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Exhibit 9-5
Imagine an AD curve intersecting an SRAS curve at Point L on graph (1).Which
point(s) would this correspond to on graph (2)?
a. A or B
b. C
c. D or E
d. F
e. G
When the MPC = 0.6, the multiplier is
a. 0.40.
b. 2.50.
c. 1.67.
d. 6.00.
Producers' surplus is the difference between the price __________ receive for a good
and the __________ price for which they would have __________ the good.
a. sellers; maximum; sold
b. buyers; maximum; bought
c. sellers; minimum; sold
d. buyers; minimum; bought
Starting from short-run equilibrium, wage rates rise. What is the effect on the price
level and Real GDP in the short run?
a. The price level rises and Real GDP falls.
b. The price level falls and Real GDP rises.
c. The price level rises and Real GDP rises.
d. The price level falls Real GDP falls.
If reserves equal $29 million and vault cash equals $29 million, it follows that
a. bank deposits at the Federal Reserve equal $29 million.
b. currency in the hands of the public equals $29 million.
c. excess reserves equal $10 million.
d. bank deposits at the Federal Reserve equal $0.
e. There is not enough information to answer the question.
The largest component of national income in the United States is
a. rental income.
b. proprietors' income.
c. compensation of employees.
d. corporate profits.
e. net interest.
Look at the following data: The frictional unemployment rate is 1.5 percent, the natural
unemployment rate is 4.5 percent, and the cyclical unemployment rate is -1 percent.The
structural unemployment rate is _________ percent and the actual unemployment rate
(in this economy) is ___________ percent.
a. 6; 3.5
b. 3; 5.5
c. 3; 3.5
d. 6; 5.5
Although the possibility exists for an economy to experience stagflation, it has never
actually happened in the United States.
a. True
b. False
Between 1990 and 2003, college tuition went up 130 percent, which is__________ the
increase in the prices of housing, gasoline, and medical care.
a. slightly more than
b. less than
c. about the same as
d. considerably more than
Points inside (below) the production possibilities frontier (PPF) are
a. unattainable.
b. attainable, but productive inefficient.
c. preferable to points that lie on the PPF.
d. attainable and productive efficient.
Exhibit 38-1
The yield on bond E is approximately
a. 37.5 percent.
b. 0.38 percent.
c. 0.45 percent.
d. 5.0 percent.
A PPF can
a. shift outward but not inward.
b. shift inward but not outward.
c. shift inward or outward.
d. shift neither inward nor outward.
Which of the following statements is true?
a. If current Real GDP is greater than Natural Real GDP, the economy is in a
recessionary gap.
b. If current Real GDP is less than Natural Real GDP, the economy is in long-run
equilibrium.
c. Wages are flexible if the economy is self-regulating.
d. Wages rise but prices remain constant in long-run equilibrium.
e. All economists believe the economy is self-regulating.
Exhibit 34-7
The world price of good X is $15.Under a policy of free trade, U.S. consumers will
import ___________ units of X from abroad.
a. 50
b. 45
c. 40
d. 30
The short-run aggregate supply curve slopes upward as a result of the real balance
effect, the interest rate effect, and the international trade effect.
a. True
b. False
The economy is in the horizontal portion of the AS curve, there is a liquidity trap, and
investment spending is sensitive to changes in the interest rate. According to the
Keynesian transmission mechanism, if the money supply increases the interest rate
__________, investment spending __________, the AD curve __________ and the
price level __________.
a. falls; rises; shifts to the right; rises
b. falls; rises; shifts to the right; remains unchanged
c. does not change; does not change; does not change; does not change
d. does not change; shifts to the left; does not change; rises
e. rises; falls; left; falls
The economy suffers an adverse supply shock. As a result, in the short run Real GDP
will __________ and the price level will __________.
a. rise; rise
b. fall; fall
c. fall; remain constant
d. fall; rise
e. rise; fall
In the liquidity trap, the demand curve for investment is horizontal.
a. True
b. False
The original Dow Jones Industrial Average (DJIA) contained ____________ stocks,
while the DJIA now consists of ____________ stocks.
a. 10; 500
b. 11; 30
c. 15; 50
d. 20; 60
According to the simple quantity theory of money, an increase in the money supply will
shift the __________ curve to the right and raise __________.
a. AD; Real GDP
b. AS; the price level
c. AD; the price level
d. AS; Real GDP
e. none of the above
