The horizontal investment curve used to derive the TE curve implies that investment is
a. directly related to Real GDP.
b. indirectly related to Real GDP.
c. independent of Real GDP.
d. sometimes directly and sometimes indirectly related to Real GDP, depending upon
whether it is planned capital or planned inventory investment.
Juan lost his job as a nuclear physicist working for a defense contractor.He can not find
a job because no firms in the defense industry or any other industry are hiring people
with his skills.Juan is ______________ unemployed.
a. frictionally
b. cyclically
c. structurally
d. naturally
If company Z is receiving a government subsidy, the government is taking money from
____________ and giving it to company Z.If company Z is getting a tax deduction
(instead of receiving a subsidy) then company Z is ______________________.
a. taxpayers; paying more in taxes than it would without the tax deduction
b. taxpayers; subsidizing the taxpayers
c. Congress; paying more in taxes than it would without the tax deduction
d. taxpayers; paying less in taxes than it would without the tax deduction
If the minimum wage law sets a wage floor below the equilibrium wage in the market
for unskilled labor, then the
a. minimum wage will create a surplus of unskilled labor.
b. minimum wage will create a shortage of unskilled labor.
c. minimum wage will not impact the unskilled labor market.
d. unskilled labor market will change, but we cannot be certain how.
Some economists argue that the recent relatively high rate of unemployment has
resulted in part from the fact that a part of the workforce has not made the adjustment to
new technologies.
a. True
b. False
Exhibit 16-3
The economy is at point C. If a decrease in aggregate demand is correctly anticipated in
the short run, new classical theory would predict
a. no movement from point C.
b. immediate movement to point C’.
c. immediate movement to point B.
d. immediate movement to point A.
According to the real business cycle theory, business cycle contractions are generally
caused by
a. the self-interest of politicians.
b. decreases in business investment.
c. decreases in the growth rate of the money supply.
d. decreases in the economy’s capacity to produce.
e. all of the above
Stating that income elasticity of demand for potatoes equals 0.15 is equivalent to stating
that if income
a. decreases by 10 percent, potato purchases decrease by 1.5 percent.
b. increases by 10 percent, potato purchases increase by 15 percent.
c. decreases by 1.5 percent, potato purchases decrease by 10 percent.
d. increases by 15 percent, potato purchases decrease by 10 percent.
e. none of the above
Exhibit 35-5
Based on the information provided in this table, between Monday and Tuesday, the U.S.
dollar ____________ against the Thai baht and the baht _____________ against the
U.S. dollar.
a. appreciated; appreciated
b. depreciated; appreciated
c. appreciated; depreciated
d. depreciated; depreciated
Which of the following is not a prediction of the theory on baseball caps and cheating?
a. More people will wear baseball caps on test days than on lecture days.
b. More people will wear baseball caps for multiple choice tests than for essay tests.
c. More people will wear baseball caps when students sit close to each other in class
and are taking a test than when students sit far apart from each other and are taking a
test.
d. b and c
e. none of the above
Exhibit 1-2
Based on the data provided in this table,if these data were plotted in a two-variable
diagram the result would be a ______________ sloping ____________________.
a. downward; (nonlinear) curve.
b. downward; (straight) line.
c. upward; (nonlinear) curve.
d. upward; (straight) line.
e. none of the above
The economy is in a recessionary gap, there is incomplete crowding out, and
government implements expansionary fiscal policy. It follows that
a. Real GDP will fall.
b. the AD curve will shift to the right.
c. the price level will fall.
d. the recessionary gap will necessarily be completely eliminated.
e. b and d
Which of the following is good evidence against the classical view of Say’s law?
a. Investment does not always rise as interest rates fall.
b. Consumption falls by the amount that saving increases.
c. Exports are usually greater than imports.
d. People save more at higher interest rates than lower interest rates.
e. none of the above
Something that motivates or encourages people to take an action is referred to as a(n)
a. utility.
b. abstract.
c. market.
d. incentive.
Exhibit 15-1
Keynesians are often accused of having an “inflationary bias.” This is due at least in
part to their advocacy of expansionary monetary policy when they believe it is needed
to take the economy from point
a. B to point C.
b. B to point A.
c. D to point C.
d. A to point B.
If a bank’s assets are $500 million and its liabilities are $380 million, then its net worth
(bank capital) is ____________________.If the bank’s assets then rise by 6 percent at
the same time that its liabilities rise by 5 percent, the percentage change in the bank’s
net worth will be approximately _______________ percent.
a. $440 million; 10.2
b. $120 million; 1.2
c. $100 million; 11.2
d. $120 million; 9.2
In the textbook, economics is defined as the science of
a. money and business.
b. choices.
c. scarcity.
d. price.
e. individuals’ actions.
A quota raises the price of the product on which the quota has been placed, decreases
consumers’ surplus, increases producers’ surplus, and generates tariff revenue for the
government.
a. True
b. False
The multiplier process following a drop in autonomous spending is
a. just as powerful as for a rise in autonomous spending.
b. more powerful than for a rise in autonomous spending.
c. less powerful than for a rise in autonomous spending.
d. nonexistent, because the multiplier applies only to a rise in autonomous spending.