If you are faced with the choice of receiving $500 today or $800 6 years from today,
you will be indifferent between the two possibilities if the interest rate is 8.148 percent.
a. True
b. False
Which of the following is the correct expression for finding the present value of a
$1,000 payment one year from today if the interest rate is 6 percent?
a. $1,000 (1.06)
b. $1,000(1.06)
c. $1,000/(1.06)
d. None of the above is correct.
Suppose the price index was 100 in 2014, 109 in 2015, and the inflation rate was lower
between 2015 and 2016 than it was between 2014 and 2015. This means that
a. the price index in 2016 was lower than 109.0.
b. the price index in 2016 was lower than 118.9.
c. the price index in 2016 was lower than 118.0.
d. the inflation rate between 2015 and 2016 was lower than 1.09 percent.
Credit cards are
a. a medium of exchange.
b. counted as part of M2 but not as part of M1.
c. important for analyzing the monetary system.
d. All of the above are correct.
Economists
a. agree that the costs of moderate inflation are low and that the cost of reducing
inflation is small.
b. agree that the costs of moderate inflation are low, but disagree about the cost of
reducing inflation.
c. disagree about the costs of moderate inflation, but agree that the cost of reducing
inflation is small.
d. disagree about the costs of moderate inflation and disagree about the cost of reducing
inflation.
If the U.S. has a trade deficit and the nominal exchange rate depreciates, then other
things the same
a. the trade deficit rises and net capital outflow rises.
b. the trade deficit rises and net capital outflow falls.
c. the trade deficit falls and net capital outflows rise.
d. the trade deficit falls and net capital outflows fall.
Table 4-8
RefertoTable4-8.If these are the only three sellers in the market, then an increase in the
market price from $6 to $12 will increase quantity supplied by
a. 12 units.
b. 24 units.
c. 36 units.
d. 48 units.
Assume the analysis of Friedman and Phelps is correct, so that the following equation is
valid: Unemployment rate = Natural rate of unemployment – a (Αctual inflation – x).In
this equation,
a. ais a parameter that measures how much actual inflation responds to expected
inflation.
b. a= 0 at the point of intersection of the short-run and long-run Phillips curves.
c. xis the expected rate of inflation.
d. All of the above are correct.
If a dollar buys more corn in the U.S. than in Mexico, then
a. the real exchange rate is greater than 1; a profit might be made by buying corn in the
U.S. and selling it in Mexico.
b. the real exchange rate is greater than 1; a profit might be made by buying corn in
Mexico and selling it in the U.S.
c. the real exchange rate is less than 1; a profit might be made by buying corn in the
U.S. and selling it in Mexico.
d. the real exchange rate is less than 1; a profit might be made by buying corn in
Mexico and selling it in the U.S.
In the United States in the late 1970s, nominal interest rates were high and inflation
rates were very high. As a result, real interest rates were
a. very high.
b. high.
c. low, but never negative.
d. low, and in some years they were negative.
Figure 2-7
Refer to Figure2-7. If this economy devotes all of its resources to the production of
engines, then it will produce
a. 0 engines and 40 tvs.
b. 10 engines and 35 tvs.
c. 40 engines and 0 tvs.
d. 40 engines and 40 tvs.
Consider Noah’s decision to go to college. If he goes to college, he will spend $80,000
on tuition, $15,000 on room and board, and $4,000 on books. If he does not go to
college, he will earn $22,000 working in a store and he will spend $13,000 on room and
board. Noah’s cost of going to college is
a. $99,000.
b. $103,000.
c. $108,000.
d. $121,000.
If the economy is initially at long-run equilibrium and aggregate demand declines, then
in the long run the price level
a. and output are higher than in the original long-run equilibrium.
b. and output are lower than in the original long-run equilibrium.
c. is lower and output is the same as the original long-run equilibrium.
d. is the same and output is lower than in the original long-run equilibrium.
An increase in government purchases is likely to
a. decrease interest rates.
b. reduce money demand.
c. crowd out investment spending by business firms.
d. All of the above are correct.
Figure 3-9
Refer to Figure3-9. If the production possibilities frontiers shown are each for two
days of production, then which of the following combinations of bolts and nails could
Uzbekistan and Azerbaijan together not make in a given 2-day production period?
a. 9 bolts and 122 nails
b. 21 bolts and 98 nails
c. 36 bolts and 56 nails
d. 47 bolts and 18 nails
Table 23-1
The table below contains data for Chereaux for the year 2015.
