Interdependence among individuals and interdependence among nations are both based
on the gains from trade.
a. True
b. False
In the open-economy macroeconomic model, at the equilibrium real interest rate, the
amount that people (including government) want to save equals desired quantities of
domestic investment and net capital outflow.
a. True
b. False
Figure 3-21
Refer to Figure3-21. If Uzbekistan and Azerbaijan switch from each country dividing
its time equally between the production of bolts and nails to each country spending all
of its time producing the good in which it has a comparative advantage, then total
production will increase by
a. 5 bolts and 10 nails.
b. 15 bolts and 40 nails.
c. 20 bolts and 50 nails.
d. 30 bolts and 80 nails.
The sum of all the individual demand curves for a product is called
a. income demand.
b. equilibrium demand.
c. complementary demand.
d. market demand.
The amount of revenue a firm receives for the sale of its products minus its costs of
production as measured by its accountants is the firm’s
a. earnings.
b. retained earnings.
c. economic, or real, profit.
d. dividend.
Economists believe that production possibilities frontiers
a. never have a bowed shape.
b. rarely have a bowed shape.
c. often have a bowed shape.
d. always have a bowed shape.
Other things the same, an increase in velocity means that
a. the rate at which money changes hands falls, so the price level rises.
b. the rate at which money changes hands falls, so the price level falls.
c. the rate at which money changes hands rises, so the price level rises.
d. the rate at which money changes hands rises, so the price level falls.
If the demand for loanable funds shifts to the right, then the equilibrium interest rate
a. and quantity of loanable funds rises.
b. and quantity of loanable funds falls.
c. rises and the quantity of loanable funds falls.
d. falls and the quantity of loanable funds rises.
When a firm wants to borrow directly from the public to finance the purchase of new
equipment, it does so by selling shares of stock.
a. True
b. False
The unemployed who quit their jobs, were fired for cause, or just entered the labor force
are not eligible for unemployment insurance.
a. True
b. False
The Dow Jones Industrial Average has been computed regularly since
a. 1976.
b. 1948.
c. 1913.
d. 1896.
Consider three imaginary countries. In Aziria, saving amounts to $3,000 and
consumption amounts to $7,000; in Graniva, saving amounts to $2,000 and
consumption amounts to $8,000; and in Tanistan, saving amounts to $4,500 and
consumption amounts to $10,500. The saving rate is
a. higher in Aziria than in Tanistan, and it is higher in Tanistan than in Graniva.
b. higher in Graniva than in Tanistan, and it is higher in Tanistan than in Aziria.
c. higher in Tanistan than in Graniva, and it is the same in Graniva and Aziria.
d. higher in Aziria than in Graniva, and it is the same in Aziria and Tanistan.
Josh is a full-time college student who is not working or looking for a job. The Bureau
of Labor Statistics counts Josh as
a. unemployed and in the labor force.
b. unemployed but not in the labor force.
c. in the labor force but not unemployed.
d. neither in the labor force nor unemployed.
Almost all economists agree that local and state governments should
a. eliminate subsidies to professional sports franchises.
b. increase subsidies to professional sports franchises.
c. copy economic policy from Washington, D.C.
d. prevent companies from outsourcing work.
Which of the following is correct? Inflation
a. impedes financial markets in their role of allocating resources.
b. reduces the purchasing power of the average consumer.
c. generally increases after-tax real interest rates.
d. is most costly when anticipated.
A movement along the supply curve might be caused by a change in
a. production technology.
b. input prices.
c. expectations about future prices.
d. the price of the good or service that is being supplied.
Table 4-5
The table below shows the quantities demanded of cases of Mt. Dew per month by four
families at various prices.
RefertoTable4-5.If the four families listed in the table are the only demanders of Mt.
Dew in the market, which of the following is a correct graph of the market demand?
a.
b.
c.
d.
If you deposit $1,000 into a savings account that pays you 5% interest per year,
approximately how long will it take to double your money?
a. 8 years
b. 10 years
c. 12 years
d. 14 years
Which of the following institutions is a central bank?
a. the Bank of Japan
b. the Bank of England
c. the Federal Reserve System
d. All of the above are correct.
