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A(n) ________ in U.S. interest rates will cause an increase in the demand for U.S.
dollars and a(n) ________ in the (per dollar) exchange rate.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Figure 9.1 shows three aggregate demand curves. A movement from point to point a
could be caused by a(n)
A) decrease in the money supply.
B) increase in taxes.
C) increase in the price level.
D) increase in government spending.
When output falls below full employment output, we expect that the:
A) wages and prices decrease as the long run aggregate supply curve shifts downward
over time.
B) wages and prices decrease as the short run aggregate supply curve shifts upward
over time.
C) wages and prices increase as the long run aggregate supply curve shifts upward over
time.
D) wages and prices decrease as short run aggregate supply curve shifts downward over
time.
A decrease in the government expenditures will:
A) shift the aggregate expenditures line upwards and shift the aggregate demand curve
to the right.
B) shift the aggregate expenditures line downwards and shift the aggregate demand
curve to the right.
C) shift the aggregate expenditures line upwards and shift the aggregate demand curve
to the left.
D) shift the aggregate expenditures line downwards and shift the aggregate demand
curve to the left.
Based on the model of the money market, when real income decreases, the equilibrium
interest rate should
A) stay the same.
B) increase.
C) decrease.
D) increase to the same extent that the supply of money increases.
The real business cycle school of thought is generally viewed as controversial because
A) it contradicts classical economic thought.
B) critics find it difficult to understand how many of the post-World War II recessions
could be explained by adverse changes in technology.
C) it blames unemployment on immigration.
D) all of the above
The worldwide recession in 2007 started from:
A) easy access to credit in the U.S.
B) booming housing prices that ultimately dropped.
C) a large number of home purchasers who were unable to afford the homes.
D) All of the above are correct.
Table 13.4 Refer to Table 13.4. First Charter Bank could still make additional loans of
$40,000 if the required reserve ratio were:
A) 10%.
B) 8%.
C) 5%.
D) 2.5%.
The labor force participation rate is the ratio of the:
A) labor force to the total population 16 years old or older.
B) labor force to total population.
C) number employed to the total population 16 years old or older.
D) number employed to total population.
Markets exist:
A) as an arrangement that allows buyers and sellers to exchange things.
B) because people are not self-sufficient.
C) because people specialize in the production of one or two products.
D) all of the above.
Table 13.2 Refer to Table 13.2. The required reserve ratio is 20%. If the First Charter
Bank is meeting its reserve requirement and has no excess reserves, its reserves equal:
A) $100.
B) $150.
C) $140.
D) $180.
Which of the following situations will arise in the domestic market following the
imposition of a tariff?
A) Imports decrease, domestic production increases, prices increase.
B) Imports increase, domestic production increases, prices increase.
C) Imports increase, domestic production decreases, prices decrease.
D) Imports decrease, domestic production increases, prices decrease.
Suppose bad weather in Florida unexpectedly results in a much smaller citrus crop than
had been projected. The reduction in the supply of Florida citrus fruit would tend to
A) increase the supply of California citrus fruit.
B) decrease the price of California citrus fruit.
C) increase the price of Florida citrus fruit.
D) shift the supply curve for Florida citrus fruit down and to the right.
Economics is the study of
A) how to invest in the stock market.
B) how society uses limited resources.
C) the role of money in markets.
D) how government officials decide which goods and services are produced.
If the Fed wished to decrease inflation, it could
A) increase the reserve requirement or conduct an open market sale.
B) increase the reserve requirement or conduct an open market purchase.
C) decrease the reserve requirement or conduct an open market sale.
D) decrease the reserve requirement or conduct an open market purchase.
Monetarists
A) believe that fiscal policy is the most important aspect of the economy.
B) believe that output is determined by technology shocks.
C) emphasize the role of money in the economy.
D) suggest that the government determine all production decisions.
Figure 2.3 In Figure 2.3, an efficient production point on production possibility curve
YZ is:
A) point A.
B) point B.
C) point C.
D) none of the above.
As we move along a planned expenditures line
A) price level rises.
B) price level falls.
C) price level is held constant.
D) price level fluctuates depending on whether the economy is expanding or
contracting.
