase the money supply which would decrease
output.
d. the central bank would have to increase the money supply which would increase
output.
It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The
company’s cost will be $50,009 if it produces an additional pound of steak. If the
company produces 5,001 pounds of steak then
a. its average cost is greater than its marginal cost.
b. its average cost and its marginal cost are equal.
c. its average cost is less than its marginal cost.
d. there is insufficient information to compute average and marginal costs.
Stock market fluctuations
a. often go hand in hand with fluctuations in the economy more broadly.
b. rarely have anything to do with fluctuations in the economy more broadly.
c. have few, if any, macroeconomic implications.
d. are attributable to the widespread belief that the efficient markets hypothesis is
correct.
The design of tax policy is one of the responsibilities of economists who work at the
a. Council of Economic Advisers.
b. Federal Reserve.
c. Department of the Treasury.
d. Congressional Budget Office.
If a good is inferior, then an increase in income will result in a(n)
a. increase in the demand for the good.
b. decrease in the demand for the good.
c. movement down and to the right along the demand curve for the good.
d. movement up and to the left along the demand curve for the good.
Suppose aggregate demand shifts to the left and policymakers want to stabilize output.
What can they do?
a. repeal an investment tax credit or increase the money supply
b. repeal an investment tax credit or decrease the money supply
c. institute an investment tax credit or increase the money supply
d. institute an investment tax credit or decrease the money supply
It is possible for an economy to increase its production of both goods if the economy
a. moves downward and to the right along its production possibilities frontier and the
frontier is bowed outward.
b. moves upward and to the left along its production possibilities frontier and the
frontier is bowed outward.
c. moves in either direction along its production possibilities frontier and the frontier is
a straight line.
d. moves from a situation of inefficient production to a situation of efficient production.
Table 4-13
The demand schedule below pertains to sandwiches demanded per week.
RefertoTable4-13.Suppose x = 1. Then the slope of the market demand curve is
a. -3.
b. -1/3.
c. 1/3.
d. 3.
Which of the effects listed below increases the quantity of goods and services
demanded when the price level falls and decreases the quantity of goods and services
demanded when the price level rises?
a. the wealth effect
b. the interest-rate effect
c. the exchange-rate effect
d. All of the above are correct.
Table 23-1
The table below contains data for Chereaux for the year 2015.
RefertoTable23-1. Net national product for Chereaux in 2015 is
a. $194.
b. $196.
c. $198.
d. $204.
Which of the following shifts short-run, but not long-run aggregate supply right?
a. a decrease in the actual price level
b. a decrease in the expected price level
c. a decrease in the capital stock
d. an increase in the money supply
The manager of the bank where you work tells you that the bank has $300 million in
deposits and $255 million dollars in loans. If the reserve requirement is 8.5 percent,
how much is the bank holding in excess reserves?
a. $15 million
b. $19.5 million
c. $25.5 million
d. $0 million
A significant example of a temporary tax cut was the one announced in 1992 by
President George H. W. Bush. The effect of that tax cut on consumer spending and
aggregate demand was
a. zero.
b. likely smaller than if the cut had been permanent.
c. likely about the same as if the cut had been permanent.
d. likely larger than if the cut had been permanent.
You put $150 in the bank two years ago and forgot about it. The bank sends you a
notice that you now have $169.34 in your account. What interest rate did you earn?
a. 5.50 percent
b. 5.65 percent
c. 6.25 percent
d. 7.05 percent
Figure 28-3
RefetoFigure28-3.If the government imposes a minimum wage of $8, then how many
workers will be unemployed?
a. 0
b. 3,000
c. 4,000
d. 7,000
If the nominal interest rate is 8 percent and the real interest rate is 5.5 percent, then the
inflation rate is
a. -2.5 percent.
b. 0.45 percent.
c. 2.5 percent.
d. 13.5 percent.
Table 23-2
The table below contains data for country A for the year 2010.
RefertoTable23-2.What was country A’s investment in 2010?
a. $1178
b. $1295
c. $1882
d. $1999
Suppose that when income rises, the demand curve for doctor’s visits shifts to the right.
In this case, we know doctor’s visits are
a. inferior goods.
b. normal goods.
c. perfectly competitive goods.
d. durable goods.
Table 24-10
The table below shows the prices of baseballs and baseball bats for three years. Assume
the typical consumer’s basket consists of 6 baseballs and 2 baseball bats.
RefertoTable24-10.If 2010 is the base year, then the consumer price index was
a. 77.40 in 2008, 85.16 in 2009, and 100.00 in 2010.
b. 50.50 in 2008, 67.50 in 2009, and 100.00 in 2010.
c. 90.88 in 2008, 85.16 in 2009, and 100.00 in 2010.
d. 169.50 in 2008, 186.50 in 2009, and 219.00 in 2010.
Changes in real GDP reflect only changes in the amounts being produced.
a. True
b. False
Macroeconomics is the study of economy-wide phenomena.
a. True
b. False
Which of the following affected aggregate demand during the recession of 2008-2009?
a. a decline in residential construction and a decrease in lending
b. a decline in residential construction but not a decrease in lending
c. a decrease in lending but not a decline in residential construction
d. neither a decrease in residential construction nor a decrease in lending
U.S. prices rose at an average annual rate of about 3.6 percent over the last 80 years.
a. True
b. False
Table 23-7
The table below contains data for the country of Togogo. The base year is 1974.
RefertoTable23-7.From 1975 to 1976,
a. inflation was 25% and output did not grow.
b. inflation was 25% and output grew.
c. inflation was 50% and output did not grow.
d. inflation was 50% and output grew.
A higher price for batteries would result in a(n)
a. increase in the demand for flashlights.
b. decrease in the demand for flashlights.
c. increase in the demand for batteries.
d. decrease in the demand for batteries.
When the price of an asset rises above what appears to be its fundamental value, the
market is said to be experiencing a speculativebubble.
a. True
b. False
If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the
inflation rate is 3 percent.
a. True
b. False
Every unit of good xthat is produced in the United States is exported to other countries.
An increase in the price of good xshows up
a. in the consumer price index and in the GDP deflator.
b. in the consumer price index, but not in the GDP deflator.
c. in the GDP deflator, but not in the consumer price index.
d. in neither the consumer price index nor in the GDP deflator.
With careful planning, we can usually get something that we like without having to give
up something else that we like.
a. True
b. False
In the economy of Talikastan in 2015, exports were $500, GDP was $6400, government
purchases were $1700, imports were $400, and investment was $1800. What was
Talikastan’s consumption in 2015?
a. $2000
b. $2800
c. $3000
d. $3800
The long-run Phillips curve would shift to the left if
a. the money supply growth rate increased or labor markets become more flexible.
b. the money supply growth rate increased but not if labor markets become more
flexible.
c. labor markets become more flexible but not if the money supply growth rate
increased.
d. None of the above is correct.
If the supply of dollars in the market for foreign-currency exchange shifts left, then the
exchange rate
a. rises and the quantity of dollars exchanged falls.
b. rises and the quantity of dollars exchanged does not change.
c. rises and the quantity of dollars exchanged rises.
d. falls and the quantity of dollars exchanged does not change.
Measuring unemployment is the job of the Bureau of Labor Statistics.
a. True
b. False