Money
a. is a perfect store of value.
b. is the most liquid asset.
c. has intrinsic value, regardless of which form it takes.
d. All of the above are correct.
Bert put $75 into an account and one year later had $100. What interest rate was paid on
Bert’s deposit?
a. 20 percent
b. 25 percent
c. 28 percent
d. None of the above is correct.
Amelia knows that she has about $105 in her bank account. She knows she earned an
interest rate of 4 percent, but she doesn’t remember how much she opened the account
with a year ago. How much did she put in?
a. $98.18
b. $100.96
c. $102.04
d. $103.24
What is the present value of a payment of $100 to be made one year from today if the
interest rate is 6 percent?
a. $105.26
b. $105.00
c. $97.24
d. $94.34
From 2001 to 2004 the U.S. budget went from surplus to deficit. According to the open
economy macroeconomic model, this change should have
a. increased U.S. interest rates and increased the real exchange rate of the dollar.
b. increased U.S. interest rates and decreased the real exchange rate of the dollar.
c. decreased U.S. interest rates and increased the real exchange rate of the dollar.
d. decreased U.S. interest rates and decreased the real exchange rate of the dollar.
Which of the following people purchased the correct asset to meet his or her objective?
a. Michelle wanted to be a part owner of Mamma Rosa’s Pizza, so she purchased a bond
issued by Mamma Rosa’s Pizza.
b. Tim wanted a high return, even if it meant taking some risk, so he purchased stock
issued by Specific Electric instead of bonds issued by Specific Electric.
c. Jennifer wanted to buy equity in Honda, so she purchased bonds sold by Honda.
d. All of the above are correct.
Figure 4-18
RefertoFigure4-18. At what price would there be an excess demand of 200 units of the
good?
a. $15
b. $20
c. $30
d. $35
A macroeconomist as opposed to a microeconomist might study the effect of
a. changes in the money supply on the inflation rate.
b. an increase in the gas tax on fuel consumption.
c. a technological advance on the natural gas industry.
d. a hurricane on prices in the orange industry.
The logic behind the tradeoff between inflation and unemployment is that high
aggregate demand puts upward pressure on wages and prices while raising output.
a. True
b. False
When box office receipts are corrected for inflation, the most popular movie of all time
is
a. StaWars.
b. Titanic.
c. GoneWiththeWind.
d. TheSoundofMusic.
Which of the following did the Fed do during the recession of 2008-2009?
a. lowered the federal funds rate and sold securities and loans
b. lowered the federal funds rate and purchased securities and loans
c. raised the federal funds rate and sold securities and loans
d. raised the federal funds rate and purchased securities and loans
People who buy newly issued stock in a corporation such as Crate and Barrel provide
a. debt finance and so become part owners of Crate and Barrel.
b. debt finance and so become creditors of Crate and Barrel.
c. equity finance and so become part owners of Crate and Barrel.
d. equity finance and so become creditors of Crate and Barrel.
Which of the following public policies would be leastlikely to result in more rapid
economic growth for a poor or developing country?
a. policies designed to promote economic development in coastal areas
b. policies designed to foster strict enforcement of property rights
c. policies designed to foster free trade
d. inward-oriented policies
When calculating the cost of college, which of the following should you probably not
include?
a. The cost of tuition
b. The cost of books required for college classes
c. The income you would have earned had you not gone to college
d. The cost of rent for your off-campus apartment.
RefertoFigure2-10,Panel(a).To gain 2 tractors by moving from point W to point V,
society must sacrifice
a. 12 sofas.
b. employment.
c. efficiency.
d. More than one of the above is correct.
The economist A.W. Phillips published a famous article in 1958 in which he showed a
a. negative correlation between the rate of unemployment and the rate of inflation.
b. positive correlation between the rate of unemployment and the rate of inflation.
c. negative correlation between the rate of unemployment and the rate of interest.
d. positive correlation between the rate of unemployment and the rate of interest
Other things the same, if the exchange rate changes from 30 Thai bhat per dollar to 25
Thai bhat per dollar, then the dollar has
a. appreciated and so buys more Thai goods.
b. appreciated and so buys fewer Thai goods.
c. depreciated and so buys more Thai goods.
d. depreciated and so buys fewer Thai goods.
