Recall Application 3, “The Financial System Under Stress: September 11, 2001,” to
answer the following questions:
To avoid a financial crisis after September 11, 2001, any policy by the implemented Fed
must:
A) be approved by the President of the United States.
B) decrease the amount of money in circulation.
C) increase the debt of the US treasury.
D) increase the amount of money in circulation.
Which of the following is not included in the U.S. current account?
A) imports of services
B) Canada’s debt forgiven by the U.S.
C) net investment income
D) net transfer payments
Table 2.2
Krystal runs a nail salon and needs to decide how many hours to stay open. Table 2.2
illustrates her marginal costs of staying open for each additional hour. Suppose that
Krystal’s marginal benefit of staying open per hour is $30. If she is following the
marginal principle, how many hours should Krystal stay open?
A) 4 hours
B) 5 hours
C) 6 hours
D) 7 hours
According to the quantity equation, a reduction in the velocity of money, all else fixed,
will tend to cause:
A) an increase in the money supply.
B) a reduction in the money supply.
C) an increase in nominal GDP.
D) a reduction in nominal GDP.
Which of the following sequence of events follows an expansionary fiscal policy?
A) aggregate demand real GDP money demand real interest rate investment
B) aggregate demand real GDP money demand real interest rate investment
C) aggregate demand real GDP money demand real interest rate investment
D) aggregate demand real GDP money demand real interest rate investment
Figure 18.3 Refer to Figure 18.3. After trade and specialization begin, the maximum
amount of scooters that Livonia can consume is
A) 120.
B) 100.
C) 80.
D) 40.
Figure 14.3
Refer to Figure 14.3. The money market will be in equilibrium at an interest rate of:
A) 0%.
B) 6%.
C) 3%.
D) 8%.
Money that has no intrinsic value and is created by a government decree is called
A) barter money.
B) commodity money.
C) fiat money.
D) asset money.
Recall the Application about the impact that home equity values have on consumer
spending and wealth to answer the following question(s). From 1997 to mid-2006,
housing prices rose nationally by approximately 90 percent and consumer wealth
increased by $6.5 trillion, but in the summer of 2006, housing prices began to fall.
Home equity is the single largest component of net wealth for most families in the
United States, and changes in the value of home equity affect consumer spending.
According to this Application, home equity is the single largest component of net
wealth for most families in the United States. As home equity falls
A) autonomous consumption will decrease, shifting the consumption function
downward.
B) autonomous consumption will decrease, shifting the consumption function upward.
C) the MPC will decrease, increasing the slope of the consumption function.
D) the MPC will decrease, decreasing the slope of the consumption function.
As the Federal Reserve ________ bonds, interest rates rise and the price of bonds
________.
A) buys; rises
B) sells; rises
C) buys; falls
D) sells; falls
When the aggregate demand pushes production above full employment in the short run,
then:
A) firms find it hard to hire and retain workers, so wages rise.
B) firms find it easy to hire and retain workers, so wages rise.
C) firms find it hard to hire and retain workers, so wages drop.
D) firms find it easy to hire and retain workers, so wages drop.
The marginal propensity to consume is always
A) less than one.
B) greater than one.
C) equal to one.
D) equal to zero.
Deciding if a college uses more PhDs to teach introductory classes answers the
economic question of:
A) Who consumes the products produced?
B) What will be produced?
C) Where will the products produced be consumed?
D) How will we produce it?
If the demand for jelly decreases, and the price of grapes (used to make jelly) rises
A) the equilibrium price of jelly rises and the equilibrium quantity of jelly might rise or
fall.
B) the equilibrium price of jelly falls and the equilibrium quantity of jelly might rise or
fall.
C) the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly
falls.
D) the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly
rises.
Refer to Figure 18.4. With free trade, what is the equilibrium price of gloves in
Duckland?
A) $0
B) $8
C) $9
D) $11
The labor supply and demand most directly affect the level of ________ in an economy.
A) people attending colleges
B) people requiring retraining
C) employment
D) welfare benefits
Figure 4.4 illustrates the supply of tacos. If the government offered a subsidy to
Mexican restaurants for each taco they produce, this would most likely cause a
movement from
A) point a to point c.
B) point c to point .
C) S2 to S1.
D) S0 to S1.
Microeconomic analysis can be used to:
A) better understand how markets work.
B) make personal or managerial decisions.
C) evaluate the merits of public policies.
D) All of the above are correct.