Who owns a commercial bank?
a. Its depositors
b. Its stockholders
c. Lenders
d. Savers
e. The Federal Reserve
The long-run Phillips curve is downward-sloping.
Households make their savings available to borrowers through
a. resource markets
b. the loanable funds market
c. the labor market
d. the taxes
e. spending
Inflation
a. hurts society by imposing additional opportunity costs
b. is generally harmful, but has the benefit of reducing opportunity costs
c. makes it easier for us to comparison shop
d. benefits society by causing people to make use of resources that would have
otherwise gone to waste
e. benefits society because by making people better consumers, they start to buy only
those consumer goods they really need
What major historical event led to the most significant challenge to classical economic
thinking?
a. The war on poverty
b. The American Revolution
c. World War II
d. The Great Depression
e. The oil shocks of the 1970s
Goodyear produces tires for automobiles, 50,000 in all. Suppose 40,000 go on new cars
and are sold as part of each car, while the other 10,000 are produced as replacement
tires and are sold individually. How many tires would be counted in current GDP?
a. 50,000, because everything produced is counted
b. 40,000 because only the ones on new cars are counted
c. 10,000 because 40,000 will be counted in the value of the new cars
d. 0 because they are all intermediate goods
e. 10,000 because they are the only ‘œfinal’ goods and services in the total
Credit cards
a. are considered money because they are a means of payment
b. are not considered money and thus are not of importance to the monetary authority
c. are not considered money but are important because they may affect how much
people hold in M1 and M2
d. are counted in the money supply as part of M3
e. are considered money when held by the public
Assume Japan must forego producing 60 computers for each automobile it produces.
Moreover, the United States can produce one automobile if it forgoes producing 80
computers. Which of the following is true?
a. The United States has a lower opportunity cost of producing automobiles.
b. The United States has a comparative advantage in producing automobiles.
c. Japan has a comparative advantage in producing computers.
d. No trade will occur between Japan and the United States.
e. Japan has a lower opportunity cost of producing automobiles.
Commercial banks that are members of the Federal Reserve System actually choose
some of the directors of the 12 Federal Reserve District banks.
An unstable inflation rate
a. always redistributes real income from lenders to borrowers.
b. always redistributes real income from borrowers to lenders.
c. adds to the risk of borrowing and lending and interferes with long-run financial
planning.
d. makes goods and services too expensive.
e. always redistributes real income from taxpayers to the government.