The Fed’s efforts to attain full employment are complicated by
a. the persistence of cyclical unemployment
b. the instability of the inflation rate
c. new legislation that attempts to avoid financial panics
d. the difficulty of determining what normal unemployment means
e. conflicting objectives among its member banks
A $1.00 increase in the price of a restaurant meal results in a drop in quantity demanded
of 5 meals. Which of the following statements is correct?
Because markets may not clear for several months or even several years, the classical
model
a. is no longer considered valuable by mainstream economists
b. has no value when explaining a situation where excess supply exists
c. is irrelevant to any discussion of a market in which excess demand exists
d. does a better job of explaining short-term fluctuations than long-run growth
e. does a better job of explaining long-run growth than short-run fluctuations
The demand curve facing a firm acts as a constraint by
Over the past thirty years in the U.S., increases in labor demand have been __________
than increases in labor supply so that wages on average have __________.
a. smaller; increased
b. larger; increased
c. smaller; decreased
d. larger; decreased
e. larger; stayed constant
If demand is perfectly inelastic, a decrease in price results in a(n)
The sign of the cross-price elasticity tells us whether two commodities are complements
or substitutes, but the size of this elasticity measure tells us
Suppose you observed firms’ inventory stocks drop by $100 billion. If you knew that
aggregate expenditure was $3,000 billion, what would GDP be?
a. $3,000 billion
b. $2,000 billion
c. $2,900 billion
d. $1,000 billion
e. $3,100 billion
The marginal propensity to consume (MPC) is
a. the change in consumption divided by the change in disposable income
b. total consumption divided by total disposable income
c. the change in disposable income divided by the change in consumption
d. total disposable income divided by total consumption
e. the change in disposable income minus the change in consumption
Which group of people would be characterized as unemployed?
a. Those who are unwilling to work
b. Those who are unable to find work
c. Those who are unable to work
d. Those who did not search for work
e. Those who are too young to work
Savings and loan associations are not a financial intermediary.
If the elasticity of supply is much greater than the elasticity of demand, an excise tax
levied on the suppliers will
At which of the following exchange rates would the quantity of British pounds
demanded be the highest?
a. $5.00 per pound.
b. $2.50 per pound
c. $3.00 per pound.
d. $1.50 per pound.
e. $2.00 per pound.
A person has a comparative advantage if
Figure 12-3 illustrates the marginal revenue product of labor and three possible labor
supply curves facing a firm that hires industrial design engineers. The firm initially is in
equilibrium at point e. Then, the cost of training rises for new industrial design
engineers. Assume that the full impact of the change in training costs is indicated by
one of the curves in the figure. After all long-run adjustments are made, this firm pays a
wage
Refer to Figure 17-3 above figure, where the current demand curve is D1. Suppose
interest rates in England drop relative to those in the United States. Which of the
following would happen?
a. The U.S. would move from point A to point B along D1.
b. The U.S. demand curve for British pounds would shift from D1to D2
c. The U.S. demand curve for British pounds would shift from D1to D3
d. The U.S. would move from point A to point C along D1.
e. The U.S. would move from point C to point B along D1.
The demand for loanable funds curve is downward sloping because
a. as the interest rate falls business firms demand fewer loanable funds
b. as the interest rate falls business firms demand more loanable funds
c. as the interest rate rises business firms demand more loanable funds
d. as the interest rate rises, the government demands more loanable funds
e. as the interest rate rises, the government demands fewer loanable funds
Which of the following is an economic cost of unemployment?
a. The extra leisure time available
b. The increase in short-run output that results in higher unemployment
c. The psychological cost of not having a job
d. The cost of having to count the unemployed
e. The opportunity cost of lost output
A zero inflation rate is not the Fed’s objective because
a. that would cause prices to rise
b. that would cause price to fall
c. it knows that it cannot attain a zero rate
d. it believes that the true rate of inflation is lower than what is measured by the
Consumer Price Index (CPI)
e. high rates of inflation may help labor markets adjust more easily
If Japan can produce each unit of steel using fewer resources than Canada uses,
a. Canada has an absolute advantage in steel production
b. Japan has a comparative advantage in steel production
c. Canada has a comparative advantage in steel production
d. Canada may have an absolute advantage in producing steel
e. Japan has an absolute advantage in steel production