Suppose a major computer virus struck the nation’s computers and all hard drives were
erased. What would happen in the labor market?
a. The real wage would increase and so would employment.
b. The real wage would not change, but employment would decrease.
c. The real wage would increase and employment would decrease.
d. The real wage would decrease and so would employment.
e. The real wage would decrease and employment would increase.
Which of the following would shift the aggregate demand curve to the right?
a. Increases in government purchases, investment spending, autonomous consumption,
taxes, or the money supply
b. Increases in government purchases, investment spending, autonomous consumption,
or the money supply
c. Decreases in government purchases, investment spending, autonomous consumption,
taxes, or the money supply
d. Increases in government purchases, investment spending, autonomous consumption
or taxes
e. Decreases in government purchases or investment spending, and increases in
autonomous consumption, taxes, or the money supply
To achieve economic efficiency, a pure public good
In a Mexican factory, each worker can produce 1/8 of a vase or 1/16 of a statue per
hour. If there are 400 workers at the factory, the opportunity cost of one vase is
a. 2 statues
b. 8 statues
c. 1/2 of a statue
d. 16 statues
e. 1/16 of a statue
Which of the following is the best example of physical capital used to produce a
textbook?
To cause the interest rate to fall, the Fed can
a. decrease the money supply
b. stabilize the money supply to increase investor confidence
c. decrease the price of bonds
d. increase the money supply
e. increase the demand for money
Which of the following describes a trade deficit?
a. Exports plus imports
b. Exports divided by imports
c. Exports multiplied by imports
d. Exports exceed imports
e. Imports exceed exports
Why do negative supply shocks present such a difficulty for the Federal Reserve?
a. the Fed can choose to fight the rising price level, but this will result in lower
unemployment.
b. the Fed can choose to fight the rising unemployment, but this will result in an even
lower price level.
c. the Fed can choose to fight the falling unemployment, but this will result in an even
higher price level.
d. the Fed can choose to fight the rising unemployment, but this will result in an even
higher price level.
e. the Fed can choose to fight the rising unemployment, but this will result in higher
taxes.
Economic growth is defined as a long-run increase in an economy’s
a. resources
b. employment rate
c. total output of goods and services
d. level of profits
e. money supply
For each watch Switzerland produces, it gives up the opportunity to produce 50 pounds
of cheese. Germany can produce one watch at a cost of 100 pounds of cheese. Which of
the following is true?
a. The opportunity cost of producing watches is greater in Switzerland.
b. The opportunity cost of producing cheese is greater in Switzerland.
c. The opportunity cost of producing cheese is the same in both countries.
d. It is impossible to compare costs because the two countries use different
technologies.
e. In the two countries combined, the cost of producing one watch is 150 pounds of
cheese.
If the Fed conducts an open market sale of bonds, which of the following will happen?
a. The interest rate will decrease, the aggregate expenditure line will shift upward and
the aggregate demand curve will shift rightward
b. The interest rate will decrease, the aggregate expenditure line will shift downward
and the aggregate demand curve will shift rightward
c. The interest rate will increase, the aggregate expenditure line will shift downward
and the aggregate demand curve will shift leftward
d. The interest rate will decrease, the aggregate expenditure line will shift upward and
the aggregate demand curve will shift leftward
e. The interest rate will increase, the aggregate expenditure line will shift downward
and the aggregate demand curve will shift rightward.
The Federal Reserve banks make loans to member banks at a special interest rate called
the discount rate.
In a perfectly competitive labor market, no individual firm’s employment decision can
affect the market wage because
Bill can cook dinner in 45 minutes and mow the lawn in 1.5 hours. Eileen can cook
dinner in 1.5 hours and mow the lawn in 2 hours. Which of the following statements is
correct?
