If a country has a trade surplus
a. it has positive net exports and positive net capital outflow.
b. it has positive net exports and negative net capital outflow.
c. it has negative net exports and positive net capital outflow.
d. it has negative net exports and negative net capital outflow.
In order to maintain stable prices, a central bank must
a. maintain low interest rates.
b. keep unemployment low.
c. tightly control the money supply.
d. sell indexed bonds.
If it were not for the automatic stabilizers in the U.S. economy,
a. the Federal Reserve would have less reason than it has now to monitor stock prices.
b. it would be more desirable than it is now for the Federal Reserve to target an interest
rate.
c. a strict balanced-budget rule would be more desirable than it is now.
d. output and employment would probably be more volatile than they are now.
Other things the same, a decrease in velocity means that
a. the rate at which money changes hands falls, so the price level rises.
b. the rate at which money changes hands falls, so the price level falls.
c. the rate at which money changes hands rises, so the price level rises.
d. the rate at which money changes hands rises, so the price level falls.
Which of the following is correct? Since 1950
a. U.S. exports and U.S. imports each about doubled.
b. U.S. exports and U.S. imports each about tripled.
c. U.S. exports about doubled and U.S. imports about tripled.
d. U.S. exports about tripled and U.S. imports about doubled.
The effects of borrowing by the federal government would be studied by a
microeconomist rather than a macroeconomist.
a. True
b. False
According to fundamental analysis, a saver should prefer to buy stocks that are
a. undervalued. This means the price of the stock is low given the value of the
corporation.
b. undervalued. This means the value of the corporation is low given the price of stock.
c. overvalued. This means the price of the stock is high given the value of the
corporation.
d. overvalued. This means the value of the corporation is high given the price of stock.
Figure 34-14
Refer to Figure 34-14. Initial equilibrium exists at point A. A decline in prices will
cause households to _____ their desired money holdings, moving the interest rate to
_____.
When the price level falls
a. people want to hold less money.
b. the interest rate falls.
c. investment spending rises.
d. All of the above are correct.
A high demand for a company’s stock is an indication that
a. the company is in need of funds.
b. the company has recently sold a large quantity of bonds.
c. people are optimistic about the company’s future.
d. people are pessimistic about the company’s future.
The Federal Reserve
a. was created in 1836.
b. serves as a lender of last resort.
c. was created to facilitate the federal government’s collection of taxes as well as its
expenditures.
d. All of the above are correct.
Which of the following contains a list only of things that increase when the budget
deficit of the U.S. increases?
a. U.S. supply of loanable funds, U.S. interest rates, U.S. domestic investment
b. U.S. imports, U.S. interest rates, the real exchange rate of the dollar
c. U.S. interest rates, the real exchange rate of the dollar, U.S. domestic investment
d. the real exchange rate of the dollar, U.S. net capital outflow, U.S. net exports
RefertoFigure4-27. Which of the four panels represents the market for cars as a result
of the adoption of new technology on assembly lines?
a. Panel (a)
b. Panel (b)
c. Panel (c)
d. Panel (d)
Both the multiplier effect and the investment accelerator tend to make the
aggregate-demand curve shift further than it does due to an initial increase in
government expenditures.
a. True
b. False
RefertoFigure2-10,Panel(a)andPanel(b).A shift of the economy’s production
possibilities frontier from Panel (a) to Panel (b) could be caused by
a. unemployment.
b. an improvement in sofa production technology.
c. an improvement in tractor production technology.
d. an improvement in both sofa and tractor production technology.
The CPI is a measure of the overall cost of
a. the inputs purchased by a typical producer.
b. the goods and services purchased by a typical consumer.
c. the goods and services produced in the economy.
d. the stocks on the New York Stock Exchange.
Suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students
purchase 750 cups per day. If the price decreases to $3.75 per cup, which of the
following is the most likely outcome?
a. Students would purchase fewer than 750 cups per day.
b. Student would continue to purchase 750 cups per day.
c. Students would purchase more than 750 cups per day.
d. We do not have enough information to answer this question.
If a shortage exists in a market, then we know that the actual price is
a. above the equilibrium price, and quantity supplied is greater than quantity demanded.
b. above the equilibrium price, and quantity demanded is greater than quantity supplied.
c. below the equilibrium price, and quantity demanded is greater than quantity supplied.
d. below the equilibrium price, and quantity supplied is greater than quantity demanded.
