If the natural rate of unemployment falls,
a. both the short-run and long-run Phillips curves shift left.
b. the short-run Phillips curve shifts left, the long-run Phillips curve is unchanged.
c. the short-run Phillips curve is unchanged, the long-run Phillips curve shifts right.
d. the short-run and the long-run Phillips curves shift right.
Scenario 16-2.
The Monetary Policy of Tazi is controlled by the country’s central bank known as the
Bank of Tazi. The local unit of currency is the taz. Aggregate banking statistics show
that collectively the banks of Tazi hold 300 million tazes of required reserves, 75
million tazes of excess reserves, have issued 7,500 million tazes of deposits, and hold
225 million tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits
and so all money is on deposit at the bank.
Refer to Scenario 16-2. Suppose the Bank of Tazi purchased 50 million tazes of Tazian
Treasury Bonds from the banks. Suppose also that both the reserve requirement and the
percentage of deposits held as excess reserves stay the same. By how much does the
money supply change?
a. 625 million tazes
b. 1,000 million tazes
c. 1,250 million tazes
d. None of the above is correct.
From 2001 to 2004 the U.S. budget went from surplus to deficit. According to the open
economy macroeconomic model, this change should have
a. increased U.S. interest rates and increased the real exchange rate of the dollar.
b. increased U.S. interest rates and decreased the real exchange rate of the dollar.
c. decreased U.S. interest rates and increased the real exchange rate of the dollar.
d. decreased U.S. interest rates and decreased the real exchange rate of the dollar.
Figure 2-8
Panel (a) Panel (b)
Refer to Figure 2-8, Panel (a). The opportunity cost of moving from point K to point L
is
a. 0 cups of coffee.
b. 1 donut.
c. 2 donuts.
d. 4 cups of coffee.
Mike and Sandy are two woodworkers who both make tables and chairs. In one month,
Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs.
Given this, we know that the opportunity cost of 1 chair is
a. 1/5 table for Mike and 1/3 table for Sandy.
b. 1/5 table for Mike and 3 tables for Sandy.
c. 5 tables for Mike and 1/3 table for Sandy.
d. 5 tables for Mike and 3 tables for Sandy.
Kristi and Rebecca sell lemonade on the corner. It costs them 9 cents to make each cup.
On a certain day, they sell 40 cups, and their producer surplus for that day amounts to
$12.40. Kristi and Rebecca sold each cup for
a. 36 cents.
b. 40 cents.
c. 45 cents.
d. 52 cents.
In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that
people hold only deposits and no currency, and that banks hold no excess reserves, then
the reserve requirement is
a. 14 percent.
b. 12.5 percent.
c. 8 percent.
d. None of the above is correct.
The CPI was 172 in 2007, and the CPI was 46.5 in 1982. If your parents put aside
$1,000 for you in 1982, then how much would you have needed in 2007 in order to buy
what you could have bought with the $1,000 in 1982?
a. $270.35
b. $1,255.00
c. $2,698.92
d. $3,698.92
Table 15-3
2010 Labor Data for Adults (age 16 and older) in Meditor
Refer to Table 15-3. What is the adult unemployment rate in Meditor?
a. 4.2 percent
b. 6.25 percent
c. 6.7 percent
d. 10 percent
The Council of Economic Advisers
a. was created in 1776 and consists of three members and a staff of several dozen
economists.
b. was created in 1776 and consists of thirty members and a staff of a dozen economists.
c. was created in 1946 and consists of three members and a staff of several dozen
economists.
d. was created in 1946 and consists of thirty members and a staff of a dozen economists.
Figure 9-15
Refer to Figure 9-15. Producer surplus with the tariff is
a. G.
b. C + G.
c. A + C + G.
d. A + B + C + G.
Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his
purchase. Ray’s willingness to pay is
a. $13,000.
b. $105,000.
c. $118,000.
d. $131,000.
Which of the following is not correct?
a. Evaluating statements about how the world should be involves values as well as
facts.
b. Positive statements can, in principle, be confirmed or refuted by examining evidence.
c. Normative statements can be judged using data alone.
d. Deciding what is good or bad policy is not just a matter of science.
A 2009 article in The Economist noted that
a. recent research has allowed economists to estimate the values of fiscal multipliers
with a great deal of precision.
b. research on multipliers indicates that multipliers for permanent tax cuts tend to be
smaller than multipliers for temporary tax cuts.
c. most of the evidence on multipliers for government spending is based on changes in
military expenditures.
d. All of the above are correct.
Which of these activities will most likely impose an external cost?
a. Betty plants flowers in her garden.
b. Bonnie gets a flu vaccine.
c. Bridget drives her car after having too much alcohol to drink.
d. Becky buys a new flat screen television.
Table 10-5
A hypothetical country of Lahland produces only movies and popcorn. Quantities and
prices of these goods for the last several years are shown below. The base year is 2009.
