The difference between microeconomics and macroeconomics is that
a. microeconomics deals with only small numbers while macroeconomics is always
dealing with numbers in the billions and trillions
b. microeconomics deals with the economy as a whole while macroeconomics deals
with individual firms
c. microeconomics is concerned with the behavior of individual decision-makers while
macroeconomics is concerned with behavior of entire economies
d. microeconomics is only useful for small countries while macroeconomics is useful
for large countries
e. microeconomics is only useful for large economies like the United States while
macroeconomics is only useful for small economies
What would be the effect on the loanable funds market of an increase in the corporate
profits tax? (Assume that the government maintains a balanced budget.)
a. The demand for funds would decrease, lowering the interest rate and leading to lower
private investment.
b. The demand for funds would increase, raising the interest rate and leading to higher
private investment.
c. Both the demand and the supply of funds would increase, lowering the interest rate
and leading to lower private investment.
d. The supply of funds would increase, lowering the interest rate and leading to higher
private investment.
e. The supply of funds would decrease, raising the interest rate and leading to lower
private investment.
Everything that consumers purchase during a period is included as part of consumption
when calculating GDP.
If prices are free to rise and fall, and supply and demand cross at a positive price,
quantity combination, neither excess demand nor excess supply can persist in a market.
The higher the price of a foreign currency, the more expensive that foreign country’s
goods and services are to individuals in the domestic economy.
Which of the following would cause a leftward shift of the supply curve for computers?
a. an increase in the price of printed circuit boards used to build computers
b. a decrease in the price of electricity
c. an increase in incomes of consumers
d. a decrease in the price of computers
e. a decrease in the size of the population
When a bank needs to increase its reserves, it will
a. call in all its loans
b. stop paying interest on its saving accounts
c. borrow money from the government
d. call in a loan or reduce new lending
e. increase the number of loans it makes
An increase in the interest rate shifts the money demand curve to the right.
The amount of wealth that an individual wishes to hold as money is determined by
a. the price level
b. the price level and real income
c. real income
d. real income and the interest rate
e. the price level, real income, and the interest rate
The chairman of the Board of Governors of the Federal Reserve System is appointed by
the Senate and approved by the President.
]If consumers become more optimistic, which of the following is the most likely in the
short run?
a. A decrease in output, a decrease in money demand, and a decrease in the interest rate.
b. An increase in output, an increase in money demand, and an increase in the interest
rate.
c. An increase in output, an increase in money demand, and a decrease in the interest
rate.
d. A decrease in output, an increase in money demand, and a decrease in the interest
rate.
e. An increase in output, a decrease in money demand, and a decrease in the interest
rate.