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If the monthly unemployment rate increase mentioned in the Application wound up
being a permanent and not temporary change, the best economic decision by the
committee would most likely be to
A) increase the money supply to stimulate the economy.
B) decrease the money supply to stimulate the economy.
C) decrease the money supply to slow the economy down.
D) not change monetary policy.
Suppose that a market for a product is in equilibrium at a price of $5 per unit. At any
price above $5 per unit
A) there will be an excess demand for the product.
B) there will be an excess supply of the product.
C) the quantity supplied of the product will be less than the quantity demanded of that
product.
D) there will be a shortage of that product.
When President Jefferson declared a self-imposed embargo on international shipping
between 1807-1809, it may be said that the U.S. came very close to:
A) autarky.
B) free trade.
C) comparative advantage.
D) specialization.
New growth theory suggests that:
A) diminishing returns can be avoided through capital deepening.
B) only new technology should be protected by patents.
C) investment in education leads to faster technological progress.
D) induced innovation is more powerful than creative destruction.
If the findings in the application are true, then if the World Bank wants to improve the
return of its infrastructure projects in countries with inefficient governments like
Zimbabwe, then it must first:
A) improve the people's right to own property.
B) discourage freedom of expression.
C) encourage the government to nationalize all industries.
D) bribe the country's politicians.
Sally works 10 hours a week, but would prefer to work more hours. According to the
BLS, Sally is classified as:
A) employed and "an individual working part time for economic reason."
B) unemployed and "an individual working part time for economic reason."
C) a discouraged worker.
D) employed but not "an individual working part time for economic reasons."
Figure 18.1 Refer to Figure 18.2. Pizzaland has a comparative advantage in the
production of:
A) tomatoes.
B) cheese.
C) both cheese and tomatoes.
D) neither cheese nor tomatoes.
Bananas and apples are substitutes. When the price of bananas rises and a technological
advance in apple production occurs at the same time:
A) the equilibrium price of apples rises and the equilibrium quantity of apples falls.
B) the equilibrium price of apples rises and the equilibrium quantity of apples rises.
C) the equilibrium price of apples rises and the equilibrium quantity of apples might
rise or fall.
D) the equilibrium quantity of apples rises and the equilibrium price of apples might
rise or fall.
The Federal Reserve can use monetary policy to
A) change output in the long run, but not the short run.
B) change output in the short run, but not the long run.
C) change output in both the short run and the long run.
D) Monetary policy has no effect on output.
Inside lags are
A) longer for monetary policy than for fiscal policy.
B) longer for fiscal policy than for monetary policy.
C) the same for fiscal policy and monetary policy.
D) more variable for monetary policy than for fiscal policy.
When checks are exchanged between banks, the Fed oversees the banks to ensure the
appropriate funds have been transferred. This is known as
A) check kiting.
B) check clearing.
C) check floating.
D) check balancing.
Refer to Figure 11.4. Which diagram illustrates the effect of an increase in government
spending?
A) A
B) B
C) C
D) D
Figure 8.3
Refer to Figure 8.3. Which of the following will not move the economy from K1 to K3?
A) a higher depreciation rate
B) a higher saving rate
C) a lower depreciation rate
D) All of the above are correct.
Recall the Application about running a lawn-cutting business using solar-powered
equipment to answer the following question(s). The current income you would
sacrifice to start your own lawn-cutting business is part of the
A) opportunity cost of invested funds.
B) opportunity cost of starting a business.
C) cost of doing business.
D) present value of your initial investment.
