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If the Fed wished to decrease interest rates, it could
A) increase the reserve requirement or conduct an open market sale.
B) increase the reserve requirement or conduct an open market purchase.
C) decrease the reserve requirement or conduct an open market sale.
D) decrease the reserve requirement or conduct an open market purchase.
Figure 1A.1
Refer to Figure 1A.1. The slope of the line between the points where hours worked per
week are 20 and hours worked per week are 30 is
A) 0.2.
B) 5.
C) 10.
D) 50.
Figure 19.1
Referring to Figure 19.1, if the exchange rate is currently 11 pesos per dollar, then we
expect the dollar to ________ and the peso to ________.
A) depreciate; depreciate
B) depreciate; appreciate
C) appreciate; depreciate
D) appreciate; appreciate
Which of the following is not a topic studied in macroeconomics?
A) Gross Domestic Product
B) the unemployment rate
C) the relative price of IBM computers
D) the inflation rate
A U.S. boycott against Mexican tuna caught in nets was
A) upheld by the WTO on the grounds that the use of nets to catch tuna also kills
dolphins.
B) upheld by the WTO on the grounds that nations can impose any environmental
standards on other nations.
C) not upheld by the WTO on the grounds that U.S. ships could still use nets to catch
tuna.
D) not upheld by the WTO on the grounds that killing dolphins in tuna nets does not
harm the United States directly.
When there are sustained increases in real GDP over time, we say that the economy is
undergoing
A) economic stagnation.
B) a recession.
C) economic growth.
D) massive changes in productive capacity.
Automatic stabilizers
A) minimize fluctuations in the economy.
B) must be authorized by the President.
C) decrease taxes during expansions.
D) increase welfare payments during expansions.
The smallest category of federal spending is:
A) discretionary spending.
B) entitlements and mandatory spending.
C) net interest.
D) none of the above
Suppose that the government requires that farms use only animals instead of machinery
when planting and harvesting corn. This will result in a(n):
A) decrease in the supply of corn.
B) decrease in the quantity supplied of corn.
C) increase in the supply of corn.
D) increase in the quantity supplied of corn.
If the capital stock remains ________ while labor ________, the new labor will likely
be ________ productive than the old labor because of diminishing returns.
A) fixed; increases; more
B) fixed; decreases; more
C) variable; decreases; less
D) fixed; decreases; less
If prices are slow to adjust, then it is possible that:
A) there will be a demand surplus.
B) there will be a supply shortage.
C) some markets will not be in equilibrium.
D) all of the above are true.
A downward shift of the planned expenditure curve resulting from an increase in the
price level corresponds to
A) an increase in aggregate demand.
B) a decrease in aggregate demand.
C) a movement down along the aggregate demand curve.
D) a movement up along the aggregate demand curve.
Recall Application 3, "The Financial System Under Stress: September 11, 2001,"
to answer the following questions:
According to the application, which of the following was not a tool used by the Fed to
avert a financial crisis in 2001?
A) the Fed increased the Federal Reserve Float
B) the Fed purchased government securities
C) the Fed allowed banks to borrow more
D) the Fed took over major US banks
Recall the Application about Jasper Johns and house painting to answer the
following question(s). In this Application, it is assumed that Johns can earn $5,000
per day by painting works of art, and therefore should hire a house painter who
charges $150 per day, and takes 10 days, to paint his house. At what point should
Jasper Johns consider painting his own house?
A) if the house painter charges $500 per day and takes 20 days to paint the house
B) if the house painter charged $2,500 per day, since that is excessive for painting a
house
C) if his earnings dropped to $1,000 per day
D) if the house painter charged more for 10 days worth of work than Johns could earn
each day
Which of the following would not be counted as part of M1?
A) demand deposits
B) traveler's check
C) money market accounts
D) currency
Recall the Application about how society will cope with increased demands for
entitlement programs to answer the following question(s). This Application addresses
the impact of increasing life expectancy and aging populations on the costs of
government entitlement programs such as Social Security, Medicare and Medicaid, and
examines several possible solutions to the potential problem.
According to this Application, which of the following is NOT a strategy that the
government can pursue to address the rising cost of federal retirement and health care
programs?
A) reform the health care system to encourage more competition to reduce health care
expenditures
B) increase the age at which retirement benefits begin to be paid
C) borrow from the public to finance the programs
D) promote government saving and investment to increase real GDP over time
The problem that can arise in a barter system where one person may not have what the
other person desires is called:
A) double coincidence of wants.
B) market failure.
C) medium of exchange.
D) bank run.
When the economy's unemployment rate equals the natural rate, which type of
unemployment is assumed to be zero?
A) cyclical unemployment
B) structural unemployment
C) frictional unemployment
D) frictional and structural unemployment
