Assuming all excess reserves are loaned out, if the reserve ratio is 8 percent, the money
multiplier will be equal to
A) 2.
B) 8.
C) 12.5.
D) 16.67.
Figure 4.6
Figure 4.6 illustrates a set of supply and demand curves for a product. When the market
moves from point A to point B, there has been:
A) an increase in supply and an increase in demand.
B) an increase in supply and an increase in quantity demanded.
C) an increase in quantity supplied and an increase in demand.
D) an increase in quantity supplied and an increase in quantity demanded.
If a change in government spending causes “crowding in” in an open economy, which
of the following might increase in addition to consumption and investments?
A) unemployment
B) net exports
C) stock of capital
D) supply and demand
Table 3.1
Table 3.1 illustrates Willy and Blythe’s hourly production for apples and carrots. Based
on the table, Blythe’s opportunity cost of 1 apple is:
A) 1 carrot.
B) 4 carrots.
C) 6 carrots.
D) 1/3 carrot.
If you want to purchase a new sailboat in two years for $9,000, how much would you
presently need to have in your bank account to have $9,000 in two years? Assume your
bank account pays 3 percent interest.
A) $8,484
B) $8,613
C) $8,738
D) $8,822
If each extra driver on the road makes every other drivers commute last one minute
longer and there are 600 drivers on the road, then one extra driver costs society:
A) 1 hour extra in commuting time.
B) 10 hours extra in commuting time.
C) 100 hours extra in commuting time.
D) 10 extra minutes in commuting time.
Recall Application 3, “Civil Liberties and the Efficiency of Government,” to answer the
following questions:
According to the application, country’s civil liberty includes which of the following?
A) freedom of expression
B) right to own property
C) freedom of religion
D) All of the above are part of a country’s civil liberty.
_______________________
Suppose:
C = 100 + .75 (y-T)
I = 200
G = 300
T = 300
_______________________
Table 11.5
Refer to Table 11.5. The equilibrium income in this economy is:
A) 1500.
B) 2000.
C) 2400.
D) 1600.
Figure 4.5 Figure 4.5 illustrates the supply of guitars. An increase in the price of
rosewood, which is used to make guitars, would most likely cause a movement from:
A) point B to point C.
B) point B to point A.
C) S1 to S0.
D) S1 to S2.
Dumping occurs when a firm
A) charges a higher price to a foreign market than either the price charged in its home
market or the production costs.
B) generates toxic waste when producing export goods and then dumps the waste in the
ocean.
C) stops selling to a foreign market due to excessive tariffs.
D) charges a lower price to a foreign market than either the price charged in its home
market or the production costs.
In fiscal policy, the outside lags:
A) take a long time because changes in taxes and government spending require
approval from Congress and the president.
B) take a long time because macroeconomic data take time to gather and can be
unreliable.
C) usually take a much shorter time than inside lags.
D) A and B are both correct.
Daily Output of Japan and U.S.
Table 18.2 Refer to Table 18.2. Possible terms of trade
between the U.S. and Japan are:
A) 1 stereo for 8 tractors.
B) 1 tractor for 3 stereos.
C) 1 stereo for 1/3 tractor.
D) 1 tractor for 1/3 stereo.
Recall the Application about the price of Big Macs in China and around the world to
answer the following question(s).
The following table is taken from the Application. For several years, The Economist has
measured the prices of Big Macs throughout the world and compared the price
differences to exchange rates.
According to the table, the price of Big Macs converted to U.S. dollars varies widely
around the world. This shows that Big Mac pricing does NOT follow the theory of
A) purchasing power parity.
B) supply and demand.
C) real versus nominal prices.
D) Ricardian equivalence.
If prices increase by 4 percent and wages increase by 8 percent, the:
A) real wage has not changed.
B) nominal wage has not changed.
C) nominal wage has increased by 4 percent.
D) real wage has increased.
Recall the Application about the government of Mexico City repainting highway lane
lines to transform a 4-lane highway into a 6-lane highway to answer the following
question(s).
If the government converted the highway from 4 lanes into 6 lanes, then using the
regular method of calculating percentages, the percentage increase would have been
________ percent. If the government converted the highway from 6 lanes into 4 lanes,
then using the regular method, the percentage increase would have been ________
percent.
A) 40; 40
B) 50; 33
C) 100; 50
D) 33;33
Steven lives in a big city where there is a shortage of parking. He has a parking spot in
his driveway where he parks his car. Which of the following statements is most correct?
A) Steven has a lower opportunity cost of owning a car than his neighbor, who must
rent a parking spot.
B) The opportunity cost of using the spot is zero, because Steven owns the house.
C) The opportunity cost of using the parking spot is the price he could charge someone
else for using the spot.
D) The opportunity cost depends on how much Steven’s mortgage payment is.
Figure 11.1
Refer to Figure 11.1. For the economy in general, which of the following points
correspond to an equilibrium?
A) a
B)
C) c
D) a and d
Recall the Application about European soccer stars choosing to play for clubs in
countries with lower tax rates to reduce their taxes to answer the following question(s).
A study conducted by economists Henrik Jacobsen Kleven, Camille Landais,and
Emmanuel Saez found that top tax rates and tax breaks do matter when soccer stars
choose where to locate.
Recall the Application. If country A has a lower overall income tax rate than country B,
and labor can freely and easily move between the two countries, real wages in country
A will tend to ________ and employment in country A will tend to ________.
A) increase; increase
B) decrease; increase
C) increase; decrease
D) decrease; decrease