According to public choice theorists, people in the market sector and people in the
public sector have __________, and (but) sometimes act differently because of different
__________ arrangements in the two sectors.
a. different motives; institutional
b. the same motives; institutional
c. different views of politics; equilibrium
d. the same motives; equilibrium
e. none of the above
“Barter” implies that
a. to get one good or service, an individual offers another.
b. to get one good or service, an individual offers money.
c. to get a check, an individual offers a good or service.
d. different kinds of money are exchanged for each other.
e. none of the above
You go on vacation to Mexico and take $1,000 with you. During your time in Mexico,
the peso appreciates in value relative to the dollar. It follows that
a. you will be able to buy more goods and services in Mexico after the peso appreciates.
b. you will be able to buy fewer goods and services in Mexico after the peso
appreciates.
c. the purchasing power parity theory is incorrect.
d. Mexican workers, paid in pesos, will be able to buy fewer goods and services in
Mexico after the peso appreciates.
Exhibit 4-9
Suppose that the government imposes a price ceiling at a price of $13._________ units
would be exchanged at the equilibrium price and ____________ units would be
exchanged with the price ceiling in effect.
a. 150; 220
b. 150; 150
c. 110; 180
d. 150; 90
If the economy is self-regulating and current Real GDP is greater than Natural Real
GDP, the economy is operating __________ the natural unemployment rate and wages
will soon __________.
a. below; fall.
b. above; fall
c. below; rise
d. above; rise
e. none of the above
The process whereby votes are exchanged to gain support for legislation is referred to
as
a. logrolling.
b. rational ignorance.
c. simple majority voting.
d. special interest voting.
e. a and d
When commercial banks borrow from other commercial banks, the immediate impact is
that reserves in the banking system
a. increase.
b. decrease.
c. are unaffected.
d. first increase, then decrease.
e. first decrease, then increase.
If the economy is self-regulating and in a recessionary gap, what happens?
a. Wages rise, the SRAS curve shifts leftward, and both Real GDP and the price level
rise.
b. Wages fall, the SRAS curve shifts leftward, the price level rises, and Real GDP falls.
c. Wages fall, the SRAS curve shifts rightward, and both the price level and Real GDP
fall.
d. Wages fall, the SRAS curve shifts rightward, the price level falls, and Real GDP
rises.
e. none of the above
Which of the following changes would not be considered a likely source of changes in
Real GDP according to real business cycle theory?
a. a natural disaster
b. a technological change
c. a change in the price of an important input
d. a change in the money supply
e. none of the above
If the average income per U.S. worker decreases while that of Japanese workers
remains unchanged, then the demand curve for Japanese yen will shift __________,
which will cause the equilibrium exchange rate of the dollar price per yen to
__________, which is the same thing as saying that the dollar will __________.
a. rightward; rise; appreciate
b. leftward; fall; appreciate
c. rightward; rise; depreciate
d. leftward; fall; depreciate
e. rightward; fall; depreciate
In the case of a negative externality,
a. marginal external costs are greater than marginal private costs.
b. marginal external costs are less than marginal private costs.
c. marginal external benefits are greater than marginal private benefits.
d. marginal external benefits are equal to marginal private costs.
e. none of the above
If the aggregate supply curve is vertical, it follows that a change in
a. Real GDP can originate on the demand side of the economy.
b. Real GDP can originate on the supply side of the economy.
c. Real GDP can originate on either the demand side or the supply side of the economy.
d. price level can originate on the demand side of the economy.
e. b and d
Bank A holds $1 million in required reserves and the required reserve ratio is 9 percent.
It follows that Bank A holds checkable deposit liabilities that total approximately
a. $111 million.
b. $11.11 million.
c. $90 million.
d. $900 million.
Exhibit 2-3
If PPF1 is the relevant production possibilities frontier, society can choose points that
lie only
a. below PPF1.
b. below or on PPF1.
c. on PPF2.
d. none of the above