When the economy is in an inflationary gap, the labor market is experiencing a
_____________.In a self-regulating economy, wage rates will then ___________ and
the ______________ curve will shift __________________.
a. shortage; rise; SRAS; leftward
b. shortage; fall; SRAS; leftward
c. surplus; rise; AD; rightward
d. shortage; fall; AD; rightward
e. surplus; fall; SRAS; rightward
Exhibit 34-11
PW is the price that exists in the market before a tariff is imposed and PW + T is the price
that exists in the market after a tariff is imposed. As a result of the tariff, producers’
surplus __________ by the area __________.
a. rises; EBCF
b. falls; DBE
c. rises; FCG
d. falls; DBCG
e. none of the above
The SRAS curve is upward sloping, there is a liquidity trap, and investment spending is
sensitive to changes in the interest rate. According to the monetarist transmission
mechanism, if the money supply increases the AD curve __________ and the price
level __________.
a. does not change; does not change
b. shifts to the left; falls
c. shifts to the right; rises
d. does not change; rises
e. none of the above
If consumers’ surplus is $30 and the price paid for the good is $50, then the maximum
price a buyer is willing and able to pay for the good is
a. $80.
b. $30.
c. $50.
d. $20.
e. There is not enough information to answer the question.
An increase in autonomous consumption, an increase in disposable income, or a
decrease in the marginal propensity to consume can all increase consumption.
a. True
b. False
Exhibit 2-7
Point F is
a. unattainable if the economy’s PPF is PPF1.
b. inefficient if the economy’s PPF is PPF2.
c. attainable if the economy’s PPF is PPF2.
d. all of the above
e. none of the above
Suppose the total market value of all final goods and services produced in economy X
this year is $4 million. Of the $4 million worth of goods and services, $3 million is sold
and $1 million is held in inventory. For this year, the GDP for economy X is
a. $4 million.
b. $3 million.
c. $1 million.
d. $7 million.
e. none of the above
The branch of economics that studies the decisions made by individuals and firms is
called macroeconomics.
a. True
b. False
Given that the economy is operating in the horizontal section of the aggregate supply
curve in the simple Keynesian model, an increase in autonomous spending will
____________________ (assuming that the economy remains in the horizontal section
of the aggregate supply curve).
a. increase Real GDP and raise the price level
b. decrease Real GDP and raise the price level
c. increase Real GDP and leave the price level unchanged
d. increase Real GDP and lower the price level
Increases in import spending _____________________,ceteris paribus.
a. raise GDP
b. lower GDP
c. are always equal to decreases in exports
d. may raise or lower GDP
Exhibit 38-1
The yield on bond B is approximately
a. 9.5 percent.
b. 15.8 percent.
c. 0.15 percent.
d. 17 percent.
In the United States, which is the largest dollar figure?
a. disposable personal income
b. gross domestic product
c. per-capita GDP
d. personal income
Which of the following statements is false?
a. The Treasury bond information published under the column heading “Yield” is based
on the ask price of the bond.
b. The Treasury bond information published under the column heading “Yield” is based
on the assumption that the bond is held to maturity.
c. The Treasury bond information published under the column heading “Bid” indicates
the price a buyer will pay if he buys the bond.
d. The Treasury bond information published under the column heading “Bid” is the
price a buyer will receive if she sells the bond.
Which of the following statements is false?
a. To an economist, the resource land includes natural resources such as minerals,
forests, water and unimproved land.
b. To an economist, the resource capital consists of unproduced goods that can be
turned into produced goods.
c. To an economist, the resource labor consists of the physical and mental talents people
contribute to the production process.
d. To an economist, the resource entrepreneurship refers to a particular talent that some
people have for organizing the resources of land, labor, and capital to produce goods,
seek new business opportunities, and develop new ways of doing things.
An example of automatic fiscal policy is
a. the unemployed automatically become eligible for unemployment benefits when they
lose their jobs in a recession.
b. when interest rates automatically fall in a recession.
c. Congress passes a law during a recession that automatically extends unemployment
benefits for those whose benefits will soon expire.
d. a and b
e. a, b and c
Let X be the number of hours you spend studying for an exam on Wednesday afternoon
and Y be your chances of winning the Wednesday night state lottery. What kind of a
relationship do you most likely expect between X and Y?
a. direct
b. inverse
c. linear
d. 45-degree line
e. independent
Increased productivity in the agricultural sector is not always a benefit to farmers
because it is accompanied by
a. lower prices and if demand is inelastic, lower prices mean lower revenues.
b. higher prices and if demand is elastic, higher prices mean lower revenues.
c. lower prices and if demand is elastic, lower prices mean lower revenues.
d. higher prices and if demand is inelastic, higher prices mean lower revenues.