If people in countries that have had persistently high inflation are skeptical about efforts
to reduce inflation, the short- run Phillips curve will remain far to the
a. left, and the sacrifice ratio will be low.
b. left, and the sacrifice ratio will be high.
c. right, and the sacrifice ratio will be low.
d. right, and the sacrifice ratio will be high.
The CPI was 172 in 2007, and the CPI was 46.5 in 1982. If your parents put aside
$1,000 for you in 1982, then how much would you have needed in 2007 in order to buy
what you could have bought with the $1,000 in 1982?
a. $270.35
b. $1,255.00
c. $2,698.92
d. $3,698.92
When a minimum-wage law forces the wage to remain above the level that balances
supply and demand, the quantity of labor supplied is lower and the quantity of labor
demand is higher than at the equilibrium wage.
a. True
b. False
Other things the same, an unexpected fall in the price level results in some firms having
a. lower than desired prices, which increases their sales.
b. lower than desired prices, which depresses their sales.
c. higher than desired prices, which increases their sales.
d. higher than desired prices, which depresses their sales.
Cash payments that companies make to shareholders are called
a. annuities.
b. dividends.
c. premiums.
d. favorables.
Toni deposited $250 into an account and one year later she had $272.50 in the account.
What interest rate was paid on Toni’s deposit?
a. 8 percent
b. 9 percent
c. 10 percent
d. None of the above is correct.
Over the last few decades, Americans have chosen to cook less at home and eat more at
restaurants. This change in behavior, by itself, has
a. reduced measured GDP.
b. not affected measured GDP.
c. increased measured GDP by the value of the restaurant meals.
d. increased measured GDP by the value added by the restaurant’s preparation and
serving of the meals.
Changes in the quality of a good
a. do not present a problem in the construction of the consumer price index.
b. present a problem in the construction of the consumer price index, and that problem
is sometimes referred to as substitutiobia.
c. are not accounted for, as a matter of policy, by the Bureau of Labor Statistics.
d. can lead to either an increase or a decrease in the value of a dollar.
Table 24-6
The table below pertains to Napandsnack, an economy in which the typical consumer’s
basket consists of 2 pillows and 15 hotdogs.
RefertoTable24-6. If the base year is 2010, then the consumer price index was
a. 83.33 in 2009, 100.00 in 2010, and 96.67 in 2011.
b. 85.56 in 2009, 100.00 in 2010, and 102.22 in 2011.
c. 85.56 in 2009, 100.00 in 2010, and 96.67 in 2011.
d. 92.22 in 2009, 99.00 in 2010, and 95.22 in 2011.
Figure 3-14
RefertoFigure3-14.Arturo and Dina would notbe able to gain from trade if Dina’s
opportunity cost of one taco changed to
a. 1/2 burrito.
b. 3/4 burrito.
c. 4/3 burritos.
d. 2 burritos.
Which of the following causes of unemployment is associated with a wage rate above
the market equilibrium level?
a. minimum-wage laws
b. unions
c. efficiency wages
d. All of the above are correct.
Market power refers to the
a. power of a single person or small group to influence market prices.
b. ability of a person or small group to successfully market new products.
c. power of the government to regulate a market.
d. importance of a certain market in relation to the overall economy.
U.S. monetary policy in the early 1980s reduced the inflation rate by more than half.
a. True
b. False
Scenario25-1. An economy’s production form takes the form Y= AF(L, K, H, N).
RefertoScenario25-1. Krepresents the quantity of
a. human capital only.
b. physical capital only.
c. human capital and physical capital combined.
d. nonrenewable natural resources.
In a simple circular-flow diagram, total income and total expenditure are
a. never equal because total income always exceeds total expenditure.
b. seldom equal because of the ongoing changes in an economy’s unemployment rate.
c. equal only when the government purchases no goods or services.
d. always equal because every transaction has a buyer and a seller.
Bank regulators impose capital requirements in order to
a. increase the amount of leverage in the economy.
b. provide an incentive for banks to hold risky assets.
c. ensure banks can pay off depositors.
d. increase the probability of a credit crunch.
Beef is a normal good. You observe that both the equilibrium price and quantity of beef
have fallen over time. Which of the following explanations would be most consistent
with this observation?
a. Consumers have experienced an increase in income, and beef-production technology
has improved.
b. The price of chicken has risen, and the price of steak sauce has fallen.
c. New medical evidence has been released that indicates a negative correlation
between a person’s beef consumption and life expectancy.
d. The demand curve for beef must be positively sloped.
Which of the following leads to an increase in net exports in the long run?
a. either a decrease in the budget deficit or imposing an import quota
b. a decrease in the budget deficit but not imposing an import quota
c. imposing an import quota but not a decrease in the budget deficit
d. neither a decrease in the budget deficit nor imposing an import quota
Figure 3-22
Refer to Figure3-22. Which of the following prices would result in an mutually
advantageous trade for Alice and Betty?
a. 100 pizzas for 100 pitchers of lemonade
b. 100 pizzas for 125 pitchers of lemonade
c. 100 pizzas for 180 pitchers of lemonade
d. 100 pizzas for 220 pitchers of lemonade
Risk aversion helps to explain various things we observe in the economy, including
a. adherence to the old adage, “Don”t put all your eggs in one basket.”
b. insurance.
c. the risk-return trade-off.
d. All of the above are correct.
Treasury Bonds are
a. both a store of value and a medium of exchange.
b. a store of value, but not a medium of exchange
c. a medium of exchange, but not a store of value.
d. neither a store of value nor a medium of exchange.
The consumer price index tries to gauge how much incomes must rise to maintain
a. an increasing standard of living.
b. a constant standard of living.
c. a decreasing standard of living.
d. the highest standard of living possible.
Shoeleather costs and menu costs are both costs of anticipated inflation.
a. True
b. False
Figure27-1. The figure shows a utility function.
RefertoFigure27-1. The utility function that is shown exhibits the property of
diminishing
a. wealth.
b. utility.
c. marginal wealth.
d. marginal utility.
If in some year real GDP was $25 billion and the GDP deflator was 68, what was
nominal GDP?
a. $2.72 billion.
b. $17 billion.
c. $36.8 billion.
d. $43 billion.
The possibility of speculative bubbles in the stock market arises in part because
a. stock prices may not depend at all on psychological factors.
b. fundamental analysis may be the correct way to evaluate the value of stocks.
c. future streams of dividend payments are very hard to estimate.
d. the value of shares of stock depends not only on the future stream of dividend
payments but also on the price at which the stock will be sold.
The interest rate falls if
a. either money demand or money supply shifts right.
b. money demand shifts right or money supply shifts left.
c. either money demand or money supply shifts left.
d. money demand shifts left or money supply shifts right.
Data for the United States traced out an almost perfect Phillips curve for much of the
a. 1960s.
b. 1970s.
c. 1980s.
d. 1990s.
As compared to a tax cut, an increase in government expenditures is likely to affect
aggregate demand
a. more quickly but is more likely to be spent on projects with little benefit.
b. more quickly and is less likely to be spent on projects with little benefit.
c. less quickly but is less likely to be spent on projects with little benefit.
d. less quickly and is more likely to be spent on projects with little benefit.
Table 4-9
RefertoTable4-9.Which combination would produce a decrease in equilibrium price
and an indeterminate change in equilibrium quantity?
a. A
b. B
c. C
d. D