RefertoTable23-1. The market value of all final goods and services produced within
Chereaux in 2015 is
a. $214.
b. $200.
c. $204.
d. $230.
Table 24-3
The table below pertains to Iowan, an economy in which the typical consumer’s basket
consists of 4 pounds of pork and 3 bushels of corn.
RefertoTable24-3. If 2013 is the base year, then the inflation rate in 2013 was
a. 24.7 percent.
b. 54.0 percent.
c. 32.8 percent.
d. 38.0 percent.
Table 4-9
RefertoTable4-9.Which combination would produce an increase in equilibrium
quantity and an indeterminate change in equilibrium price?
a. A
b. B
c. C
d. D
Which of the following statements is correct?
a. A high-risk person is more likely to apply for insurance than a low-risk person
because a high-risk person would benefit more from insurance protection.
b. A low-risk person is more likely to apply for insurance than a high-risk person
because a low-risk person would benefit more from insurance protection.
c. Insurance companies can fully guard against the problem of adverse selection, but
they cannot fully guard against the problem of moral hazard.
d. Insurance companies can fully guard against the problem of moral hazard, but they
cannot fully guard against the problem of adverse selection.
When Microsoft establishes a distribution center in France, U.S. net capital outflow
a. increases because Microsoft makes a portfolio investment in France.
b. decreases because Microsoft makes a portfolio investment in France.
c. increases because Microsoft makes a direct investment in capital in France.
d. decreases because Microsoft makes a direct investment in capital France.
According to the long-run Phillips curve, in the long run monetary policy influences
a. both the inflation rate and the unemployment rate.
b. the inflation rate but not the unemployment rate.
c. the unemployment rate but not the inflation rate.
d. neither the unemployment rate nor the inflation rate.
Jai Li just lost her job, and she has not yet started looking for a new one. The Bureau of
Labor Statistics counts Jai Li as
a. unemployed and in the labor force.
b. unemployed but not in the labor force.
c. in the labor force but not unemployed.
d. neither in the labor force nor unemployed.
Which of the following would notbe a consequence of an increase in the U.S.
government budget deficit?
a. U.S. interest rates rise
b. U.S. net capital outflow falls
c. the real exchange rate of the U.S. dollar depreciates
d. the U.S. supply of loanable funds shifts left
Which of the following is a correct statement about production possibilities frontiers?
a. An economy can produce only on the production possibilities frontier.
b. An economy can produce at any point inside or outside a production possibilities
frontier.
c. An economy can produce at any point on or inside the production possibilities
frontier, but not outside the frontier.
d. An economy can produce at any point inside the production possibilities frontier, but
not on or outside the frontier.
Other things equal, in the short run a lower price level leads households to
a. increase consumption and firms to buy more capital goods.
b. increase consumption and firms to buy fewer capital goods.
c. decrease consumption and firms to buy more capital goods.
d. decrease consumption and firms to buy fewer capital goods.
The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to
produce furniture are called
a. human capital.
b. physical capital.
c. natural resources.
d. technological knowledge.
Use the following graph to answer the following questions.
a. How would point J be represented as an ordered pair?
b. What type of curve is this?
c. Does this curve show a positive or negative correlation between price and quantity?
d.Compute the slope of D1 between points J and L.
e. What is the slope of D1between points L and N? Why would you not have to
calculate this answer?
f. What is it called if we move from D1 to D2??
g.How do you know that the slope of D2 is the same as the slope of D1?
Which of the following statements exemplifies a principle of individual
decisionmaking?
a. Trade can make everyone better off.
b. Governments can sometimes improve market outcomes.
c. The cost of something is what you give up to get it.
d. All of the above are correct.
Figure 4-17
RefertoFigure4-17.At a price of
a. $8, there is a surplus of 6 units.
b. $5, there is neither a shortage nor a surplus.
c. $2, there is a shortage of 6 units.
d. All of the above are correct.
All U.S. paper dollars read “This note is legal tender for all debts, public and private.”
This statement represents which characteristic of US currency?
a. The U.S. operates under the gold standard.
b. U.S. paper money is commodity money.
c. U.S. paper money is fiat money.
d. U.S. paper money is a convenient store of wealth.