The change in the interest rate due to a change in the supply of loanable funds is
referred to as the __________ effect.
a. income
b. expectations
c. liquidity
d. real
In 2000, the top 100 transnational companies produced about _____________ percent
of the entire world’s output.
a. 2.1
b. 4.3
c. 10.5
d. 22.1
To eliminate a recessionary gap, Keynesian theory indicates that government should
a. increase taxes.
b. decrease taxes.
c. increase government purchases.
d. decrease government purchases.
e. b or c
An example of expansionary fiscal policy is
a. an increase in government spending, or an increase in taxes, or both.
b. a decrease in government spending, or a decrease in taxes, or both.
c. an increase in government spending, or a decrease in taxes, or both.
d. a decrease in government spending, or an increase in taxes, or both.
e. holding government spending constant while increasing taxes.
A person buys a newly issued bond that matures in 6 years with a face value of $1,000
and a coupon rate of 5%. How much money will the bondholder receive in the sixth
year?
a. $1,050.
b. $1,500.
c. $1,000.
d. $50.
e. $500
If variable X goes down as a result of variable Y going down, then X and Y are
a. directly related.
b. negatively related.
c. inversely related.
d. independent.
Which of the following statements is likely to be made by an economist who believes in
activist monetary policy? (1) The more closely monetary policy can be designed to
meet the particulars of a given economic environment, the better. (2) Because of long
and uncertain time lags, activist monetary policy may be destabilizing rather than
stabilizing. (3) There is sufficient flexibility in wages and prices in modern economies
to allow the economy to equilibrate in reasonable speed at the natural level of Real
GDP. (4) The ‘same-for-all-seasons” monetary policy is the way to proceed. (5) There is
evidence that monetary policy in the mid-1970s caused a recession.
a. (1), (2), and (3)
b. (1), (4), and (5)
c. (1) and (5)
d. (4) and (5)
e. (1), (3), and (4)
Which of the following represents a double coincidence of wants?
a. Smith has what Jones has and neither wants what the other has.
b. Smith has what Jones wants but Jones doesn’t have what Smith wants.
c. Smith has what Jones wants and Jones has what Smith wants.
d. Smith wants what Jones has, Jones wants what Brown has, and Brown wants what
Smith has.
e. none of the above
Efficiency is consistent with
a. maximizing net benefits.
b. equating marginal benefits and marginal costs.
c. maximizing total benefits.
d. minimizing total costs.
e. a and b
The objective of speculators is to buy at one price and sell at a lower price.
a. True
b. False
Exhibit 9-5
Point G on graph (2) would correspond to the intersection of an AD curve and a SRAS
curve at which point(s) on graph (1)?
a. I or J
b. K
c. L or M
d. I or L
e. J or M
Exhibit 16-9
Assume that the starting point is point 1.Suppose that the government implements
expansionary fiscal policy that raises aggregate demand.Which of the following best
goes with the diagram shown?
a. New classical theory with policy incorrectly anticipated, bias downward
b. New classical theory with policy incorrectly anticipated, bias upward
c. Real business cycle theory
d. New classical theory with policy unanticipated
e. Policy ineffectiveness proposition (PIP)
Exhibit 9-2
The economy is currently producing Q1. At this level of Real GDP, the economy is
experiencing
a. a shortage in the labor market.
b. a surplus in the labor market.
c. neither a shortage nor a surplus in the labor market.
d. all of the above are equally likely
An economy is producing its Natural Real GDP when the unemployment rate is equal
to the __________ unemployment rate.
a. frictional
b. structural
c. sum of the frictional unemployment rate and the structural
d. seasonal
e. cyclical
The California gold rush resulted in an increase in the amount of money in circulation
and an increase in prices across the country.
a. True
b. False
The marginal tax rate is equal to the
a. total amount of a person’s tax payment divided by the total amount of the person’s
taxable income.
b. total amount of a person’s tax payment divided by the change in the person’s taxable
income.
c. change in the person’s tax payment divided by the total amount of the person’s
taxable income.
d. change in the person’s tax payment divided by the change in the person’s taxable
income.
When a production function is graphed with Real GDP on the vertical axis and labor on
the horizontal axis, a rise in labor ________________________which shifts the LRAS
curve ____________ resulting in ______________________.
a. shifts the production function up; rightward; economic growth
b. shifts the production function down; leftward; a shrinking economy
c. moves us up along a given production function; rightward; economic growth
d. moves us down along a given production function; leftward; a shrinking economy
The Laffer curve makes the point that cutting a very high marginal tax rate can
__________ the tax base enough so that tax revenues__________.
a. lower; rise
b. lower; fall
c. raise; rise
d. raise; fall
Americans buying Japanese cars create a
a. demand for U.S. dollars and supply of Japanese yen.
b. demand for both U.S. dollars and Japanese yen.
c. supply of U.S. dollars and demand for Japanese yen.
d. supply of both U.S. dollars and Japanese yen.
When an economist states that the monetarist transmission mechanism is “direct” it
means that a change in the money supply creates a direct impact on the goods and
services market.
a. True
b. False