Which of the following is a definition of the consumption function?
a. A functional relationship between real consumption spending and real disposable
income
b. A functional relationship between real consumption spending and the interest rate
c. A functional relationship between real consumption spending and wealth
d. A functional relationship between real consumption spending and total spending
e. A functional relationship between real consumption spending and net taxes
Assume the typical shapes of the demand and supply curves. If both demand and supply
increase in a competitive market, the equilibrium price will
a. always rise
b. always fall
c. rise if demand increases more than supply increases
d. fall if demand increases more than supply increases
e. remain unchanged
If we know that the slope of the consumption function is 0.6, then we know that if real
disposable income increased by $1,000 billion, real consumption spending would
a. increase by $60 billion
b. increase by $1,000 billion
c. increase by $600 billion
d. increase by $6,000 billion
e. decrease by $6 billion
Given the following information, what would be the value of M1?
a. $400 billion
b. $100 billion
c. $425 billion
d. $425 billion
e. $1,175 billion
A price floor on corn would have the effect of
a. creating a surplus regardless of the level at which the price floor is set
b. creating a surplus supply when the floor is above the equilibrium price
c. creating a shortage when the price floor is set below the equilibrium price
d. creating a shortage regardless of where the price floor is set
e. ensuring a more equitable distribution of the good among consumers
Refer to Figure 9-7. Everything else equal, which attainable production point will result
in the most economic growth?
a. A
b. B
c. C
d. D
e. all points would promote growth equally
The money we pay for a good or service
a. generally exceeds its opportunity cost.
b. generally equals its opportunity cost.
c. has no part in determining its opportunity cost.
d. generally equals two-thirds of its opportunity cost.
e. generally is only part of its opportunity cost.
Increases in __________ have been responsible for most of the economic growth in the
U.S. over the last 50 years.
a. imports.
b. productivity.
c. average hours.
d. the employment-to-population ratio.
e. tax revenues.
Using the table below, calculate GDP for a particular year.
Based on the above information, GDP in this year was
a. $1,450
b. $2,000
c. $2,550
d. $2,900
e. $4,000
If the demand for British pounds decreases,
a. the equilibrium price of the pound will increase
b. the equilibrium price of the pound will decrease
c. the equilibrium price of the pound will not change
d. the equilibrium price of the pound will change, but we need additional information to
predict the direction of the change
e. no one can predict what will happen
The aggregate production function is the relationship between the
a. total cost of labor and the quantity of output in the economy
b. total cost of labor and the total real cost of inputs
c. quantity of labor employed in the economy and the total quantity of output produced
d. cost of labor and the supply of labor
e. quantity of labor and the quantity of capital
Nominal federal spending is a
a. good indicator of how responsibility the federal government is
b. good indicator of the overall economy’s performance
c. measure of the public’s concern for the educational needs of the country
d. warning sign that our governmental officials are sometimes out of control
e. misleading measure of government’s effect, unless it is seen in the context of the
country’s income
The federal government’s budget been in deficit every year since 1959.
The Federal Open Market Committee is important because
a. its deliberations are extremely private
b. it sets the course for the nation’s money supply
c. it is composed of people who are most knowledgeable about the economy
d. it discusses unemployment and inflation
e. of its influence on fiscal policy
Government debt and interest payments on that debt
a. are problems if they grow faster than GDP
b. are unrelated in the short run
c. are unrelated in the long run, but not in the short run
d. generally grow faster than government spending
e. contributed to the crisis experienced by the U.S. economy in the late 1990s
From the 1960s through the 1990s military expenditures increased as a percentage of
GDP and they were a major influence in the continued growth of government outlays.
Specialization leads to greater production than is otherwise possible
a. only if different workers have different natural abilities
b. only if production is organized within business firms
c. under capitalism, but not under communism
d. even if different workers have identical natural abilities
e. under communal ownership, but not under capitalism
The aggregate supply curve is
a. the sum of all individual firms’ supply curves.
b. vertical in the short run.
c. downward sloping in the short run.
d. upward sloping in the short run.
e. upward sloping both in the short run and the long run.
How would an increase in the required reserve ratio affect banks’ ability to create
money?
a. Banks will be able to create more money because of the decrease in excess reserves.
b. Banks will be able to create more money because of the increase in the demand
deposit multiplier.
c. It will have no effect on banks’ ability to create money.
d. It will reduce banks’ ability to create money by forcing them to hold more reserves.
e. It will reduce the banks’ ability to create money by increasing excess reserves.