Which of the following is true?
a. Kremer argued that with greater population, society would generate more ideas so
that growth of real GDP per person could continue. Malthus argued that increasing
population would outstrip agricultural production.
b. Kremer argued that increases in population would reduce the amount of human and
physical capital per worker so that eventually the standard of living would decline.
Malthus argued that increases in technology would allow increased output growth so
that even with population growth, society would enjoy a higher standard of living.
c. Malthus argued that with greater population, society would generate more ideas so
that growth of real GDP per person could continue. Kremer argued that increasing
population would outstrip agricultural production.
d. Malthus argued that increases in population would reduce the amount of human and
physical capital per worker so that eventually the standard of living would decline.
Kremer argued that increases in technology would allow increased output growth so
that even with population growth, society would enjoy a higher standard of living.
Table 10-1
The table below contains data for Bahkan for the year 2010.
Refer to Table 10-1. Disposable personal income for Bahkan in 2010 is
a. $37.
b. $44.
c. $54.
d. $63.
When two variables have a negative correlation,
a. when the x-variable decreases, the y-variable decreases.
b. when the x-variable decreases, the y-variable increases.
c. when the x-variable increases, the y-variable increases.
d. More than one of the above is correct.
Which of the following lists contains, in this order, natural resources, human capital,
and physical capital?
a. For a restaurant: the land the restaurant was built on, the things the Chef learned at
Cooking School, the freezers where the chops and steaks are kept.
b. For a furniture company: wood, the company cafeteria, saws.
c. For a railroad: fuel, railroad engines, railroad tracks.
d. None of the above is correct.
Indexation refers to
a. a process of adjusting the nominal interest rate so that it is equal to the real interest
rate.
b. using a law or contract to automatically correct a dollar amount for the effects of
inflation.
c. using a price index to deflate dollar values.
d. an adjustment made by the Bureau of Labor Statistics to the CPI so that the index is
in line with the GDP deflator.
If the nominal interest rate is 5 percent and there is a deflation rate of 2 percent, what is
the real interest rate?
a. 7 percent
b. 5 percent
c. 3 percent
d. 3/5 percent
Table 7-10
Refer to Table 7-10. You want to hire a professional photographer to take pictures of
your family. The table shows the costs of the four potential sellers in the local
photography market. Which of the following graphs represents the market supply
curve?
a. c.
b. d.
If the MPC = 3/5, then the government purchases multiplier is
a. 5/3.
b. 5/2.
c. 5.
d. 15.
The length of time until a bond matures is called the
a. perpetuity.
b. term.
c. maturity.
d. intermediation.
When box office receipts are not corrected for inflation, the most popular movie of all
time is
a. Star Wars.
b. Avatar.
c. Gone With the Wind.
d. The Dark Knight.
Scenario 8-1
Erin would be willing to pay as much as $100 per week to have her house cleaned.
Ernesto’s opportunity cost of cleaning Erin’s house is $70 per week.
Refer to Scenario 8-1. If Erin pays Ernesto $80 to clean her house, Erin’s consumer
surplus is
a. $80.
b. $30.
c. $20.
d. $10.
The aggregate-demand curve shows the
a. quantity of labor and other inputs that firms want to buy at each price level.
b. quantity of labor and other inputs that firms want to buy at each inflation rate.
c. quantity of domestically produced goods and services that households want to buy at
each price level.
d. quantity of domestically produced goods and services that households, firms, the
government, and customers abroad want to buy at each price level.
According to liquidity preference theory, if the quantity of money supplied is greater
than the quantity demanded, then the interest rate will
a. increase and the quantity of money demanded will decrease.
b. increase and the quantity of money demanded will increase.
c. decrease and the quantity of money demanded will decrease.
d. decrease and the quantity of money demanded will increase.
Other things the same, which of the following would shift the supply of dollars in the
market for foreign exchange to the right?
a. foreigners want to buy more U.S. bonds
b. foreigners want to buy fewer U.S. bonds
c. foreigners want to buy more U.S. goods and services.
d. foreigners want to buy fewer U.S. goods and services.
