If the U.S. dollar appreciates in the foreign exchange market, U.S. exports will be
__________ and U.S. imports will be __________.
a. relatively less expensive; relatively less expensive
b. relatively less expensive; relatively more expensive
c. relatively more expensive; relatively less expensive
d. relatively more expensive; relatively more expensive
e. unaffected; relatively less expensive
Individuals’ expectations of higher future income is a
a. rightward shifter of the AD curve.
b. leftward shifter of the AD curve.
c. reason for moving up along a given AD curve.
d. reason for moving down along a given AD curve.
A rightward shift in the demand curve for tennis balls could be caused by
a. a fall in the price of tennis balls.
b. a fall in the price of tennis rackets.
c. a rise in the price of tennis lessons.
d. a fall in income, assuming tennis balls are a normal good.
A required reserve ratio of 7 percent gives rise to a simple deposit multiplier of
a. 14.29.
b. 83.33.
c. 1.43.
d. 93.
e. 7.
In a two-country world, an increase in the real interest rate in the domestic economy
(relative to the real interest rate in the foreign economy) shifts
a. the domestic AD curve leftward and the domestic SRAS curve rightward.
b. the domestic AD curve rightward and the domestic SRAS curve leftward.
c. both the domestic AD curve and the domestic SRAS curve rightward.
d. both the domestic AD curve and the domestic SRAS curve leftward.
e. the domestic AD curve leftward and does not affect the domestic SRAS curve.
The economy was at point A producing 100X and 200Y. It moved to point B where it
produces 200X and 300Y. It follows that
a. point A may have been a point below the economy’s PPF, while point B may lie on
the PPF.
b. the economy’s PPF could have shifted outward and point A was a point on the
economy’s old PPF.
c. the economy has moved from one point on its PPF to another point on the same PPF.
d. a or b
e. a or c
Suppose the price elasticity of demand of for soy beans is 0.85.When the price of
soybeans rises by 20 percent, the quantity demanded of soybeans falls by approximately
_____________ percent.
a. 0.024
b. 26.67
c. 23.53
d. 17.00
Consider two points on the PPF: point A, at which there are 10 apples and 20 pears, and
point B, at which there are 7 apples and 21 pears. If the economy is currently at point A,
the opportunity cost of moving to point B is
a. 1 pear.
b. 7 apples.
c. 3 apples.
d. 21 pears.
Suppose farmers get together and decide to be less productive. They want to do this so
that they can shift the supply curve of farm products leftward and raise the price. What
are the thoughts of a profit-maximizing farmer most likely to be once this agreement
has been made?
a. If I break the agreement while everyone else holds to it, I can make myself better off.
b. I am happy that we decided to be unproductive; I can’t be unproductive by myself.
c. I will definitely hold to the agreement.
d. Everyone will break the agreement but me.
Exhibit 3-15
In Exhibit 3-15, at fee F1 there is a
a. shortage of(Q3 – Q1) doctors.
b. surplus of (Q3 – Q1) doctors.
c. surplus of (Q2 – Q1) doctors.
d. shortage of (Q2 – Q1) doctors.
There is a flexible exchange rate system and only two countries in the world, the United
States and Mexico. If the inflation rate in the United States rises relative to the inflation
rate in Mexico, it follows that
a. the dollar will appreciate and the peso will depreciate.
b. both the dollar and the peso will appreciate, although the peso will appreciate before
the dollar appreciates.
c. the dollar will depreciate and the peso will appreciate.
d. both the dollar and the peso will depreciate, although the peso will depreciate before
the dollar depreciates.
e. There is not enough information to answer the question.
The need for a rationing device results from scarcity.
a. True
b. False
A useful rule of thumb called the “Rule of 70” states that if something grows at a
constant rate of Z percent per year, it doubles in size approximately every __________
years.
a. 70 – Z
b. 70/Z
c. Z/70
d. 70 (Z/100)
Residents of cities with a reputation for good weather, ceteris paribus,
a. pay a higher price for housing because the demand for housing is higher.
b. pay a higher price for housing because the supply of housing is higher.
c. pay a higher price for housing because the supply and demand for housing is higher.
d. pay the same for housing as they would in cities with a reputation for bad weather.