The classical economists believed that wages, prices, and interest rates were flexible in
both the upward and the downward direction.
a. True
b. False
The U.S. real interest rate rises relative to Japan’s. As a result,
a. the yen will depreciate and the dollar will appreciate.
b. the yen will appreciate and the dollar will depreciate.
c. both the dollar and the yen will depreciate.
d. both the dollar and the yen will appreciate.
With a price elasticity of demand of 0.45, when the price of soybeans falls by 10
percent, the quantity demanded of soybeans rises by approximately _____________
percent.
a. 4.50
b. 45.0
c. 0.45
d. 0.56
Exhibit 6-2
How many unemployed persons are there in year 3?
a. 50 million
b. 100 million
c. 150 million
d. 350 million
e. 400 million
With respect to a PPF for goods X and Y, productive efficiency implies that in order to
producemore of goodX there will be a reduction in production of good Y.
a. True
b. False
Starting from short-run equilibrium, the following occurs: the money supply increases
and labor productivity increases. What is the effect on the price level and Real GDP in
the short run?
a. Real GDP falls and the price level necessarily rises.
b. Real GDP rises and the price level necessarily rises.
c. Real GDP rises and the effect on the price level cannot be determined.
d. Real GDP falls and the effect on the price level cannot be determined.
e. none of the above
For Alex, the opportunity cost of producing one unit of good A is ____________ unit(s)
of good B.
a. 3.00
b. 0.33
c. 0.75
d. 1.33
Exhibit 16-1
According to new classical macroeconomists, if decreases in aggregate demand are
unanticipated, then the economy will move from point C to
a. point B.
b. point A.
c. some point on SRPC2, below C.
d. some point on SRPC1, below A.
The economy moves from point A, where it produces 100 units of X and 200 units of Y,
to point B, where it produces 200 units of X and 150 units of Y. It follows that
a. point A is a productive inefficient point.
b. point A may be a productive inefficient point.
c. point A may be a productive efficient point.
d. point B is a productive efficient point.
e. b and c
In a barter economy, Say’s law implies there
a. can be a general overproduction of goods.
b. can be a general underproduction of goods.
c. cannot be a general overproduction or underproduction of goods.
d. can be a general overproduction of goods but never a general underproduction of
goods.
GDP can rise as a result of a rise in __________________, and Real GDP can rise as a
result of a rise in _______________________.
a. prices or output; prices only.
b. prices only; prices or output.
c. prices or output; output only.
d. prices or output; prices or output.
A decrease in the price of a nonlabor input such as electricity will cause
a. a movement down the SRAS curve.
b. a movement up the SRAS curve.
c. a leftward shift in the SRAS curve.
d. a rightward shift in the SRAS curve.
e. no change regarding the SRAS curve.
If Luke can bake bread at a lower opportunity cost than Jason, and Jason can produce
paintings at a lower opportunity cost than Luke, it follows that
a. Lukehas a comparative advantage in paintings and Jason has a comparative
advantage in baking bread.
b. BothLuke and Jason have a comparative advantage in baking bread.
c. BothLuke and Jason have a comparative disadvantage in producing paintings.
d. Lukehas a comparative advantage in baking bread and Jason has a comparative
advantage in producing paintings.
e. There is not enough information to answer the question.
In the case of a negative externality, in order to achieve efficiency the government must
set the _________________ equal to the marginal ____________________.
a. tax; external costs
b. tax; external benefits
c. subsidy; external costs
d. subsidy; external benefits
e. tax; private costs
The classical economists believed __________ determined savings, while Keynes said
it was __________.
a. interest rates; income
b. income; investment
c. investment; interest rates
d. interest rates; investment
The Board of Governors of the Federal Reserve is comprised of
a. seven persons, each appointed to a seven-year term.
b. seven persons, each appointed to a fourteen-year term.
c. fourteen persons, each appointed to a seven-year term.
d. twelve persons, each appointed to a seven-year term.
e. twelve persons, each appointed to a fourteen-year term.
An economist says, “Technological advances have the power to lower the prices of
many of the goods we buy.” Here is how this works:
a. Technological advances lead to lower demand, which leads to lower prices.
b. Technological advances lead to greater supply, which leads to lower prices.
c. Technological advances lead to greater quantity supplied, which leads to lower
prices.
d. Technological advances lead to lower taxes, which lead to greater supply, which
leads to lower prices.
e. Technological advances lead to higher taxes, which lead to fewer subsidies, which
lead to greater supply, which leads to lower prices.
“Politics is too often the thing that gets in the way of good economic policy being
implemented.”The economist who said this most likely
a. believes that fiscal policy is preferable to monetary policy when it comes to
stabilizing the economy.
b. prefers discretionary monetary policy to rule-based monetary policy.
c. believes that there will be a lot of crowding out if government spending is increased.
d. prefers rule-based monetary policy to discretionary monetary policy.