Figure 19.1
Referring to Figure 19.1, Mexican goods will become more expensive in the United
States if the exchange rate goes from ________ to ________ pesos to the dollar.
A) 12; 11
B) 12; 13
C) 11; 13
D) 10; 13
All else equal, if autonomous consumption ________, the value of the multiplier
remains constant.
A) decreases
B) increases
C) remains constant
D) all of the above
Recall the Application about the level of real wages for laborers in England from 1350
to 1550 to answer the following question(s). In 1348, the bubonic plague, also known as
the Black Death, arrived in England from Asia and caused a long decline in total
population through the 1450s.
According to this Application, economist Thomas Malthus observed that social
maladies such as the Black Death would temporarily ________ living standards until
________ living standards led to increased population growth.
A) raise; lower
B) raise; higher
C) lower; lower
D) lower; higher
If left alone, the recession experienced by an economy will cause the short-run:
A) aggregate supply curve to shift downward until the equilibrium GDP is back at full
employment.
B) aggregate supply curve to shift upward until the equilibrium GDP is back at full
employment.
C) aggregate demand curve to shift downward until the equilibrium GDP is back at full
employment.
D) aggregate demand curve to shift upward until the equilibrium GDP is back at full
employment.
In a market system, self-interest motivates most people to
A) avoid paying insurance premiums.
B) remain self-sufficient.
C) provide products for other people.
D) rely on government central planning.
The effect of income on the demand for normal goods is such that:
A) as the price of a normal good falls, people are likely to buy less of the good.
B) as the price of a good falls, people are likely to buy more of all normal goods.
C) as the price of a good falls, people are likely to buy less of all normal goods.
D) both A and C.
If firms in the economy utilize more efficient ways of organizing economic affairs that
allow the economy to increase output without increasing inputs, then we say that the
economy is experiencing:
A) capital stock growth.
B) technological progress.
C) capital labor stock growth.
D) technological decay.
Which of the following is a microeconomic question?
A) Is it sensible for the government to subsidize college education?
B) Why do some countries grow faster than others?
C) Should Congress and the president take action to reduce the unemployment rate?
D) All of the above are microeconomic questions.
The real value of money
A) is another word for the face value.
B) reflects the purchasing power of money.
C) matters less to people than its nominal value.
D) is the same as its nominal value.
Recall the Application about Fed Chairman Ben Bernanke’s views on how to fight a
liquidity trap to answer the following question(s).
Recall the Application. If nominal interest rates are ________ and the inflation rate is
expected to be ________, the result will be negative real interest rates.
A) close to zero; low
B) close to zero; high
C) high; close to zero
D) low; close to zero
The trade deficit in Mexico did not cause a problem prior to 1994 because:
A) foreign investors willingly traded their foreign currencies for Mexican pesos to buy
Mexican securities.
B) Mexicans abroad remitted huge sums of foreign currencies back to Mexico.
C) oil prices were high and Mexico was a net exporter of oil.
D) the Mexican peso was pegged to the U.S. dollar.
The fast pace of technological progress in the U.S. is due to the fact that:
A) the U.S. spends the world’s largest percentage of GDP in funding research and
development in defense-related areas.
B) the U.S. has the world’s largest capital stock.
C) the world’s largest percentage of scientists and engineers work in the U.S.
D) the U.S. spends the world’s largest percentage of GDP in funding research and
development.
Suppose the public expects a 4 percent inflation rate, while the Federal Reserve
unexpectedly allows the money growth rate to be 5 percent. In the short run, we expect
that investment spending by firms will ________ and consumer durable spending will
________.
A) decrease; decrease
B) increase; decrease
C) decrease; increase
D) increase; increase
In Figure 11.1, an increase in consumer wealth is represented by a change in the
consumption function from
A) to .
B) to .
C) to .
D) to .
Recall Application 3, “Can Labor Market Policies Account for the Great Depression,” to
answer the following questions:
According to the application, what did Cole and Ohanian include in their business cycle
models to explain the increase in real wages during the Great Depression?
A) They included government interventions that affected the labor market.
B) They included government policies that encouraged immigration.
C) They excluded government policies that affected the labor market.
D) They excluded government policies that affected the minimum wage.
Bill’s income is $1,000 and his net taxes are $250. His disposable income is:
A) $1,250.
B) $500.
C) -$250.
D) $750.