Exhibit 17-5Applying the concept of a production function to your learning, assume
that the amount of learning you acquire can be summarized by the following equation
(and that your motivation to learn and the quality of instruction are both rated on a scale
from 1 to 10):Amount of learning acquired = 0.2(number of books read) + 0.25(hours
spent studying) + 0.15(quality of instruction) + 0.4(motivation to learn)
Based on the equation given in this exhibit, if your motivation to learn rises from 7 to 9,
by how much will the amount of learning acquired rise as a result?
a. 2
b. 0.8
c. 1.6
d. 8
Controlling the nation’s money supply is the most important duty of the Federal
Reserve.
a. True
b. False
Exhibit 34-6
The opportunity cost of 1 unit of wine in terms of units of cheese is __________ for
country A.
a. 1/2
b. 2
c. 10
d. 5
e. none of the above
Changes in the money market have an impact upon the bond market.
a. True
b. False
Some years ago, chemists at 3M Corporation were trying to create a super-strong glue.
Somehow they got their molecules twisted and came up with one of the weakest glues
ever made. But, rather than pouring it down the drain, they tried coating some paper
with it, and the “Post-It Note” was born. In this case, 3M was acting asa(n)
a. utility.
b. rationer.
c. entrepreneur.
d. abstraction.
The effects of tariffs and quotas are: a(n) __________ in consumers’ surplus, and a(n)
__________ in producers’ surplus.
a. increase; increase
b. increase; decrease
c. decrease; increase
d. decrease; decrease
The institutional production possibilities frontier illustrates the different combinations
of goods that society can obtain given
a. the constraints of finite resources and the current state of technology.
b. the price level.
c. its institutional constraints.
d. the natural rate of unemployment.
e. the constraints of finite resources and the current state of technology and institutional
constraints.
In order for Say’s law to hold in a money economy,
a. there must be more than four goods.
b. funds saved must give rise to an equal amount of funds earned.
c. funds saved must give rise to an equal amount of funds invested.
d. none of the above
Exhibit 7-5Economic Data for Country Z
During year 3, Country Z experienced economic _____________ and
_________________.
a. decline; deflation (falling price level)
b. growth; inflation (rising price level)
c. growth; deflation (falling price level)
d. decline; inflation (rising price level)
A bank’s assets are $400 million and its liabilities are $300 million, which means that
the bank’s net worth (bank capital) is ____________________.If the bank€s assets
rise by 8% at the same time that its liabilities rise by 5%, the bank’s new net worth will
then be _______________.
a. $700 million; $713 million
b. $100 million; $117 million
c. $100 million; $102 million
d. $350 million; $360.5 million
According to Milton Friedman, continued inflation is always and everywhere
a. a supply-side phenomenon.
b. caused by continued decreases in aggregate supply.
c. caused by continued increases in the budget deficit.
d. a monetary phenomenon.
e. none of the above
Under a constant growth rate of money rule of 4 percent in an economy in which Real
GDP grows at an average rate of 3 percent and velocity is constant, the inflation rate is
a. 7 percent.
b. -7 percent.
c. 1 percent.
d. -1 percent.
e. constant at zero.
Treasury bonds are so safe (risk-free) that they often pay relatively low returns.
a. True
b. False
The term human capital refers to education, training and experience.
a. True
b. False
If the structural unemployment rate is 3 percent, the frictional unemployment rate is 3
percent, and the current unemployment rate is 5 percent, then the economy is in a
recessionary gap.
a. True
b. False