Assume that Spain can produce a commodity using fewer resources than any other
country. Spain will export this commodity even if other countries have a lower
opportunity cost of producing it.
Suppose the Federal Reserve wants to increase the money supply. Which combination
of actions would lead to the appropriate effect?
a. Increase the discount rate, decrease the reserve ratio, sell bonds.
b. Increase the discount rate, decrease the reserve ratio, buy bonds.
c. Decrease the discount rate, decrease the reserve ratio, buy bonds.
d. Decrease the discount rate, increase the reserve ratio, buy bonds.
e. Decrease the discount rate, decrease the reserve ratio, sell bonds.
You just won the lottery. You have a choice of three different prize options.
Option #1: receive $1,200 immediately;
Option #2: receive $1,500 a year from now;
Option #3: receive $1,800 five years from now.
If the interest rate is 15% the ranking of the options, from the lowest present value to
the highest is
Suppose there are no firms, only the government and households. What would be the
result if for some reason the supply of saving at every interest rate suddenly fell?
a. Interest rates would fall and the level of saving would fall.
b. Interest rates would fall and the level of saving would not change.
c. Interest rates would rise and the level of saving would not change.
d. Interest rates would rise and the level of saving would fall.
e. Interest rates would not change and the level of saving would fall.
The CPI is the price index used to calculate real GDP.
Which of the following would cause the aggregate demand curve to shift to the right?
a. An increase in the price level
b. A decrease in the price level
c. An increase in government purchases
d. An increase in taxes
e. An increase in the interest rate
The scenario in which the trade deficit slowly shrinks over time is called the
a. soft-landing scenario.
b. hard-landing scenario.
c. fair-trade scenario.
d. free-trade scenario.
e. protectionist scenario.
The index used to translate nominal GDP into real GDP is the
a. Consumer Price Index
b. Wholesale Price Index
c. GDP Price Index
d. Producer Price Index
e. Manufacturer’s Input Price Index
If the quantity of higher education demanded rises by 5 percent when incomes rise by
10 percent,
A positive demand shock may
a. cause an economy to operate at a point above potential GDP in the short run
b. increase potential output
c. be caused by relatively low employment levels
d. cause the price level to fall
e. be offset by falling wage rates
During the early years of the US industrial revolution, the US welcomed immigrants
from abroad. How would immigration affect the production possibilities frontier?
Unsold goods are part of the nation’s capital stock.
If the unit cost of output for a car is $8000 and the price is $10,000, what is the firms’
markup over cost?
a. 125.0 percent
b. 25.0 percent
c. 80.0 percent
d. 11.1 percent
e. 20.0 percent
According to the efficient markets theory of stock prices,
