If one variable declines as the other variable declines, the two variables are negatively
related.
The origin of a graph is the intersection of the two axes, where the value of both
variables is zero.
The term “crowding out” refers to increases in government spending which affect
private investment spending.
The Keynesian aggregate supply curve moves up if output is below its potential.
A trade surplus occurs when a country’s exports exceed that country’s imports.
If the exchange rate is 0.8 euro per dollar, one dollar is equal to 1.25 euros
In the long run, higher taxes will lead to a lower price level and a lower level of real
GDP.
Recall the Application about how to estimate the shifts in the natural rate of
unemployment to answer the following question(s).
Recall the Application. If the natural rate of unemployment has been underestimated
and is actually higher than is commonly perceived, reducing the unemployment rate to
the perceived natural rate will tend to
A) increase anticipated inflation.
B) decrease anticipated inflation
C) increase unanticipated inflation.
D) decrease unanticipated inflation.
Recall the Application about the increase in purchases of hybrid vehicles to answer
the following question(s).
According to the Application, one factor which was responsible for roughly one-third of
hybrid vehicles purchased in 2007 was an increase in the price of gasoline. The increase
in sales due to higher gasoline prices describe the economic concept of
A) using assumptions to simplify.
B) ceteris paribus.
C) marginal thinking.
D) rational self interest.
Assume the stock of capital is held constant. Table 7.1
Refer to Table 7.1. Output is increasing at
A) an increasing rate.
B) a constant rate.
C) a diminishing rate.
D) a negative rate.
Table 3.2
Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table
3.2 shows how much of each good Jesse and April can paint in one hour. Which of the
following is true?
A) April has a comparative advantage in painting kites but not snowboards.
B) April has a comparative advantage in painting snowboards but not kites.
C) April has a comparative advantage in painting both goods.
D) April does not have a comparative advantage in painting either good.
In macroeconomics, the ‘short run” denotes the time period:
A) when some prices are sticky.
B) less than one year.
C) when all prices fully adjust.
D) within the same fiscal year.
A tax system that discourages savings hurts long-run growth prospects because:
A) the trade balance deteriorates.
B) investment spending decreases.
C) consumption spending remains constant.
D) the federal budget turns into surplus.
Figure 14.5 Refer to Figure 14.5. Assume the interest rate equals 8%. If the money
supply shifts exogenously from to , what can the Fed do to bring the money
market back to equilibrium at ?
A) lower the discount rate
B) sell bonds
C) lower the reserve requirement
D) raise the fed funds rate
The nominal interest rate is always ________ than the real interest rate when inflation
is positive.
A) greater
B) equal
C) less
D) equal or less
Voluntary export restraints:
A) have the same effect as an import ban.
B) are illegal under the WTO rules.
C) violate the spirit of international trade agreements.
D) all of the above
In the simple Keynesian cross model with no government or foreign sectors, the value
of the multiplier is defined as
A) 1/MPC.
B) 1/(1-MPC).
C) 1/(MPC-1).
D) 1/(MPC+1).
As the population of the United States becomes older, which component of the Federal
Spending would increase the most?
A) entitlements and mandatory spending
B) discretionary spending
C) defense spending
D) net interest
An outside lag is
A) a lag in implementing policy.
B) the period of time it takes for policies to work.
C) a policy aimed at increasing GDP.
D) a policy aimed at reducing GDP.
Which of the following is the most likely complement for hamburgers?
A) soda
B) beef
C) hamburger buns
D) All of the above are complements.
Which of the following factors influence the position of the long-run aggregate supply
curve?
A) the supply of money
B) government spending
C) taxes
D) the level of full-employment output
Suppose the government has a $440 billion budget deficit. If the government borrows
$330 billion to finance this deficit and finances the rest by printing money, the amount
of new money created will be
A) $90 billion.
B) $110 billion.
C) $440 billion.
D) $770 billion.
The government can facilitate the transfer of unskilled workers to high-skilled jobs by:
A) increasing tariffs to help unskilled workers.
B) increasing tariffs to speed the development of jobs requiring skilled labor.
C) providing assistance for education and training for unskilled workers.
D) laying off skilled workers to provide jobs for unskilled workers.
What is the chain-weighted price index for GDP in the base year?
A) 0
B) 1
C) 100
D) The answer depends on the price index for the current year.
Explain the difference between U.S. GDP and U.S. GNP.
Explain what effect a decrease in the money supply would have on the exchange rates
of an economy.
Different people eat different amounts of food when they go to buffet restaurants, even
though they all pay the same price. Explain how this relates to the marginal principle.
Explain why money is neutral in the long run.
What is dumping and why would firms engage in it?
Explain the logic of the multiplier effect.
What does an increase in prices in retails stores do to the real value of the money you
earn as wages?
Explain how an open market purchase will affect bond prices.
Explain what happens to the equilibrium real wage when the firms makes investments
to increase the capital stock.
What is the Consumer Price Index (CPI)?