Gold and silver have historically been the most common form of commodity money.
a. True
b. False
If the credit market is close to being a competitive market, an interest rate ceiling
imposed by usury laws will bring misallocations of resources.
a. True
b. False
The velocity of circulation is the
a. speed at which the multiplier takes effect.
b. speed at which money circulates.
c. speed at which tax cuts get spent.
d. rate at which money creation takes place.
Usually, increased government spending for war increases inflationary pressures. The
principal reason that inflation occurred during the Vietnam War and not during World
War II was the existence, during World War II, of
a. full employment.
b. government ownership of factories.
c. full production.
d. wage and price controls.
e. high levels of patriotism.
Investment is the amount by which ____ grows.
a. portfolio
b. income
c. earnings
d. capital
A monopolist faces a horizontal demand schedule.
a. True
b. False
How does scarcity affect the range of possible choices that decision makers face?
a. It narrows the choice to a single option.
b. It narrows the range of choices.
c. It increases the possible methods for solving problems.
d. It clarifies the choices by highlighting the best solutions.
e. It simplifies the choices and therefore widens the range.
Figure 6-6
An article in the Wall Street Journal reports that “most cable TV operators are aware
that cable is price sensitive, and there comes a point where people won’t pay the price.”
Which demand curve in Figure 6-6 best illustrates this situation?
a. 1
b. 2
c. 3
d. 4
All actions and purchases, even those of wealthy people, involve a sacrifice.
a. True
b. False
The Organization of Petroleum Exporting Countries is a
a. professional trade association for oil companies.
b. cartel.
c. consortium for joint ventures in oil exploration.
d. loose collection of democracies that promote international pipelines.
A corporation seeking to expand, and looking for the least risky financing option would
choose:
a. stocks
b. bonds
c. retained earnings
d. a bank loan
“Plowback” is a preferred source of financing a corporation because
a. it is fairly easy, compared to issuing stocks.
b. it is not subject to double taxation.
c. selling bonds involves the high cost of money.
d. stock markets are subject to random walks.
Richard loses his job at the railroad due to a downturn in general business conditions.
He is experiencing
a. structural unemployment.
b. cyclical unemployment.
c. seasonal unemployment.
d. frictional unemployment.
Figure 19-2
Of the graphs in Figure 19-2, where the broken line represents the fixed exchange rates,
which one shows how a balance of payments deficit could be reduced through a
recession in Japan?
a. 1
b. 2
c. 3
d. 4
The original goal of the Fed’s founders was to prevent the
a. supply of money from increasing too rapidly.
b. supply of money from decreasing during downturns.
c. possibility of hyperinflation.
d. possibility of interest rates falling too rapidly.
The economy’s self-correcting mechanism to eliminate a recessionary gap relies on
a. falling interest rates that shift the aggregate demand curve outward.
b. falling wage rates that shift the aggregate supply curve outward.
c. rising wage rates that shift the aggregate supply curve inward.
d. increases in the price level that shift the aggregate supply curve inward.
An increase in the U.S. price level (foreign prices held constant) will cause a leftward
shift in the aggregate demand curve.
a. True
b. False
Part of the good economic performance of the United States in the 1990s can be
explained by a rightward-shifting aggregate supply curve.
a. True
b. False
Disposable income is obtained by
a. subtracting personal income taxes from personal income.
b. subtracting personal income taxes from national income.
c. adding transfer payments to national income.
d. adding transfer payments to personal income.
In which case will the transition from short run to long run involve the shortest
chronological time?
a. a service that provides temporary secretaries to companies
b. an automobile factory
c. a farm
d. an electric utility
If an increase in quantity demanded of a product reduces the quantity demanded of
another, then the two goods are said to be substitutes.
a. True
b. False
A production possibilities curve always slopes downward to the right because resources
a. are not scarce.
b. have no opportunity cost.
c. are freely available.
d. are limited.
e. are not related to outputs.
The long-run industry supply curve in perfect competition is derived from the
a. short-run industry supply curve which shifts as new firms enter the industry.
b. short-run industry supply curve which shifts as old firms exit the industry.
c. freedom of firms from sunk costs so that new cost curves become long-run curves.
d. All of the above reasons.
The aggregate supply curve shows for each price level the
a. total amount of money supply at each price level.
b. amount of frictional unemployment that will occur.
c. amount of structural unemployment that will occur.
d. quantity of goods and services that businesses are willing to produce.
Which of the following is an extreme form of risk associated with investing in a foreign
country?
a. Credit risk
b. Labor unrest
c. Expropriation
d. Immigration rules
“Common stock” is the type sold to small investors.
a. True
b. False
During the period from 1945 to 1975, the debt to GDP ratio
a. remained steady.
b. rose slightly.
c. increased rapidly.
d. fell steadily.
History has shown that over the long run, labor-saving technology has actually not
reduced employment.
a. True
b. False
Because there is a trade-off between total output and equality of income distribution,
a. greater equality of distribution will generally result in higher levels of output.
b. greater output is generally associated with more equal distribution.
c. policies designed to increase output will only succeed if distribution is more equal.
d. policies intended to expand output must necessarily fail.
e. policies designed to equalize distribution may adversely affect the size of output.
Figure 5-8
In Figure 5-8, the consumer is indifferent between the combinations of beer and wine
coolers indicated by points
a. A, C.
b. B, D.
c. C, B.
d. A, B.
According to economist Schumpeter, the first step in entrepreneurial growth is:
a. little competition
b. monopoly power
c. zero economic profits
d. creative destruction