According to Keynesian economists, which of the following is not a consequence of
increasing the money supply?
a. A lower interest rate.
b. Greater investment.
c. Lower real GDP.
d. Higher real GDP.
Which of the following is not an example of an externality?
a. Drunk drivers raise everyone’s auto insurance premiums.
b. The price of lumber increases as lumberjacks’ wages increase.
c. The neighbor’s beautiful front yard increases your home value.
d. Someone drives a car that emits thick black smoke.
e. People who live near a bakery enjoy the smell of baked bread.
Consider an economy made up of 100 people, 60 of whom hold jobs, 10 of whom are
looking for work, and 15 of whom are retired. The number of people in the civilian
labor force is:
a. 30.
b. 60.
c. 85.
d. 90.
e. 70.
Producer surplus:
a. measures the value between the actual selling price of a product and the price at
which sellers are willing to sell the product.
b. is illustrated by the area above the supply curve and below the market price.
c. is maximized in market equilibrium.
d. all of these.
A rightward (an outward) shift of a nation’s production possibilities curve could be
caused by:
a. a decrease in technology.
b. an increase in resources.
c. producing more consumer and fewer capital goods.
d. a decline in the labor force’s level of education and skills.
A government spending and taxation policy to achieve macroeconomic goals is known
as:
a. countercyclical policy.
b. fiscal policy.
c. monetary policy.
d. a balanced budget.
e. presidential discretion.
Exhibit 18-5 International currency markets
Exhibit 18-5 displays
the international currency market for yen in terms of dollars and dollars in terms of yen.
The demand curve in graph 18-5(A) is determined by:
a. U.S. citizens attempting to purchase Japanese-made goods.
b. Japanese attempting to purchase U.S.-made goods.
c. U.S. businesses attempting to sell to the Japanese.
d. Japanese businesses attempting to sell to the U.S.
e. the U.S. government attempting to unload dollars to the international market.
A production possibility graph slopes down because of:
a. the law of increasing costs.
b. nonhomogeneous resources.
c. inefficiency.
d. improper output mix.
e. unemployment.
Exhibit 9-4 Keynesian aggregate expenditures model
At a real GDP of $500 billion in
Exhibit 9-4, the economy experiences inventory:
a. depletion of $100 billion.
b. depletion of $250 billion.
c. accumulation of $100 billion.
d. accumulation of $250 billion.
Which of the following is an example of a progressive tax?
a. The excise tax on cigarettes.
b. The federal tax on gasoline.
c. The federal personal income tax.
d. All of these.
If foreign exchange rates are determined by the interaction of supply and demand forces
for the various currencies, then the exchange rate is:
a. fixed.
b. government-determined.
c. set by the value of gold.
d. floating.
e. improper.
The term Ceteris paribus means that:
a. everything is changing.
b. all other things remain unchanged.
c. no one knows which variables will change and which will remain constant.
d. the basic principle of economics do not apply to the case being considered.
For an economy, aggregate demand equals:
a. consumption plus investment plus government spending plus exports.
b. consumption plus investment plus government spending plus (exports minus
imports).
c. consumption plus investment plus (taxes minus transfers) plus (exports minus
imports).
d. consumption plus investment plus government spending plus net exports (imports
minus exports).