Prices and Quantities
Refer to Table 10-5 What was this country’s nominal GDP in 2009?
a. $7,600
b. $9,100
c. $9,500
d. $10,500
Higher saving is associated with
a. a larger capital stock and a higher standard of living.
b. a larger capital stock but not a higher standard of living.
c. a higher standard of living but not a larger capital stock.
d. neither a higher standard of living nor a higher capital stock.
You have a bond that entitles you to a one-time payment of $10,000 one year from now.
The interest rate is 10 percent per year. How much is the bond worth today?
a. $9,090.91
b. $10,000.00
c. $8,264.46
d. $9,523.81
Assume the market for pork is perfectly competitive. When one pork buyer exits the
market,
a. the price of pork increases.
b. the price of pork decreases.
c. the price of pork does not change.
d. there is no longer a market for pork.
Which of the following countries achieved higher economic growth, in part by
mandating a reduction in population growth?
a. Great Britain
b. China
c. Australia
d. France
Who in the adult population is counted as employed in U.S. labor statistics?
a. people who are temporarily absent from their job and people who work without pay
in a family member’s business
b. people who are temporarily absent from their job but not people who work without
pay in a family member’s business
c. people who work without pay in a family member’s business but not people who are
temporarily absent from their job
d. neither people who are temporarily absent from their job nor people who work
without pay in a family member’s business
Suppose that furniture factory worker are unionized. If these workers decide not to be
unionized,
a. the quantity of furniture factory workers demanded will rise. The supply of workers
in other industries will also rise.
b. the quantity of furniture factory workers demanded will rise. The supply of workers
in other industries will fall.
c. the quantity of furniture factory workers demanded will fall. The supply of workers
in other industries will rise.
d. the quantity of furniture factory workers demanded will fall. The supply of workers
in other industries will also fall.
According to many economists, government restrictions on ticket scalping do all of the
following except
a. inconvenience the public.
b. reduce the audience for cultural and sports events.
c. waste police officers’ time.
d. keep the cost of tickets to all consumers low.
Scenario 9-2
For a small country called Boxland, the equation of the domestic demand curve for
cardboard is
,
where represents the domestic quantity of cardboard demanded, in tons, and
represents the price of a ton of cardboard.
For Boxland, the equation of the domestic supply curve for cardboard is
,
where represents the domestic quantity of cardboard supplied, in tons, and again
represents the price of a ton of cardboard.
Refer to Scenario 9-2. Suppose the world price of cardboard is $60. Then Boxland’s
gains from international trade in cardboard amount to
a. $145.
b. $160.
c. $210.
d. $320.
The interest rate that the Federal Reserve pays banks on the reserves they hold is called
the
a. open-market rate.
b. discount rate.
c. preference rate.
d. None of the above are correct.
Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million
bushels. When the price of wheat is $3 per bushel, farmers can sell 8 million bushels.
Which of the following statements is true? The demand for wheat is
a. income inelastic, so an increase in the price of wheat will increase the total revenue
of wheat farmers.
b. income elastic, so an increase in the price of wheat will increase the total revenue of
wheat farmers.
c. price inelastic, so an increase in the price of wheat will increase the total revenue of
wheat farmers.
d. price elastic, so an increase in the price of wheat will increase the total revenue of
wheat farmers.
Fretonia and Libstien are the same except Fretonia has a larger capital stock. Both
countries undertake policies that raise their saving rates to the same higher level. We
would expect that
a. both countries would have permanent increases in their growth rates, but the increase
would initially be larger in Fretonia.
b. both countries would have permanent increases in their growth rates, but the increase
would initially be smaller in Fretonia.
c. both countries would have temporary increases in their growth rates, but the increase
would be larger in Fretonia.
d. both countries would have temporary increases in their growth rates, but the increase
would be smaller in Fretonia.
If an increase in inflation permanently reduced unemployment then,
a. money would not be neutral and the long-run Phillips curve would slope upward.
b. money would not be neutral and the long-run Phillips curve would slope downward.
c. money would be neutral and the long-run Phillips curve would slope upward.
d. money would be neutral and the long-run Phillips curve would slope downward.
In the open-economy macroeconomic model, the supply of loanable funds comes from
a. the sum of domestic investment and net capital outflow.
b. the sum of national saving and net capital outflow.
c. national saving.
d. net exports
Which of the following is a certificate of indebtedness?
a. stocks and bonds
b. stocks but not bonds
c. bonds but not stocks
d. neither stocks nor bonds
The inputs into production of goods and services that are provided by nature, such as
land, rivers, and mineral deposits are called
a. physical capital.
b. natural resources.
c. human capital.
d. technological knowledge.
Figure 13-1. The figure depicts a demand-for-loanable-funds curve and two
supply-of-loanable-funds curves.
Refer to Figure 13-1. What is measured along the vertical axis of the graph?
a. the nominal interest rate
b. the real interest rate
c. the quantity of investment
d. the quantity of saving