A University of Iowa basketball standout is offered a choice of contracts by the New
York Liberty. The first one gives her $100,000 one year from today and $100,000 two
years from today. The second one gives her $132,000 one year from today and $66,000
two years from today. As her agent, you must compute the present value of each
contract. Which of the following interest rates is the lowestone at which the present
value of the second contract exceeds that of the first?
a. 7 percent
b. 8 percent
c. 9 percent
d. 10 percent
A pair of running shoes costs $70 in the U.S. If the price of the same shoes is 4500
rupees in India and the exchange rate is 60 rupees per dollar, than the real exchange rate
is
a. more than 1, so a profit could be made by buying these shoes in the U.S. and selling
them in India.
b. more than 1, so a profit could be made by buying these shoes in India and selling
them in the U.S.
c. less than 1, so a profit could be made by buying these shoes in the U.S. and selling
them in India.
d. less than 1, so a profit could be made by buying these shoes in India and selling them
in the U.S.
The price of diamonds is high, in part because the majority of the world’s diamonds are
controlled by a single firm. This is an example of
a. a market failure caused by an externality.
b. a market failure caused by market power.
c. a market failure caused by equality.
d. There is no market failure in this case.
According to the definitions of national saving and public saving, if Y, C, and
Gremained the same, an increase in taxes would
a. raise national saving and public saving.
b. raise national saving and raise public saving.
c. leave national saving and public saving unchanged.
d. leave national saving unchanged and raise public saving.
According to the efficient markets hypothesis, the number of people who think a stock
is overvalued exactly balances the number of people who think a stock is undervalued.
a. True
b. False
Demand deposits are balances in bank accounts that depositors can access by writing a
check or using a debit card.
a. True
b. False
If outsiders had more say in union contracts then it is likely that union wages would be
a. higher so unemployment would be higher.
b. higher so unemployment would be lower.
c. lower so unemployment would be higher.
d. lower so unemployment would be lower.
In the circular-flow diagram, factors of production include land, labor, and capital.
a. True
b. False
Figure 4-15
RefertoFigure4-15.Which of the following would cause the supply curve to shift from
Supply B to Supply A in the market for butter?
a. a decrease in the price of butter
b. an increase in the price of margarine
c. an increase in the price of milk
d. an improvement in technology that allows firms to use less labor in the production of
butter
Suppose the budget deficit is rising 3 percent per year and nominal GDP is rising 5
percent per year. The debt created by these continuing deficits is
a. sustainable, but the future burden on your children cannot be offset.
b. sustainable, and the future burden on your children can be offset if you save for them.
c. not sustainable, and the future burden on your children cannot be offset.
d. not sustainable, but the future burden on your children can be offset if you save for
them.
If an American-based firm opens and operates a factory in China, then it is engaging in
a. foreign portfolio investment.
b. foreign financial investment.
c. foreign direct investment.
d. indirect foreign investment.
If you deposit $900 into an account for two years and the interest rate is 4%, how much
do you have at the end of the two years?
a. $972.00
b. $973.44
c. $974.19
d. None of the above is correct.
In fiscal year 2008, the U.S. government ran a deficit of about $459 billion. In fiscal
year 2009, the government ran a deficit of about $1,413 billion. Other things the same,
this change would be expected to have
a. decreased interest rates and investment.
b. decreased interest rates and increased investment.
c. increased interest rates and investment.
d. increased interest rates and decreased investment.
Compare the 2012 unemployment rates and labor-force participation rates of whites,
blacks, adults of prime working age (ages 25-54), and teenagers (ages 16-19).
What is the relationship between education and human capital?
Table 3-41
Refer to Table3-41. If the two countries decide to trade with each other, which country
should specialize in producing radios?
Table 4-16
The following table shows the supply and demand schedules in a market.
RefertoTable4-16. At a price of $8, how large of a surplus will there be in this market?
What measure reflects the overall cost of goods and services produced domestically?
The goal of stabilization policy is to stabilize aggregate . As a result, stabilization policy
will also stabilize _____ and _____.
In the circular flow diagram, when Brian provides labor through the markets for factors
of production to ABC Company, the flow of money he receives in exchange is called
Scenario 24-5
Suppose the residents of Mediaville spend all of their income on books, CDs, and
DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for
$900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for
$1,250. Assume that the market basket for the CPI is defined in the base year.
RefertoScenario24-5.Using 2010 as the base year, what is the CPI in each year?
Figure 4-31
Consider the market for 2-packs of light bulbs below.
RefertoFigure4-31.Suppose there is an improvement in technology in this market and
the price of lamps, a complementary good, increases. What changes do you predict in
the equilibrium price and quantity?
When tax code changes reduce saving incentives, the interest rate will _____ and
investment will _____.
Explain why banks can influence the money supply if the required reserve ratio is less
than 100 percent.
Suppose a bank is operating with a leverage ratio of 20. What is the maximum decrease
in the market value of assets before the bank becomes insolvent?
Table 24-15
The table below lists the prices of chips and salsa for the months of October, November,
and December. Assume that the typical consumer buys 8 bags of chips and 4 jars of
salsa each month, and that October is the base period.
RefertoTable24-15. Calculate the inflation rate for December.
Economists at which administrative department help enforce the nation’s antitrust laws?
What are the functions of money?