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Figure 18.1
Refer to Figure 18.1. After trade begins, ________ will specialize in the production of
bicycles and ________ will specialize in the production of hang gliders.
A) the United States.; the United States
B) the United States; Canada
C) Canada; the United States
D) Canada; Canada
Which of the following can be used as money?
A) checks
B) cigarettes
C) precious stones
D) all of the above
Double counting can be avoided by:
A) including the value of intermediate goods in the current year.
B) not counting the value of intermediate goods in GDP.
C) including the value of intermediate goods in the GNP but not in the GDP.
D) including the value of intermediate goods in the production year but not in the
selling year of those goods.
Which of the following policies tends to cause the dollar to appreciate?
A) a decrease in U.S. interest rates
B) an increase in the U.S. money supply
C) a decrease in the money supply
D) none of the above
If the price index in Year 1 is 115 and the price index in Year 2 is 120, the rate of
inflation between Year 1 and Year 2 is:
A) 10.7%.
B) 1.2%.
C) 15%.
D) 4.3%.
The Federal Reserve System was created by the
A) U.S. Treasury.
B) President.
C) Congress.
D) Supreme Court.
What are the two tools of fiscal policy that governments can use to affect the level of
aggregate demand?
A) government spending and taxation
B) government spending and technology improvements
C) taxation and controlling imports
D) taxation and controlling exports
During World War II, trade among camps caused the price of beef in camps with mainly
Sikh prisoners who did not eat beef to:
A) fall dramatically compared to the price other camps.
B) become roughly equal to the price in other camps.
C) rise above the price in other camps.
D) remain unchanged.
Recall the Application about productivity in the nation of Latvia in the 1990s to
answer the following question(s).
According to this Application, workers in the EU were more productive than workers in
Latvia in the 1990s, yet despite this, EU nations chose to trade with Latvia. Engaging in
trade with Latvia allowed ________ to become more productive.
A) workers in the EU but not workers in Latvia
B) workers in Latvia but not workers in the EU
C) neither workers in the EU nor in Latvia
D) workers in both the EU and in Latvia
During the U.S. savings and loan crisis in the 1980s, depositors were saved at the
expense of:
A) investors.
B) taxpayers.
C) managers of financial institutions.
D) insurance companies.
Figure 10.1 Refer to Figure 10.1 to answer this question. Which of the following fiscal
policies would move the economy from point B to point A?
A) higher taxes
B) lower taxes
C) lower government spending
D) lower money supply
People acting in their own self interest is the basis of the
A) principle of supply and demand.
B) principle of voluntary exchange.
C) real-nominal principle.
D) principle of scarcity.
Recall the Application about the decrease in the price of wool in the 1990s to
answer the following question(s). In the 1990s, the world price of wool decreased
by about 30 percent and prices have remained relatively low since then. In 2012,
an organization in New Zealand proposed that sheep shearing be added to the
Commonwealth Games and the Olympics as a spectator sport in an effort to
increase the awareness and the demand for wool. Recall the Application. If the
organization in New Zealand was successful in getting the Olympics to include sheep
shearing as a spectator sport, and this helped to raise the world price of wool, the
quantity of wool supplied would ________ because the market supply curve for wool is
________ sloped.
A) increase; positively
B) increase; negatively
C) decrease; positively
D) decrease; negatively
The market equilibrium price and quantity can be affected if:
A) supply and demand both increase.
B) supply and demand both decrease.
C) supply increases and demand decreases.
D) all of the above
The value of the multiplier ________ as the marginal propensity to save decreases.
A) is constant
B) decreases
C) increases
D) becomes negative
In the first quarter of 2009, the United States trade deficit fell to its lowest level in a
decade. This means that
A) foreign countries imported more from the United States than they exported to the
United States.
B) the United States exported more to foreign countries than it imported from the rest of
the world.
C) the United States imported more from the rest of the world than it exported to the
rest of the world.
D) foreign countries exported more to the United States than they imported from the
rest of the world.
