Table 5.1
Refer to Table 5.1. Assume that this economy produces only two goods: Good X and
Good Y. If year 1 is the base year, the value for this economy’s real GDP in year 3 is:
A) $110.
B) $146.
C) $200.
D) indeterminate given this information.
If in the third quarter of 2012 total investment spending was $4,768 billion and
depreciation was $3,292 billion, then net investment was equal to
A) $1,476 billion.
B) $3,292 billion.
C) $4,768 billion.
D) $8,060 billion.
There is a negative relationship between two variables if the two variables:
A) are positive.
B) move in opposite directions.
C) move in the same direction.
D) are negative.
If the number of people classified as unemployed is 50,000 and the number of people
classified as employed is 250,000, what is the unemployment rate?
A) 8%
B) 8.7%
C) 16.67%
D) 20.0%
The four elements of the economic way of thinking include all of the following except:
A) economists use assumptions to make things simpler and focus attention on what
really matters.
B) economic analysis often involves variables and how they affect one another.
C) economic analysis assumes that people act irrationally and that they are not
motivated by self-interest.
D) economists often consider how a small change in one variable affects another
variable.
Discouraged workers:
A) are part of the labor force.
B) are part of structural unemployment.
C) are part of frictional unemployment.
D) are not considered as part of the labor force.
Suppose that steak is a normal good. When income increases, the equilibrium quantity
of steak will ________ and the equilibrium price of steak will ________.
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
The most basic measure of money in the U.S. is:
A) M1.
B) M2.
C) M3.
D) M4.
One of the main insights of monetarism is that:
A) sustained inflation is a monetary phenomenon.
B) the government can effectively manage aggregate demand by using its spending and
taxing powers.
C) velocity is unstable and subject to wide fluctuations.
D) inflation can continue indefinitely without the cooperation of the central bank.
If the private sector is not willing to purchase government bonds being issued to finance
a deficit, and the government’s only option is to print more money, then this will likely
cause
A) a weak stock market.
B) a lower dollar value.
C) inflation.
D) a run on borrowing.
In 1999, the U.S. population 16 years old or older was 207.8 million, the number
employed was 133.5 million, the number unemployed was 5.9 million, and the labor
force was 139.4 million. The labor-force participation rate in 1999 was ________ %.
A) 64.2
B) 67.1
C) 4.2
D) 95.8
Recall Application 3, “Debt Forgiveness?” to answer the following questions:
According to the Application, why did many home owners find themselves underwater
by 2012?
A) There was a decrease in the value of their homes.
B) There was a natural disaster.
C) There was a break in many levees across America.
D) Because the government increased the money supply to increase, causing interest
rates to drop.
Recall Application 2, “Law of Supply and Woolympics,” to answer the following
questions:
According to the Application, why might introducing sheep shearing not be an effective
policy to raise wool prices?
A) Increased sheep shearing might decrease the demand for wool.
B) Increased sheep searing might increase the demand for wool substitutes.
C) Increased sheep shearing will definitely increase the demand for wool, causing the
prices to drop.
D) Increased sheep shearing will definitely increase the supply of wool, causing the
prices to drop.
Recall Application 2, “What Have Been the Local Effects of Chinese Imports?” to
answer the following questions:
According to the Application, what effects of the Chinese imports were advantageous to
local communities?
A) lower prices for consumers
B) improved US-China relations
C) a stronger local currency
D) None of the above are correct.
In Figure 11.1, a decrease in the marginal propensity to save is represented by a change
in the consumption function from
A) to .
B) to .
C) to .
D) to .
In order for a barter transaction to be successful, there must be a
A) market for the goods.
B) high demand for a certain item.
C) double coincidence of wants.
D) federal tax law in effect.
Which of the following is an example of a contractionary fiscal policy?
A) increasing the money supply
B) decreasing the money supply
C) increasing taxes
D) decreasing taxes
Daily Output of Scotland and Poland
Table 18.1 Refer to Table 18.1. The opportunity cost of
an accordion in Poland is:
A) 2 bagpipes.
B) 1/2 bagpipe.
C) 6 bagpipes.
D) 1/3 bagpipe.
When we graph the 45 degree line, what are the labels on the x-axis and the y-axis?
A) output on the x-axis and expenditures on the y-axis
B) output on the x-axis and income on the y-axis
C) expenditures on the x-axis and output on the y-axis
D) income on the x-axis and interest rates on the y-axis
Monetizing the deficit occurs when:
A) the central bank purchases newly issued government bonds.
B) the central bank prints more money because the private sector’s money demand has
increased.
C) banks lend more dollars to the central bank.
D) banks buy more treasury bills from the US Treasury.