If the Fed has a goal of stable real GDP and the government announces a tax cut, which
of the following would occur?
a. Money demand would not change, real GDP would not change, the interest rate
would decrease, and there would be partial crowding out.
b. Money demand would not change, real GDP would not change, the interest rate
would increase, and there would be complete crowding out.
c. Money demand would increase, real GDP would not change, the interest rate would
increase, and there would be partial crowding out.
d. Money demand would not change, real GDP would increase, the interest rate would
decrease, and there would be complete crowding out.
e. Money demand would increase, real GDP would not change, the interest rate would
decrease, and there would be complete crowding out.
Which of the following is a stock variable?
a. Saving
b. Consumption
c. Income
d. Investment
e. Money.
An example of a flow variable is
a. the number of cars in the United States today
b. the current value of your wealth
c. the population of Mexico
d. income
e. the number of sweaters a clothing store has on its shelves
In supply and demand schedules in Figure 3-10, the equilibrium price of a pair of socks
is
a. $4
b. $8
c. $6
d. $2
e. $10
Even if economic theory is based on positive analysis, economists may still disagree
with each other because
a. economists tend to have excessive self-interest
b. they ignore politics
c. they are opinionated
d. they may have different values, like everyone else
e. they try to be right all the time
If there is a strong possibility that the dollar price of the Japanese yen will fall in the
next few months, which of the following would we expect to happen right now in the
market for yen?
a. A rightward shift of the demand curve, a leftward shift of the supply curve, and an
appreciation of the yen
b. A leftward shift of the demand curve, a rightward shift of the supply curve, and an
appreciation of the yen
c. A leftward shift of the demand curve, a leftward shift of the supply curve, and a
depreciation of the yen
d. A rightward shift of the demand curve, a rightward shift of the supply curve, and an
appreciation of the yen
e. A leftward shift of the demand curve, a rightward shift of the supply curve, and a
depreciation of the yen.
If Congress voted to eliminate the minimum wage, which of the following would most
likely occur?
a. Decrease in unit costs and an upward shift of the aggregate supply curve
b. Decrease in unit costs and an upward movement along the aggregate supply curve
c. Decrease in unit costs and a downward shift of the aggregate supply curve
d. Increase in unit costs and an upward shift of the aggregate supply curve
e. Increase in unit costs and an upward movement along the aggregate supply curve.
What are the components of private consumption expenditures?
a. Services, newly-constructed homes, durable goods, and nondurable goods
b. Services, durable goods, and nondurable goods
c. Services and nondurable goods
d. Services, durable goods, and used goods
e. Services and durable goods
The equilibrium price level
a. determines by how much the AD curve shifts
b. is inversely related to the nominal wage rate
c. is influenced by the pricing behavior of all the firms in the economy
d. is unaffected by changes in resource costs
e. is the same thing as the interest rate
Refer to Figure 8-2. The economy’s potential level of output on the graph
a. cannot be determined with this information, only actual output can be found
b. is rising
c. exceeds $8 trillion
d. is less than $8 trillion
e. equals $8 trillion
A bank’s balance sheet shows
a. information about the riskiness of its loans
b. the amount of money loaned to each individual borrower
c. the amount of cash in the hands of the public
d. the number of checking accounts it maintains
e. the bank’s assets and liabilities
Which of the following properly matches the owner of a resource with the
corresponding payment?
a. Land owners and rent
b. Entrepreneurs and interest payments
c. Laborers and profit
d. Entrepreneurs and rent
e. Capitalists and salaries
Sven has a comparative advantage over Alice in cooking but not in doing the laundry.
Which of the following must be true?
a. Sven must have an absolute advantage in both cooking and doing the laundry.
b. Sven has a lower opportunity cost in doing the laundry.
c. Sven has an absolute advantage in doing the laundry.
d. Alice must have an absolute advantage in cooking.
e. Sven must have a lower opportunity cost than Alice for cooking.
Which of the following is a common reaction to an increase in the interest rate?
a. A decline in oil prices
b. A war
c. A decrease in spending on new homes
d. An expansion
e. An increase in military spending
The president of the Federal Reserve Bank of which district has a permanent vote in the
Federal Open Market Committee?.
a. San Francisco.
b. New York.
c. Chicago.
d. Atlanta
e. Boston.
When individuals concentrate on a limited number of productive activities, this is
known as
a. shirking
b. productive inefficiency
c. exchange
d. specialization
e. an economic system
When people buy land, their purchases are included in GDP.
An increase in buyers’ incomes
a. increases the quantity demanded of a good
b. decreases the quantity demanded of a good
c. increases the demand for a normal good
d. increases the demand for an inferior good
e. decreases the quantity demanded of a normal good
A financial institution’s leverage ratio is defined as:
a. Profit / Revenue.
b. Total Assets / Shareholders’ Equity.
c. Shareholders’ Equity / Total Assets.
d. Value of Delinquent Loans / Value of All Loans.
e. Total Debt / Total Revenue.