Patents turn new ideas into
a. public goods, and increase the incentive to engage in research.
b. public goods, but decrease the incentive to engage in research.
c. private goods, and increase the incentive to engage in research.
d. private goods, but decrease the incentive to engage in research.
If saving is greater than domestic investment, then
a. there is a trade deficit and Y > C + I + G.
b. there is a trade deficit and Y < C + I + G.
c. there is a trade surplus and Y > C + I + G.
d. there is a trade surplus and Y < C + I + G.
Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the
following combinations of cookies and coffee is not currently attainable but would be
attainable if there was an improvement in overall production technology?
a. 800 dozen cookies and 150 pounds of coffee
b. 700 dozen cookies and 400 pounds of coffee
c. 500 dozen cookies and 850 pounds of coffee
d. 300 dozen cookies and 900 pounds of coffee
Figure 8-1
Refer to Figure 8-1. Suppose the government imposes a tax of P’ – P”’. The consumer
surplus after the tax is measured by the area
a. J+K+I.
b. J.
c. M.
d. L+M+Y.
Over the past 70 years, prices in the U.S. have risen on average about
a. 2 percent per year.
b. 4 percent per year.
c. 6 percent per year.
d. 8 percent per year.
The price of a bond is equal to the sum of the present values of its future payments.
Suppose a certain bond pays $50 one year from today and $1,050 two years from today.
What is the price of the bond if the interest rate is 5 percent?
a. $1,050.00
b. $1,045.35
c. $1,000.00
d. $945.35
If the number of workers in an economy doubled, all other inputs stayed the same, and
there were constant returns to scale, productivity would
a. fall to less than one-half of its former value.
b. fall, but it would still be greater than one-half of its former value.
c. stay the same.
d. rise but less than double.
The theory of purchasing-power parity implies that the demand curve for
foreign-currency exchange is
a. downward sloping.
b. upward sloping.
c. horizontal.
d. vertical.
Andre owns his own business. Oscar is an unpaid worker in his family’s business. Who
is included in the Bureau of Labor Statistics’ “employed” category?
a. only Andre
b. only Oscar
c. both Andre and Oscar
d. neither Andre nor Oscar
If a country had a trade surplus of $100 billion and then its exports rose by $40 billion
and its imports rose by $30 billion, its net exports would now be
a. $110 billion
b. $90 billion.
c. $70 billion.
d. $60 billion.
Which of the following has the highest future value?
a. $100 saved for 2 years at 10 percent interest
b. $110 saved for 2 years at 9 percent interest
c. $120 saved for 2 years at 8 percent interest
d. $130 saved for 2 years at 7 percent interest
Ruben earned a salary of $60,000 in 2001 and $80,000 in 2006. The consumer price
index was 177 in 2001 and 25 in 2006. Ruben’s 2006 salary in 2001 dollars is
a. $20,000; thus, Ruben’s purchasing power increased between 2001 and
b. $20,000; thus, Ruben’s purchasing power decreased between 2001 and
c. $64,000; thus, Ruben’s purchasing power increased between 2001 and
d. $64,000; thus, Ruben’s purchasing power decreased between 2001 and
When you calculate your true costs of going to college, what portion of your
room-and-board expenses should be included?
a. Your full room-and-board expenses should always be included.
b. None of your room-and-board expenses should ever be included.
c. You should include only the amount by which your room-and-board expenses exceed
the income you earn while attending college.
d. You should include only the amount by which your room-and-board expenses exceed
the expenses for rent and food if you were not in college.
Figure 4-19
The diagram below pertains to the demand for turkey in the United States.
Refer to Figure 4-19. All else equal, a decrease in the price of the grain fed to turkeys
would cause a move from
a. DA to DB.
b. DB to DA.
c. x to y.
d. y to x.
If the Fed increases the money supply,
a. the interest rate increases, which tends to raise stock prices.
b. the interest rate increases, which tends to reduce stock prices.
c. the interest rate decreases, which tends to raise stock prices.
d. the interest rate decreases, which tends to reduce stock prices.
In the open-economy macroeconomic model, if a country’s interest rate rises, its net
capital outflow
a. rises and the real exchange rate rises.
b. falls and the real exchange rate falls.
c. rises and the real exchange rate falls.
d. falls and the real exchange rate rises.