In conducting their research, economists face an obstacle that not all scientists face;
specifically, in economics, it is often impractical to
a. make use of theory and observation.
b. rely upon the scientific method.
c. conduct laboratory experiments.
d. find articles or books that were written before 1900.
In 1870, the richest country in the world was
a. Germany.
b. Japan
c. the United Kingdom.
d. the United States.
Table 23-1
The table below contains data for Chereaux for the year 2015.
RefertoTable23-1. Disposable personal income for Chereaux in 2015 is
a. $190.
b. $211.
c. $130.
d. $141.
Which of the following is true concerning IRA’s, 401(k) and 403(b) plans?
a. Not everyone is eligible to put funds into them.
b. There are restrictions on the amount of funds that can be put into them.
c. Except under unusual circumstances, there are penalties for withdrawals before
retirement.
d. All of the above are correct.
In 1970, Professor Plum earned $12,000; in 1980, he earned $24,000; and in 1990, he
earned $36,000. If the CPI was 40 in 1970, 70 in 1980, and 130 in 1990, then in real
terms, Professor Plum’s salary was highest in
a. 1970 and lowest in 1980.
b. 1970 and lowest in 1990.
c. 1980 and lowest in 1970.
d. 1980 and lowest in 1990.
Apple founder Steve Jobs received patents on many of his ideas. While the patents
existed, his ideas were
a. public goods and proprietary knowledge.
b. public goods but not proprietary knowledge.
c. private goods and proprietary knowledge.
d. private goods but not proprietary knowledge.
In which of the following cases would it necessarily be true that national saving and
private saving are equal for a closed economy?
a. Private saving is equal to government expenditures.
b. Public saving is equal to investment.
c. After paying their taxes and paying for their consumption, households have nothing
left.
d. The government’s tax revenue is equal to its expenditures.
Because the CPI is based on a fixed basket of goods, the introduction of new goods and
services in the economy causes the CPI to overestimate the cost of living. This is so
because
a. new goods and services are always of higher quality than existing goods and services.
b. new goods and services cost less than existing goods and services.
c. new goods and services cost more than existing goods and services.
d. when a new good is introduced, it gives consumers greater choice, thus reducing the
amount they must spend to maintain their standard of living.
A decrease in the price of pizza will shift the supply curve for pizza to the left.
a. True
b. False
The CPI is a measure of the overall cost of the goods and services bought by a typical
consumer.
a. True
b. False
According to the short-run Phillips curve, inflation
a. and unemployment would fall if the policymakers decreased the money supply.
b. would fall and unemployment would rise if policymakers decreased the money
supply.
c. and unemployment would fall if the policymakers increased the money supply.
d. would fall and unemployment would rise if policymakers increased the money
supply.
John is an athlete. He has $120 to spend and wants to buy either a heart rate monitor or
new running shoes. Both the heart rate monitor and running shoes cost $120, so he can
only buy one. This illustrates the principle that
a. trade can make everyone better off.
b. people face trade-offs.
c. rational people think at the margin.
d. people respond to incentives.
The invisible hand’s ability to coordinate the decisions of the firms and households in
the economy can be hindered by
a. government actions that distort prices.
b. increased competition in markets.
c. enforcement of property rights.
d. too much attention paid to efficiency.
If monetary policy moves unemployment below its natural rate, both expected and
actual inflation will rise.
a. True
b. False
An increase in the money supply causes output to rise in the long run.
a. True
b. False
A bond is a
a. financial intermediary.
b. certificate of indebtedness.
c. certificate of partial ownership in an enterprise.
d. None of the above is correct.
Figure30-2. On the graph, MS represents the money supply and MD represents money
demand. The usual quantities are measured along the axes.
RefetoFigure30-2. What quantity is measured along the horizontal axis?
a. the price level
b. the real interest rate
c. the value of money
d. the quantity of money
Figure 34-11
RefertoFigure34-11.The economy is currently at point A. To stabilize output, the
president and Congress can reduce __________ and/or increase _____.
Which of the following would cause prices and real GDP to rise in the short run?
a. short-run aggregate supply shifts right
b. short-run aggregate supply shifts left
c. aggregate demand shifts right
d. aggregate demand shifts left
The Norwegian government uses $500,000 of previously obtained U.S. dollars to buy
$500,000 of police cars from a U.S. company. As a result of this exchange, by how
much, if at all, and in which direction did:
A. U.S. net exports change?
B. U.S. net capital outflow change?
Average income has been stagnant for many years in
a. Western European counties.
b. some Asian countries like South Korea and Singapore.
c. some Sub-Saharan African countries.
d. All of the above are correct.
Demand deposits are a type of
a. checking account.
b. time deposit.
c. money market mutual fund.
d. savings deposit.
In the markets for factors of production in the circular-flow diagram,
a. households provide firms with labor, land, and capital.
b. households provide firms with savings for investment.
c. firms provide households with goods and services.
d. firms provide households with revenue.
Trade policies
a. affect a country’s overall trade balance, but affect all firms and industries the same.
b. affect a country’s overall trade balance, but affect some firms or industries differently
than others.
c. do not affect a country’s overall trade balance, but affect some firms or industries
differently than others.
d. do not affect either a country’s overall trade balance or specific firms or industries.
“Leaning against the wind” is exemplified by a(n)
a. tax increase when there is a recession.
b. decrease in the money supply when there is a recession.
c. increase in government expenditures when there is a recession.
d. All of the above are correct.
An important function of the U.S. Federal Reserve is to
a. set the debt ceiling.
b. fund Congressional spending.
c. control the supply of money.
d. mint coins.
When each person specializes in producing the good in which he or she has a
comparative advantage, each person can gain from trade but total production in the
economy is unchanged.
a. True
b. False
The two loops in the circular-flow diagram represent
a. the flow of goods and the flow of services.
b. the flow of dollars and the flow of financial assets.
c. the flow of inputs into production processes and the flow of outputs from production
processes.
d. the flows of inputs and outputs and the flow of dollars.
An improvement in production technology will
a. increase a firm’s costs and increase its supply.
b. increase a firm’s costs and decrease its supply.
c. decrease a firm’s costs and increase its supply.
d. decrease a firm’s costs and decrease its supply.
In a certain economy, when income is $500, consumer spending is $375. The value of
the multiplier for this economy is 5. It follows that, when income is $510, consumer
spending is
a. $381.67.
b. $378.
c. $383.
d. $383.33.