Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Transfer payments are excluded from GDP.
The Mexican financial crisis of 1994 was due to international investors' loss of
confidence in the country.
If the actual interest rate in the money market is higher than the equilibrium interest
rate, there would be an excess supply of money.
Classical economics is often associated with Say's law, the doctrine that 'supply creates
its own demand."
As a lender of last resort, the Fed makes loans to any investor who loses money in the
stock market.
The rate at which units of one product can be exchanged for units of another product is
called the terms of trade.
If consumer preference for a product increases, this will cause the equilibrium price of
the product to go down, and the equilibrium quantity of the product to go up.
If the reserve ratio is 0.3 and a deposit of $1,000 is made to the bank, the bank can lend
out $700.
The "long-run neutrality of money" is when the increase of the supply of money has no
effect on the real interest rates, investment or output.
Negative relationships are also referred to as inverse relationships.
If the consumption function is C = 100 + 0.6Y, then the multiplier is:
A) 6.
B) .6.
C) 1/6.
D) 2.5.
There is a positive relationship between two variables if
A) they move in opposite directions.
B) they move in the same direction.
C) one variable changes and the other does not.
D) neither variable moves.
The unemployment rate equals:
A) labor force/population.
B) unemployed/employed.
C) (employed - unemployed)/labor force.
D) (labor force - employed)/labor force.
Figure 9.6 Refer to Figure 9.6. Suppose the equilibrium is at point A. An oil embargo
which raises the price of oil would move the equilibrium to:
A) point D.
B) point E.
C) point F.
D) point H.
Milton Friedman, along with other monetarists, pioneered research on the link between:
A) money and real GDP.
B) money and hyperinflation.
C) money and unemployment.
D) money, nominal income and inflation.
In 2002, President Bush imposed a tariff on imported steel in order to protect domestic
steel producers. What was the reason why the tariff ended?
A) the threat of retaliatory tariffs by Europe
B) the threat of a possible recession in the U.S.
C) the improved profitability of domestic steel firms
D) the decrease in demand for steel by U.S. industries
Figure 4.4
Figure 4.4 illustrates the demand for guitars. A successful advertising campaign to sell
guitars would bring about a movement from:
A) point B to point C.
B) point B to point A.
C) D1 to D0.
D) D1 to D2.
Recall the Application about the effect of global warming on economic growth to
answer the following question(s).
According to this Application, a one degree Celsius rise in temperature
A) increases poor countries' exports.
B) decreases poor countries' exports.
C) increases rich countries' exports.
D) decreases all countries' exports.
Figure 11.2
Refer to Figure 11.2. Which consumption function has the largest marginal propensity
to consume?
A)
B)
C)
D) cannot be determined from the figure
An increase in the price level will result in a:
A) shift the aggregate expenditure line upwards.
B) shift the aggregate expenditure line downwards.
C) movement along the the aggregate demand curve upwards.
D) movement along the the aggregate demand curve downwards.
In the long run, the amount of output that the economy can produce will depend on:
A) the supply of labor and capital.
B) the money supply.
C) the nominal interest rate.
D) the price level.
Depreciation is
A) what is left over from total new private investment after use for a year.
B) the total amount of private investment purchases, whether new or previously
existing.
C) the total amount of new private investment purchases.
D) the wear and tear on private investment.
Richard runs a pizza delivery restaurant. List the three basic types of decisions
economics studies and give an example from Richard's restaurant.
Explain how expectations can be self-fulfilling in contributing to inflation.
What is convergence? How is it related to the principle of diminishing returns?
What is the difference between a 'shift in the supply curve" and a "movement along the
supply curve"?
What is the difference in how GDP is determined in the short run and in the long run?
Economists generally agree that increases in the growth rate of the money supply
increase inflation and that inflation is undesirable. Given this, why have there been
hyperinflations?
Which line is steeper: the 45 degree line or the consumption function?
Explain what effect an increase in the marginal propensity to save will have on the
slope of the demand line and on the size of the multiplier.
Briefly explain how a change in the personal income tax rate affects aggregate demand.
