If a bank has $100,000 in checkable deposits, reserves of $20,000, and no excess
reserves, then the required reserve ratio is:
a. 10 percent.
b. 20 percent.
c. 25 percent.
d. 30 percent.
e. 50 percent.
Which of the following will not shift the aggregate demand curve to the right?
a. Consumers becoming more optimistic about the future.
b. An increase in government spending.
c. Business optimism increases.
d. Consumers become pessimistic about the future.
According to the equation of exchange, if V = 5, P = 100, and Q = 10, the M is:
a. 20.
b. 10.
c. 500.
d. 1,000.
e. 200.
If Sam is willing to pay $50 for one good X, $30 for a second, $20 for a third, $8 for a
fourth, and the market price is $10, then Sam’s consumer surplus is:
a. $10.
b. $40.
c. $70.
d. $100.
Exhibit 17-1 Inflation and unemployment rates
The graph in Exhibit 17-1 indicates
a(n):
a. direct relationship.
b. quadratic relationship.
c. exponential relationship.
d. inverse relationship.
e. hyperbolic relationship.
Other things being equal, the effects of an increase in the price of crackers on the
market for soup is represented by a(n):
a. downward movement along the demand curve for soup.
b. upward movement along the demand curve for soup.
c. rightward shift in the demand curve for soup.
d. leftward shift in the demand curve for soup.
An individual who is employed part time, but is looking for a full-time job, is classified
as:
a. frictionally unemployed.
b. cyclically unemployed.
c. structurally unemployed.
d. employed.
When economists say goods are scarce, they mean:
a. consumers are too poor to afford the goods and services available.
b. consumers are unwilling to buy goods unless they have very low prices.
c. goods are generally freely available from nature in most countries.
d. the desire for goods and services exceeds our ability to produce them with the limited
resources available.
The pre-Keynesian or classical economic theory viewed the long-run aggregate supply
curve for the economy to be:
a. horizontal at the full-employment level of real GDP.
b. positively sloped at the full-employment level of real GDP.
c. vertical at the full-employment level of real GDP.
d. backward bending at the full-employment level of real GDP.
During periods of hyperinflation, which of the following is the most likely response of
consumers?
a. Save as much as possible.
b. Spend money as fast as possible.
c. Invest as much as possible.
d. Lend money.
Which of the following will most likely occur during the recessionary phase of a
business cycle?
a. Real GDP rises, and the unemployment rate falls.
b. Real GDP declines, and the rate of inflation rises.
c. The sales of most businesses decline, and the unemployment rate rises.
d. Inflation rises, and employment/population ratio falls.
Incorporation of expectations into economic decision making indicates that in the long
run:
a. inflation relates directly to unemployment.
b. inflation is inversely related to unemployment.
c. the Phillips curve is vertical at the natural rate of unemployment.
d. high unemployment is a primary cause of inflation.
‘˜If the marginal propensity to consume (MPC) is 0.80, and if policy makers wish to
increase real GDP $200 billion, then by how much would they have to change taxes?
a. -$240 million.
b. -$200 million.
c. -$180 million.
d. -$50 million.