In moving along a demand curve, everything is held constant except buyers’ income.
a. True
b. False
If the government legalizes the purchase and sale of marijuana, the equilibrium quantity
would then _________ and the price would then ________ if the supply of marijuana
increased by _______ than the demand for marijuana increased.
a. fall; fall; more
b. fall; rise; more
c. rise; fall; more
d. rise; fall; less
e. fall; fall; less
Ceteris paribus, the greater the increase in the money supply, the __________ the
inflation rate, the __________ the expected inflation rate, and the __________ the
interest rate.
a. higher; higher; higher
b. lower; lower; lower
c. higher; lower; higher
d. lower; higher; lower
e. higher; lower; lower
Scarcity occurs in both wealthy societies and poor societies.
a. True
b. False
One point on a market supply curve represents $4 and 100 units quantity supplied. If
there are three suppliers, and at a price of $4 one of the suppliers supplies 23 units, then
which of the following combinations of price and quantity supplied might hold for the
other two suppliers?
a. At $4, quantity supplied could be 40 units for one supplier and 27 for the other.
b. At $4, quantity supplied could be 33 units for one supplier and 27 for the other.
c. At $4, quantity supplied could be 40 units for one supplier and 37 for the other.
d. At $4, quantity supplied could be 77 units for one supplier and 10 for the other.
e. There is not enough information to answer this question.
The Samuelson and Solow Phillips curve suggested a(n) __________ relationship
between the rate of change in __________ and the unemployment rate.
a. direct; real wage rates
b. inverse; money wage rates
c. inverse; prices
d. direct; prices
e. none of the above
Suppose we import only one good from Germany: cars.Initially, the exchange rate is
$0.60 per euro.We import 150,000 cars annually, priced at 70,000 euros each.Then the
euro rises to $0.625.Assuming the dollar value of our exports to Germany remains
constant, we will stop moving down the J-curve and €turn the corner€ to move upward
along it once we import ______________ German cars per year.
a. fewer than 150,000
b. fewer than 144,000
c. fewer than 93,750
d. more than 150,000
e. more than 156,250
For economic imperialists, economics is more of a method of analysis than a specific
field of study.
a. True
b. False
Suppose that the exchange rate between the U.S. dollar and the Mexican peso starts out
at $0.11 per peso.If the exchange rate then changes to $0.13 per peso, there will be a(n)
__________ in the quantity demanded of dollars by Mexicans, and therefore there will
be a(n) __________in the quantity supplied of pesos to the foreign exchange market.
a. decrease; decrease
b. decrease; increase
c. increase; decrease
d. increase; increase
The banking system currently holds $20 billion in required reserves and zero excess
reserves. The Fed lowers the required reserve ratio from 15 percent to 12.5 percent.
Assuming that there are no cash leakages, the resulting change in checkable deposits (or
the money supply) is approximately
a. $2.7 billion.
b. $1.5 billion.
c. $2.0 billion.
d. $12.5 billion.
e. $26.6 billion.
For Say’s law to hold in a money economy,
a. funds invested must give rise to an equal amount of funds spent.
b. funds saved must give rise to an equal amount of funds invested.
c. funds spent must give rise to an equal amount of output produced.
d. interest rates must fall when saving decreases.
e. b and c
If Real GDP is greater than Natural Real GDP, the economy is in a(n)
a. frictional gap.
b. structural gap.
c. recessionary gap.
d. inflationary gap.
Required reserves are the amount of
a. reserves a bank must hold against its deposits as mandated by the Federal Reserve.
b. cash a bank must hold against its deposits as mandated by the Federal Reserve.
c. checkable deposits a bank must hold against all other deposits as mandated by the
U.S. Treasury.
d. reserves a bank must hold against all its assets as mandated by the Federal Reserve.
Exhibit 7-1
Which of the following summations represents net domestic product?
a. GDP – $222
b. GDP – $331
c. GDP – $412
d. GDP – $295
e. GDP + $134
The marginal propensity to consume plus the marginal propensity to save is always
a. equal to zero.
b. greater than zero but less than one.
c. equal to one.
d. greater than one.
When taxes on the return to capital in a given economy are reduced, it causes firms to
employ __________ capital goods.In terms of the production function (graphed with
labor on the horizontal axis and Real GDP on the vertical axis), this then
causes____________________ which makes the LRAS curve shift ____________
resulting in ______________________.
a. less; the production function to shift downward; leftward; a shrinking economy
b. more; the production function to shift upward; rightward; economic growth
c. more; a movement up along a given production function; rightward; economic
growth
d. more; a movement down along a given production function; leftward; a shrinking
economy