Philip Cagan, a student of Milton Friedman, is best known for his work on:
A) money and real GDP.
B) hyperinflation.
C) the quantity theory of money.
D) measuring money supply.
A reason that economists keep an eye on both M2 and M1 is because
A) M2 is more accurate than M1.
B) both fluctuate widely and frequently in total dollar value.
C) money market accounts are sometimes used like checking accounts and sometimes
like savings accounts.
D) during a recession, M1 is meaningless.
Table 6.2 Refer to Table 6.2.
The total number of people employed is:
A) 129.67 million.
B) 128.92 million.
C) 73.5 million.
D) 199.5 million.
Relative to hotdogs, hotdog buns are considered:
A) complements.
B) substitutes.
C) inputs.
D) luxury goods.
Which action could the Fed use to decrease the money supply?
A) an open market purchase
B) an increase in the required reserve ratio
C) a tax increase
D) a decrease in the discount rate
Which of the following is NOT included in M1?
A) savings accounts
B) deposits in checking accounts
C) deposits in checking accounts that pay interest
D) traveler’s checks
If a bond was to pay off one year from now for $840 and was purchased for $800, what
is the interest rate?
A) 4 percent
B) 5 percent
C) 20 percent
D) 40 percent
According to the international effect explanation of the downward slope of the AD
curve, a higher price level in the U.S. economy causes:
A) U.S. imports to increase and U.S. exports to decrease.
B) U.S. imports and U.S. exports to decrease.
C) U.S. imports to decrease and U.S. exports to increase.
D) U.S. imports and U.S. exports to increase.
Which of the following should be included in U.S. GDP?
A) a 3D television manufactured in Thailand and sold in the United States
B) a 3D television manufactured in Thailand by a U.S. firm and sold in the United
States
C) a 3D television manufactured in the United States and sold in Thailand
D) a used 3D television manufactured in the United States and sold in Thailand
Figure 9.2
Refer to Figure 9.2. A movement from point a to point d could be caused by a
simultaneous ________ and ________.
A) increase in government spending; decrease in the price of oil
B) increase in taxes; increase in the price of oil
C) decrease in taxes; massive crop failure
D) decrease in the money supply; decrease in government spending
Which of the following is generally procyclical?
A) investment
B) interest rates
C) consumption expenditures
D) All of the above are procyclical.
Recall the Application about the policies used by the European Union to support
the agricultural sectors of is member countries to answer the following question(s).
According to this Application, in recent years the European Union has reformed its
agriculture policies by reducing or eliminating minimum prices. Ceteris paribus, these
policy reforms would ________ excess supply by ________ prices.
A) reduce; raising
B) reduce; lowering
C) increase; raising
D) increase; lowering
Figure 16.1 Refer to Figure 16.1 to answer this question. Suppose the economy is
initially at Point A. Labor leaders will only choose to demand a wage increase if:
A) the Fed sends a credible signal that it wants to fight inflation.
B) the Fed does not send a credible signal that it wants to fight inflation.
C) the Fed sends a credible signal that it wants to increase unemployment.
D) the Fed does not send a credible signal that it wants to decrease unemployment.
Output in the long run is determined by which of the two following factors when an
economy operates at full employment?
A) capital and supply
B) imports and exports
C) capital and labor
D) the “real” GDP and purchases
Which of the following government policies is not considered a fiscal policy?
A) government policies regarding the purchase of goods and services
B) government policies regarding taxation
C) government policies regarding money supply in the economy
D) government policies regarding transfer payments and welfare benefits
Maintaining a balanced budget during an economic recession would be the difficult to
implement because:
A) personal income taxes would have to be raised in order to compensate for lower tax
revenues.
B) transfer payments would have to be reduced in order to curb spending.
C) corporate income taxes would have to be raised in order to compensate for lower tax
revenues.
D) all of the above
A policy that reduces the natural rate of unemployment:
A) shifts the expectations Phillips curve right.
B) shifts the expectations Phillips curve left.
C) makes the long-run Phillips curve horizontal.
D) has no effect on the expectations Phillips curve.
Social security payments are examples of
A) nondurable goods.
B) durable goods.
C) services.
D) transfer payments.
Table 3.2
Consider two individuals, Rose and Sharon, who produce fish and coconuts. Rose and
Sharon’s hourly productivity are shown in Table 3.2. Which of the following is true?
A) Sharon has an absolute advantage in producing coconuts but not fish.
B) Sharon has an absolute advantage in producing fish but not coconuts.
C) Sharon has an absolute advantage in producing both goods.
D) Sharon does not have an absolute advantage in producing either good.
Figure 15.2
Refer to Figure 15.2. For this economy to produce and sustain that level of output
without inflation:
A) the price of oil must decrease.
B) the government must implement an expansionary fiscal policy.
C) the government must implement an expansionary monetary policy.
D) potential output must increase.