As long as the loanable funds market clears, Say’s law holds..
Of the following, which could cause the demand curve for personal computers to shift
to the left?
a. a decrease in the price of personal computers
b. an increase in the price of computer software
c. a decrease in the price of computer software
d. an increase in wealth (assuming personal computers are a normal good)
e. expectations of an increase in the price of personal computers in the future
A movement along the consumption-function line would most likely be caused by a(n)
a. increase in net taxes
b. decrease in net taxes
c. increase in income
d. decrease in productivity
e. change in autonomous consumption
The federal funds rate is not just targeted by the Fed but is determined by the Fed.
Market forces are irrelevant.
The Federal Reserve was originally created to
a. stabilize exchange rates
b. keep the unemployment rate at 0%
c. create jobs
d. issue bonds
e. create and regulate the U.S. money supply
Suppose Mike and Renee are the only two people in a very simple economy and that
they produce and exchange two goods, soda and pretzels. Which of the following might
cause a recession in this simple economy?
a. Mike gets the idea that Renee wants more soda, which Mike produces.
b. Renee gets the idea that Mike wants more pretzels, which she produces.
c. Mike gets the idea that Renee wants less soda, which he produces.
d. Renee gets the idea that Mike wants less soda, which he produces.
e. The production of pretzels being equal to the production of soda.
An entrepreneur is best described as
a. someone that is hired to work in a firm
b. someone who creates human capital
c. someone with the ability to combine other resources in a productive enterprise
d. anyone who owns productive enterprise
e. anyone who produces long-lived physical capital
Nominal wages react slowly to changes in output for the following reasons, except one.
Which is the exception?
a. The nominal wage may be fixed and independent of output because of labor contracts
that last up to three years.
b. The real wage remains constant despite changes in output.
c. Firms with a reputation for paying stable nominal wages will find it easier to attract
new workers.
d. Changing the nominal wage can be costly to firms.
e. Nominal wages may be set by slow-moving corporate bureaucracies.
The Fed does not try to reduce frictional unemployment because it
a. is easier to eliminate with fiscal policy
b. is not a serious social problem
c. has microeconomic solutions
d. signals a strong economy
e. rarely exceeds a 1 percent rate
Which of the following is not among the factors that influence economic growth?
a. Increase in employment
b. Growth in physical capital stock
c. Technological progress
d. Lower government debt
e. An efficient political and legal system.
If consumers enjoy an increase in wealth due to stock market gains, which of the
following combinations of events will mostly likely take place?
a. A downward shift of the aggregate expenditure line and a rightward shift of the AD
curve
b. A downward shift of the aggregate expenditure line and a rightward shift of the AD
curve.
c. An upward shift of the aggregate expenditure line and a leftward shift of the AD
curve.
d. An upward shift of the aggregate expenditure line and a rightward shift of the AD
curve.
e. An upward shift of the aggregate expenditure line and no shift in the AD curve.
What is the difference between actual investment (as defined in GDP) and planned
investment?
a. Planned investment does not include unplanned inventory changes; actual investment
does.
b. There is no difference; they are the same.
c. Planned investment does not include depreciation; actual investment does.
d. Planned investment includes inventories; actual investment does not.
e. Planned investment includes depreciation; actual investment does not.
Refer to Figure 15-9. Suppose the economy is in equilibrium with real GDP of $7
trillion. A demand shock shifts the aggregate demand curve to AD2, increasing real
GDP to its full-employment level of $7.2 trillion. In the long run, following the shock,
we would expect the
a. aggregate demand curve to shift rightward, further increasing real GDP and the price
level
b. aggregate demand curve to shift leftward, returning real GDP to $7 trillion
c. aggregate supply curve to shift downward, returning the price level to 120
d. aggregate supply curve to shift upward, returning real GDP to $7 trillion
e. economy to remain at the new level of output of $7.2 trillion.
Aggregation is important in macroeconomics because
a. it is a basic tool of reasoning
b. we need a model with as much information as possible
c. it allows us to comprehend the entire economy in all its detail
d. it allows us to keep different markets separate in our minds
e. we need to consider the entire economy at once with a model as simple as possible
Refer to Figure 9-10. Assume that A represents the minimum level of investment
necessary to increase capital per worker and B represents the minimum production of
consumer goods acceptable to the population. If the economy is currently at point D and
if the population continues to grow,
a. the production possibilities frontier will shift outward very rapidly
b. the production possibilities frontier will shift outward, but not fast enough to increase
living standards
c. the economy will move to point C on the production possibilities frontier
d. the economy will remain at point D on the production possibilities frontier
e. the production possibilities frontier will shift inward and living standards will
deteriorate
An excess demand for money exists if the interest rate is below the equilibrium rate.
Deleveraging is the process of reducing leverage, and therefore increasing the risk to
capital from any further declines in asset prices.
If the Federal Reserve wishes to increase the money supply by $30,000 and the reserve
requirement ratio is 0.4, how big a purchase of bonds will the Fed need to make?
a. $75,000
b. $12,000
c. $1,000
d. $30,000
e. $3,000
Double-digit inflation
a. has occurred in the United States in only three of the past fifty years
b. has occurred throughout most of United States history
c. is also called creeping inflation
d. was the norm in the United States until the end of the Vietnam War
e. has not occurred in the United States since the Great Depression
The Federal Reserve System
a. is influenced by the executive and legislative branches through the appointment
process
b. is under the jurisdiction of the executive branch
c. is under the control of the private banks that own it
d. is directed in its actions by the U.S. Congress
e. answers only to the judicial branch