Table 3-1
Refer to Table 3-1. The table above shows the demand schedules for Kona coffee of
two individuals (Luke and Ravi) and the rest of the market. If the price of Kona coffee
rises from $4 to $5, the market quantity demanded would
A) decrease by 35 lb.
B) increase by 115 lb.
C) increase by 35 lb.
D) decrease by 115 lb.
As a business type, corporations ________ in the United States.
A) earn the majority of revenues
B) are the most common
C) are the least common
D) are subject to the fewest taxes
The only way the standard of living of the average person in a country can increase is if
________ increases faster than ________.
A) production; population
B) population; GDP per capita
C) population; production
D) population; income
According to the Taylor rule, the Fed should set the target for the federal funds rate
equal to the sum of the equilibrium real federal funds rate, the current inflation rate,
one-half times the ________, and one-half times the ________.
A) interest rate gap; inflation gap
B) interest rate gap; output gap
C) inflation gap; output gap
D) unemployment gap; government-spending gap
The period of expansion ends with a ________ and the period of recession ends with a
________.
A) business cycle peak; business cycle trough
B) business cycle trough; business cycle peak
C) business cycle peak; business cycle peak
D) business cycle trough; business cycle trough
Which of the following is a reason why we should consider the federal national debt a
problem?
A) The federal government is in danger of defaulting on its debt.
B) If the debt drives up interest rates, crowding out will occur.
C) If the debt was incurred to finance improvements in infrastructure, crowding out will
occur.
D) If the debt was incurred to finance research and development, crowding out will
occur.
Figure 18-2
Refer to Figure 18-2. Which of the events below cause the shifts in the supply and
demand curves in the market for dollars against the British pound shown in the graph
above?
A) Interest rates rise in England.
B) Interest rates rise in the United States.
C) Real income rises in the United States.
D) Real income falls in England.
If actual inflation is greater than expected inflation, what is the relationship between the
actual real wage and the expected real wage?
A) The actual real wage will be lower than the expected real wage.
B) The actual real wage will be higher than the expected real wage.
C) The actual real wage will be equal to the expected real wage.
D) The relationship between the actual real wage and the expected real wage cannot be
predicted.
To affect the market outcome, a price floor
A) must be set above the black market price.
B) must be set above the legal price.
C) must be set above the price ceiling.
D) must be set above the equilibrium price.
Voluntary exchange increases economic efficiency
A) because neither the buyer nor the seller would agree to a trade unless they both
benefit.
B) because voluntary exchange only takes place with government permission.
C) because it is free and consequently does not cost anything.
D) because it allows wealthy individuals to act altruistically and give to the poor.
Macroeconomics, as opposed to microeconomics, includes the study of what
determines the level of
A) employment in a specific industry.
B) employment in the economy.
C) output of a specific firm.
D) output of a specific industry.
Under the Bretton Woods system, central bankers could obtain foreign currency loans
from the
A) U.S. Treasury Department.
B) World Trade Organization.
C) International Monetary Fund.
D) Bank of England.
Suppose that the economy is producing above potential GDP and the Fed implements
the correct change in monetary policy, but not until after the economy has passed the
peak of the boom. Then
A) the Fed’s contractionary policy will result in too large of a decrease in GDP.
B) the Fed’s contractionary policy will result in too small of a decrease in GDP.
C) the Fed’s expansionary policy will result in too small of a decrease in GDP.
D) the Fed’s expansionary policy will result in too large of an increase in GDP.