Table 3-13
Juanita and Shantala run a business that programs and tests cellular phones. Assume
that Juanita and Shantala can switch between programming and testing cellular phones
at a constant rate. The following table applies.
Refer to Table 3-13. The number of minutes needed by Juanita to program a cellular
phone is
a. 4.
b. 5.
c. 7.5.
d. 15.
Suppose that a country imports $90 million worth of goods and services and exports
$80 million worth of goods and services. What is the value of net exports?
a. $170 million
b. $80 million
c. $10 million
d. -$10 million
If car manufacturers begin using new labor-saving technology on their assembly lines,
we would notexpect
a. a smaller quantity of labor to be used.
b. the supply of cars to increase.
c. the firms’ costs to fall.
d. individual car manufacturers to move up and to the right along their individual
supply curves.
If a country repeals an investment tax credit,
a. net capital outflow and the real exchange rate rise.
b. net capital outflow rises and the real exchange rate falls.
c. net capital outflow falls and the real exchange rate rises.
d. net capital outflow and the real exchange rate fall.
Which of the following functions of money is also a common function of most other
financial assets?
a. a unit of account
b. a store of value
c. medium of exchange
d. None of the above is correct.
Electronics firms may be able to get patents on their ideas. Doing so makes their ideas
a. private goods rather than public goods. This gives people more incentive to engage in
research.
b. private goods rather than public goods. This gives people less incentive to engage in
research.
c. public goods rather than private goods. This gives people more incentive to engage in
research.
d. public goods rather than private goods. This gives people more incentive to engage in
private research.
If the U.S. government imposes a quota on leather shoes, then net exports of U.S. shoes
would
a. rise.
b. not change.
c. fall.
d. rise, not change, or fall depending on what happened to the exchange rate.
In the 1970’s the Federal Reserve responded to an adverse supply shock. Its policy
made
a. the recession that followed smaller and so provided a more favorable tradeoff
between inflation and unemployment.
b. the recession that followed smaller, but in doing so produced a less favorable tradeoff
between inflation and unemployment.
c. the recession that followed larger, but in doing so provided a more favorable tradeoff
between inflation and unemployment.
d. the recession that followed larger and also produced a less favorable tradeoff between
inflation and unemployment.
If a country went from a government budget deficit to a surplus, national saving would
a. increase, shifting the supply of loanable funds right.
b. increase, shifting the supply of loanable funds left.
c. decrease, shifting the demand for loanable funds right.
d. decrease, shifting the demand for loanable funds left.
At the equilibrium price, the quantity of the good that buyers are willing and able to buy
a. is greater than the quantity that sellers are willing and able to sell.
b. exactly equals the quantity that sellers are willing and able to sell.
c. is less than the quantity that sellers are willing and able to sell.
d. Either a) or c) could be correct.
Which of the following events must cause equilibrium price to rise?
a. demand increases and supply decreases
b. demand and supply both decrease
c. demand decreases and supply increases
d. demand and supply both increase
Other things constant, which of the following would reduce unemployment and raise
inflation?
a. businesses become more optimistic about the future of the economy
b. because of high growth abroad, net exports rise
c. the government cuts taxes
d. All of the above are correct.
Available evidence indicates that stock prices, even if not exactly a random walk, are
very close to a random walk.
a. True
b. False
People hold $400 million of bank deposits but no currency. Banks have made $380
million dollars of loans and only hold enough reserves to satisfy reserve requirements.
Because of uncertainty, banks choose to hold $10 million more in reserves. The Fed
takes no action. What happens to bank loans?
a. they fall $220 million
b. they fall $200 million
c. they rise $200 million
d. they rise $220 million
An implication of the Employment Act of 1946 is that the government should respond
to changes in the private economy to stabilize aggregate demand.
a. True
b. False
If your research leads you to believe that the present value of a stock’s dividend stream
and future price is less than
its price then you believe the stock is
a. overvalued so you should consider buying it.
b. overvalued so you should not consider buying it.
c. undervalued so you should consider buying it.
d. undervalued so you should not consider buying it.