If people start to use cash because of an increase in credit card fraud, which of the
following would we expect to happen under a neutralization policy?
a. The money supply would decrease, real GDP would not change, and the interest rate
would not change.
b. The money supply would increase, real GDP would not change, and the interest rate
would not change.
c. The money supply would decrease, real GDP would increase, and the interest rate
would decrease.
d. The money supply would increase, real GDP would not change, and the interest rate
would decrease.
e. The money supply would decrease, real GDP would decrease, and the interest rate
would not change.
An increase in the interest rate reduces the opportunity cost of holding money.
Which of the following would lead to a positive supply shock?
a. An increase in the money supply.
b. A decrease in taxes.
c. The discovery of a more efficient production method.
d. An increase in consumer confidence.
e. An increase in energy prices.
One guideline that should be used whenever possible in developing a model is to
a. keep the model as simple as possible
b. make the model as complex as possible so that it will be more accurate than other
models
c. rely on as many assumptions as possible
d. not be concerned about including unnecessary details
e. make certain that the model is an accurate, complete depiction of reality
The presence of involuntary part-time workers
a. causes the official unemployment rate to underestimate actual unemployment
b. causes the official unemployment rate to overestimate actual unemployment
c. has no effect on the accuracy of the official unemployment rate
d. is accounted for in the official unemployment rate
e. is insignificant in the U.S. economy and thus is no cause for concern
The standard definition of money is
a. currency + checking account balances + saving account balances
b. currency + checking account balances + travelers’ checks
c. currency + checking account balances + credit cards
d. currency + credit cards + certificates of deposit
e. currency only
One problem with changing the required reserve ratio is that
a. the policy must be kept secret from the public in order to have any effect
b. the results are unpredictable
c. the changes are usually not effective
d. banks will often ignore the changes
e. it takes too much time for these changes to affect the economy
Bread and butter are complements. A decrease in the price of bread results in a(n)
a. decrease in the supply of break
b. increase in the demand for butter
c. increase in the demand for bread
d. increase in resource prices
e. violation of the law of demand
If Americans became more pessimistic about the economy, what would happen to the
consumption-income line?
a. A rightward movement along the line
b. A leftward movement along the line
c. The entire line would shift upward
d. The entire line would shift downward
e. The entire line would shift downward and there would be a rightward movement
along the new line
If Arthur has a comparative advantage in sewing and Susan has a comparative
advantage in accounting, then
a. Arthur must have an absolute advantage in sewing
b. Arthur must have an absolute advantage in accounting
c. Susan must have an absolute advantage in sewing
d. we cannot conclude anything about absolute advantage
e. Susan must have an absolute advantage in accounting
Holding everything else constant, as the price of natural gas rises, selling natural gas
becomes
a. more profitable, and the quantity supplied falls
b. less profitable, and the quantity supplied rises
c. less profitable, and the quantity supplied falls
d. more profitable, and the quantity supplied rises
e. more profitable, but the quantity supplied does not change
The phase of the business cycle characterized by rising output is called a(n)
a. peak
b. recession
c. depression
d. trough
e. expansion