Refer to Figure 8-4. Based on these graphs, what are the equilibrium interest rate and
quantity of loanable funds exchanged?
a. 5 percent and $1.4 trillion
b. 5 percent and $2.2 trillion
c. 8 percent and $1.8 trillion
d. 8 percent and $2.8 trillion
e. It cannot be determined with the information given.
A decrease in the price of a particular good, with all other variables constant, causes
a. a shift to a different demand schedule with higher quantities demanded
b. a shift to a different demand schedule with lower quantities demanded
c. a movement along a given demand curve to a lower quantity demanded
d. a movement along a given demand curve to a higher quantity demanded
e. no movement along a given demand curve unless supply also changes
Macroeconomists are able to study the entire economy by
a. ignoring much of the data available in order to reduce the number of markets that
need to be studied
b. studying only a few markets at a time
c. simply adding up all the prices and quantities in individual markets
d. aggregation which reduces the number of markets that need to be studied
e. dividing total output by the number of markets
If the marginal propensity to consume is 0.5 and disposable income decreases by
$10,000, by how much will consumption spending decrease?
a. $10,000
b. $500
c. $50
d. $5,000
e. $9,524
If government spending decreases, which of the following would occur?
a. An increase in GDP, an increase in the price level, an increase in money demand, and
an increase in the interest rate
b. An increase in GDP, a decrease in the price level, an increase in money demand, and
a decrease in the interest rate
c. A decrease in GDP, a decrease in the price level, a decrease in money demand, and a
decrease in the interest rate
d. A decrease in GDP, a decrease in the price level, an increase in money demand, and
an increase in the interest rate
e. An increase in GDP, an increase in the price level, a decrease in money demand, and
a decrease in the interest rate.
This year, Shirts Inc. purchased $1,000 worth of silk from the Silky Silkworm
Company, $100 worth of buttons from Barney’s Buttons, and $200 worth of thread from
Tracy’s Thread Company. Shirts Inc. sold the shirts they produced for $2,000. As a
result of these transactions, how much did Shirts Inc. contribute to GDP this year?
a. $700
b. $1,300
c. $2,000
d. $2,700
e. $3,300
During the contraction phase of the business cycle
a. employment and output are both rising
b. employment and output are both at a peak
c. employment and output are both at their lowest
d. employment and output are both falling
e. employment is falling and output is rising
Use the table below to calculate the CPI in 2007. Assume the base year is 2006 and the
cost of the market basket in the base year is $200.
The CPI in 2007 is
a. 100
b. 126
c. 115
d. 230
e. 200
The three-step procedure for economic analysis
a. works better in macroeconomics than in microeconomics
b. begins with characterizing the market
c. helps governments decide how to change the market equilibrium
d. focuses on goals and constraints
e. is used only in microeconomics
Using open market operations to create or reduce deposits has two advantages over
other tools. Those advantages are
a. secrecy and security
b. precision and effectiveness
c. secrecy and effectiveness
d. security and precision
e. precision and secrecy
Cyclical unemployment is a problem because
a. it reflects lost output
b. workers are not compensated have no income support at all while they are
unemployed
c. it will never reach zero
d. cyclically-unemployed individuals do not have the skills needed for available jobs
e. we do not know how to reduce it
If you lend money at a nominal interest rate of 9 percent and the inflation rate is 1
percent, what real interest rate will you earn?
a. 3 percent
b. 4 percent
c. 8 percent
d. 12 percent
e. 15 percent
The natural rate of unemployment
a. is a specific unemployment rate that can be a target for the Fed
b. changes as the inflation rate changes
c. is natural because it does not change from period to period
d. is a measure of the quality of the Fed’s performance
e. changes as the efficiency of job searches change
Using the information in Figure 2-11, Jill’s opportunity cost of fetching each additional
pail is
a. 2 boards sawed
b. 1/2 of a board sawed
c. 8 boards sawed
d. 1/5 of a board sawed
e. 10 boards sawed
Macroeconomics is the branch of economics that concerns
a. the behavior of individual actors in the economy
b. output in a specific industry
c. the overall healthof the economy
d. the federal government only
e. prices in a specific industry