Which of the following could shift the labor supply curve and increase employment?
a. An increase in the number of firms
b. An increase in income tax rates
c. Increased spending on welfare programs
d. Increased federal funding for education
e. A decrease in income tax rates
If demand is perfectly inelastic,
One of the main reasons that Malthus’ prediction of repeated wars and famines did not
come true is
a. the government’s intervention in the economy
b. the implementation of an income tax to raise money for governmental spending
c. increases in the supply of labor
d. continuing technological change
e. changes in planned investment spending
Refer to Figure 16-2. Suppose a supply shock shifts the aggregate supply curve from
AS1to AS2, and decreases output below full employment. If the Fed then decreases the
money supply, it will
a. stabilize the price level, but cause a further decline in output
b. return output to its full-employment level, but at the expense of an increase in the
price level
c. increase both output and the price level
d. stabilize the price level and return output to its full-employment level
e. decrease the price level and shift the aggregate demand curve to the right until output
returns to its full-employment level
The supply curve for a foreign currency typically
a. is horizontal
b. is vertical
c. slopes downward
d. slopes upward
e. none of the above.
Which of the following is an example of productive inefficiency?
If the elasticity of supply is much greater than the elasticity of demand, a subsidy
awarded to demanders will
Which of the following will decrease if the Fed sells bonds?
a. autonomous consumption.
b. business investment.
c. real GDP.
d. none of the above.
Given the following information, what would be the value of M1?
a. $400 billion
b. $100 billion
c. $425 billion
d. $425 billion
e. $1,175 billion
The price elasticity of demand measures the responsiveness of quantity demanded to
changes in price.
Banks can create
a. income
b. power
c. wealth
d. money
e. capital stock
Establishing a unit of value and establishing a standard means of payment are two
functions of a monetary system.
In perfect competition
The main tradeoff to be considered when judging pro-growth policies is
a. foregone current consumption versus the current benefits of technological progress
b. foregone current consumption versus the future benefits of technological progress
c. foregone future consumption versus the future benefits of technological progress
d. foregone future consumption versus the current benefits of technological progress
e. government surpluses versus deficits in the future
The cumulative total of the federal government’s budget deficits has been greater than
the total of its surpluses.
Countercyclical fiscal policy can
a. only be employed in reaction to an existing recession
b. only be employed in reaction to an existing boom
c. be employed to prevent a potential recession or boom or in reaction to an existing
recession or boom
d. only be employed to prevent a potential boom
e. only be employed to prevent a potential recession