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The absence of clear property rights
A) is caused by capital deepening.
B) is common in many developing nations.
C) encourages creative destruction.
D) all of the above
Currency held by the public + demand deposits + travelers checks + other checkable
deposits =:
A) M3.
B) M2 - M1.
C) M3 - M1.
D) M1.
One major lesson that we learn from the circular flow diagram is that:
A) saving must always be less than investment.
B) taxes must always be greater than government expenditures.
C) total income in the economy must always equal total spending.
D) all of the above.
A defining feature of new growth theory is that it involves economic models of growth
which account for
A) population increases.
B) technological progress.
C) political changes.
D) capital flight.
Suppose Venezuela experiences economic expansion in 2013, yet its unemployment
rate is 15 percent, and economists have estimated that the natural rate of unemployment
in Venezuela is also approximately 15 percent.. If this is the case, then for the
Venezuelan economy in 2013,
A) actual output is significantly above potential output.
B) potential output is significantly above actual output.
C) actual output is roughly equal to potential output.
D) None of the above are correct because there is no relationship between actual output
and potential output in the short run.
Which of the following is considered a liability to a bank?
A) customer deposits
B) reserves
C) the bank's loans
D) the bank's buildings and equipment
Assume that the short-run AS is upward sloping. If the government chooses to reduce
government expenditure or to increase taxes, according to the Aggregate Supply -
Aggregate Demand model:
A) the price level will fall and GDP will increase.
B) the price level will rise and GDP will increase.
C) the price level will fall and GDP will decrease.
D) the price level will rise and GDP will decrease.
Bridget wants to make an 8% real return on a loan that she is planning to make, and the
expected inflation rate during the period of the loan is 10%. She should charge a
nominal interest rate of:
A) 8%.
B) 18%.
C) 5%.
D) -2%.
According to Robert Solow, the production function should be written as
A) Y = F(K, L).
B) Y = F(K, L, A).
C) Y = F(K, A).
D) Y = F(A, L).
Figure 19.4 Refer to Figure 19.4. Which of the following will shift the supply of
pounds from to ?
A) Fewer British firms want to invest in the United States.
B) The price of U.S. bonds decreases relative to the price of British bonds.
C) More British citizens travel to the United States.
D) The inflation rate in the United States decreases relative to the inflation rate in
England.
If the value of the U.S. dollar changes from 1.4 euros to 1.2 euros, we would expect that
the United States would experience a ________ in exports and a ________ in imports.
A) rise; rise
B) fall; fall
C) rise; fall
D) fall; rise
Actual unemployment can fall below the natural rate of unemployment due to
A) structural unemployment.
B) negative cyclical unemployment.
C) frictional unemployment.
D) all of the above
The Phillips curve depicts a relationship between unemployment and inflation that is:
A) long term.
B) permanent.
C) temporary.
D) permanent only in the long term.
Suppose your bank pays you 5% interest per year on your savings account while prices
increase by 3% per year over that time. Approximately how much nominal value do you
gain by keeping $100 in the bank for a year?
A) $5
B) $2.50
C) $0
D) $2.00
Recall the Application about the causes of the Argentinean financial crisis to answer the
following question(s). During the late 1980s, Argentina suffered from hyperinflation. As
part of its financial reforms, Argentina pegged its currency to the U.S. dollar, making
pesos "convertible" into dollars. The financial and other institutional reforms worked
well in the early 1990s, but then problems developed. As the dollar appreciated sharply
on world markets after 1995, Argentina began to suffer from a large trade deficit
because its currency was pegged to the dollar. Then in 1999, Brazil devalued its
currency, putting additional pressure on neighboring Argentina. Eventually, Argentina
was forced to default on its international debt in 2002 and freeze bank accounts, and a
severe depression ensued.
According to this Application, because Argentina pegged its currency to the U.S. dollar,
the appreciation of the dollar caused a large trade deficit in Argentina. This trade deficit
meant that
A) the supply of Argentinean pesos exceeded the demand for the pesos.
B) the supply of Argentinean pesos exceeded the demand for U.S. dollars.
C) the demand for Argentinean pesos exceeded the supply of the pesos.
D) the demand for Argentinean pesos exceeded the supply of U.S. dollars.
In 2012, the U.S. population 16 years old or older was 242.6 million, the number
employed was 142.0 million, the number unemployed was 12.7 million, and the labor
force was 154.7 million. The labor-force participation rate in 1999 was ________ %.
A) 63.8
B) 19.1
C) 58.5
D) 69.0
Which of the following is true about inside and outside lags in monetary policy?
A) Inside lags are shorter than outside lags.
B) Outside lags are shorter than inside lags.
C) Inside lags are equally as long as outside lags.
D) There are no inside lags or outside lags in monetary policy.
