If income elasticity of demand for food is 1.55 it follows that
a. a 10 percent rise in the price of food lowers the quantity demanded of food by 15.5
percent.
b. if income rises by 10 percent, consumption of food rises by 15.5 percent.
c. if income rises by 10 percent, consumption of food falls by 15.5 percent.
d. a 1 percent rise in the price of food decreases the quantity demanded of food by 1.55
percent.
e. none of the above
If foreign real national income rises, the U.S. ____________ curve shifts
_____________. When labor productivity increases the _____________ curve shifts
_______________.If both of these situations occur simultaneously, the combined result
would be a(n) ______________ the price level and a(n) __________________ Real
GDP in the United States.
a. AD; leftward; SRAS; rightward; decrease in; indeterminant impact on
b. AD; rightward; SRAS; leftward; increase in;indeterminant impact on
c. SRAS; leftward; SRAS rightward; indeterminant impact on; indeterminat impact on
d. AD; rightward; SRAS; rightward; indeterminant impact on; increase in
Economic fine-tuning is the (usually frequent) use of
a. monetary policy that is based on a predetermined steady growth rate in the money
supply to counteract even small undesirable movements in economic activity.
b. only fiscal policy to counteract even small undesirable movements in economic
activity.
c. monetary and fiscal policies to counteract even small undesirable movements in
economic activity.
d. fiscal policy that both balances the budget and counteracts even small undesirable
movements in economic activity.
If an economy consumes 75 percent of any increase in disposable income, then an
increase in autonomous investment of $1 billion could result in an increase in total
spending of as much as
a. $1.0 billion..
b. $4.0 billion.
c. $5.0 billion.
d. $1.8 billion.
e. $6.0 billion.
In 1900, the country with the highest per capita GDP was
a. Australia.
b. New Zealand.
c. the United States.
d. Belgium.
e. the Netherlands.
Which of the following may block the Keynesian transmission mechanism?
a. the loanable funds market
b. aggregate demand
c. interest-insensitive investment
d. the liquidity trap
e. c and d
In a divisive society the members of groups within the society see themselves as
a. working in harmony with other groups in the society.
b. equal to other groups within the society.
c. pitted against other groups in the society.
d. a and b
Exhibit 6-1
Prices rose by __________ percent from Year 2 to Year 3.
a. 3.39
b. 0.023
c. 3.28
d. 2.22
e. 2.27
If a country’s economic growth rate is 4 percent a year, approximately how many years
will it take to double its Real GDP?
a. 22.2
b. 25.0
c. 15.6
d. 17.5
e. 8.8
Exhibit 7-1
Which of the following summations represents GDP using the expenditure approach?
a. $4,150 + $751 + $850 + $300
b. $4,150 + $751 + $850 – $331 + $300
c. $4,150 + $751 + $850 + $331 + $300
d. $4,150 + $751 + $850 + $331 + $300 – $320
e. $4,150 + $751 + $850 + $331 + $300 – $320 + $111
Which of the following is false?
a. When the U.S. government imposed price ceilings on gasoline, the result was a
surplus of gasoline.
b. When the U.S. government imposed price ceilings on gasoline, the result was a
shortage of gasoline.
c. If a price ceiling is imposed below the equilibrium price in a given market, the result
is a shortage in that market.
d. First-come-first-served is a commonly used rationing device.
The situation where a country can produce a good at a lower opportunity cost than
another country is called a(n) __________ advantage.
a. permanent
b. transitory
c. absolute
d. comparative
e. natural
Exhibit 39-7
Let E1 represent the initial equilibrium in the market for X. Population growth
combined with the widely publicized results of medical research extolling the virtues of
consuming X will, ceteris paribus, result in a new equilibrium at
a. E2.
b. E3.
c. E4.
d. E5.
e. E4 or E5, depending on the extent of income elasticity of demand.
The law of demand states that price and ______________ are _____________
related,ceteris paribus.
a. demand; inversely
b. quantity demanded; inversely
c. demand; directly
d. quantity demanded; directly
e. €quantity supplied; directly
If, under a fixed exchange rate system, the dollar price of Mexican pesos is below its
equilibrium level, then the
a. dollar is undervalued.
b. peso is undervalued.
c. dollar has depreciated.
d. peso has appreciated.
e. a and c
In the simple Keynesian model, the aggregate supply curve has a horizontal segment at
levels of output below the level of natural Real GDP and a vertical segment at the level
of natural Real GDP.
a. True
b. False
One of the effects of a price floor (set above equilibrium price) is
a. a surplus.
b. higher-quality goods are produced.
c. more satisfied customers.
d. all of the above
e. none of the above
George is a gift giver and Roger is a gift recipient.George has Roger in his utility
function, but Roger does not have George in his utility function.Roger may try to get
George to __________________ George’s efficient number of gifts to (give).
a. give more gifts to him than
b. reduce the number of gifts he receives below
c. increase the number of gifts he receives beyond
d. a and b
e. a and c
“Full employment” is said to exist when the unemployment rate equals
a. zero.
b. the cyclical unemployment rate.
c. the structural unemployment rate.
d. the natural unemployment rate.
The Mexican demand for American goods leads to
a. the demand for Mexican pesos and the supply of U.S. dollars on the foreign exchange
market.
b. the demand for U.S. dollars and the demand for Mexican pesos on the foreign
exchange market.
c. the demand for U.S. dollars and the supply of Mexican pesos on the foreign exchange
market.
d. the demand for U.S. dollars and the supply of U.S. dollars on the foreign exchange
market.