The cost of a bachelor’s degree in philosophy equals the tuition plus the cost of room
and board.
“Ricardian equivalence” is the proposition that it does not matter whether government
expenditure is financed by taxes or by issuing debt.
If the reserve ratio is 10 percent, the money multiplier is equal to 10.
According to the theory of rational expectations, people do not make mistakes when
they form their expectations.
Two goods are complements if an increase in the price of one good leads to an increase
in demand for the other.
Net exports are total imports minus total exports.
Automatic stabilizers
A) require explicit actions by policy makers to become active.
B) work without the need for decisions from Congress or the White House.
C) magnify fluctuations in the economy.
D) increase taxes during recessions.
Recall the Application about the behavior of prices in retail catalogs to answer the
following question(s). Economist Anil Kashyap of the University of Chicago examined
the prices of 12 selected goods from L.L. Bean, REI, and The Orvis Company, Inc.
Kashyap tracked the prices from the companies’ catalogs which were reissued every six
months.Even though the catalogs listed in the Application were reissued every six
months, the prices which were tracked in these retail catalogs
A) were typically fixed for a year or more.
B) changed every month.
C) tended to fall during periods of high inflation.
D) were not listed due to low rates of inflation.
Figure 19.2
Referring to Figure 19.2, the effect of a decrease in U.S. prices is represented by a
movement from point
A) d to a.
B) to c.
C) a to d.
D) a to .
If the Japanese government enters the foreign exchange market and purchases yen to
maintain a specific exchange rate with the dollar, the dollar will ________ and the yen
will ________.
A) depreciate; depreciate
B) depreciate; appreciate
C) appreciate; depreciate
D) appreciate; appreciate
Refer to Figure 8A.1. Moving from K0 to ,
A) economic growth stops.
B) saving becomes negative.
C) capital stock continues to increase.
D) depreciation starts to decline.
From the end of 1997 through 2000, federal government debt as a percentage of GDP:
A) increased.
B) decreased.
C) became negative.
D) remained constant.
Which of the following explains why the world market may support only one or two
firms worldwide?
A) large economies of scale
B) comparative advantage
C) learning by doing
D) constant returns to scale
Suppose that you lend $1,000 to a friend and he or she pays you back one year later.
What is the opportunity cost of lending the money?
A) There is no cost.
B) the real interest rate that would have been earned on the money
C) the nominal interest rate that would have been earned on the money
D) the implicit cost of the money
A(n) ________ is a tax on an imported good.
A) tariff
B) import quota
C) voluntary export restraint
D) export quota
Recall the Application about the government of Mexico City repainting highway lane
lines to transform a 4-lane highway into a 6-lane highway to answer the following
question(s).
If a variable is 100 and then decreases to 60, then using the initial value approach its
percentage decline is:
A) -40 percent.
B) 160 percent.
C) 40 percent.
D) 50 percent.
Recall the Application about the market for meteorites to answer the following
question(s).
According to the Application, the market price of meteorites varies from a few dollars
per gram to hundreds of dollars per gram. In a market system like the market for
meteorites, prices vary due to
A) government intervention in the pricing of the products.
B) the lack of accounting rules in this market.
C) the relative scarcity, or rarity, of the product.
D) outsourcing.
For the United States, explain why the amount of output that each worker can produce
per hour has risen in the last half century.
Explain the connection between property rights and economic growth.
How do economists’ beliefs about the speed of the adjustment process affect their
recommendations about policy?
Should the Fed only have the single goal of price stability? Why or why not?
You are running a small yard maintenance business for the summer. What do you
expect to happen to the number of yards you can maintain in a day as you add workers
if you don’t purchase more capital equipment (like mowers and leaf blowers)?