A checking deposit functions as
a. a medium of exchange and as a store of value.
b. a medium of exchange, but not as a store of value.
c. a store of value, but not as a medium of exchange.
d. neither a medium of exchange nor as a store of value.
Which of the following statements is correct?
a. All items that are included in M1 are included also in M2.
b. All items that are included in M2 are included also in M1.
c. Credit cards are included in both M1 and M2.
d. Savings deposits are included in both M1 and M2.
Trade can make everybody better off because it
a. increases cooperation among nations.
b. allows people to specialize according to comparative advantage.
c. requires some workers in an economy to be retrained.
d. reduces competition among domestic companies.
The Bureau of Labor Statistics computes unemployment rates for the entire adult
population and for more narrowly defined groups.
a. True
b. False
Monetary policy
a. can be implemented quickly and most of its impact on aggregate demand occurs very
soon after policy is implemented.
b. can be implemented quickly, but most of its impact on aggregate demand occurs
months after policy is implemented.
c. cannot be implemented quickly, but once implemented most of its impact on
aggregate demand occurs very soon afterward.
d. cannot be implemented quickly and most of its impact on aggregate demand occurs
months after policy is implemented.
When a minimum-wage law forces the wage to remain above the equilibrium level, it
a. raises both the quantity of labor supplied and the quantity of labor demanded
compared to the equilibrium level.
b. raises the quantity of labor supplied and reduces the quantity of labor demanded
compared to the equilibrium level.
c. reduces the quantity of labor supplied and raises the quantity of labor demanded
compared to the equilibrium level.
d. reduces both the quantity of labor supplied and the quantity of labor demanded
compared to the equilibrium level.
Table 3-16
The following table contains some production possibilities for an economy for a given
month.
RefertoTable3-16.If the production possibilities frontier is bowed outward, then “?”
could be
a. 200.
b. 300.
c. 400.
d. 500.
Hit-It produces 320 baseball bats per day using 2 workers who each work 8 hours per
day. What is HitIt’s productivity?
a. 320 baseball bats
b. 160 baseball bats per hour
c. 20 baseball bats per hour
d. None of the above is correct.
Table 3-33
Chris and Tony’s Production Opportunities
Refer toTable 3-33Chris and Tony both produce tomatoes and pasta sauce. The table
shows their possible production per month if both work the same number of 8 hour
days. Given this information, Chris’s opportunity cost of 1 lb. of tomatoes is
a. 2 jars of sauce and Tony’s opportunity cost of 1 lb. of tomatoes is 3 jars of sauce.
b. 3 jars of sauce and Tony’s opportunity cost of 1 lb. of tomatoes is 2 jars of sauce.
c. 20 jars of sauce and Tony’s opportunity cost of 1 lb. of tomatoes is 30 jars of sauce.
d. 30 jars of sauce and Tony’s opportunity cost of 1 lb. of tomatoes is 20 jars of sauce.
If a government redesigned its unemployment insurance programs so that the
unemployed had greater incentives to quickly find appropriate jobs, then which of the
following curves would shift right?
a. the long-run Phillips curve and the long-run aggregate supply curve
b. the long-run Phillips curve but not the long-run aggregate supply curve
c. the long-run aggregate supply curve but not the long-run Phillips curve
d. neither the long-run Phillips curve nor the long-run aggregate supply curve
In the months of November and December, people in the United States hold a larger
part of their money in the form of currency because they intend to shop and travel for
the holidays. As a result, other things the same, the money supply increases.
a. True
b. False
Other things being constant, when a firm sells new shares of stock, the
a. supply of the stock increases and the price decreases.
b. supply of the stock decreases and the price increases.
c. demand for the stock increases and the price increases.
d. demand for the stock decreases and the price decreases.
The field of economics is traditionally divided into two broad subfields,
a. national economics and international economics.
b. consumer economics and producer economics.
c. private sector economics and public sector economics.
d. microeconomics and macroeconomics.
When a surplus exists in a market, sellers
a. raise price, which increases quantity demanded and decreases quantity supplied, until
the surplus is eliminated.
b. raise price, which decreases quantity demanded and increases quantity supplied, until
the surplus is eliminated.
c. lower price, which increases quantity demanded and decreases quantity supplied,
until the surplus is eliminated.
d. lower price, which decreases quantity demanded and increases quantity supplied,
until the surplus is eliminated.