Exhibit 8-3
A shift in aggregate demand from AD1 to AD2could have been the result of
a. a decrease in the price level.
b. an increase in the price level.
c. a decrease in interest rates (which was not prompted by a change in the price level).
d. an increase in interest rates (which was not prompted by a change in the price level).
Corporate profits can be broken into three categories: dividends, undistributed profits,
and corporate profits taxes.
a. True
b. False
Exhibit 6-2
How many unemployed persons are there in year 4?
a. 80 million
b. 100 million
c. 150 million
d. 350 million
e. 400 million
Expansionary monetary policy _______________ Real GDP ______________ in an
open economy than in a closed economy.
a. raises; more
b. raises; less
c. lowers; more
d. lowers; less
Jose has one evening in which to prepare for two exams and can employ one of two
possible strategies:
The opportunity cost of receiving a 94 on the economics examis __________ points on
the statistics exam.
a. 79
b. 17
c. 11
d. 90
Normative economics is concerned with
a. value judgments.
b. opinions.
c. cause-effect relationships.
d. observations that can be proved.
e. both a and b
Given the following data, what is the distance from the origin to the point where the
total expenditures (TE) curve cuts the vertical axis?
C = $800 + 0.85Yd
I = $350
G = $420
a. $1,570
b. $1,150
c. $1,220
d. $770
e. $1,220.85
Can a change in the price level change aggregate demand?
a. Yes, as the price level rises, aggregate demand falls.
b. Yes, but only under the condition that the real balance effect is operational.
c. No, only a change in a factor other than the price level can change aggregate demand.
d. No, a change in the price level can only change aggregate supply.
e. none of the above
Which of the following statements is false?
a. The Dow Jones Industrial Average went down by 40 percent during the decade of the
1930s.
b. Based on data from the period between 1926 and 2004, the probability of having a
positive return on an investment in the stocks contained in the Dow Jones Industrial
Average would have been 97.1 percent if the stocks had been held for 10 years.
c. When reading the stock market page of a newspaper, if the column marked “Div.” is
blank, it means that the company does not currently pay out dividends.
d. A stock that yields 4 percent is better than a stock that yields 5 percent, all else being
the same.
Some economists believe that because the government ______________ discouraged
workers as unemployed, the unemployment rate is biased ________________.
a. counts; upward
b. counts; downward
c. does not count; upward
d. does not count; downward
A political candidate running in a two-person race is likely to occupy
a. an extreme end of the political spectrum and hope that his or her opponent will
gravitate toward the middle so that he or she can then claim that his or her opponent has
flip-flopped.
b. the middle of the political spectrum and label his or her opponent as an extremist
(either liberal or conservative).
c. a position somewhere between the middle of the political spectrum and an extreme
end so that he or she can move either way shortly before the election.
d. one extreme end of the political spectrum early in the race and the other extreme end
near the end of the race.
In 2011, the top 25 percent of income earners in the U.S. (by the size of their taxable
incomes) paid about __________ percent of the total federal income taxes.
a. 25
b. 30
c. 54
d. 65
e. 86
According to John Taylor, during the period 2002-early 2006 the Fed set its federal
funds rate target _____________ the rate that would have existed had the Fed set its
target using the Taylor rule.
a. below
b. above
c. equal to
d. sometimes below and sometimes above
In the definition of GDP, the words “total market value” refer to total
a. dollar value at base prices.
b. dollar value at current prices.
c. subjective value.
d. objective value.
e. a and d
If V is constant, the rate of growth of M that is consistent with a stable price level is
a. zero.
b. the rate of growth of PQ.
c. the rate of growth of Q.
d. the expected rate of inflation.
e. none of the above
With a constant opportunity cost between goods A and B, the PPF for goods A and B
would
a. be a straight line.
b. be a bowed-outward line.
c. be a bowed-inward line.
d. not exist.
The U.S. Congress passed a stimulus bill in February 2009 to help remove the economy
from a recessionary gap. This is an example of the use of
a. expansionary monetary policy.
b. contractionary monetary policy.
c. contractionary fiscal policy.
d. expansionary fiscal policy.
International trade (a key component of globalization) has been linked to lower prices
in numerous studies.
a. True
b. False